Rev. Rul. 57-432

Amounts contributed to the Office of the U.S. Commissioner General, Brussels Universal & International Exhibition, 1958, for the purpose of assisting in the strengthening of friendly, sympathetic and peaceful relations between the United States and other countries of the world through cultural and athletic exchanges and participation in international fairs and festivals as provided for under the International Cultural Exchange and Trade Fair Participation Act of 1956, 70 Stat. 778, 22 U.S.C. 1991, constitute contributions or gifts to or for the use of the United States for exclusive public purposes within the meaning of section 170 of the Internal Revenue Code of 1954 and are deductible in the manner and to the extent provided in such section.

A newspaper donating space in its newspaper to an organization meeting the requirements of section 170(c) of the Internal Revenue Code of 1954 is rendering a service and not making a gift of property. The fair market value of the space so donated does not qualify as a contribution or gift allowable as a deduction under section 170 of the Code.

Advice has been requested whether newspaper space donated by a newspaper to on organization meeting the requirements of section 170(c) of the Internal Revenue Code of 1954 constitutes a gift of property, the fair market value of which is deductible as a charitable contribution or gift.

Section 170 of the Code provides, in part, that there shall be allowed as a deduction in the case of a corporation, within stated limitations, any contribution or gift, payment of which is made to certain qualified organizations. Section 39.23(q)-1(b) of Regulations 118, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides in part, by reference to section 39.23(o)-1, that if the contribution or gift is other than money, the basis for the calculation of the amount thereof shall be the fair market value of the property at the time of the contribution or gift.

O.D. 712, C.B. 3, 188 (1920), holds that the value of services rendered to a charitable organization is not allowable as a deduction for charitable contributions.

It is the position of the Internal Revenue Service that a newspaper which gratuitously publishes advertisements for charitable organizations is not donating property but is merely rendering a service. It is held that this does not constitute a contribution or gift within the meaning of section 170 of the Code. Accordingly, the fair market value of the space does not qualify as an allowable deduction.