Jay Carter Joan H. Carter v. United States

Jay and Joan Carter appeal the entry of summary judgment against them in their tax refund suit challenging the Internal Revenue Service’s disallowance of a deduction for charitable contributions in 1983. We affirm the district court’s denial of the Carters' summary judgment motion, but reverse its grant of the IRS’s summary judgment motion and remand for trial.

BACKGROUND

The Carters founded the Psychal Phy-sionic Universal Life Church (PPULC) in 1975 after being ordained ministers in the Universal Life Church, Inc. of Modesto (ULC). They organized a congregation, affiliated their church with the ULC, and opened a church bank account on which the Carters were the sole signatories. Jay Carter became a full-time minister and does not hold any other employment. In lieu of a salary Jay receives a parsonage allowance, which is not taxable as income when paid to members of the clergy. See 26 U.S.C. § 107 . Joan Carter, who is employed, donates to the PPULC fifty percent of her income, the maximum deductible contribution to a qualifying religious organization. The donations are deposited into *1482 the PPULC account and are used to pay the parsonage allowance (including mortgage…

Concurring in Part and Dissenting in Part:

I concur in the judgment and in almost all aspects of the majority’s opinion. I dissent only from the discussion contained in footnote 5 of the opinion. Although it is not necessary to the court’s decision and is therefore dicta and not binding on either this court or the district courts, the majority goes out of its way to criticize Gookin v. United States, 707 F.Supp. 1156, 1158 (N.D.Cal.1988), which holds that any personal inurement can erase a contribution’s status as charitable for purposes of the tax law.

*1490 The majority and I undoubtedly agree that such a draconian rule might not be fair or good policy. But where is it written that the internal revenue laws must comport with individual judges' notions of propriety and practicality? An argument certainly could be made for requiring a no inurement bright line rule in deciding what qualifies for tax exempt status. Otherwise, the Internal Revenue Service is confronted with the task of deciding on a case-by-case basis how much profiteering is tolerable and when personal inurement crosses the line from de minimis to significant. Insisting, as the majority does, that the Internal…

973 F.2d 1479 70 A.F.T.R.2d 92 -5689, 92-2 USTC P 50,473 Jay CARTER; Joan H. Carter, Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee. No. 90-16683. United States Court of Appeals, Ninth Circuit. Argued and Submitted Jan. 16, 1992. Decided Sept. 1, 1992. Edward O.C. Ord, Ord & Norman, San Francisco, Cal., for plaintiffs-appellants. Paula K. Speck, Tax Div., U.S. Dept. of Justice, Washington, D.C., for defendant-appellee. Appeal from the United States District Court for the Northern District of California. Before: TANG, PREGERSON, and BOOCHEVER, Circuit Judges. BOOCHEVER, Circuit Judge: 1 Jay and Joan Carter appeal the entry of summary judgment against them in their tax refund suit challenging the Internal Revenue Service's disallowance of a deduction for charitable contributions in 1983. We affirm the district court's denial of the Carters' summary judgment motion, but reverse its grant of the IRS's summary judgment motion and remand for trial. BACKGROUND 2 The Carters founded the Psychal Physionic Universal Life Church (PPULC) in 1975 after being ordained ministers in the Universal Life Church, Inc. of Modesto (ULC). They organized a congregation,…