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EXECUTIVE SUMMARY The taxpayer, Craig Terry, deducted $6,000 in charitable contribution to his church, which operates his children’s school. The IRS disallowed $4,800 of this deduction claiming that it was tuition. When Terry made the contribution, he was not acting out of pure generosity, but in anticipation that his children would receive an education. Terry made a quid pro quo contribution, in which only the excess of the value of the services received is deductible. We rule in favor of the IRS due to overwhelming legislative support, as outlined below.
FACTS
* In 2006, Craig Terry “contributes” $6,000 to his church which operates the school that his two children attend. * The school charges no tuition for students to attend, but the families are provided with a suggested donation of $200, which is how much it costs to educate a child per year. However, no child is refused admission to the school if their family is unable to contribute. * The IRS disallows $4,800 of the charitable contribution stating it is tuition. * Terry responds that because the school charges no tuition, the entire $6,000 is deductible. Terry, also, argues that because the IRS allows the Church of Scientology to deduct fees paid to the church for religious education, he should be allowed this deduction as well.

ISSUES Per IRC section 170(c)(2)(B), “a charitable contribution is defined as a contribution or gift to or for the use of a corporation, trust, or community chest, fund, or foundation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes.” These charitable contributions are deductible by IRC section 170(a)(1). On the other hand, if these charitable contributions fall within the definition of a quid pro quo exchange, then they would not qualify the taxpayer for a deduction in the full amount. IRC section

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