Tax Legal Services · Primary-source case analysis

Hernandez: Fixed Payments for Religious Services Were Not Charitable Contributions

By Aneeta Mishra and Timothy Chan

Published August 28, 2026

Hernandez v. Commissioner involved payments to the Church of Scientology under fixed-price schedules for auditing and training sessions.

A contribution must exceed the value received in return

Section 170’s gift concept requires donative intent and payment beyond a substantial benefit supplied to the transferor.

The transactions used fixed prices and identifiable services

The record supported an exchange rather than an unconditional transfer for the organization’s general charitable work.

Religious character did not eliminate quid-pro-quo analysis

Neutral application of the deduction statute did not require courts to evaluate the truth or centrality of religious doctrine.

Documentation controls partial deductions

When a payment contains both a benefit and a genuine excess contribution, valuation and contemporaneous acknowledgment rules must be satisfied.

Key takeaways

• Identify every good, service, or privilege received.
• Value the return benefit using objective evidence.
• Separate any excess donative amount from the exchange price.
• Obtain the acknowledgment and disclosure required by current law.