Rev. Rul. 84-1

1984-1 C.B. 39.

                       Internal Revenue Service
                                 Revenue Ruling

     CHARITABLE CONTRIBUTIONS;  RIGHT TO USE OF LODGING AND TRANSPORTATION

                           Published: January 3, 1984

SECTION 170--CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS, 26 CFR 1.170A-1: Charitable, etc., contributions and gifts; allowance of deduction

  Charitable contributions;  right to use of lodging and transportation.  A radio station that donates to an agency of the U.S. Government its right to use of lodging and transportation acquired from hotels and airlines in exchange for radio advertising time may deduct, under section 170 of the Code, the fair market value of the rights donated.  Rev.Ruls. 57-462 and 67-236 distinguished.

ISSUE

  Whether a radio station is allowed a charitable contribution deduction under section 170 of the Internal Revenue Code for the donation to an agency of the United States Government of its rights to the use of certain lodging and transportation under the circumstances described below.

FACTS

  A radio station entered into an arrangement with several hotels and airlines pursuant to which the station provided radio advertising time to the hotels and airlines in exchange for lodging and transportation provided by the hotels and airlines.  The radio station included in its gross income the fair market value of the lodging and transportation, and the hotels and airlines included in their respective gross incomes the fair market values of the advertising time. Immediately after their receipt, the radio station donated its rights to the lodging and transportation to an agency of the United States Government, an organization described in section 170(c)(1) of the Code.  Under applicable federal statutes, the agency director is authorized to accept and use gifts for the purpose of carrying out of any of the agency's functions.  The radio station subsequently claimed a charitable contribution deduction for the fair market value of the donated rights.

LAW AND ANALYSIS

  Section 170 of the Code allows, subject to certain limitations, a deduction for charitable contributions to or for the use of organizations described in section 170(c), payment of which is made during the taxable year.

  Section 170(c)(1) of the Code defines a charitable contribution, in part, as a contribution or gift to or for the use of the United States, if the contribution or gift is made exclusively for public purposes.

  Section 1.170A-1(g) of the Income Tax Regulations requires the disallowance of a charitable deduction for the contribution of services.

  Here, the contribution by the radio station of the right to the lodging and transportation provided by the hotel and airlines is a contribution of property in the form of a contract right to receive purchased services.  It is not a contribution of the donor's services.  This situation is analogous to the situation described in Rev. Rul. 68-113, 1968-1 C.B. 80. In that revenue ruling, a taxpayer purchased dancing lessons from a dancing school and donated the right to receive the lessons to a charitable organization.  That revenue ruling concluded that the value of the right to receive the dancing lessons is deductible as a charitable contribution.

  Rev. Rul. 57-462, 1957-2 C.B. 157, and Rev. Rul. 67-236, 1967-2 C.B. 103, which disallow a charitable deduction for a donor's contribution of newspaper advertising space and radio broadcast time, respectively, are distinguishable, since they involve a contribution of services performed by the donor.

HOLDING

  The contribution by the radio station of its rights to use the lodging and transportation is deductible as a charitable contribution under section 170(a) of the Code, subject to the limitations of section 170(b), in an amount equal to the fair market value of the rights contributed.  Although this contribution of property is subject to the limitations of section 170(e)(1), no reduction is required in this case, because the donor's basis in the contributed property is equal to its fair market value.

EFFECT ON OTHER REVENUE RULINGS

  Rev. Rul. 57-462 and Rev. Rul. 67-236 are distinguished.

Rev. Rul. 84-1, 1984-1 C.B. 39.