Rev. Rul. 54-565

Advice has been requested whether membership dues paid to an organization, contributions to which are deductible under sections 23(o) and (q) of the Internal Revenue Code of 1939, are deductible by members in computing their taxable net income in the manner and to the extent provided by sections 23(o) and (q) of the Code.

The question whether membership dues paid to organizations of the type set out in sections 23(o) and (q) of the Code are deductible as contributions by members under those provisions of law depends on the particular facts of each case. If membership in the organization does not bestow upon the members any benefits or privileges in return for the payment of dues, the payment of such dues may represent the payment of contributions under the provisions of sections 23(o) and (q) of the Code. If, however, membership in the organization bestows upon members certain benefits and/or privileges in return for the payment of dues, such as monthly bulletins or journals, the free use of a library, etc., the privileges of attending luncheons, musicals, motion picture programs, and lectures, etc., the dues do not constitute a contribution or gift and they are not deductible under sections 23(o) and (q) of the Code.

In such case, however, membership dues may qualify as ordinary and necessary expenses paid or incurred in carrying on a trade or business within the meaning of section 23(a) of the Code. Section 39.23(a)-5 of Regulations 118 provides that a professional man may claim as deductions in computing net income the dues to professional societies and subscriptions to professional journals. Also that amounts currently expended for books, the useful life of which is short, may be deducted.

Since the subscriptions for publications of educational organizations do not represent gifts, the cost of such subscriptions including mailing expenses paid by recipients of the publications, would not be deductible under sections 23(o) and (q) of the Code. However, the expenses incurred for such items could very well represent a business expense and be deductible under section 23(a) of the Code as subscriptions to professional journals. Whether such subscriptions are ordinary and necessary business expenses deductible under section 23(a) of the Code depends upon the particular facts in each case.

If the taxpayer's trade or business is the performance of services as an employee, the dues paid to professional societies and subscriptions to professional journals, as well as amounts currently expended for books, the useful life of which is short, may not be deducted in computing adjusted gross income. Such expenses may be deducted only if such taxpayer itemizes his deductions on page 3 of Individual Income Tax Return, Form 1040.