SECTION 2. BACKGROUND

.01 Section 162(a) allows as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.

1997–46 I.R.B. 17 November 17, 1997

.02 Section 162(b) provides that no deduction is allowed under § 162(a) for any contribution or gift that would be allowable as a deduction under § 170 were it not for the percentage limitations, the dollar limitations, or the requirements regarding the time of payment, set forth in § 170.

.03 Section 1.162–15 of the Income Tax Regulations provides, in part, that no deduction is allowable under § 162(a) for a contribution or gift by an individual or a corporation if any part thereof is deductible under § 170(a).

.04 Section 170(a)(1) allows as a deduction any charitable contribution (as defined in § 170(c)) payment of which is made within the taxable year.

.05 Section 170(c)(1) provides, in part, that the term “charitable contribution” means a contribution or gift to or for the use of the United States, but only if the contribution or gift is made for exclusively public purposes.

.06 Section 1.170A–1(c)(5) provides that transfers of property to an organization described in § 170(c) that bear a direct relationship to the taxpayer’s trade or business and that are made with a reasonable expectation of financial return commensurate with the amount of the transfer may constitute allowable deductions as trade or business expenses under § 162 rather than as charitable contributions under § 170.

.07 Section 1.170A–1(g) provides that no deduction is allowable under § 170 for the contribution of services. However, unreimbursed expenditures made incident to the rendition of services to an organization, contributions to which are deductible, may constitute a deductible contribution. For example, out-of-pocket transportation expenses necessarily incurred in performing donated services are deductible. Reasonable expenditures for meals and lodging necessarily incurred while away from home in the course of performing donated services also are deductible. For the purposes of this paragraph, the phrase “while away from home” generally has the same meaning as that phrase has for purposes of § 162 and the regulations thereunder.

.08 Section 1.170A–1(h)(1) provides that no part of a payment that a taxpayer makes to or for the use of an organization described in § 170(c) that is in considera

tion of goods or services is a contribution or gift unless the taxpayer intends to and actually does pay an amount that exceeds the fair market value of the goods or services received. See United States v. American Bar Endowment, 477 U.S. 105 (1986).

.09 Federal advisory committees are governed by the Federal Advisory Committee Act, 5 U.S.C. app. §§ 1–15 (1994) (Act), and the regulations thereunder. A federal advisory committee is a “useful and beneficial means of furnishing expert advice, ideas, and diverse opinions to the Federal Government.” Act § 2(a). Under the Act, a federal agency may accept the services without compensation of a federal advisory committee member. 41 C.F.R. § 101–6.1033(d) (1996). An advisory committee member may be reimbursed by the federal agency for travel expenses, including a per diem in lieu of lodging, meal, and incidental expenses. 41 C.F.R. § 1.101–6.1033(e) (1996).