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OPINION
Neither party has brought to our attention any prior case
involving the application of section 170(e)(1) and (3) to charitable
contributions of rapidly perishable inventory, and we know of none.
However, Rev. Rul. 85-8, 1985-1 C.B. 59 deals with the application
of section 170(e)(3) to charitable contributions of dated products,
and is discussed infra.
The relevant provisions of section 170(e), in effect for the
years in issue, are as follows:
(e) Certain Contributions of Ordinary Income and Capital Gain
Property.--
(1) General Rule.--The amount of any charitable
contribution of property otherwise taken into account under this
section shall be reduced by the sum of
(A) the amount of gain which would not have been long-
term capital gain if the property contributed had been sold
by the taxpayer at its fair market value (determined at the
time of such contribution), and
* * * * * * *
(3) Special Rule for Certain Contributions of Inventory and
Other Property.--
(A) Qualified Contributions.--For purposes of this
paragraph, a qualified contribution shall mean a charitable
contribution of property described in paragraph (1) or (2)
of section 1221, by a corporation (other than a corporation
which is an S corporation) to an organization which is
described in section 501(c)(3) and is exempt under section
501(a) (other than a private foundation, as defined in
section 509(a), which is not an operating foundation, as
defined in section 4942(j)(3)), but only if--
(i) the use of the property by the donee is related
to the purpose or function constituting the basis for
its exemption under section 501 and the property is to
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