What Do You Own? McVeigh’s Lawyer Doesn’t Own Files — Can’t Donate Them and Deduct Value

Stephen Jones, Timothy McVeigh’s lead defense counsel in the Oklahoma City Bombing case, donated to the University of Texas voluminous materials that he received from the Government during the preparation of McVeigh's defense. The question in Jones v. Commissioner, 129 T.C. 146, 2007 U.S. Tax Ct. LEXIS 34 (Tax Ct. Nov. 1, 2007), was whether Jones and his wife properly claimed a deduction of $294,877 on their joint Federal income tax return for 1997 for the donation of the materials. Held, the files belonged to the client (McVeigh), not the lawyer (Jones), precluding Jones’ deduction:

Because petitioner was not the legal owner of the materials, he was not legally capable of divesting himself of the burdens and benefits of ownership or effecting a valid gift of the materials. He is therefore not entitled to any deduction under section 170 for his donation of the materials. Because the materials contain merely copies of documents and other items that have been duplicated many times and are in the possession of many different people and entities, we have serious doubts about the value asserted by petitioners' appraiser. However, because petitioner was not the legal owner of the materials and was not legally entitled to donate them, we need not reach the valuation issue.

The Court noted that there is a split of authority as to the ownership of work product materials, as to which a lawyer might be the actual owner. The materials at issue in this case, however, were not work product, so the issue was academic.

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