1964 U.S. Tax Ct. LEXIS 34">*34
43 T.C. 1">*1 Respondent determined the following deficiencies in petitioners' income tax:
| Year | Deficiency |
| 1959 | $ 760.68 |
| 1960 | 1,100.89 |
| 1961 | 260.00 |
By amended answer, respondent increased the deficiency for 1961 to $ 585. Petitioners have conceded that a portion of the increased1964 U.S. Tax Ct. LEXIS 34">*35 deficiency is correct since they cannot substantiate $ 400 of a claimed $ 2,250 charitable contribution. Petitioners have also conceded certain adjustments made for 1960. The only issue remaining for decision is whether petitioners' contributions in 1959, 1960, and 1961 were made to or for the use of the Sudan Interior Mission.
FINDINGS OF FACT
The stipulated facts are hereby found accordingly.
Petitioners George E. Peace (hereinafter sometimes referred to as petitioner) and his wife, Lillian W. Peace, reside at 4520 NE. 22d Road, Fort Lauderdale, Fla. Petitioners filed their joint Federal income tax returns for the years 1959 and 1960 with the district director of internal revenue, Jacksonville, Fla., and their joint Federal income 43 T.C. 1">*2 tax return for the year 1961 with the district director of internal revenue, Cleveland, Ohio.
The Sudan Interior Mission, Inc. (hereinafter referred to as the mission), is and was a corporation organized and operating exclusively for religious and charitable purposes, within the meaning of
The gross income of the mission was almost $ 4 million yearly in 1959, 1960, and 1961. The mission, which is interdenominational, is dependent for its support entirely upon freewill offerings of individuals, groups, and churches. A substantial portion of the mission's income is obtained from visitations throughout the United States by missionaries on furlough from their work in the field (foreign countries). The missionaries visit churches, groups, and individuals, making known the mission's needs for funds, in line with the mission's policy of "full information and no solicitation."
Much of the mission's income is devoted to the support of the missionaries in foreign countries. It is the practice of the mission to estimate the cost of a missionary's yearly support. During 1959, 1960, and 1961 the estimated yearly cost was $ 1,600 for each missionary. Allowances for missionaries1964 U.S. Tax Ct. LEXIS 34">*37 in any country were identical, although allowances might vary from one country to the next.
Funds are received by the mission in three categories: General undesignated funds, funds for support, and special funds. General undesignated funds are used to meet current expenses. Funds received for support are divided into three portions: 50 percent going into a support pool, 20 percent into a mission passage fund which cares for missionaries' travel to and from furloughs, and 30 percent into a general fund used for missionaries' housing, medical and administrative expenses, social security payments, and various other things. Special funds include gifts designated for special projects and personal transmission gifts sent directly to the missionaries concerned.
During 1959, 1960, and 1961 Harold Hide, 1 Peter Klassen, Mary Thornton, and Ida Trapp were missionaries for the mission, except that Ida Trapp was on a leave of absence from November 1, 1961, through at least December 31, 1961.
In 1959, 1964 U.S. Tax Ct. LEXIS 34">*38 1960, and 1961 the petitioner sent 23 checks to the mission. Each check was made payable to the order of the "Sudan Interior 43 T.C. 1">*3 Mission." Each check constituted a payment made in the taxable year in which it was issued. On the lower left-hand corner of the face of 11 of the checks, the petitioner wrote the names of the four missionaries, Harold Hide, Peter Klassen, Mary Thornton, and Ida Trapp. On the lower left-hand corner of the face of one of the checks, dated November 10, 1961, he wrote the names of three of the missionaries, omitting that of Ida Trapp.
The 1959 check to the mission, dated February 5, 1959, was for $ 2,400. In 1960 there were 12 checks, each in the amount of $ 200, sent to the mission. In 1961 there were seven checks in the amount of $ 200 and three checks in the amount of $ 150 sent to the mission.
For each of the 23 checks, the mission furnished the petitioners a receipt. The following appears on the face of the 1959 receipt:
| Support: | ||
| Miss Ida Trapp | $ 600 | |
| Miss Mary Thornton | 600 | |
| Mr. Harold Hide | 600 | |
| Mr. Peter Klassen | 600 | |
With the exception of the last three receipts in 1961, the following, although not necessarily in the same order, 1964 U.S. Tax Ct. LEXIS 34">*39 appears on the face of each receipt in 1960 and 1961:
| Box | 2, 4, 5 -- Miss I. Trapp | $ 50 |
| 2, 4, 5 -- Miss M. Thornton | 50 | |
| 2, 4, 5 -- Mr. H. Hide | 50 | |
| 2, 4, 5 -- Mr. P. Klassen | 50 |
On the face of each receipt, box 2 was designated "Support Allowance" and was allocated $ 25 per person; box 4 was designated "Maintenance From Support" and was allocated $ 15 per person; and box 5 was designated "Passage From Support" and was allocated $ 10 per person. The last three receipts in 1961 are identical except for the omission of Ida Trapp's name and the equal allocation of $ 150 to the other three named missionaries.
