DocketNumber: Docket Nos. 9667-77, 8798-78
Citation Numbers: 42 T.C.M. 431, 1981 Tax Ct. Memo LEXIS 372, 1981 T.C. Memo. 371
Filed Date: 7/20/1981
Status: Non-Precedential
Modified Date: 11/20/2020
Petitioner, a professional writer, wrote a book which was published and copyrighted in 1967. Only 6,000 copies of this book were printed originally. In 1975, petitioner presented the copyright certificate to the directors of a museum. On his 1975 income tax return, petitioner claimed a charitable contribution deduction of $ 30,000 for donation of the copyright interest. Due to the limits of
MEMORANDUM FINDINGS OF FACT AND OPINION
BRUCE,
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of facts, and the exhibits attached thereto, are incorporated herein by this reference.
Petitioners, Robert T. and Edna L. Smith, resided at Smyrna, Georgia, during the years in question and when the petitions herein were filed. They timely filed joint Federal income tax returns for taxable years 1974, 1975 and 1976 with the Internal Revenue Service Center, Chamblee, Georgia. They also filed amended returns *376 for the years 1975 and 1976 with the center at Chamblee. Since Edna did not join in the petition in Docket No. 9667-77 and is a party to the proceeding in Docket No. 8798-78 only by virtue of having filed a joint return with Robert, we will hereafter refer to Robert as petitioner.
Since September 1963, petitioner has continuously been employed by the Federal Aviation Administrations (FAA). One of his duties with the FAA was the writing of periodic newsletters for private pilots. During the years in question, petitioner also received income as a member of the United States Air Force Reserves and received some royalties from materials authored as a free-lance writer of various aeronautical magazine articles and flying manuals and books. The costs of writing these items were expensed annually by petitioner.
Petitioner authored and published, through a private printer, a book on the history of the Staggerwing Beechcraft airplane entitled
In 1975, petitioner decided to contribute the copyright to the Staggerwing Museum Foundation, Inc. (hereafter Museum) rather than personally incur the expenses of revising and publishing a new
In February, 1975, the Museum Board of Directors, which was aware of petitioner's intent to transfer the copyright to the Museum, held its regular meeting, but took no action regarding the acceptance of the copyright. Soon thereafter, at a banquet for the Museum membership, attended by members of the Board of Directors, petitioner handed the original copyright certificate to W.C. Yarbrough, an officer of the Museum and an acquaintance of petitioner since 1962. As of the date of trial in this case, no action had been taken or legal documents processed to transfer the copyright from the name of the petitioner to the name of the Museum.
Nevertheless, the Museum Board of Directors, believing that the costs of a revised edition would be a prohibitive $ 40,000 to $ 50,000, authorized and permitted Staggerwings Unlimited (hereafter Unlimited) to use the copyright, without a written contract or paid consideration, for the revision and production of a new
Petitioner claimed charitable contribution deductions for the copyright totalling $ 30,000, even though he had earlier expensed his related costs. For 1976, petitioner deducted $ 14,844.09, having taken the remainder in 1975 as follows:
Fair Market Value | $ 30,000.00 | |
1975: | Charitable Contribution Limitation | |
(1/2 adjusted gross income) | 15,900.41 | |
Less: Allocation to Business Expenses | 4 744.50 | |
15,155.91 | ||
1976: | Fair Market Value | $ 30,000.00 |
Less: Claimed deduction for 1975 | 15,155.91 | |
$ 14,844.09 |
Petitioner also claimed additional charitable deductions for 1975 and 1976 as follows:
1975: | Cash Contributions | $ 386.80 |
United Appeal | 25.00 | |
$ 411.80 | ||
1976: | Girl Scouts | $ 27.50 |
Girl Scouts | 30.00 | |
Staggerwing Museum | 166.68 | |
Staggerwing Museum | 111.12 | |
Staggerwing Museum | 218.00 | |
United Appeal | 25.00 | |
578.30 |
Respondent *380 disallowed petitioner's entire charitable deductions of $ 16,312.21 5 for 1975 and $ 15,422.39 for 1976.
