Briggs v. Commissioner

*411OPINION.

MoRitis:

The Commissioner conceded at the hearing that the petitioner correctly reported his taxable income, in so far as affected by his compensation from the Poster Advertising Co., Inc. The purported additional commissions of $11,725.41 should therefore be excluded in computing the petitioner’s net income.

The petitioner offered no evidence to sustain his assignment of error in regard to the $420 item alleged to have been dividends received by him. As to that item the determination of the Commissioner is approved.

This leaves, for our consideration whether the amount of $23,032.89 paid to or for the account of the American Protective League, is deductible. The petitioner contends that he is entitled to the deduction either as an ordinary and necessary business expense under section 214 (a) (1) or in the alternative, as a charitable contribution under section 214 (a) (11). The pertinent parts of section 214 of the Revenue Act of 1918 are as follows:

Sec. 214. (a) That in computing net income there shall be allowed as deductions:
(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, * * *
*412(11) Contributions or gifts made witbin the taxable year to corporations organized and operated exclusively for religious, charitable, scientific, or educational purposes, * * *

Although the petitioner devoted his entire time during the year 1918 to the American Protective League and its activities, it was not such employment as made it his trade or business in the contemplation of the statute here involved. In Thomas F. Sheridan v. Commissioner, 4 B. T. A. 1299, we quoted with approval the definition of “ trade or business ” as given in Bouvier’s Law Dictionary as, “ That which occupies the time, attention and labor of men for the purpose of a livelihood and profit.” That definition ivas adopted by the Supreme Court in the cases of Flint v. Stone Tracy Co., 220 U. S. 107, and Von Baumbach v. Sargent Land Co., 242 U. S. 503, 515. The Sheridan appeal involved the interpretation of the term “trade or business ” as used in section 214 (a) (4), but the definition adopted is equally applicable to that term as used in section 214 (a) (1). The petitioner is not entitled therefore to the deduction claimed as an ordinary and necessary expense.

Section 214 (a) (11) provides for the deduction of donations made to corporations organized and operated for certain purposes. Section 1 of the Act provides that the term “ corporation ” includes associations. The first prerequisite is that the donation shall have been made to a corporation or association. As the American Protective League was not incorporated, it must fall within the class of associations for the donation in question to be deductible, assuming it was organized and operated for one of the designated purposes. In the United States, the term association “ is used to signify a body of persons united without a charter but upon the methods and forms used by incorporated bodies for the prosecution of some enterprise.” 1 Bouvier’s Law Dictionary (Rawle’s 3d Rev. 269). Other definitions are, “ In the United States, as distinguished from a corporation, a body of persons organized for the prosecution of some purpose, without a charter, but having the general form and mode of procedure of a corporation.” Webster’s Few Int. Diet. “The term ‘association’ usually means an unincorporated organization composed of a body of men, partaking in its general form and mode of procedure of the characteristics of a corporation.” 1 Words and Phrases 584. See also Hecht v. Malley, 265 U. S. 144; Appeal of Philadelphia & Reading Relief Association, 4 B. T. A., 713. In our opinion, the American Protective League does not fall within those definitions. The donations made to and for the benefit thereof are not, therefore, deductible under section 214 (a) (11).

Judgment will be entered on 15 days’ notice, under Rule 50.