1928 BTA LEXIS 3386">*3386 Contribution to the civic fund of the City Club of New York held not deductible.
12 B.T.A. 1186">*1186 Proceeding for the redetermination of a deficiency in income tax for 1921 in the amount of $21.84. Only so much is in controversy as result from the disallowance of a claimed deduction for a contribution to the civic fund of the City Club of New York.
FINDINGS OF FACT.
In 1921 petitioner, a resident of New York City, contributed $148 to the civic fund of the City Club of New York.
The City Club of New York is a corporation. Its purposes, as stated in its articles of incorporation, are as follows:
The particular business or object of such society or club shall be to promote social intercourse among persons specially interested in the good government of the City of New York, in securing honesty and efficiency in the administration of city affairs, in severing municipal from national politics, and in procuring and election of fit persons to city offices; and to take such action as may tend to the honest, efficient and independent government of1928 BTA LEXIS 3386">*3387 the City of New York; and for these purposes, to establish and maintain in the City and County of New York, for the use of ourselves and such others, above mentioned, a clubhouse, having a liabrary, a reading-room, a publication office for the distribution of the publications of the Club, and such other appurtenances and belongings as are usual in clubs and club houses and publishing offices.
Its purpose as set forth in its constitution is as follows:
The purpose of The City Club of New York shall be to aid in securing permanent good government for the City of New York by:
1. The divorce of the city's affairs from national party politics.
2. The establishment and maintenance of an efficient and responsible form of city government.
3. Honest and fair methods of nominating and electing municipal officers.
4. The improvement of economic and social conditions in the city.
5. Conducting discussions of the affairs and problems of the city.
6. Providing, through the facilities of a social club, means of intercourse and co-operation among citizens, officials, and organizations interested in the city's welfare.
The City Club of New York pledges itself not to participate1928 BTA LEXIS 3386">*3388 in the nomination, election, or appointment of candidates to any office, nor to conduct any political activities except such as are involved in legislation affecting the city, or the adoption or rejection by the city government of measures of public policy. This shall not preclude proceedings for the removal of public officers on definite charges.
12 B.T.A. 1186">*1187 No citizen of the City of New York shall be debarred from membership in the Club by reason of his party affiliations.
The club has a clubhouse, containing a library, dining room, meeting rooms, and bedrooms. It does not have any recreational facilities such as billiard rooms or bowling alleys.
Each year the club obtains contributions from 600 or 700 persons, most of whom are club members, to make up a so-called civic fund. This fund is raised and kept separate and distinct from club funds and is spent on what the club designated as its civic work. This work consists largely of obtaining reports on bills introduced in the State legislature, selecting such as are within the scope of the purposes for which the club is formed, and either advocating or opposing their passage. Other purposes for which the civic fund is1928 BTA LEXIS 3386">*3389 raised are the drafting and introduction of legislative measures, investigations and reports on municipal matters such as street railway operation and fares, housing problems, and various phases of administration of the city government. In advocating or opposing particular measures, reports are prepared by the club, or its committees, and are printed in pamphlet form.
The following is a statement of the subscriptions to and expenditures made from the civic fund for the year ended September 30, 1921:
| Subscriptions | $23,105.89 | |
| Expenses: | ||
| Secretary and assistant | $10,750.00 | |
| Clerks | 4,005.67 | |
| Postage | 307.92 | |
| Printing and supplies | 1,003.15 | |
| Telephone, telegrams, and messengers | 521.71 | |
| Civic service | 1,813.67 | |
| Legislative information | 75.00 | |
| Miscellaneous | 700.69 | |
| Total | 19,177.81 | |
| Excess subscriptions over expenses | 3,928.08 |
The amount contributed to the civic fund each year is around $20,000.
OPINION.
ARUNDELL: The deduction sought by the petitioner is claimed under section 214(a)(11) of the Revenue Act of 1921 which allows, among other things, the following:
Contributions or gifts made within the taxable year to or for the use of: * * * any1928 BTA LEXIS 3386">*3390 corporation, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, or educational purposes, * * * no part of the net earnings of which inures to the benefit of any private stockholder or individual; * * *.
The 12 B.T.A. 1186">*1188 claim is here made that the objects for which the civic fund is raised bring that fund within the "educational purposes" clause of the section of the statute quoted.
It does not appear that the civic fund is a distinct entity so that its nature and functions can be considered and determined entirely separate and apart from the City Club. While the monies contributed to the fund were apparently administered apart from other club monies, it appears that the activities for which the fund was expended were merely a part of the larger political and civic enterprises of the club. We have in evidence a number of booklets and pamphlets, some of which deal with subjects within the scope of the purposes for which the civic fund was maintained, but all apparently published by the City Club as they all bear the name of the club and purport to be club publications and not publications of the so-called civic1928 BTA LEXIS 3386">*3391 fund. In this situation we do not see how we can determine the status of the fund for tax purposes except as it is a part of the City Club. In other words, contributions to the City Club's civic fund are deductible or not, dependent upon whether the club itself meets the statutory tests. These tests are set out in the opinion in , a case which arose under the Revenue Act of 1918, but equally applicable here, as follows:
In order to be exempt, the corporation or association must meet three tests: (a) It must be organized and operated for one or more of the specified purposes; (b) it must be organized and operated exclusively for such purposes; and (c) no part of its income must inure to the benefit of private stockholders or individuals.
The respondent does not question that the club meets the third of the enumerated requisites, and it appears from the annual reports in evidence that there was no income which could inure to any stockholder or individual. There remains then the application of the other two elements. It is quite clear from the parts of the articles of incorporation and the constitution that we have quoted that the1928 BTA LEXIS 3386">*3392 club was not organized for the purposes enumerated in the statute. and it is equally plain from the evidence that it was not operated for such purposes. It was, rather, an institution organized and operated for the purpose of advocating such legislation and municipal action as it believed would make for good municipal government and opposing such measures as it deemed detrimental to the municipality. An idea of its activities can well be gained from the club's publications placed in evidence. We list here the titles of some of them selected at random: "Pending Amendments to the State Constitution"; "Development of the Port of New York"; "Automatic Compensation for Automobile Accident Victims"; "The Housing Crises"; "Rules of Legislative Procedure, Changes, Recommended"; "Preliminary Report on Voting Machines"; "A Useless Census - Shall 12 B.T.A. 1186">*1189 We Continue It?"; "Why Delinquent Public Officers Escape, A Loop-Hole in the Law"; "Public Employment Exchanges"; "The Transit Problem of Brooklyn"; "Memorandum of the City Club with Relation to the Qualifications of Certain Candidates for the State Legislature."
Even if it be conceded that there is some element of education in the1928 BTA LEXIS 3386">*3393 dissemination of information through the club's publications, its advocacy of or opposition to candidates and proposed municipal measures carries it beyond the exclusively educational purposes contemplated by the taxing statute. See
Judgment will be entered for the respondent.