In other matters, respondent and petitioner have differed as to the allowable amounts of certain other deductions, as follows:
Respondent | ||||
Later | ||||
Interest | Claimed | Allowed | Allowed | Disallowed |
Home Mortgage | $ 868.37 | $ 868.37 | ||
C & S Bank | 155.26 | 155.26 | ||
Sears | 67.00 | 67.00 | ||
Rich's Dept. Store | 26.44 | 26.44 | ||
Credit Union | 507.14 | $ 507.14 | ||
BankAmericard | 5.87 | 5.87 | ||
Insurance loans | 1,249.28 | $ 1,249.28 | ||
First Bank | 21.74 | |||
$ 2,879.36 | $ 1,122.94 | $ 528.88 | $ 1,249.28 |
Miscellaneous expenses 6*381 $ 4,468.10 (entirely disallowed)
Political contributions | $ 200.00 | (entirely disallowed) |
Miscellaneous expenses | 5,921.09 | (entirely disallowed) |
Other business deductions | 1,253.42 | (shown, but not |
deducted, on return) |
Respondent | |||
Later | |||
Interest | Claimed | Conceded | Disallowed |
Home Mortgage | $ 567.01 | $ 522.20 | $ 44.81 |
Davison's | 59.41 | 59.41 | |
BankAmericard | 2.35 | 2.35 | |
Sears | 179.00 | 179.00 | |
Credit Union | 662.30 | 662.30 | |
Mutual Benefit | 10.04 | 10.04 | |
Pan Am Life Ins. | 184.25 | 184.25 | |
Mutual Benefit | 84.39 | 84.39 | |
MONY | 18.70 | 18.70 | |
MONY | 127.38 | 127.38 | |
First State Bank | 80.00 | 111.00 | |
Math Error | (567.01) | ||
Prudential | 187.30 | ||
$ 1,407.82 | $ 2,002.24 | $ 190.89 |
Taxes | Claimed | Allowed | Respondent | Disallowed |
Later | ||||
Conceded | ||||
State & Local | ||||
Income | $ 1,223.40 | $ 1,223.40 | ||
Real Estate | 507.96 | $ 507.96 | ||
State & Local | ||||
Tax | 121.00 | 121.00 | ||
General Sales | 257.92 | 253.76 | $ 4.16 | |
Personal | ||||
Property | 121.70 | 99.70 | 22.00 | |
Math error | (1,223.40) | |||
$ 1,008.58 | $ 1,477.16 | $ 728.66 | $ 26.16 |
Medical Expenses | (originally entirely disallowed) | Later Conceded 8 |
Insurance Premiums | $ 160.70 | $ 160.70 |
(excess of $ 150) | ||
Doctors/Dentists | 1,424.00 | 1,333.00 |
Transportation | 72.00 | |
7*382 $ 1,681.70 | $ 1,493.70 | |
Less: 3% Adjusted | ||
Gross Income | 940.39 | |
741.31 | ||
Insurance Premiums | 150.00 | 150.00 |
(remainder) | ||
$ 891.31 |
Miscellaneous expenses $ 2,940.74 (entirely disallowed)
OPINION
We will first address the question of petitioner's itemized deductions for 1974, 1975 and 1976, exclusive of the charitable contribution deductions for 1975 and 1976. For many of these items, our attention is drawn to petitioner's failure to provide adequate proof that the claimed amounts were spent, or, if spent, were spent for the deductible purposes claimed. Deductions are a matter of legislative grace.
In prior cases, too numerous to list here, upon finding the taxpayer to be candid and forthright, we have chosen to approximate a figure for an allowable deduction if reasonable evidence is presented, while bearing heavily upon the petitioner whose inexactitude is of his own making.
