Submitted by: Submitted by huaying
Views: 10
Words: 516
Pages: 3
Category: Business and Industry
Date Submitted: 10/25/2015 11:28 AM
In issue 3, Steve was not assigned as an usher or volunteer. Therefore, no volunteer expenses were incurred for the benefit of the church. However, Steve was attending Church’s Saturday and Sunday Service. Travel expenses were incurred when Steve was commuting to the church.
Under Code § 162, deductions are allowed for ordinary and necessary expenses incurred for carrying on any trade or business during the taxable year. To qualify for deduction under Code § 162, expenses should meet two criteria: ordinary and necessary, and incurred for carrying on trade or business.
In order to define second criteria of “trade and business”, we explore the definition of trade or business in Rev. Rul. 69-645, 1969-2 C.B. that “a ‘trade or business’ is generally defined as that branch of activities wherein an individual expends his usual everyday efforts to gain a livelihood”. Steve doesn’t spend his everyday effort to participate in Saturday and Sunday Service to earn a living. Thus, Steve’s participation in Saturday and Sunday Service is not trade or business. Therefore, Steve’s un-reimbursed travel expenses are not deductible under Code § 162.
Under Code § 170(a), charitable contributions that are made within the taxable year are deductible. Code § 170(c) defines “charitable contribution” as a contribution or gift to or for the use of certain organizations. Steve’s un-reimbursed travel and volunteer expenses were expenditures and not direct contribution or gift, therefore are not deductible under Code § 170(a). Some may argue that the travel expenses were rendered in connection with church activities and therefore should be deducted. However, Seed, 57 T.C. (CCH) Dec.31, 080 ruled ruled that that payments and expenses related to charities defined under Code § 170(c) were not deductible as “charitable contributions” because the taxpayer benefited substantially from these payments and expenses. Steve travelled to Church to participate in the Saturday and Sunday Service that...