or local tax liability.The IRS ruled that, if a C corporation makes a payment to or for the use of a charitable organization and receives or expects to receive a tax credit that reduces a state or local tax imposed on the corporation in return for the payment, the corporation may treat the payment as meeting the requirements for an ordinary and necessary business expense to the extent of the credit. The same outcome results where the payment is made by a business entity other than a C corporation that is regarded for federal income tax purposes as separate from its owners and where the credit pertains to a tax other than a state or local income tax. (Rev. Proc. 2019-12, 2019-4 I.R.B. 401.)137 137 Reg. § 1.170A-1(b)(2).
138 138 Reg. § 1.170A-1(h)(4)(i). This position is based on case law (e.g., Singer Co. v. United States, 449 F.2d 413 (Ct. Cl. 1971)) and IRS guidance (e.g., Rev. Rul. 67-246, 1967-2 C.B. 104). Moreover, a person's expectation of a substantial benefit in return, from any source, has been held to reflect a lack of donative intent on the part of the donor (see § 2.1(a)) (e.g., Ottawa Silica Co. v. United States, 699 F.2d 1124 (Fed. Cir. 1983)).
139 139 See § 3.7.
140 140 Blake v. Commissioner, 697 F.2d 473 (2nd Cir. 1982), aff'g 42 T.C.M. (CCH) 1336 (1981).
141 141 Id., 697 F.2d at 480.
142 142 Id.
143 143 Rev. Rul. 80-77, 1980-1 C.B. 56.
144 144 Id.
145 145 Id.
146 146 Rev. Rul. 67-446, 1967-2 C.B. 119. In this instance, the benefits to the merchants and property owners were considered incidental in comparison to the benefits accruing to the public. Also Rev. Rul. 79-323, 1979-2 C.B. 106; Rev. Rul. 69-90, 1969-1 C.B. 63.
147 147 Rev. Rul. 74-246, 1974-1 C.B. 130.
148 148 Rev. Rul. 81-307, 1981-2 C.B. 78. Again (see supra note 146), the benefit to the donor was deemed incidental in comparison to the benefits accruing to the public.
149 149 Rev. Rul. 75-66, 1975-1 C.B. 85.
150 150 Priv. Ltr. Rul. 9447028.
151 151 Priv. Ltr. Rul. 9729024.
152 152 Rev. Proc. 97-52, 1997-2 C.B. 527.
153 153 See § 2.4(c).
154 154 See IRC § 4946.
155 155 See IRC § 4941. See Private Foundations ch. 5.
156 156 Private Foundations § 5.7(c).
157 157 H. Rep. No. 1337, 83d Cong., 2d Sess. A44 (1954); S. Rep. No. 1622, 83d Cong., 2d Sess. 196 (1954). These reports accompanied IRC § 162(b), which provides that a payment cannot be deducted as a business expense (under IRC § 162) when it is properly deductible as a charitable contribution (under IRC § 170) but is not deductible in a tax year because of restrictions such as the percentage limitations (see ch. 7).
158 158 Transamerica Corporation v. United States, 254 F. Supp. 504 (N.D. Cal. 1966), aff'd, 392 F.2d 522 (9th Cir. 1968).
159 159 Parker v. Commissioner, 86 T.C. 547 (1986). Also Snyder v. Commissioner, 86 T.C. 567 (1986).
160 160 Parker v. Commissioner, 86 T.C. 547, 565 (1986).
161 161 Kamilche Co. v. United States, 809 F. Supp. 763 (N.D. Cal. 1992).
162 162 Kamilche Co. v. United States, 53 F.3d 1059 (9th Cir. 1995).
163 163 E.g., United States v. Mitchell, 403 U.S. 190, 197 (1971); Burner v. Harmel, 287 U.S. 103, 110 (1932).
164 164 Klavan v. Commissioner, 66 T.C.M. (CCH) 68 (1993); Weiss v. Commissioner, 65 T.C.M. (CCH) 2768 (1993).
165 165 Mountanos v. Commissioner, 105 T.C.M. (CCH) 1818 (2013), 107 T.C.M. (CCH) 1211 (2014), aff'd, Fed. Appx. 592 (9th Cir. 2016).
166 166 Bond v. United States, 97-2 U.S.T.C. ¶ 50,868 (N.D. Ill. 1997).
167 167 Id. at 90,440.
168 168 20 U.S.C. § 1415.
169 169 Bond v. United States, 97-2 U.S.T.C. ¶ 50,868 at 90,440 (N.D. Ill. 1997).
170 170 Id.
171 171 See § 23.6.
172 172 Allen v. Commissioner, 91-1 U.S.T.C. ¶ 50,080 (9th Cir. 1991).
173 173 Id. at 87,325.
174 174 Id.
175 175