Petitioner's attempt to prove the contested deductions consisted of petitioner's self-serving testimony of general statements contending the deductibility of the items, copies of his 1974, 1975, and 1976 income tax returns, and a copy of an "affidavit" presented to respondent prior to trial with attached copies of letters, receipts and checks purportedly supporting the deductions claimed. Some of the copied materials, coupled with petitioner's generalized testimony, are sufficient substantiation for some of the claimed deductions. Most of these deductions, thus properly substantiated, have been allowed or conceded by respondent, as noted in the facts above. Those few other deductions, clearly proven or sufficiently established to warrant application of
To the contrary, respondent's disallowance of those deductions not earlier allowed or conceded or specifically allowed below is sustained. Petitioner has failed to carry his burden *385 of proof as to those deductions. Those amounts of claimed deductions of interest for 1974 and 1976, political contributions for 1975 and taxes and medical expenses for 1976 for which no documentation was provided were disallowed by respondent. We agree with that disallowance. A more complicated situation is presented by the jumbled summation of amounts listed on petitioner's returns for the years in question as "miscellaneous deductions." See note 6,
Nevertheless, certain amounts can be identified reasonably or estimated confidently and will be allowed as deductions under the
The final issue 10*389 *390 for our decision is the proper charitable contribution deductions of petitioner for 1975 and 1976. Central to this matter is the alleged "donation" of a copyright to Museum by petitioner, valued by petitioner at $ 30,000. Respondent denies the existence of any of the elements *388 of a properly deductible charitable contribution, contends that no benefit will be received by Museum, refutes petitioner's valuation of the copyright, and contends that petitioner had no basis in the copyright, having previously deducted all expenses related to writing the book copyrighted and that, if any amount is allowed, the contribution must be reduced by the amount of ordinary income which would have been ealized from the sale of the copyright. Petitioner's other charitable deductions for 1975 and 1976 were disallowed as unsubstantiated.
As to part of the smaller portion of charitable deductions of $ 411.80 and $ 578.30 claimed by petitioner for 1975 and 1976, respectively, petitioner has met only part of his burden and will be allowed charitable contribution deductions for 1975 and 1976 of $ 25.00 and $ 360.30, respectively. The larger portion of petitioner's claimed charitable contribution deductions for the years in question consists of the alleged transfer of a $ 30,000 copyright in 1975. Of the $ 30,000 value claimed, $ 15,155.91 was claimed in 1975 within the limit of 50 percent of adjusted gross income under
Although we find merit in all of respondent's arguments for disallowing the charitable deduction for the copyright, since any one of these arguments will defeat the deduction, we address only one. As used in
Determination of whether a properly completed transfer of a copyright interest occurred is governed by state law, but only after valid Federal restrictions are met.
certificate does not constitute ownership of the copyright itself. The certificate is not the copyright and the copyright "is not transferred by mere physical delivery, or other acquisition, of the certificate."
To reflect the foregoing,
1. On June 25, 1979, the date of trial of this case, counsel for petitioner filed an Entry of Appearance in this matter and presented petitioner's case. All matters prior to trial were handled by petitioner pro se.↩
2. Respondent has conceded some interest deductions for 1974 and some interest and taxes deductions for 1976 in excess of his original determinations. In fact, respondent's concessions for interest and taxes deductions for 1976 exceed petitioners' originally claimed deductions as a result of unclaimed items conceded and math errors in both amounts which were discovered and corrected in petitioners' favor by respondent. Respondent has also conceded some amounts which may be used to calculate a medical expense deduction for petitioners, whose originally claimed medical deduction was totally disallowed. All of these figures will be set out in the facts below. For 1976, respondent applied the standard deduction in his determination, rather than the lesser allowed itemized deductions, which now, due to respondent's concessions, exceed the standard deduction for 1976 and should be applied instead of the standard deduction. Readjustment of petitioners' General Tax Credit for 1976 may also be necessary. For these reasons, a decision will be entered under Rule 155 in docket No. 9667-77, should we decide any of the remaining issues for respondent, and in docket No. 8798-78, regardless of our decision on the remaining issues.
3. Unless otherwise indicated, all statutory references are to the Internal Revenue Code of 1954, as amended and in effect during the years in question. Deductions are allowed for trade or business expenses under
4. This amount was eliminated from petitioner's miscellaneous deductions and from the charitable contribution amount shown above. No explanation was given.↩
5. This amount includes the $ 744.50 "allocated to business" on petitioner's amended return for 1975. See note 4,
6. The lists of these expenses on petitioner's income tax returns for 1974, 1975, and 1976, are not sufficiently informative, despite their great length, to warrant reproduction here. It is enough to say that these expenses included amounts for "dues," "donations," "answering service," meals, car rental, truck expenses, advertisements, attorney fees, damaged shrubs, lumber, hardware, storm windows, utilities, books, maps, films, stamps, stationery and "office supplies." The amounts in each list were summed for each year without category or other identification to specific facts which would explain their presence on the respective return or their deductibility.
