The U.S. Tax Court finds that a family's expenses for a funeral luncheon held to honor friends and family of the decedent are not deductible because the family could not show the reasonableness of the expense or its connection to the funeral. Davenport v. Commissioner of Internal Revenue (T.C. No. 16060-04, Oct. 5, 2006).
Sarah Davenport, a Michigan resident, died at age 12. On the day of her funeral service, Sarah's family held a luncheon to honor friends and family who had cared for Sarah during her lifetime. The affair cost the family more than $3,600. Afterward, the Internal Revenue Services (IRS) assessed a federal estate tax deficiency on Sarah's estate of more than $500,000. That assessment included a determination that expenses for the luncheon were not deductible. The Davenport family challenged three elements of the IRS assessment, including the luncheon determination. Losing their first challenge, the family appealed the matter to the U.S. Tax Court.
The U.S. Tax Court affirms the IRS's tax assessment. First, the court finds that because the Davenports provided only the final cost of the luncheon, it is impossible to determine the expense's reasonableness. Second, because the purpose of the luncheon was to honor those who had helped Sarah in her lifetime rather than to eulogize Sarah, the luncheon cannot be considered necessary to Sarah's funeral. Finally, the court notes that the luncheon occurred at a different location from the actual funeral service, which further suggests it was an event independent from the funeral.
To download the full text of this decision in PDF format, go to: https://www.ustaxcourt.gov/InOpHistoric/Davenport.TCM.WPD.pdf. (If you do not have the free PDF reader installed on your computer, download it here.)
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