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Haverly v. United States

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Haverly v. United States, 513 F.2d 224 (7th Cir.1975) is a United States income tax case.

Contents

Held:

  • The taxpayer (a public elementary school principal) had to include in gross income the value of unsolicited sample textbooks, sent to him by publishers, when he subsequently donated them to the school's library and claimed a charitable deduction. I.R.C.1954 §§ 61, 170.

    • Holding

    Haverly cannot take a charitable contribution deduction for donating books that he himself never purchased. Following this decision, Congress enacted Rev. Rule. 70-498, which prevents double dipping of both deducted and charitable donations.

    Academic Commentary

    It seems strange to permit a party to exclude a receipt and also deduct its value. Nevertheless, the court barred neither—but it accompanied the charitable deduction with income realization at an equal amount. Here are the reasons it chose this approach:

  • the court had to permit exclusion in the first instance, because of hardship to lower-paid persons of paying cash for kind (even though gross income includes any accession to wealth, including unasked for samples)
  • the court also had to permit the deduction because the code [absent today's §170(e)(1)] authorized a deduction for the full value of donated property (even though a charitable deduction should not exceed the taxpayer's basis)

    • References

    Haverly v. United States Wikipedia
    (Text) CC BY-SA


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