William R. And Lorna E. Hall v. Commissioner of Internal Revenue

Appellants William and Loma Hall deducted $3951 as charitable contributions on their 1976 tax return. Most of this money had been donated to the Church of the United Brotherhood (“CUB”), a chartered congregation of the Universal Life Church, Inc. The congregation was organized by William Hall and two of his friends. It practiced no formal rituals, was not housed in a church building, and, except for the charter, no organizational documents were introduced into evidence below. The Tax Court held that contributions to the congregation did not qualify for charitable deductions and sustained the Commissioner’s imposition of a penalty for disregard of Internal Revenue rules and regulations. Hall appeals this ruling on several grounds. We affirm.

DISCUSSION

I. THE CUB IS NOT A CHARITABLE ORGANIZATION UNDER I.R.C. § 170.

Hall argues that the Universal Life Church is a tax exempt charity. See Uni versal Life Church, Inc. v. United States, 372 F.Supp. 770, 776 (E.D.Cal.1974). Accordingly, contributions to one of its congregations, the CUB, should be deductible.

The courts have repeatedly held that exemptions for parent churches do not automatically carry over to local congregations.…