Home Daily Blitz Questioning Timing Of Shares Donation, IRS Nixes $12.7 Million Charity Deduction For Stein Mart CEO

Questioning Timing Of Shares Donation, IRS Nixes $12.7 Million Charity Deduction For Stein Mart CEO


forbes articleThe following is an excerpt from Ashlea Ebeling | September 17, 2015 | Forbes.com |

Donate to charity. Take a charitable tax deduction off your federal income taxes. If it were only that simple. Jay Stein, chief executive of discount retailer Stein Mart, and his wife, Deanie, are fighting the Internal Revenue Service over a donation of 500,000 shares of publicly-traded Stein Mart they made back in 2005 to their private foundation. On audit last year the IRS questioned the timing of the donation, and then bizarrely disallowed the entire $12.7 million charitable contribution deduction the Steins claimed and assessed an additional tax of $3.4 million, which the Steins paid. That’s according to a previously unreported lawsuit the Steins filed last week in federal district court in Jacksonville seeking to recover the tax they say was “erroneously or illegally assessed and collected by the IRS.”

“We do not understand why the IRS disallowed the entire charitable contribution deduction claimed in the Stein’s tax returns other than to try to apply pressure on Mr. and Mrs. Stein to settle the case for less than they are entitled,” said their lawyer, Robert Bernstein, a tax lawyer with Foley & Lardner, adding: “Mr. and Mrs. Stein have a long history of charitable giving, made a large charitable donation in 2005 and are obviously very disappointed that the IRS has taken the position they have in respect to such a generous gift.”

Stein and his wife, of Jacksonville, Fla., are big givers with a wide range of interests. They’re benefactors of the U.S. Holocaust Museum ($5 million-plus), members of the New York University’s Sir Harold Acton Society ($1 million-plus), and 5-digit supporters of organizations ranging from the Jacksonville YMCA to the National Theater to the Mississippi Museum of Art to the Friends of FAI which restores Italian historical monuments.

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