Dowell v. United States

In January 1971, Ruth Dowell (plaintiff) toured University Village, a retirement center associated with the Oral Roberts Evangelistic Association (Oral Roberts) with hopes of future residency for herself and her husband. On February 11, 1971, Dowell was informed that she and her husband had been granted admittance. On February 25, 1971, Dowell remitted $22,500 as a sponsorship gift to Oral Roberts and moved into University Village on March 26, 1971. As a resident, Dowell was responsible for rent and other costs associated with her and her husband’s stay. University Village used sponsorship gifts by residents and nonresidents to repay a loan obtained by Oral Roberts to build the property. University Village provided information to prospective residents regarding the sponsorship gifts but also informed prospective residents that the gift was not required to gain admittance to the retirement center and that no discount on rent was given if a sponsorship gift was made. The Internal Revenue Service (IRS) (defendant) issued a deficiency notice stating that there was a quid pro quo or other significant relationship between Dowell making the gift to Oral Roberts and being admitted to University Village. Dowell challenged the ruling, testifying that she did not remember receiving information regarding the sponsorship gifts at the time of her tour and made one because she valued the work of Oral Roberts. The trial court found that there was no quid pro quo or significant relationship between Dowell’s sponsorship gift to Oral Roberts and her admittance to University Village and that Dowell could deduct the gift as a charitable contribution on her federal income-tax return. The IRS appealed.