-16 recognized and sanctioned the legitimate desires of Presidential donors to limit access to to their papers. Not surprisingly, challenges against the effectiveness of Presidential gifts to the United States are not a common phenomenon. The only known precedent for the current situation is a challenge brought by President Franklin D. Roosevelt's heirs against the effectiveness inter vivos of his gift of papers. There, in a decision which will be examined in detail below, a New York Surrogate's court held that the President's undelivered gift was effective despite the existence of far 4/ greater ambiguity than is present here. In light of the Roosevelt decision, there can be no question that President Nixon's 1969 gift, viewed as an interest of specified value in delivered papers, was effective prior to July 25, 1969. Accordingly, the charitable contribution deductions taken in connection with the gift were legal and appropriate. IV DISCUSSION A. Title To The 1969 Gift Papers A threshold question which has been raised in connection with this matter is whether the President ever owned the papers generated during his public career. If the papers were public property as some observers have contended, there would be no 4/ In re Roosevelt's Will, 73 N.Y.S.2d 821 (Sur. Ct. 1947). -17 need to discuss whether the 1969 transaction satisfied the requirements of a gift. This was not the case, however. Appendix B to this memorandum demonstrates that the papers of every U.S. President from the time of George Washington have been treated as their personal property. Since 1950, property when Congress enacted the Federal Records Act, the unbroken The Office of the Presidency, like 5/ 6/ 7/ 64 Stat. 583. 44 U.S.C. $2101 et seq. Hearings on H.J. Res. 330, 331 and 332 Before a Special Since there is explicit Congressional recognition of the concept of private ownership in the papers of Presidents, a statutory change would be required to give effect to arguments that the papers should be treated as public property. Such an amendment would not affect the 1969 gift. B. The Law Applicable To The 1969 Gift Three bodies of law bear upon the question of whether President Nixon made a valid gift of papers prior to the July 25, 1969 effective date of the Tax Reform Act. The first is the Internal Revenue Code and applicable IRS regulations under which the President's charitable contribution deductions were taken; the second is the Presidential Libraries Act which makes specific provision for the donation of Presidential papers; and the third is a body of judicial decisions comprising the common law of gifts which is implicitly incorporated in the Internal Revenue Code. Each of the three sources of law will be examined below. 8/ The legal principle recited by Speaker McCormack has - Public or Private?" N.Y. Times Mag., Oct. 19, 1947 at 11. Prior to the 1969 Tax Reform Act, a public official who donated his personal and work-related papers to the National Archives was entitled under the Internal Revenue Code to a charitable contribution deduction equal to the fair market value of the papers at the time the gift was made. In practice, the size of the deduction was the amount which would have been derived from the sale of papers, as estimated by an expert in the field of document valuation. Code. In 1969, as now, the only statutory description of a charitable contribution was contained in Section 170 of the Section 170 (a) (1) provided in relevant 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) stated that "for purposes of this section, the term 'charitable contribution' means a contribution or gift to or for the use of [certain enumerated entities, including the United States]." The IRS regulations did little to fill in this sketchy outline, stating only that "ordinarily a contribution is made at the time delivery is 9/ effected." Lacking a precise statutory or administrative definition of a charitable contribution, courts sitting in tax cases have -20 universally applied common law gift standards in determining 10/ whether a taxpayer was entitled to a deduction." Thus, the basic rules for determining the validity of charitable contribution deductions taken on behalf of President Nixon must be gleaned from the common law. However, where there is a conflict between the Internal Revenue Code, as it incorporates common law, and clearly defined national policy, the latter takes precedence. The application of this principle was 11/ illustrated in Green v. Connally, where a U. S. district court held that segregated private schools could not be granted tax exempt status under Section 501 (c) (3) and that contributors to such schools could not take deductions under Section 170. The Court pointed to the Civil Rights Act of 1964 and a line 12/ of cases originating with Brown v. Board of Education as evidence of the national policy against segregated educational facilities, and it concluded: policy The Internal Revenue Code 10/ See e.g., Henry W. Dodge, Jr. 27 T.C. Mem. 1170 (1968); 330 F.Supp. 1150 (D.D.C.), aff'd sub. nom., Coit v. 11/ 12/ 347 U.S. 483 (1954). 13/ 330 F.Supp. at 1164 (emphasis added). |