Court Opinion

ID: 4607202
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:40:07.726008+00
Date Added: 2024-06-11T07:53:29.964535
License: Public Domain

DANIEL W. NORRIS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Norris v. CommissionerDocket No. 21282.United States Board of Tax Appeals22 B.T.A. 1146; 1931 BTA LEXIS 2007; April 9, 1931, Promulgated *2007  A home for nurses, the primary purpose of which was to operate a registry but which also provided rooms and meals for nurses, held, upon the evidence not to be a corporation organized and operated exclusively for charitable or educational purposes and a contribution thereto is not deductible.  Perry J. Stearns, Esq., for the petitioner.  J. M. Leinenkugel, Esq., for the respondent.  MCMAHON *1146  This is a proceeding for the redetermination of a deficiency in income tax for the year 1922 in the amount of $1,450.55, not all of which is in controversy.  The only error assigned is the disallowance by the respondent as a deduction of an amount of $3,011.99, claimed by the petitioner as a contribution to a charitable organization.  FINDINGS OF FACT.  The petitioner is an individual, a resident of Milwaukee, Wis.  During the calendar year 1922 the petitioner made a contribution or gift to the Wisconsin Nurses' Club and Directory, amounting to $3,011.99 in value.  The petitioner deducted such amount upon his *1147  1922 income tax return.  The total contributions made by the petitioner, including said amount, were less than 15 per cent*2008  of his net income for 1922 as computed without the benefit of paragraph 11 of section 214(a) of the Revenue Act of 1921.  The Wisconsin Nurses' Club and Directory, hereinafter referred to as the Club, was a corporation located in Milwaukee, Wis.  Its object, as set forth in its articles of organization, was as follows: The object of the Wisconsin Nurses' Club and Directory shall be: 1.  To maintain a headquarters for all nursing interests and activities, including among others: (a) A Directory of Nurses.  (b) A Club House and Home for Nurses.  (c) Facilities for helping ambitious nurses to achieve higher standards.  2.  To co-operate with the Medical Profession and Public in securing efficient care for the sick.  3.  To maintain a Bureau of Publicity to interpret professional nursing to the Public and to be responsive to the new and increasing demands that the Public is constantly making of the nursing profession.  The articles of organization also provided: Such corporation shall have no capital stock whatever, and is organized and shall be conducted solely for the purposes above mentioned, and no dividends or pecuniary profits shall be declared or distributed*2009  to the members thereof.  Its by-laws, after providing for meetings of members and directors, defined its classes of membership as follows: Section 1.  Membership in said Corporation shall consist of four classes (4) as follows: Honorary membership may be conferred upon persons who have rendered some special service to the Corporation and whom the members wish to honor - and confers social privileges only.  Active - Any registered nurse in good standing may become an active member of said Corporation upon presenting satisfactory credentials to the membership committees, and upon signing the constitution and paying dues for the current year - which dues shall be five (5) dollars.  Active members in good standing may vote.  Registered - Registered nurses who pay the fee of $10.00 per year may be of this class of membership and shall be entitled to all privileges of active club membership.  Associate - Registered nurses in good standing who are not permanently located in Milwaukee or who are residents of the State or who for any reason cannot take an active part in Club activities may become Associate members upon paying a fee of three (3) dollars.  They have*2010  all privileges of the Club except voting.  * * * The by-laws provided for certain standing committees, a finance committee, an entertainment and program committee, publicity committee, membership and eligibility committee, etc., and also a sick visiting committee which was to visit all sick nurses regardless of affiliations.  *1148  The Club went out of existence sometime after 1922 and amalgamated with the 4th and 5th District of Wisconsin State Nurses Association.  The Club maintained a home for nurses with a dining room.  The nurses paid for their rooms and meals.  During 1921 and 1922, there were about three hundred nurses who were registered members of the Club of which about fifty were Club members.  They were not necessarily registered with the State, but some of them were practical nurses.  The membership was of three kinds, honorary members, Club members, and directory members.  The Club members paid $5 a year and the directory members $10, $5 of which was for membership in the Club and $5 for the services of the directory.  The Club members were members who had full-time employment and were not looking for temporary assignments.  The Club supplied the public*2011  with nurses upon call by the hospitals, doctors, or patients.  For this purpose it kept a directory, which included all but the Club members.  This was arranged alphabetically according to different hospitals.  No charge was made to the hospitals or patients for this service.  The nurses did not pay anything in addition to their regular fee for this service.  There was some one on duty at the Club at all hours to take telephone messages and get in touch with the nurses.  During the war, Stella Matthews, registrar of the Club, assisted in the organization of Base Hospital No. 22, a part of the United States Marmy service.  This unit went overseas with the military forces.  She also formed a class for a short course in nursing in connection with the Red Cross activities at the Club.  This work did not continue after 1919.  There were also a few classes given in psychology at the Club.  The nurses who attended paid for the course, but the remuneration went to the professor; the Club charged nothing for the use of its rooms.  There were other classes in history, parliamentary law, nutrition, and social service.  Various nurses' organizations met at the Club from time to time and no*2012  charge was made to them for the rooms.  The Club had a committee which visited sick nurses with no charge to them.  The Club did not maintain any free beds at hospitals or render any other free nursing service.  The Club was the first official registry of its kind in the State of Wisconsin.  It maintained an advisory committee, which was always ready to give advice and help nurses with their problems.  No member of the Club received any private profit, emolument or dividend therefrom.  For the calendar year 1921, the Club sustained a net profit of $2,313.04.  For the calendar year 1922, the books of account of the *1149  Club show that there was a net profit of $22.65 from the home, and a net profit upon the registry of $812.07, making a total net profit of $834.72.  The Club was not organized and operated exclusively for charitable or educational purposes.  OPINION.  MCMAHON: The only question in the instant proceeding is whether the Wisconsin Nurses' Club and Directory is a corporation organized and operated exclusively for "charitable or educational" purposes within the meaning of section 214(a)(11) of the Revenue Act of 1921.  That section provides: (a) That in*2013  computing net income there shall be allowed as deductions: * * * (11) Contributions or gifts made within the taxable year to or for the use of: * * * (B) any corporation, * * * organized and operated exclusively for * * * charitable, * * * or educational * * * purposes, * * * no part of the net earnings of which inures to the benefit of any private stockholder or individual; * * * The petitioner contends that the Club was organized and operated either for charitable or educational purposes.  The objects of the Club are set forth in our findings of fact.  Miss Anna Heil, registrar of the Club during 1922, testified that the primary purpose of maintaining the home was for the benefit of the nurses and Club members, and that the directory was operated in the same way as a commerical directory, except that it charged the nurses only for their registration fee, whereas the usual practice in a commercial directory is to charge them a registration fee plus a percentage of any fees received from their nursing.  The Club maintained rooms and meals for nurses for which, however, they paid.  The only educational features are that there were a few classes from time to time under the auspices*2014  of the Club in psychology, history, parliamentary law, nutrition and social service, and that the Club gave advice to nurses upon their problems.  The Club did not maintain any free beds in hospitals or do any free nursing except for other sick nurses.  It is clear that any charitable or educational work of the Club was merely incidental to the main purpose, i.e., the maintenance of the directory and home for the benefit of the Club members.  The petitioner has not established that the corporation was organized and operated exclusively for educational or charitable purposes, and we, therefore, sustain the action of the respondent in disallowing the deduction.  See , and . Judgment will be entered for the respondent.