Slee v. Commissioner

J. NOAH H. SLEE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Slee v. Commissioner Docket Nos. 17306, 21233, 36603, 39727. United States Board of Tax Appeals 15 B.T.A. 710; 1929 BTA LEXIS 2800; March 6, 1929, Promulgated *2800 Contributions to the American Birth Control League and the American Birth Control League, Inc., held not deductible. Newell W. Ellison, Esq., for the petitioner. Frank S. Easby-Smith, Esq., for the respondent. ARUNDELL *710 These proceedings, which were consolidated for hearing and decision, involve income taxes as follows: Docket No. Year Deficiencies determined Amount in controversy 17306 [1921] $1,407.20 $1,407.20 21233 [1922] 2,879.53 21233 [1923] 4,892.76 5,963.72 7,772.29 [1924] 3,664.58 36603 [1925] 3,685.35 7,349.93 39727 [1926] 9,434.28 2,434.28 2,434.28 There is only one issue in the several proceedings, and that is whether contributions to the American Birth Control League in 1921 and to the American Birth Control League, Inc., in the subsequent years are deductible from income. *711 FINDINGS OF FACT. Petitioner is a citizen of the United States and a resident of the State of New York. During the years 1921 to 1926, inclusive, he made the following contributions to the American Birth Control League and the American Birth Control League, Inc.: 1921. American Birth Control League $4,463.80 1922. American Birth Control League, Inc 10,902.01 1923. American Birth Control League, Inc 9,131.84 1924. American Birth Control League, Inc 7,848.44 1925. American Birth Control League, Inc 14,741.39 1926. American Birth Control League, Inc 9,054.46 *2801 Petitioner's income for these years, before deducting charitable contributions, was as follows: [1921] $52,268.89 [1922] 63,677.07 [1923] 76,312.90 [1924] $121,415.85 [1925] 143,118.10 [1926] 106,655.28 For each of the years involved petitioner, in computing net income, claimed as a deduction from gross income the amount contributed in the respective years to the American Birth Control League and the American Birth Control League, Inc. The American Birth Control League, hereinafter called the League, was organized as an unincorporated association in November, 1921, at a conference of a number of people interested in the birth control movement. Among those attending were many doctors of medicine and other professional men connected with large universities and hospitals. At the conference the following resolutions were presented and adopted: RESOLUTIONS to present to the meeting called to form the AMERICAN BIRTH CONTROL LEAGUE WHEREAS, there is an urgent need for a wider cooperation of groups and individuals in the interest of the Birth Control Movement; and WHEREAS the complex problems now confronting America as the result of the practice of reckless procreation*2802 are fast threatening to grow beyond human control, THEREFORE BE IT RESOLVED that we proceed to organize an AMERICAN BIRTH CONTROL LEAGUE, the objects of which will be To establish a DEPARTMENT FOR RESEARCH AND INVESTIGATION HYGIENIC AND PHYSIOLOGICAL instruction by the medical profession to mothers and potential mothers through clinics A program of EDUCATION to the public at large To enlist the support and cooperation of Legal Advisors, Statesmen and Legislators *712 To send into the various States of the Union field workers to enlist the support and interest of the masses, and To establish a Department to cooperate with similar international organizations. BE IT FURTHER RESOLVED that the Chairman of this meeting be empowered to appoint a Committee of three to draft a Constitution and By-Laws, allowing a recess of twenty minutes to have them present this to the meeting. The American Birth Control League, Inc., hereinafter called the League, Inc., was incorporated under the laws of the State of New York in September, 1922, since which time it has operated under its corporate name. In the certificate of incorporation the objects of the League, Inc., are set*2803 forth as follows: To collect, correlate, distribute and disseminate lawful information regarding the political, social and economic facts of uncontrolled procreation. To enlist the support and cooperation of legal advisors, statemen and legislators in effecting the lawful repeal and amendment of state and Federal statutes which deal with prevention of conception. In conjunction with these objects to publish an official organ, to be known as THE BIRTH CONTROL REVIEW, in which there shall be contained reports and studies of the relationship of controlled and uncontrolled population to national and world problems. Nothing herein set forth, however, shall be construed to authorise this corporation to do any act or thing forbidden by any Federal or state law. The constitution of the League, Inc., sets forth its objects in the same words as those in the certificate of incorporation. Both the League and the League, Inc., have operated along the same lines. A research department has been established in New York City, with a physician in charge, a medical director, and a clinical director. Since the establishment of this department approximately 10,000 women have applied*2804 for advice. In each case a complete record is made of the applicant, listing names, addresses, nationality, occupation, finances, number of children, and other data of both social and sex character. The applicant is examined by the physician in charge and if a proper health reason is found, contraceptive advice is given by the clinical director. If no health reason is present the applicant is dismissed without advice. In more than half the cases, particularly those referred by welfare or social agencies, no charge is made for advice and materials. In cases where the applicant has some income a charge is made for supplies, and in some cases applicants make voluntary contributions. The research department keeps in touch, as far as possible, with applicants to whom advice is given and the history of each case is recorded. The information so obtained is placed at the disposal of the medical profession. Thousands of physicians have inquired of the research department as to its discoveries, many have visited it, and at the request of medical societies the medical director has spoken in each of the United States before such societies, hospital staffs, and other interested groups. *2805 *713 These lectures were presentations of the data gathered in the 10,000 cases that have been handled. Largely as a result of the work of the League, Inc., some twenty clinics of a character similar to its research department have been established in various parts of the country. The League, Inc., and its research department prepare and distribute various publications. One is entitled "Report of the Clinical Research Department of the American Birth Control League for the year 1925." It contains a description of the clinic, the method of recording data, the number of patients advised, data as to the source of reference of patients, their religion, and social and economic status. Another publication is entitled "Some Reasons for the Popularity of the Birth Control Movement." This contains articles by the medical director of the research department on such subjects as population and food supply, child welfare, social status of women, and the director's replies to objections to birth control. Another published pamphlet is entitled, "What We Stand For. Principles and Aims of the American Birth Control League, Inc." Under the head of "Aims" is set forth the following: *2806 POLITICAL AND LEGISLATIVE: To enlist the support and cooperation of legal advisors, statesmen and legislators in effecting the removal of state and federal statutes which encourage dysgenic breeding, increase the sum total of disease, misery and poverty and prevent the establishment of a policy of national health and strength. Most of the legislative work of the League and the League, Inc., has been carried on in the eastern States. This work has consisted in part in directing interested groups in the several States how best to formulate their proposals for repeal of existing laws, and in the distribution of leaflets asking legislators, statesmen, and others interested in eugenic breeding to aid in securing changes in statutes. No part of the net earnings of the League or the League, Inc., inures to the benefit of any private stockholder or individual. In a letter to the League, Inc., dated November 25, 1925, the collector of internal revenue for the second district of New York quoted from a letter from the respondent holding that the League, Inc. was exempt under section 231(8) of the Revenue Acts of 1921 and 1924 as a civic league or organization not organized for profit, *2807 but operated exclusively for promotion of social welfare. OPINION. ARUNDELL: The petitioner contends that the League and the League, Inc., were organized and operated exclusively for charitable, scientific and educational purposes within the meaning of section 214 (a)(11) of the Revenue Act of 1921 and section 214(a)(10) of the Revenue Acts of 1924 and 1926, and hence his contributions, to the *714 extent that they do not exceed the 15 per cent limitation, are deductible from gross income. The respondent concedes that if contributions to the League, Inc., are deductible, then those made to the League may also be deducted. We will therefore refer to the two organizations indiscriminately as the League. The statutory provisions here involved allow deductions for amounts contributed to: (B) * * * any corporation * * * 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 stockholder or individual. The above sections of the taxing Acts further allow deductions for contributions*2808 to: (C) * * * the special fund for vocational rehabilitation authorized by section 7 of the Vocational Rehabilitation Act. (Revenue Acts of 1921, 1924 and 1926.) and also to: (E) * * * a fraternal society, order, or association, operating under the lodge system * * *. (Revenue Acts of 1924 and 1926.) The contributions under (E) are allowed if they are to be used for the purposes specified in paragraph (B). In the case of , the statutory tests that an organization of the claimed character of the League must meet are set out as follows: (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 evidence is that the League meets the last of the enumerated tests. As to the other two, we are of the opinion that the League does not come within them. The certificate of incorporation and the constitution specifically state that one of its objects was, To enlist the support and cooperation of legal advisors, statesmen and legislators in*2809 effecting the lawful repeal and amendment of state and Federal statutes which deal with prevention of conception. The League did not abandon this avowed object of its formation, but continued to hold it as one of its aims as shown by the quotation in the findings of fact taken from one of its pamphlets. Moreover, the evidence shows that this aim was carried into operation through the direction of groups in various States and the distribution of literature seeking the repeal or amendment of statutes which the League felt hampered it in accomplishing its aims. In these matters we think the League stepped beyond whatever charitable, scientific, or educational character it might otherwise have had. Undoubtedly the definition given to the words "charitable," "scientific" and "educational" by such standard authorities as Webster's New International *715 Dictionary and the Century Dictionary are sufficiently broad that some phases of the League's activities may come within them. If it had been the intention of Congress, however, to give to the words of the statute the broad definition the petitioner contends for, it would have been unnecessary to have specifically provided in*2810 the Act that contributions or gifts for the prevention of cruelty to children or animals might be deducted or to have provided that contributions might be deducted if made to the special fund for vocational rehabilitation, authorized by section 7 of the Vocational Rehabilitation Act. There can be no doubt that one of the objects of the League was to engage in the dissemination of controversial propaganda and that it did in fact carry out that purpose. The word "propaganda" is defined in Webster's New International Dictionary as "The scheme or plan for the propagation of a doctrine or system of principles." The dissemination of propaganda is usually thought of, not as a charitable, religious, or educational program, but primarily to accomplish the purpose of the person instigating it, which purpose here was a change or repeal of statutes. That the matters to which the propaganda of the League was directed are controversial is shown by the fact of the existence of statutes which the League felt should be amended or repealed. The Board has heretofore held that organizations engaged in such pursuits do not come within the provisions of the taxing act. See *2811 Such has also been the uniform interpretation of the Commissioner of Internal Revenue in all of his regulations, beginning with those promulgated April 17, 1919. See article 517 of Regulations 45, 62, 65, and 69. In our opinion the League was not organized and operated exclusively for the purposes specified in the statute and contributions to it are not deductible from gross income. Reviewed by the Board. Judgment will be entered for the respondent.