Document Type


Publication Date



This is an appeal from a decision of the United States Tax Court (Sterrett, C.J.) disallowing an income tax deduction of $5,881.83 paid by appellants to the Church of Scientology, Mission of Burbank, now the Mission of Los Angeles, California, in 1976 and assessing a deficiency in the sum of $975.92. The payments were made in connection with the appellants' participation in religious practices known as "auditing" and "training" in the Church of Scientology. No trial was conducted in this case, the parties having stipulated to be bound by the findings of fact and conclusions of law made in three "test" cases then pending in the tax court. The parties also stipulated "that to the extent relevant the records in said [three test cases] shall be deemed part of the record herein for purposes of any ... appeal." App. at 12. The test cases concluded in the tax court with a decision in favor of the Commissioner, Graham v. Commissioner, 83 T.C. 575 (1984), and the tax court entered its decision assessing a deficiency in the case at bar accordingly. The Graham case was affirmed on appeal to the Ninth Circuit Court of Appeals, which held that the fixed donations required to participate in the religious practices in question do not qualify for the deduction for religious contributions authorized by § 170 of the Internal Revenue Code of 1954. Graham v. Commissioner, 822 F.2d 844 (9th Cir.1987). Faced with the same issues, the First Circuit Court of Appeals also held in favor of the Commissioner. Hernandez v. Commissioner, 819 F.2d 1212 (1st Cir.1987). The Eighth Circuit Court of Appeals, however, has held that "payments to the Church of Scientology for participation in strictly religious practices were contributions within the meaning of section 170." Staples v. Commissioner, 821 F.2d 1324 (8th Cir.1987). We agree with the Eighth Circuit and reverse.


844 F.2d 94 (1988)

Michael F. and Nancy S. FOLEY, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 428, Docket 86-4026.

United States Court of Appeals, Second Circuit.

Argued December 3, 1986.

Decided April 19, 1988.

New York Law School location: File #287, Box #119