In Albrecht v. Commissioner, the Tax Court held in favor of the Internal Revenue Service over a dispute of the IRS’s denial of a taxpayer’s charitable deduction. The IRS issued a notice of deficiency against a taxpayer after determining that she did not meet the necessary substantiation requirements under the Internal Revenue Code for her donation of jewelry and artifacts to a museum.


The taxpayer in this matter was Martha L. Albrecht (Ms. Albrecht). She and her late husband acquired a large collection of Native American jewelry and artifacts during their marriage. In 2014, Ms. Albrecht donated approximately 120 items from her collection to the Wheelwright Museum of the American Indian (museum) and sought a charitable deduction on her 2014 income tax return for the value of the contribution.

In connection with her donation, she and the museum executed a Deed of Gift. The Deed of Gift stated that the donation was “unconditional and irrevocable” and that “all rights, titles, and interests held by the donor in the property were included in the donation, unless otherwise stated in the Gift Agreement.” Despite the reference to a Gift Agreement, no such agreement was included with the Deed of Gift nor was one provided to the IRS when Ms. Albrecht filed her 2014 income tax return claiming a charitable deduction for her donation.

After examining Ms. Albrecht’s 2014 tax return, the IRS concluded that the Deed of Gift was insufficient to meet Section 170(f)(8)(B)’s strict content requirements and therefore disallowed the charitable deduction. Because of the Deed of Gift’s reference to a Gift Agreement, the IRS claimed that the Deed of Gift did not specify whether the museum provided any goods or services in return for the donation nor did it state that it that represented the entire agreement between the museum and Ms. Albrecht. Consequently, the IRS issued Ms. Albrecht a notice of deficiency for her 2014 tax return.

Ms. Albrecht argued that the Gift Agreement was irrelevant for determining whether the museum provided any good or services because: (i) its sole purpose was to describe the extent to which the donor retained any rights in the donation and (ii) the museum’s failure to provide Ms. Albrecht with such agreement created a presumption that all of the Ms. Albrecht’s rights in the donated property were included in the donation. The Tax Court found that Ms. Albrecht’s arguments were unsupported by precedent, and they were unwilling to create a new rule to offer relief based on such arguments. Accordingly, the court held in favor of the Commissioner.


Generally, the Commissioner’s determinations in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving that the determinations are in error. Thus, the taxpayer claiming a deduction must demonstrate that the deduction is provided for by statute and maintain sufficient records for the Commissioner to determine the correct tax liability.

 A taxpayer is statutorily permitted to deduct charitable contributions under Section 170(a)(1), and Section 170(f)(8)(A) provides that the proper record for such deduction must be a contemporaneous written acknowledgement (CWA). The CWA must include (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 such property; and (iii) a description and good faith estimate of the value of any such goods and services. Furthermore, the taxpayer must receive the CWA from the donee organization on or before the date the taxpayer files her return or the due date for filing such return. The CWA is not required to take any particular form, but it must meet the strict content requirements of Section 170(f)(8)(B), or the taxpayer will not be allowed to take a charitable deduction (substantial compliance with Section 170(f)(8) is insufficient).

Here, Ms. Albrecht offered the Deed of Gift as her CWA for her donation of her jewelry and artifacts to the museum. There was no dispute that the Deed of Gift was received before Ms. Albrecht filed her return. The dispute was on the grounds that the Deed of Gift was an inadequate CWA since it failed to meet the strict content requirements of Section 170(f)(8)(B). Specifically, the Deed of Gift failed to address whether the donee provided goods or services for the donation. Because of the reference in the Deed of Gift to a Gift Agreement, ambiguity existed as to whether such agreement’s additional terms would provide for the museum’s exchange of goods and/or services for Ms. Albrecht’s donation.

The Court stated that when a Deed of Gift does not contain explicit language as to whether the donee provided goods and/or services in exchange for a donation, the Court will consider factors such as whether the Deed of Gift (i) effectively states whether any goods or services were provided in the exchange; (ii) states whether the donation is an unconditional gift; (iii) recites whether consideration was received in the exchange; and (iv) contains a provision stating that the Deed of Gift is the entire agreement of the parties. Here, the Deed of Gift stated that the donation was “unconditional and irrevocable;” however, it also stated that “all rights, titles, and interest held by the donor in the property are included in the donation, unless otherwise stated in the Gift Agreement.” Thus, by referencing another document that superseded the terms of the Deed of Gift with respect to the donor’s rights in the donation, the Deed of Gift provided Ms. Albrecht with the ability to retain an interest in her donation, including in a potential quid pro quo arrangement with the museum. Because of the reference to the Gift Agreement, Ms. Albrecht’s Deed of Gift was not construed to be the entire agreement and thus was not sufficient in addressing whether goods and/or services were provided in exchange for her donation. Such ambiguity is not acceptable to satisfy the strict content requirements of Section 170(f)(8)(B).


The Tax Court held that Ms. Albrecht was not entitled to a charitable deduction since she failed to provide a proper CWA for her donation to the museum with her 2014 tax return. Although the court noted that Ms. Albrecht made a good faith attempt to substantially comply with the IRC, they also reiterated that substantial compliance does not satisfy the strict requirements of Section 170(f)(8).

This article first appeared in the October 2022 Edition of the Estate Planning Journal.