                        T.C. Memo. 2002-153



                      UNITED STATES TAX COURT



                    GARY L. WEINER, Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7731-00.             Filed June 18, 2002.



     Steven R. Toscher, for petitioner.

     David Holtz, for respondent.



              MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Judge:   Respondent determined deficiencies in

petitioner’s Federal income tax of $37,012 for 1997 and $33,373

for 1998.

     Petitioner claimed charitable contribution deductions for

his payment to the National Heritage Foundation (NHF) of $93,000

in 1997 and $93,000 in 1998, which NHF used to pay premiums on
                               - 2 -

life insurance policies for the lives of petitioner’s daughter

and son-in-law.   The insurance policies were so-called charitable

split-dollar life insurance contracts, under which NHF was

entitled to receive from 48 percent to 92 percent of the initial

death benefits, and petitioner’s family trusts were entitled to

receive from 8 percent to 52 percent of those benefits.

Respondent determined that petitioner is not entitled to

charitable contribution deductions for his payments to NHF.

     The sole issue for decision is whether petitioner may deduct

his payments to NHF as charitable contributions.1   We hold that

he may not.

     Unless otherwise indicated, section references are to the

Internal Revenue Code.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

A.   Petitioner

     Petitioner, a dentist, resided in Los Angeles, California,

when he filed the petition.   Traci Rae Pontello and Wendi Lyn

Iannaccone are petitioner’s adult daughters, and Frank James

Pontello is petitioner’s son-in-law.




     1
        Petitioner contends that sec. 7491(a) requires respondent
to bear the burden of proof on all issues in the case. We need
not decide petitioner’s contention because our findings and
analysis do not depend on which party bears the burden of proof.
                                - 3 -

B.   Petitioner’s Family Trusts and Foundation

     1.   The Traci Rae Pontello Irrevocable Trust and the Frank
          James Pontello Irrevocable Trust

     On September 21, 1995, petitioner created the Traci Rae

Pontello Irrevocable Trust (TRP trust) and the Frank James

Pontello Irrevocable Trust (FJP trust).    Wendi Lyn Iannaccone was

trustee for the TRP trust, and Traci Rae Pontello was trustee for

the FJP trust.   Petitioner was the sole beneficiary of the TRP

and FJP trusts (the family trusts).     Under the trust instruments,

petitioner’s daughters become beneficiaries of the family trusts

upon the death of petitioner.

     2.   NHF

     NHF is a section 501(c)(3) organization and is eligible to

receive tax-deductible contributions under section 170(c)(2).

     3.   The Gary Weiner Family Foundation

     On October 1, 1995, petitioner established a fund within NHF

called the Gary Weiner family foundation.    The purpose of the

Gary Weiner family foundation is to fund medical research and

other educational programs.   Petitioner paid $265 to NHF to

establish his foundation.

C.   The Charitable Split-Dollar Insurance Agreements

     On October 15, 1995, the family trusts and NHF entered into

split-dollar insurance agreements (SDIAs) to divide the death

benefits from the life insurance policies on the lives of Traci
                                  - 4 -

Rae Pontello and Frank Pontello that would be issued to the

family trusts.     The SDIAs remained in effect through 1998.

     In the SDIAs, the family trusts and NHF agreed that, if NHF

paid about $93,000 of the annual premiums, NHF and the family

trusts would become entitled to the following initial death

benefits:

                                    NHF’s
                                   portion      Trusts’      Trusts’
                                      of      portion of   percentage
                      Initial      initial      initial    of initial
                       death        death        death        death
    Policy            benefit      benefit      benefit      benefit
Western Reserve
  Life Assurance
   policy no.                      $750,000    $750,000         50
    01B0349122       $1,500,000
     (WRL
01B0349122)

Western Reserve
  Life Assurance
   policy no.                       820,000     880,000         52
    01B0349121       1,700,000
 (WRL
01B0349121)
Bankers United
  Life Assurance
   policy no.                       750,000      69,672          8
    B140145          819,672
 (BUL B140145)
Bankers United
  Life Assurance
   policy no.                       820,000     487,531         37
    B140146          1,307,531
 (BUL B140146)


The family trusts agreed to pay any premiums due on those

insurance policies.     The amounts of the death benefits payable to
                               - 5 -

NHF remain fixed at the various initial death benefit amounts

even if the death benefits increased under the various policies.

     Under the SDIAs, as long as the annual premiums were paid,

the family trusts were entitled to receive death benefits in the

amounts stated in the policies plus any increase in death

benefits under the policies.

D.   The Insurance Policies on Petitioner’s Daughter and Son-In-
     Law

     On October 17 and 18, 1995, the TRP trust bought BUL B140146

and WRL 01B0349121 on the life of Traci Rae Pontello.   On October

17 and 18, 1995, the FJP trust bought BUL B140145 and WRL

01B0349122 on the life of Frank Pontello.

E.   Petitioner’s Payments to NHF and to the Insurance Companies

     Petitioner sent checks for $93,000 to NHF on November 30,

1995, October 24, 1996, October 23, 1997, and October 21, 1998.