In a letter, dated February 5, 1959, accompanying the 1959 check, petitioner stated:
Enclosed please find check for $ 2,400.00 for our Missionaries Ida Trapp, Mary Thornton, Harold Hide, and Peter Klassen for the year 1959.
In a letter dated February 17, 1960, petitioner wrote to the mission:
As I am retired now and my income is less than half of previous I am rearranging my contributions. I still want to keep Ida Trapp, Mary Thornton, Harold Hide, and Peter Klassen at $ 600 per year. I will have to send it monthly. * * *
Also I have joined Bethany Presby Church1964 U.S. Tax Ct. LEXIS 34">*40 in Ft. Lauderdale and they have a large missionary program of which I feel I should contribute more than I do. * * *
I would like to put the $ 1,200 for Mary Thornton and Harold Hide thro [sic] the Bethany Church from Mrs. Peace and I as of now * * *. We would still take care of Ida and Peter ourselves.
43 T.C. 1">*4 In reference to petitioner's letter of February 17, 1960, Albert H. TerMeer (hereinafter referred to as TerMeer), secretary of the mission, replied, on March 7, 1960:
Thank you for your good letter of February 17th, together with your check in the amount of $ 200. We are very gratefully acknowledging your contribution to the supports of these four missionaries by our receipt No. D2547.
We note that you say that you would like to send your contributions monthly from now, and that is of course very agreeable to us, if it makes it more convenient for you.
We note further that you would like to put through the $ 600 each for Mary Thornton and Harold Hide through the Bethany Church, but that you will continue to care for Miss Trapps and Mr. Klassens $ 600 each per year directly through this office. This also is quite agreeable to us, and thank you for letting us know.
Mission-form1964 U.S. Tax Ct. LEXIS 34">*41 remittance envelopes in which were enclosed the checks sent by the petitioner to the mission in September, November, and December 1960 provided:
Remittance for
(Kindly print full name of Missionary)
To be designated as follows:
| Support | Miss Ida Trapp |
| Miss Mary Thornton | |
| Mr. Harold Hyde | |
| Mr. Peter Klassen |
The checks transmitted to the mission in September and December 1960 were not among the 11 on which the names of the missionaries had been written in the lower left-hand corner.
In a letter dated September 29, 1961, accompanying a check on which no names had been written, the petitioner states:
We have supported Miss Trapp for 20 years and feel she has done a remarkable job for the Lord. She intimated she might take position in Montana as head of hospital. So am sending check for support of Mary Thornton, Harold Hide and Peter Klassen. We are at present burdened for a Bible teacher and Evangelist in the United States and feel he is doing a remarkable job so have taken him as our home Missionary as I believe we are close to the End and America needs the gospel.
TerMeer responded on November 8, 1961:
Thank you so much for your contribution of $ 150.00 * * *
We1964 U.S. Tax Ct. LEXIS 34">*42 are sending you herewith our official receipt No. E26873 for the support of $ 50.00 each to Miss Thornton, Harold Hide and Peter Klassen. We thank you very much for your fellowship with us in the support of these missionaries, and know that you will be praying the Lord's bless upon their separate ministries.
Now with regard to Miss Trapp * * *. She has asked for a leave of absence from the Mission as of November 1st, which means that from now on we will not be financially responsible for her in any way, and the responsibility of each donor to her support will also be notified that support is no longer needed for her. * * * We do thank you for your fellowship in her support for this long time.
43 T.C. 1">*5 On a mission-form remittance envelope sent in November 1961 to the mission, the petitioner wrote the following:
Enclosed find check for $ 150 50 Harold Hide 50 Mary Thornton 50 Peter Klassen
I would prefer the whole amount in future to go to their support only do not break it up.
TerMeer wrote petitioners on December 20, 1961, that:
the Leave of Absence [requested by Ida Trapp] has been granted effective November 1st, 1961.
We have appreciated very much your fellowship in her1964 U.S. Tax Ct. LEXIS 34">*43 support during the time she has been serving * * *. During the time she is on a Leave of Absence she will not be receiving allowances from the Mission, and so we will not require further support for her until such time as she is again able to return to the field. Possibly you might like to transfer this to another of our workers who has such a need, and if so, we will be glad to give you further information.
In a letter dated December 21, 1961, Mr. Fred Zabel of the mission wrote in reply to petitioner's request on the mission-form remittance envelope sent in November 1961:
Thank you for your recent gift of $ 150 toward the support of Mr. Hyde, Mr. Klassen and Miss Mary Thornton for which we are enclosing receipt No. E30358.
In this letter I am sending to you a little pamphlet called "Missionary Maintenance" which shows the breakdown of support figures. All of the money that you send in designated support is actually for the support of the missionary as described on Page 5 of this pamphlet which I have encircled the portion that I believe you would want to read.
If after reading this pamphlet there are some questions in your mind that you would like to ask, please write us a line1964 U.S. Tax Ct. LEXIS 34">*44 and we shall be most happy to try and answer. We do want your gifts to go exactly as you have designated them.
