Hernandez v. Commissioner
In Hernandez v. Commissioner, 490 U.S. 680 (1989), the Court determined that Church of Scientology auditing fees were not deductible. Ordinarily, gifts to qualified exempt charities entitle the donor to a charitable deduction for income tax purposes. The basic rationale for the charitable deduction is that the gift accomplishes a public good. However, expenditure for a fixed-price service to the donor suggests that this transfer is a commercial exchange rather than a charitable gift.
The Church of Scientology had created mandatory fixed prices for auditing and training sessions. Since the training sessions require fixed-mandatory payments, even though there may be some religious benefit, the practical result is that this is a payment in exchange for services. Therefore, the deduction is denied.