MEMORANDUM AND ORDER RE: MOTION FOR SUMMARY JUDGMENT ON MISCELLANEOUS DEDUCTIONS
WILLIAM B. SHUBB, District Judge.
Plaintiffs Alan and Wendy Pesky brought suit against the United States of America seeking a refund for taxes, penalties, and interest assessed against them for the 2003 and 2004 tax years. Currently before the court are the parties' cross-motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Docket Nos. 105, 106.)
The parties' dispute can generally be divided into two general topics: (1) deduction of the Conservation Easement, and (2) deduction of various other expenses. After carefully considering the parties' briefs, the court finds that these two issues presented are best addressed in separate orders. This order addresses the parties' claims regarding the Peskys' various claims for reimbursement based on disallowance of deductions in the 2002, 2003 and 2004 tax years, excluding the deductions and penalties related to the Conservation Easement.
I. Factual and Procedural Background
In short, plaintiffs seek reimbursement for taxes paid to the IRS after the IRS disallowed certain deductions claimed by the Peskys in the 2002, 2003 and 2004 tax years. (First Am. Compl. ("FAC") (Docket No. 72).) Plaintiffs seek, in relevant part, reimbursements based upon total or partial disallowance of the following deductions: $202, 278.00 in stock donated to the Pesky Family Foundation, (id. ¶ 32); $41, 308.00, $41, 514.00, and $86, 155.00 in mortgage interest deductions, (id. ¶¶ 30-31, 44-45, 68-69); $47, 892.00 and $112, 963.00 in miscellaneous itemized deductions after the two percent adjusted gross income limitation, including investment interest, foreign tax credits, and deductions passed through to the Peskys from partnerships in which they held an interest, (id. ¶¶ 34-35, 49-60). While the Peskys originally filed claims for reimbursement based on disallowance of Schedule C business deductions and various other charitable contributions, (Compl. ¶¶ 39-42, 55-58 (Docket No. 1)), they do not pursue those claims in the FAC. The United States has filed a counterclaim for fraud penalties under 26 U.S.C. § 6663 based upon Alan Pesky's allegedly fraudulent Schedule C business deductions. (Answer to FAC ¶¶ 157-175 (Docket No. 90).)
The United States moves for summary judgment in its favor on the Peskys' claims and related accuracy and filing penalties. (See generally U.S. Mot. for Summ. J. ("U.S. MSJ") (Docket No. 106).) The United States does not, however, seek summary judgment on its counterclaim for Schedule C fraud penalties. (See id. at 2.) The Peskys do not seek summary judgment on any of these issues. (See Peskys Mot. for Summ. J. ("Peskys MSJ") at 2 (Docket No. 106-1).)
The court reviews the United States' motion for summary judgment based upon the standards set forth in Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986), and Celotex Corp. v. Catrett , 477 U.S. 317, 322-23 (1986).
"Deductions are a matter of legislative grace, and taxpayers must prove they are entitled to the deductions claimed." Weatherly v. Comm'r, 102 T.C.M. (CCH) 199, 2011 WL 3794241, at *1 (2011). "Taxpayers are required to maintain records sufficient to establish the amounts of allowable deductions and to enable the Commissioner to determine the correct tax liability." Id . (citing 26 U.S.C. § 6001).
A. Schedule C Business Deductions and Various Charitable Deductions
First, the United States seeks summary judgment in its favor on the validity of the Peskys' Schedule C business deductions and various charitable deductions claimed in the 2003 and 2004 tax years. (U.S. MSJ at 18-20.) The United States has already assessed and collected the amounts owed on these deductions. The Peskys confirm that they no longer seek to recover the assessments, and the Peskys' pleadings have been amended to exclude all reference to these assessments. The court will accordingly grant the United States' motion for summary judgment based on improper substantiation of the Peskys' Schedule C business deductions and various charitable deductions.
B. Stock Contribution to the Family Foundation
The United States also seeks summary judgment on the issue of whether an allegedly charitable contribution of $202, 278 in stock to the Pesky Family Foundation on July 7, 2003 was properly substantiated by a contemporaneous written acknowledgment. (Id. at 17-18.)
"Contributions of cash or property of $250 or more require the donor to obtain contemporaneous written acknowledgment of the donation from the donee." Villareale v. Comm'r, 105 T.C.M. (CCH) 1464, 2013 WL 948473, at *2 (citing 26 U.S.C. § 170(f)(8)(A)). "At a minimum, the contemporaneous written acknowledgment must contain a description of any property contributed, a statement as to whether any goods or services were provided in consideration, and a description and good-faith estimate of the value of any goods or services provided in consideration." Id . (citing 26 U.S.C. § 170(f)(8)(B)). "A written acknowledgment is contemporaneous if it is obtained by the taxpayer on or before the earlier of (1) the date on which the ...