The pamphlet entitled "Missionary Maintenance" states the mission's policy as follows:
Distribution of Funds
All money received is prayerfully distributed. Contributions designated by the donor to a specific department of the work or to an individual are applied as designated. The General Fund, from which the general administrative expenses are met, receives most undesignated and sundry contributions.
It is the aim of the Mission that as far as possible each missionary going forth have his full support promised. The money thus received is divided equally for Personal Allowance and Service Support. The Personal Allowance fund is divided equally each month among all the missionaries, and fluctuates in proportion to the amount available. This is the equivalent of the missionary's "salary" and is for his personal use. The actual sum received varies slightly on different fields but the fund is shared in such a manner as to enable each one to enjoy as nearly as possible the same purchasing power.
From the half that goes into Service Support, appropriate sums are set aside1964 U.S. Tax Ct. LEXIS 34">*45 for passage and general maintenance requirements, from which medical and other services not covered by the allowances are paid. At the end of each month 43 T.C. 1">*6 any balance in the General Fund is transferred to the Allowance fund and augments the amount available for the missionary's monthly allowance.
Share and Share Alike
By sharing funds this way, with each member contributing his support funds to the general family welfare, the Mission is happily following the example of the early church * * *
Workers Together With God
* * * *
There are missionaries accepted by the Mission who are waiting to sail but who need financial support. Perhaps God would have you share the burden by undertaking partial or full support of one of these, to be your personal gospel representative in Africa.
Or perhaps God would have you go. The cry for workers on all our fields is a daily heartache. There are many millions of people in Mission fields alone who do not know the gospel -- there is no one to tell them.
It was the policy of the mission that each of the missionaries have promised from donors the amount of his annual support. It is a frequent practice for contributors to indicate that their1964 U.S. Tax Ct. LEXIS 34">*46 contributions are for support, measured in terms of the support of individual missionaries. Petitioners measured their contributions to the mission in terms of partially meeting the support allowances for Harold Hide, Peter Klassen, Mary Thornton, and Ida Trapp.
Petitioners were familiar with the financial policy of the mission as to the disposition of contributions by donors designating certain missionaries to be supported.
The petitioners' contributions were all placed in a common pool used for missionary support and were disbursed in accordance with the policy of the mission as set out above under the designation "Distribution of Funds" in the mission publication "Missionary Maintenance."
The mission-form remittance envelopes included a place for "Personal Gift (Transmission)" which, on the envelopes in evidence, was not specified by the petitioner. Box 9 of the mission receipt is for "Transmission." On no receipt is any part of the petitioners' contribution attributed to box 9.
On occasion petitioners did make personal gifts to the missionaries. Cash was given to Mary Thornton personally when she visited Florida. Money was sent to Ida Trapp to enable her to buy a motorcycle. 1964 U.S. Tax Ct. LEXIS 34">*47 Money was also sent to a missionary named Janet Traup to enable her to buy a typewriter. No deduction was claimed for any of these gifts.
During 1959, 1960, and 1961 it was the petitioners' intention that their contributions be credited to the support allowance of the missionaries Harold Hide, Peter Klassen, Mary Thornton, and Ida Trapp. Petitioners knew and intended that their contributions would go into 43 T.C. 1">*7 a common pool to be administered by the mission and distributed in accordance with the mission's policy.
OPINION
The tax-exempt status of the mission has been stipulated and accordingly is not in issue. The sole question is whether petitioner's contributions were "to or for the use of" 2 the mission, so as to be deductible under
1964 U.S. Tax Ct. LEXIS 34">*48 The respondent contends that the contributions are not deductible because they were made for the support of certain designated individuals, rather than to or for the use of the mission. In the respondent's own words, with which we have concurred,
In support of his contention, respondent relies on such cases as
Finally, we believe1964 U.S. Tax Ct. LEXIS 34">*50 respondent is hoist with his own petard. In
The test in each case is whether the organization has full control of the donated funds and discretion as to their use, so as to insure that they will be used to carry out its functions and purposes.
In the instant case, the son's receipt of reimbursements from the fund is alone insufficient to require a holding that this test is not met. Accordingly, unless the taxpayer's contributions to the fund are distinctly marked by him so that they may be used only for his son or are received by the fund pursuant to a commitment or understanding1964 U.S. Tax Ct. LEXIS 34">*51 that they will be so used, they may be deducted by the taxpayer in computing his taxable income in the manner and to the extent provided by
It seems to us that respondent has chosen the wrong case to be puristic in his effort to collect the sovereign's revenue. In view of our findings, nothing further need be said. We decide this issue for petitioners, but because of certain concessions made by them,
1. Sometimes spelled Hyde.↩
2.
(c) Charitable Contribution Defined. -- For purposes of this section, the term "charitable contribution" means a contribution or gift to or for the use of -- (1) A State, a Territory, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes. (2) A corporation, trust, or community chest, fund, or foundation -- (A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State or Territory, the District of Columbia, or any possession of the United States; (B) organized and operated exclusively for religious, charitable, scientific, literary or educational purposes or for the prevention of cruelty to children or animals; (C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and (D) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.↩
