Tax Court Bins $194,000 Cycling Gear Deduction on Substantiation Failure [US]

The US Tax Court disallowed a California couple's $194,000 charitable deduction for cycling and paintball gear donations in Gibson, TC Summ. Op. 2026-1 (6 January 2026). The claim covered more than 4,000 items donated in 2019.

The court rejected the deduction despite the taxpayers filing Form 8283. The substantiation failed on two grounds: inadequate property descriptions and no independent appraisal for items exceeding $5,000 in value.

Why This Matters Now

The ruling arrives as substantiation requirements tighten for 2026. Non-itemisers can now claim up to $2,000 for joint filers (cash donations only). But itemisers face a new 0.5% AGI floor before any deduction applies. A couple earning $200,000 must donate more than $1,000 to claim any benefit.

The court applied the longstanding principle: charitable deductions are "legislative grace," not taxpayer rights. Burden of proof sits entirely with the donor.

Substantiation Thresholds

The requirements scale with value:

• Under $250: Bank record or written acknowledgement
• $250+: Contemporaneous written acknowledgement describing property, confirming no quid pro quo
• $500+: Form 8283 plus acquisition date, method, cost basis, FMV determination method
• $5,000+: All above, plus independent qualified appraisal

Non-cash household items must be "in good used condition or better" to qualify.

The $250 Trap

Multiple donations to the same charity totalling over $250 aren't aggregated. The threshold applies per donation. Five $200 gifts escape heightened requirements. One $1,000 gift does not.

Practitioner Notes

Recent case law (Besaw) shows courts reject deductions even when donations genuinely occurred if receipts lack item descriptions. The charity acknowledgement must describe what was donated, not just confirm receipt.

For high-value non-cash donations, obtain the appraisal before filing. The IRS won't grant retroactive substantiation relief.

The 2026 changes also introduce a 35% cap on total itemised deductions for high earners. Donors in the 37% bracket lose dollar-for-dollar value above that threshold.

Charities should proactively provide compliant receipts. Donor errors become charity problems when deductions fail audit.