Court Rejects Tax Deduction for House Donated to Fire Department.

The Seventh Circuit U.S. Court of Appeals has rejected an attempt by a husband and wife to claim a $76,000 “charitable” tax deduction on their income tax return for donating their home to a local fire department on the condition that the home be used in a fire training exercise (e.g., torched) and then demolished.  After demolition, the owners planned to then build a new home on the three acre lake front site in Chenequa, Wisconsin. 

To view the court’s decision, click here Rolfs v. Commissioner of Internal Revenue (7th Cir. 2012).  The IRS had disallowed the deduction and that decision was upheld by the United States Tax Court and affirmed by the Seventh Circuit on February 8, 2012.  The Seventh Circuit’s decision discusses charitable deductions under the Internal Revenue Code and also how property is valued for tax purposes.

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