In the recently decided case of Mohamed v. Commissioner, TC Memo 2012-152 (5/29/2012), the Tax Court denied taxpayers a charitable deduction for a donation of real property with a value in excess of $18 million that a husband and wife contributed to their charitable trust. In his memorandum decision, Judge Mark V. Holmes admitted this was a “harsh” result but one that was required because of the taxpayers’ failure to meet the substantiation requirements for charitable contributions contained in the regulations promulgated pursuant to Section 170 (a) of the Internal Revenue Code.

According to the opinion, Joseph Mohamed Sr. is a real estate broker, a certified real estate appraiser and a prominent Sacramento, Calif., entrepreneur. During his career, Mohamed and his wife amassed a fortune in real estate and created a charitable remainder trust for the ultimate benefit of several well-known public charities. In 2003, the Mohameds donated five properties to their charitable trust. Mohamed filled out the couple’s 2003 federal income tax return himself, including Form 8283 (Non-Cash Charitable Contributions), the form required to be filed to report noncash contributions to charity. Mohamed admits that he did not read the instructions before completing this form because, as he testified, the form seemed so clear. In 2004, the Mohameds donated additional properties to their charitable trust. Mohamed again filled out the couple’s 2004 tax return himself and again did not read the instructions.

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