Re: [EL] Electionlawblog news and commentary 5/11/11

Perhaps someone with more knowledge than I could weigh in on whether
the logic of Carson v. Commissioner, 71 T.C. 252 (1978) would apply in
this case.  It appears to me that the Court’s analysis, while
notionally limited to a contribution to a political candidate, would
be equally applicable to a donation to a social welfare organization
with a specific public policy goal (including supporting or opposing a
ballot measure).

In Carson (to which the Service has acquiesced in result only), the
IRS attempted to impose the gift tax on political contributions that
were made before Congress adopted the current exemption for donations
to 527 organizations.  The Court held that these contributions were
not subject to the gift tax.  The Court stated that:

"These facts do not suggest a gift to the candidate, but the use of
petitioner's resources to promote the social framework petitioner
considered most auspicious to the attainment of his objectives in
life.  Petitioner focused on the social structure most conducive to
his economic aspirations; others may focus on a social structure
advancing their own notions of social justice, or conditions they deem
essential for world peace or public order.  In either case, in the
particular circumstances before us, the individual candidate may
generally be viewed, for purposes of the gift tax, as the means to the
ends of the contributor."

In a concurring opinion, J. Hall said, "In most cases, including this
one, political contributions proceed from the donor's desire to see
his own views regarding political policy given effect.  I do not
believe any gift is usually involved for gift tax purposes because
there is rarely, if ever, a desire to benefit the donee in his
personal capacity, but rather only a desire to further the donor's own
political objectives through the candidate. Such an expenditure, given
solely to be used in facilitating the propagation of views of
political policy which resemble the donor's, is no more a gift to the
recipient than is an expenditure for a newspaper advertisement a gift
to the paper.  In either case, the recipient is primarily viewed as a
means for propagating the taxpayer's own views.  I would not lay down
as a matter of law that a political contribution may never be a gift.
The question should be left open, for example, whether a father's
substantial contribution to his son's candidacy might be a gift for
gift tax purposes under certain circumstances.  Here, however, no such
facts are involved and no gift tax was due."

Daniel

On Wed, May 11, 2011 at 8:14 AM, Ellen Aprill <Ellen.Aprill@lls.edu> wrote: