Court Opinion

ID: 4611671
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:49:27.053865+00
Date Added: 2024-06-11T07:54:18.249472
License: Public Domain

EDITH A. WOLF, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Wolf v. CommissionerDocket No. 92429.United States Board of Tax Appeals40 B.T.A. 1232; 1939 BTA LEXIS 733; December 22, 1939, Promulgated 1939 BTA LEXIS 733">*733  Petitioner, desiring to perpetuate the memory of her father, created a committee for the award of an annual literary prize.  Held, contribution to committee for awarding the prize is deductible from petitioner's gross income for the year 1936 under section 23(0)(2) of the Revenue Act of 1936.  Julius Bloomberg, Esq., for the petitioner.  Thomas Callahan, Esq., for the respondent.  VAN FOSSAN 40 B.T.A. 1232">*1232  This proceeding was brought for the redetermination of a deficiency in petitioner's income tax for the year 1936 in the sum of $496.34.  Of this amount, only the sum of $364.01 is here in controversy.  The single question before the Board involves the deductibility from petitioner's gross income for the year 1936 of a contribution 40 B.T.A. 1232">*1233  made by petitioner to a committee for the purpose of awarding a literary prize.  FINDINGS OF FACT.  The facts were stipulated substantially as follows: Petitioner is a married woman and is a resident of Cleveland Ohio.  In 1932 the petitioner, Edith A. Wolf, communicated with Amy Loveman, who was then associate editor of the Saturday Review of Literature, by letter regarding the establishment by her1939 BTA LEXIS 733">*734  of some plan for a memorial to her father, John Anisfield, who died in April 1929, to which Amy Loveman answered by letter on June 17, 1932, in part as follows: Of course I am interested, and very much so, in your plan of establishing a memorial to your father.  What it should be and the method of giving it publicity would depend, of course, entirely upon the amount of money you intended to devote to that purpose.  If you are planning to offer some sort of a prize of considerable money value the thing could probably be best presented to the public through a paper such as ours.  If on the other hand you did not wish it to exceed $50 or $75 a year, probably your best plan would be to offer a prize through one of the universities.  What would you think of awarding it for the best book of the year written for a general public in the field of business or general industry?  Let me know what you want to do further and I'll do anything I can to help you establish it either through our own publication or through a university.  On June 29, 1932, petitioner wrote to Amy Loveman, as follows: Thank you for your very nice letter in answer to my query.  I am glad of your interest in my plan, 1939 BTA LEXIS 733">*735  and there is no way in which I would rather have it worked out, than through you and your paper.  I would appreciate it if you would develop your suggestion further.  I realize that my purpose must have seemed vague to you as it still is somewhat so to me.  While it is natural for you to think of business and industry in connection with my father, yet I always find myself considering his wider interest in human welfare.  That, of course, is an all-comprehensive field.  My idea is to take as an objective, some definite way in which the state of man has been made better - some influence - some plan - some suggestion - some world achievement - brought out literarily".  The first reaction to such a thought is that it may take time for an influence of that kind to be felt as an influence, but it might be viewed from a potential standpoint.  Ultimately we hope to have a local fund, the proceeds of which shall be used annually for any outstanding community need.  The award we are here outlining must perhaps be narrowed to one particular subject.  In the present state of resources there is available about $1,000 annually, for such purpose.  Do you consider that sufficient to be worthwhile1939 BTA LEXIS 733">*736  in comparison to some of the large existent prizes, and what expense do you anticipate in connection with handling the matter?  It may take some thought to work out details of a feasible proposition, and I do appreciate your cooperation.  With best wishes to you and all from us all, Very sincerely yours, [Signed] EDITH A. WOLF.  40 B.T.A. 1232">*1234  On July 6, 1932, Amy Loveman again wrote to the petitioner, as follows: Dear Edith: Your fund is so generous a one that I think the use which is to be made of it ought to be very carefully considered.  Will you let me take a little time until I can get a chance to talk over with some of my associates a fit manner of employing it?  When I can get their suggestion I'll write you what they say and then, of course, you can go ahead establishing your memorial either through the Saturday Review or any other means that you see fit.  With best wishes to all of you, Sincerely yours, [Signed] AMY LOVEMAN.  To carry out the program suggested in these letters, Amy Loveman communicated the matter to Henry Seidel Canby of New York City, at that time the managing editor of the Saturday Review of Literature.  On October 7, 1932, Amy1939 BTA LEXIS 733">*737  Loveman wrote the following letter to Edith Wolf: Dear Edith: I finally talked over again with Mr. Canby a suggestion for a memorial for your father.  His idea is that it might be well to do in a fashion what France does when it crowns a book, that is, appoint a committee which should change each year and which each year should designate some work chosen from a broad field as of outstanding interest or importance to the general public.  The committee could be appointed, if you so desire, by "The Saturday Review" and have on its board one of the editorial staff.  Any details of the sort I think ought to be worked out in a personal discussion with you and not by letter.  Won't you, if you get to New York in the near future, let me know so that we can make an appointment to discuss your project?  Sincerely yours, [Signed] AMY LOVEMAN Managing Editor - The Saturday ReviewA conference was had in New York City subsequent thereto, at which the petitioner, her husband, Eugene E. Wolf, Amy Loveman, and Canby were present.  A plan for the establishing of a fund by Edith Wolf for literary and educational purposes as a memorial to her father, John Anisfield, was discussed.  It1939 BTA LEXIS 733">*738  was agreed to encourage and stimulate the writing of more and better books upon the general subject of racial relations.  Later a committee, consisting of Henry Seidel Canby, Henry Pratt Fairchild, professor of sociology in New York University, and Donald Young of the Social Science Research Council, was appointed.  On January 23, 1934, Canby wrote to Edith Wolf as follows: Dear Mrs. Wolf: Miss Loveman and I, after discussing the award, propose the following wording: "A prize of $1,000 to be given annually for a sound and illuminating book on 40 B.T.A. 1232">*1235  the subject of racial relations in the contemporary world, the prize to be awarded by a committee of competent judges to the author of a book published between September first and September first of successive years.  I am, Sincerely yours, [Signed] HENRY S. CANBY, Editor - The Saturday ReviewShortly thereafter the following announcement was published in the leading periodicals circulating among writers and thinkers on such lines: The Saturday Review has the honor to announce a prize of $1,000 established by Mrs. Edith Anisfield Wolf of Cleveland, Ohio, in memory of her father, to be called the John Anisfield1939 BTA LEXIS 733">*739  Award.  The prize will be administered by a committee of judges consisting of Henry Seidel Canby, Editor of the Saturday Review of Literature, Henry Pratt Fairchild, Professor of Sociology in New York University, and Donald Young, of the Social Science Research Council.  Books submitted for the award may be sent to The Anisfield Award Committee, care of The Saturday Review, 25 West 45th Street, New York City.  The first award will be made to a book published between August 1, 1934, and August 1, 1935.  The aforesaid notice appeared in a number of magazines, including the American Sociological Review, American Economic Review, Annals of the American Academy of Political and Social Science, Human Biology, Journal of Heredity, the American Anthropologist, American Journal of Sociology, American Historical Review, Social Forces the Survey, Common Sense, Time Magazine, News Week, Christian Science Monitor, Saturday Review of Literature, and other periodicals.  In 1935 petitioner contributed to the committee $1,300 by check dated February 15, 1935, payable to Henry S. Canby, chairman of the Anisfield award committee, and thereupon relinquished all right to the amount so contributed by1939 BTA LEXIS 733">*740  her to the committee, as set forth in letter of petitioner to the Bankers Trust Co., dated March 2, 1935, as follows: Bankers Trust Company 501 Fifth Avenue at 42nd St.  New York CityGentlemen: I am advised that you carry an account in the name of "Henry S. Canby, Chairman of the Anisfield Award Committee", which account was opened by a check in the amount of Thirteen Hundred Dollars ($1300.00) drawn by me to the order of Henry S. Canby, Chairman of the Anisfield Award Committee has the sole title to such account, and that he alone, in such capacity, will draw thereon.  [Sic]Very truly yours, (MRS.) EDITH A. WOLF The withdrawal of the funds thereafter and the utilization thereof rested thereafter in the sole discretion of the committee.  Pursuant to the notice of the award published in the periodicals as above set forth, books were presented to the committee which were 40 B.T.A. 1232">*1236  written on the subject of racial relations during the period provided for in the notice.  For the year 1935 the committee selected the book written by Harold F. Gosnell, entitled "Negro Politicians", as the winner of the award, notified the author thereof, and paid him $1,000 from1939 BTA LEXIS 733">*741  the funds contributed by the petitioner.  The author acknowledged the same in the following letter: THE UNIVERSITY OF CHICAGODepartment of Political ScienceOctober 30, 1935.  Mrs. Edith Anisfield Wolf 1451 East Boulevard Cleveland, OhioMy dear Mrs. Wolf: Mr. Henry Seidel Canby of the Saturday Review of Literature has informed me that I have been awarded the John Anisfield prize.  Under separate cover I am sending you an autographed copy of my book, "Negro Politicians".  I wish to express to you my great appreciation of your interest in the field of race relations.  I have found the five years which I devoted to the preparation of my book very profitable in deepening my understanding of human society.  I hope that my book will contribute to the understanding of others.  