TaxConnections


 

Big-Game Hunter Becomes Hunted by IRS



Big-game hunting has fallen into disfavor in recent years, as wealthy hunters take expeditions to Africa and other far-away locations to hunt big game for sport. What we are referring to here is not hunting game for food, it is just for the “thrill of the kill.” I didn’t say “thrill of the chase,” as there is often no chase, as the game is rigged so that the animal is essentially trapped.

One such big game hunter is Paul Gardner. Gardner maintains a “trophy room” in his home, displaying many of his exploits. But after a while, Gardner began running out of space. Some of what he displayed was full body, but much of it was from the neck up, hung on walls. In these cases, there are a lot of “extra” parts that are not on display.

While on a Canadian excursion, Gardner struck up a conversation with another hunter about downsizing his collection to avoid overcrowding his trophy room.” His fellow hunter suggested a donation to the Dallas Ecological Foundation (DEF), an organization exempt from tax under section 501(a) and (c)(3).2. This hunter had himself donated specimens to DEF and told Gardner that “he knew all the ins and outs.” He subsequently put Gardner in touch with Richard W. Fullington, Ph.D., in Richardson, Texas. Following a conversation with Fullington, petitioner selected 177 items from his collection for donation to DEF. These items included no full body mounts and only three shoulder mounts The remaining 174 items consisted of: 58 skins and hides, 72 skulls (39 with horns or antlers), 15 horns, 15 antlers, six tails, five sets of hooves, two ears, and one set of tusks.

So now Gardner has a charitable contribution deduction. The issue is “How much of a deduction can he take?” The IRS allows a deduction for contribution of non-cash items. The deduction is normally limited to the fair market value or the donor’s basis, whichever is less. However, in this case, Gardner maintained that there was no fair market value as there is not a ready market for the items he donated. He elected to take replacement cost for these “unique” items. He engaged an appraiser to determine the replacement cost. The appraiser estimated what it would cost to replace each donated item. How much would Gardner have to spend to travel to the locations where the animal was killed, find and kill the animal, then ship it back to the United States and preserved. 177 times.

Based on this method Gardner took a charitable contribution deduction of $1,425,900. Not surprisingly, the IRS disagreed, allowing a deduction of $163,045. The case went to Tax Court. The IRS called Forrest Ketner, an expert in taxidermy and the appraisal of taxidermy items. Ketner stated that the donated collection consisted largely of “remnants and scraps” were not of museum quality, and were not even of record book status (which rates taxidermy items as to their quality).

Ketner further stated that there was a market for the items. Historically, taxidermists would buy, sell, swap, or trade these items as they were needed to complete projects, or to mount for their own collections. He characterized the market for such items now is “wide open,” with few if any barriers to entry, citing sales at auction houses and online auctions such as eBay.

The Tax Court agreed with the IRS, and Gardner got shot down with a $400,000 tax assessment.

Dr. John Stancil (My Bald CPA) is Professor Emeritus of Accounting and Tax at Florida Southern College in Lakeland, FL. He is a CPA, CMA, and CFM and passed all exams on the first attempt. He holds a DBA from the University of Memphis and the MBA from the University of Georgia. He has maintained a CPA practice since 1979 with an emphasis in taxation. His areas of expertise include church and clergy tax issues and the foreign earned income credit. He prepares all types of returns, individual and business.

Dr. Stancil has written for the Polk County Business Journal and has presented a number of papers at academic conferences. He wrote the Instructor’s Manual for the 13th edition of Horngren’s Cost Accounting. He is published in the Global Sustainability as a Business Imperative, Green Issues and Debates, The Encyclopedia of Business in Today’s World, The Palmetto Business Review, The CPA Journal, and in the NATP TaxPro Journal. His paper, “Building Sustainability into the Tax Code” was recognized as the outstanding accounting paper at the annual meeting of the South East InfORMS. He wrote a book entitled “Tax Issues Faced by U. S. Missionary Personnel Abroad ” that will soon be published.

He has recently launched a new endeavor, Church Tax Solutions, which presents online, on demand seminars on various church and clergy tax issues.

Facebook Twitter LinkedIn YouTube Skype 

11 comments

  1. JAY RENSTED says:

    If you’re going to allege that this hunter did not engage in fair chase, you should provide information to support that statement. Maybe it’s best that next time you stick to the facts and avoid inserting your slanted political perspective into a post that should be focusing on tax facts.

  2. John Stancil says:

    While I may have hinted that the hunter did not engage in a chase, I did not state that there was no chase. I stated that a lack of a chase is often the case in these instances.

  3. JAY RENSTED says:

    You did more than hint. You talked about hunters that engage in an activity in which “there is often no chase, as the game is rigged so that the animal is essentially trapped.” Your very next sentence is “One such big game hunter is Paul Gardner”. That is a very clear allegation. If you want credibility, don’t make a statement and then lie about what you said.

    Your bias is also evident in the unsupported insinuation that hunters engage in wanton waste, your reference to the fact(?) that these hunters are wealthy, and your generous use of charged phrases like “thrill of the kill” and “trophy room”. If you want to engage in activism against hunting, join PETA and become a vegetarian. But keep it out of a tax story.

  4. John says:

    I am sorry that you don’t believe in freedom of speech and that every tax blog should conform to your belief system.

  5. Ed Dwyer says:

    I fully support Mr. Senate’s position on tone, bias and unsupported inuensis in your blog. It struck me as very unprofessional. Yes, you are entitled to freedom of speech as a constitutional matter; but, just because you may say something doesn’t mean you should. As a professional, and you do hold yourself out to be one, and this site does consider itself to be a professional one, while REPORTING on a tax case and a legal matter, you should,like any other journalist, butadhere to minimal journalistic standards. In my opinion you failed to do so on this occasion.

      • Ed Dwyer says:

        Bad guess, Forbes is not an “unprofessional” publication, just not a professional one-i.e., not one geared toward professionals. Rather, I would consider Forbes to be an entertainment publication while Tax Connections Worldwide Blog as a professional one. And a person reporting on a tax case, indeed one who takes the time and effort to burnish his credentials in the mind of readers by listing below his article his various academic degrees, previous professional positions, publications, etc.), should bring those professional standards to his reportage by limiting his reporting to the facts, and perhaps providing his professional opinion with respect to the holding in the case, but leaving his personal bias and judgments not germane to the case at the door, or for the Forbes of the world to opine on.

        • Ed Dwyer says:

          P.S. I am not a hunter, don’t own a hunting rifle, and am not a fan of “trophy hunting”. But that is totally beside the point, and has nothing to do with what should or should not be in an article reporting on the results of a Tax Court case.

  6. John says:

    Who is Mr. Senate?

  7. Ed Dwyer says:

    I typed “Mr. Rensted” but Google, as an example of its know-it-all penchant for correcting what it perceives to be misspellings, chose to change Rensted to “Senate”. Also, there was another “typo” in my posting where “innuendo” was typed as “inuensis”.

  8. JAY RENSTED says:

    Classy move, Mr. Stancil.

Leave a Reply

Your email address will not be published. Required fields are marked *

TaxConnections