California Couple Loses $18.5 Million Charitable Deduction on Technicality | Total Return | WSJ | Laura Saunders | 5/30/12

People filing tax forms in 1920

People filing tax forms in 1920 (Photo credit: Wikipedia)

With regret, a U.S. Tax Court judge denied Joseph and Shirley Mohamed, a wealthy Sacramento, Calif., couple a deduction for $18.5 million they took after donating valuable properties to charity because they didn’t attach a proper appraisal to the donation form.

In 1998 the Mohameds set up a charitable remainder trust; such trusts typically pay income for life to the donors and after death give the remaining assets to one or more charities. (The Mohameds’ charities included the Shriners Hospitals for Children, the Sacramento Food Bank & Family Services and the Pacific Legal Foundation.)

In 2003 and 2004 the Mohameds donated more than half a dozen properties worth millions of dollars to their trust. Mohamed filled out the tax returns himself and later admitted he did not read the instructions, according to the decision.  Even though the judge conceded that the instructions were confusing, and the Internal Revenue Service has since altered the form, the fact the Mohameds didn’t attach qualified appraisals of the donated properties to their tax returns resulted in a ruling in favor of the IRS.

For full article see: California Couple Loses $18.5 Million Charitable Deduction on Technicality – Total Return – WSJ.

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About vinhsu

Center City Philadelphia General Practice Law Firm with emphasis on Criminal Defense, Family Law, Immigration, Real Property, and Wills/Trusts/ Estate Planning. Licensed in Pennsylvania and New Jersey.
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