Rev. Rul. 67-362

Advice has been requested with respect to the deductibility, for Federal income tax purposes, of unreimbursed expenditures for meals and of-pocket transportation expenses, and expenditures for meals and lodging while away from home, necessarily incurred by a volunteer member of the Service Corps of Retired Executives under the circumstances described below.

The Service Corps of Retired Executives (SCORE) is a volunteer group of business executives sponsored by the Small Business Administration for the purpose of making the executives' managerial skill and experience available to small businessmen. The group is composed for the most part of retired and semi-retired executives but under certain circumstances individuals still engaged in full-time business activities may participate.

An executive joins SCORE by filing with the Small Business Administration an employment application form. If he is accepted, he receives an identification card from the Small Business Administration which designates him a counselor for SCORE. The executive is then assigned by the Small Business Administration to counsel a small businessman who has requested management counseling assistance from SCORE. As a result of this assignment, the executive performs gratuitous services and necessarily incurs expenses, such as the costs of transportation, and meals and lodging while away from home, for which he is not reimbursed.

Section 2(a) of the Small Business Act of 1958, Public Law 85-536, 15 U.S.C. 631, provides, in part, that it is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns in order to preserve free competitive enterprise, and to maintain and strengthen the over-all economy of the Nation.

Under section 8(b)(1) of the Act, the Small Business Administration is authorized to provide advice and counsel to small firms on matters in connection with Government procurement, and on the policies, principles and practices of good management; and to cooperate with voluntary nonprofit organizations in this activity. Section 8(b)(1) of the Act was amended by Public Law 89-754 (section 1017), 15 U.S.C. 637, to enable the Small Business Administration to permit members of SCORE, and similar cooperating nonprofit groups, the use of its available office facilities and related materials and services for the purpose of enhancing the Small Business Administration's ability to encourage such private groups to provide assistance to small firms as contemplated under the Small Business Act. See House Report No. 1931, Eighty-ninth Congress, at page 44, and Senate Report No. 1455, Eighty-ninth Congress, at pages 26 and 27.

Section 170(a) of the Internal Revenue Code of 1954 provides, in part, that there shall be allowed as a deduction any charitable contribution (as defined in subsection (c)) payment of which is made within the taxable year.

Section 170(c)(1) of the Code defines `charitable contribution' as including a contribution or gift to or for the use of a State, a Territory, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

Section 1.170-2(a)(2) of the Income Tax Regulations provides, in part, that unreimbursed expenditures made incident to the rendition of services to an organization contributions to which are deductible may constitute a deductible contribution. Out-of-pocket transportation expenses, and reasonable expenditures for meals and lodging while away from home necessarily incurred in the course of rendering donated services to such an organization, are deductible.

Members of SCORE, while performing volunteer services as business consultants to small businessmen in furtherance of the purpose of the Small Business Administration to provide management assistance to small firms, in accordance with the Small Business Act, are rendering gratuitous services to the United States within the meaning of section 170(c) of the Code.

Accordingly, reasonable unreimbursed expenditures, such as out-of-pocket expenses for transportation and expenditures for meals and lodging while away from home, necessarily incurred by a SCORE counselor while rendering gratuitous services directly to small businessmen in furtherance of the purpose of the Small Business Administration to provide management assistance to small firms, are deductible as charitable contributions under section 170 of the Code, subject to the limitation prescribed in section 170(b)(1)(B) of the Code.