Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 69-80

1969-1 C.B. 65

Sec. 170

IRS Headnote

A domestic commercial corporation is entitled to a charitable contribution deduction for an unrestricted contribution to a domestic charitable corporation even though the contribution is used in a foreign country.

Full Text

Rev. Rul. 69-80

Advice has been requested as to the deductibility, under section 170 of the Internal Revenue Code of 1954, of a contribution made by a commercial corporation to a domestic charitable corporation that uses the contribution in a foreign country.

X corporation, a domestic commercial corporation, made an unrestricted charitable contribution to Y corporation, a domestic charitable corporation described in section 170(c)(2) of the Code. Y will use the contributions from X, as well as other funds, to further its charitable projects in a foreign country. Y has full control of all of the donated funds and discretion as to their use.

Section 170 of the Code provides, in material part, as follows:

"(a) Allowance of Deduction.--

"(1) General rule.--There shall be allowed as a deduction any charitable contribution (as defined in subsection (c)) payment of which is made within the taxable year. A charitable contribution shall be allowable as a deduction only if verified under regulations prescribed by the Secretary or his delegate.

* * * * *

"(c) Charitable Contribution Defined.--For purposes of this section, the term "charitable contribution" means a contribution or gift to or for the use of--

* * * * *

"(2) A corporation, trust, or community chest, fund, or foundation--

"(A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State or Territory, the District of Columbia, or any possession of the United States;

"(B) organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals;

"(C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and

"(D) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation.

"A contribution or gift by a corporation to a trust, chest, fund, or foundation shall be deductible by reason of this paragraph only if it is to be used within the United States or any of its possessions exclusively for purposes specified in subparagraph (B). [Emphasis added.]"

While the last sentence in section 170(c)(2) denies a deduction for a charitable contribution by a corporation to a trust, chest, fund, or foundation if it is used outside the United States or any of its possessions, that sentence contains no limitation as to deductions by a corporation for charitable contributions to a domestic charitable corporation. Thus, the statute does not preclude the deductibility of contributions to a domestic charitable corporation which uses its funds for a charitable purpose in a foreign country.

Accordingly, in the instant case the X corporation is entitled to a charitable contribution deduction, subject to the limitations of section 170(b)(2) of the Code, for contributions to Y corporation even though Y uses the contributions in a foreign country.