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Wednesday, March 05, 2003


Danvis S. And Sheryl S. Smith were not allowed to deduct contributions to �Alpha Ministries�, where the �contributions� were used almost exclusively for the housing and personal expenses of the Smiths. Assuming there were actual contributions made, which Tax Court rightly seemed suspicious of, contributions cannot be deducted to the extent the contributor receives personal benefits from the contribution, and these contributions were used entirely for the personal benefit of the Smiths. The Smiths were also denied business deductions for which they failed to supply any substantiation. Tax Court particularly noted the expense deduction for a trip to Hawaii, where they provided no receipts for travel and their daily planner showed their only business activity for the day was making phone calls that could have been made from home. Tax Court also allowed accuracy related penalties due to the Smiths� lies negligence.

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