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(3) a copyright, a literary, musical, or artistic
composition, a letter or memorandum, or similar
property, held by--
(A) a taxpayer whose personal efforts created
such property, [or]
(B) in the case of a letter, memorandum, or
similar property, a taxpayer for whom such
property was prepared or produced * * *
Because the materials would fall under the exclusion of letters,
memoranda, or similar property created by the taxpayer’s own
efforts, if they had been created by the taxpayer’s own efforts
and were work product, we would be required to treat them as
ordinary assets. Thus, even if petitioners could fall within the
minority work product exception to the general rule that a
client’s case file legally belongs to the client, their allowable
deduction would be limited to their basis in the materials.
Petitioners have presented no evidence that the basis in the
materials was greater than zero. Thus, even if we held that
petitioner legally owned the materials under a work product
exception, section 170(e)(1)(A) would limit petitioners’
deduction to zero, the amount of petitioners’ basis.
Because petitioner was not the legal owner of the materials,
he was not legally capable of divesting himself of the burdens
and benefits of ownership or effecting a valid gift of the
materials. He is therefore not entitled to any deduction under
section 170 for his donation of the materials. Because the
materials contain merely copies of documents and other items that
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Last modified: March 27, 2008