Yours sincerely, HFG: VR HAROLD F. GOSNELL The remaining $300 of the amount contributed by the petitioner to the committee as aforesaid in 1935 was distributed to the committee members to compensate them for their labor and service, and to reimburse them for such other incidental expenses as they might have been put to in carrying out the functions assigned to them.  On June 30, 1936, petitioner1939 BTA LEXIS 733">*742  contributed the further sum of $1,300 by check payable to Henry S. Canby, chairman, for the same purposes, and it is the disallowance of this contribution that brought about the assessment of the additional tax.  In 1936 the committee awarded $1,000 of the money contributed in that year by petitioner to Julian Huxley and A. C. Haddon of London, England, for their book entitled "We Europeans", and expended the remaining $300 in the same manner as in the previous year.  A similar contribution was made December 18, 1937, by the petitioner to the committee by check payable to Henry S. Canby, chairman, in the sum of $1,300, who awarded $1,000 to Elin L. Anderson of Winnipeg, Manitoba, Canada, for her book "We Americans - A Survey of Cleavage in an American City." In 1938 a similar contribution was made by the petitioner, and Charles S. Johnson of Nashville, Tennessee, author of "The Negro College Graduate", received the $1,000 awarded by the committee.  Petitioner is not a member of the award committee nor is any person in her family a member, and no part of the income of the fund 40 B.T.A. 1232">*1237  inures to the benefit of the petitioner or to any private shareholder or individual.  1939 BTA LEXIS 733">*743  No activity of the committee is devoted to the carrying on of propaganda or otherwise attempting to influence legislation.  Respondent disallowed the contribution of $1,300 made as aforesaid in the year 1936 and added that amount to the net income reported by petitioner in her income tax report for that year.  The respondent thereupon added an additional income tax in the sum of $496.34 and gave notice of the deficiency in the income tax liability to petitioner.  There was included in the additional tax so assessed taxes in the sum of $132.33 to which petitioner has consented, and which she has offered to pay.  The balance of the deficiency in the sum of $364.01 results from the disallowance of petitioner's contribution hereinbefore referred to.  Petitioner took timely exception to the disallowance of the contribution to the committee and to the proposed assessment of additional income tax by respondent.  No written instrument was executed to establish the relationship between petitioner and the committee other than the letters herein-before referred to.  OPINION.  VAN FOSSAN: The question for decision is whether the contribution of $1,300 made by taxpayer in 1936 as1939 BTA LEXIS 733">*744  above set out was deductible under section 23(0)(2) of the Revenue Act of 1936. 1 As we view it the case turns on the characterization of the "Anisfield Award Committee", i.e., whether it was such an entity as comes within the statute.  There can be no question that the statute is satisfied as to the organization, operation, and purposes of the committee.  The purposes were exclusively the encouragement of literary efforts to the end of bettering race relations, the latter phase being educational.  It is stipulated that "no part of the income of the fund inures to the benefit of the petitioner or to any private shareholder or individual." The committee is not engaged in carrying on propaganda or otherwise attempting to influence legislation.  1939 BTA LEXIS 733">*745  Whether the committee was an entity within the requirement of the statute is to be determined by a study of all the facts relating to its 40 B.T.A. 1232">*1238  creation, composition, activity, and functions.  We take it that the absence of the words "trust" or "fund" or "foundation" can not be determinative.  Nor, in our opinion, is it material that no more formal document marked the creation of the committee.  The committee was the result of careful planning, and was conceived as an agency adequate in form to carry out the donor's purpose.  It was formally held out to the world as an entity to which books submitted for the award might be sent.  The check contributed by petitioner was payable to "Henry S. Canby, Chairman of the Anisfield Award Committee" and was deposited in an account similarly styled, he alone, in such capacity, having authority to draw thereon.  It is stipulated that the withdrawal and utilization of the funds were in the sole discretion of the committee.  The committee functioned as an entity for the purpose planned and made awards accordingly over several years, taxpayer each year contributing to it the requisite funds. 1939 BTA LEXIS 733">*746  Petitioner had no part in the selection of the recipient of the prize award and in nowise used the committee as a shield to hide private donations.  We are of the opinion that the Anisfield Award Committee was such an entity as entitles it to classification within the provisions of section 23(o)(2) and that petitioner's donation to it was deductible.  See ; . Decision will be entered under Rule 50.Footnotes1. SEC. 23.  DEDUCTIONS FOM GROSS INCOME.  In computing net income there shall be allowed as deductions: * * * (o) CHARITABLE AND OTHER CONTRIBUTIONS. - In the case of an individual, contributions or gifts made within the taxable year to or for the use of: * * * (2) a corporation, or trust, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation. ↩