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unless the taxpayer substantiates it by a contemporaneous written
acknowledgment by the donee organization. Sec. 170(f)(8).
The question of what constitutes a "contribution or gift"
for purposes of section 170 has been the subject of considerable
caselaw. Some 5 years before the transaction at issue in this
case, the Supreme Court provided the following guidance:
The legislative history of the "contribution or
gift" limitation [of section 170], though sparse,
reveals that Congress intended to differentiate between
unrequited payments to qualified recipients and
payments made to such recipients in return for goods or
services. Only the former were deemed deductible. The
House and Senate Reports on the 1954 tax bill, for
example, both define "gifts" as payments "made with no
expectation of a financial return commensurate with the
amount of the gift." * * * Using payments to hospitals
as an example, both Reports state that the gift
characterization should not apply to "a payment by an
individual to a hospital in consideration of a binding
obligation to provide medical treatment for the
individual's employees. It would apply only if there
were no expectation of any quid pro quo from the
hospital." * * * [Hernandez v. Commissioner, 490 U.S.
680, 690 (1989); citations omitted.]
Thus, "A payment of money [or transfer of property] generally
cannot constitute a charitable contribution if the contributor
expects a substantial benefit in return." United States v. Am.
Bar Endowment, 477 U.S. 105, 116 (1986); see also Transamerica
Corp. v. United States, 902 F.2d 1540, 1543 (Fed. Cir. 1990);
Singer Co. v. United States, 196 Ct. Cl. 90, 449 F.2d 413 (1971)
(sewing machine manufacturer not entitled to charitable
contribution deduction for sale of sewing machines to public
schools at discount, given the expectation that students' use
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