## Facts

- Dr. John H. Lary, Jr. and Sherry S. Lary filed joint federal income tax returns for 1975 and 1976.
- On their 1976 return, they claimed a charitable contribution deduction equal to the fair market value of a pint of blood Dr. Lary donated to the American Red Cross.
- The Commissioner of Internal Revenue disallowed the blood-donation deduction and assessed deficiencies; the taxpayers paid and sued for a refund in federal district court.
- The district court entered judgment for the government, ruling that the blood donation was a nondeductible contribution of personal services.
- The taxpayers appealed, pursuing only the issue of whether the blood donation was deductible as a charitable contribution.

## Issues

1. Whether a taxpayer may claim a charitable contribution deduction under I.R.C. § 170 for the fair market value of the taxpayer’s own blood donated to a qualified charity.
2. Whether the result changes if the donation is characterized as the performance of a service versus a contribution of property.

## Decision

- The Eleventh Circuit affirmed the judgment for the United States.
- The court held that no charitable contribution deduction was available for the blood donation.
- The court declined to decide whether donating blood is a service or property because the deduction failed under either characterization.
- If treated as services, Treasury regulations bar deducting the value of services.
- If treated as property, the taxpayers had no tax basis in their own donated blood and thus could not claim a deductible amount.

## Legal Principles

- The value of a taxpayer’s services is not deductible as a charitable contribution under Treasury regulations implementing I.R.C. § 170.
- For property contributions, the deductible amount depends on applicable statutory limits and the taxpayer’s adjusted basis; a taxpayer cannot claim a deduction predicated on value where the taxpayer has no basis in the contributed item.
- A court may resolve a tax deduction dispute without definitively classifying the donated item when the claimed deduction is unavailable under all plausible characterizations.

## Conclusion

The Eleventh Circuit held that donating one’s own blood to a qualified charity does not generate a charitable contribution deduction because deductions are barred for services and, even if blood is treated as property, the taxpayer has no basis in the blood to support the claimed deduction.


Lary v. United States, 787 F.2d 1538 (11th Cir. 1986)