NHF was not obligated to use petitioner’s funds to pay the

premiums on the insurance policies on the lives of his daughter

and son-in-law, but petitioner expected NHF to do so.   On the day

that NHF received petitioner’s payments, NHF paid to the

insurance companies its $92,722 portion of the premiums for the

life insurance policies on the lives of Traci Rae Pontello and

Frank Pontello.   Each year from 1995-98, the trusts paid $7,278

to the insurance companies for premiums on those insurance

policies.
                                 - 6 -

     NHF gave petitioner a receipt for each of his $93,000

payments in which NHF stated that “NHF did not provide any goods

or services to the donor in return for the contribution.”

F.   Petitioner’s Tax Returns and the Notice of Deficiency

     Petitioner claimed deductions for charitable contributions

to NHF of $93,000 in 1997 and $93,000 in 1998.    Respondent

determined in the notice of deficiency that petitioner is not

entitled to those deductions.

                                OPINION

     Petitioner contends that he may deduct $93,000 in 1997 and

1998 as charitable contributions to NHF.    We disagree.

     We recently decided Addis v. Commissioner, 118 T.C.

(2002), in which the taxpayers deducted their payments to NHF

under a split-dollar life insurance plan.    The split-dollar life

insurance plan in Addis is indistinguishable from the plan that

petitioner used.   In Addis, NHF used the funds from the taxpayers

to pay for life insurance on the life of Mrs. Addis and, as a

result, the taxpayers’ family trust became entitled to receive

part of the death benefits from the life insurance policy.     In

Addis, NHF gave the taxpayers receipts in which NHF stated that

the taxpayers received no consideration in exchange for their

payments.   We held that the taxpayers could not deduct the

payments as charitable contributions because NHF did not state in

the receipts for those payments that it used the taxpayers’ funds
                               - 7 -

to pay for a life insurance policy under which the taxpayers

would receive part of the death benefits.   We held that the

taxpayers did not comply with the substantiation requirement of

section 170(f)(8)2 and section 1.170A-13(f)(6), Income Tax

Regs.,3 because NHF incorrectly stated in the receipts that the

taxpayers received no consideration for their payments.      We reach




     2
         Sec. 170(f)(8) provides in part:

          (A) General rule.--No deduction shall be allowed
     under subsection (a) for any contribution of $250 or
     more unless the taxpayer substantiates the contribution
     by a contemporaneous written acknowledgment of the
     contribution by the donee organization that meets the
     requirements of subparagraph (B).

          (B) Content of acknowledgment.--An acknowledgment
     meets the requirements of this subparagraph if it
     includes the following information:

                (i) The amount of cash and a description
           (but not value) of any property other than
           cash contributed.

                (ii) Whether the donee organization
           provided any goods or services in
           consideration, in whole or in part, for any
           property described in clause (i).

                (iii) A description and good faith
           estimate of the value of any goods or
           services referred to in clause (ii) * * *.

     3
         Sec. 1.170A-13(f)(6), Income Tax Regs., provides:

          (6) In consideration for.--A donee organization
     provides goods or services in consideration for a
     taxpayer’s payment if, at the time the taxpayer makes
     the payment to the donee organization, the taxpayer
     receives or expects to receive goods or services in
     exchange for that payment. * * *
                                 - 8 -

the same conclusion here because the facts of this case and of

Addis are indistinguishable.

     As in Addis, NHF gave petitioner receipts for his payments

which stated that NHF had not provided any goods or services to

petitioner in return for those payments.       Petitioner expected NHF

to use his payments of $93,000 to pay NHF’s portion of the

premiums on the life insurance policies in 1997 and 1998 and thus

expected his family trusts to receive a substantial part of the

death benefits under the policies.       NHF failed to make a good

faith estimate of the value of those benefits as required by

section 170(f)(8)(B)(iii).

     Petitioner’s contention that his expectation that NHF would

pay the premiums on the life insurance policies was not

consideration under section 170(f)(8) fails to take into account

the definition of consideration in section 1.170A-13(f)(6),

Income Tax Regs.   A donee organization provides goods or services

in consideration for a taxpayer’s payment if, at the time the

taxpayer makes the payment to the donee organization, the

taxpayer receives or expects to receive goods or services in

exchange for that payment.     Id.

     Petitioner’s daughters, rather than petitioner, were the

trustees of the family trusts.       In contrast, in Addis, the

taxpayers were the trustees.    Like the taxpayers in Addis,
                                   - 9 -

petitioner expected that he would benefit from his payments to

NHF.    Just as in Addis, NHF used petitioner’s money to pay the

premiums on the life insurance policies under which petitioner or

his daughters, through the family trusts, were entitled to

receive a substantial part of the death benefits.

       As in Addis, petitioner’s failure to comply with section

170(f)(8) results in disallowance of his charitable contribution

deductions.    Thus, petitioner may not deduct his contributions to

NHF of $93,000 in 1997 and $93,000 in 1998.

       To reflect the foregoing,

                                             Decision will be entered

                                        for respondent.