8. Final calculation of the medical expense deduction may be dependent upon the decision of other issues herein. Respondent also conceded medicine expenses of $ 90.45, but this amount is more than offset by the floor of one percent of petitioner's adjusted gross income for 1976.↩
7. The arithmetically correct total is $ 1,656.70. Since respondent disallowed the medical expense deduction in full, no correction of petitioner's arithmetic was necessary.
9.
10. Petitioner requested an award of attorney fees in his petition and argued that he was denied the protection of the
Petitioner's request for attorney fees is denied. The petitioner, not respondent, initiated the instant proceeding as to all issues.
Petitioner's claim that respondent's failure to give
11.
Copyright secured under this title or previous copyright laws of the United States may be assigned, granted, or mortgaged by an instrument in writing signed by the proprietor of the copyright, or may be bequeathed by will.
Title 17 was revised in its entirety by the Copyright Reform Act of 1976, Pub. L. 94-553, Title I, sec. 101, 90 Stat. 2541. Some parts of this revision became effective October 19, 1976, but the majority of the revision, including the pertinent sections below, became effective January 1, 1978.
(d) Transfer of Ownership.--
(1) The ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law, and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession.
(a) A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.↩
12. An Affidavit was presented by petitioner at trial which stated that, as of June 15, 1979, legal transfer of the original copyright had not occurred. Trial in this case was held on June 26, 1979.
By attachment of his opening brief, petitioner attempted to submit as evidence a "NUNC PRO TUNC ASSIGNMENT" for February 1, 1975, executed by petitioner on August 8, 1979, six weeks after the trial of this case. We will not consider this document as evidence in this case. Cf.
Petitioner's position would be dubious even with the admission of the
While the assignment may have been effective as of the date of the purported
Halle v. Commissioner of Internal Revenue , 175 F.2d 500 ( 1949 )
William F. Sanford v. Commissioner of Internal Revenue , 412 F.2d 201 ( 1969 )
United States v. Frank A. Jaskiewicz , 433 F.2d 415 ( 1970 )
United States v. Adam Bagdasian , 398 F.2d 971 ( 1968 )
United States v. Francis D. White and Gertrude W. White , 417 F.2d 89 ( 1969 )
Cohan v. Commissioner of Internal Revenue , 39 F.2d 540 ( 1930 )
United States v. Horton R. Prudden , 424 F.2d 1021 ( 1970 )
Arnold Van Den Wymelenberg, as of the Estate of Eleanor Van ... , 397 F.2d 443 ( 1968 )
Harold Dejong and Marjorie J. Dejong v. Commissioner of ... , 309 F.2d 373 ( 1962 )
United States v. Abraham Maius , 378 F.2d 716 ( 1967 )
Key Buick Company v. Commissioner of Internal Revenue , 613 F.2d 1306 ( 1980 )
United States v. Albert Dickerson , 413 F.2d 1111 ( 1969 )
Edson v. Lucas , 40 F.2d 398 ( 1930 )
the-duplan-corporation-burlington-industries-inc-dixie-yarns-inc , 594 F.2d 979 ( 1979 )
New Colonial Ice Co. v. Helvering , 54 S. Ct. 788 ( 1934 )
United States v. Jack I. Chikata , 427 F.2d 385 ( 1970 )
Group Publishers, Inc. v. Winchell , 86 F. Supp. 573 ( 1949 )
Gardner v. Nizer , 391 F. Supp. 940 ( 1975 )
Kingsrow Enterprises, Inc. v. Metromedia, Inc. , 397 F. Supp. 879 ( 1975 )
Duplan Corp. v. Deering Milliken, Inc. , 444 F. Supp. 648 ( 1977 )