Rev. Rul. 69-90

Advice has been requested concerning the proper treatment, for Federal income tax purposes, of voluntary payments by merchants and property owners to a city where such payments are used by the city to provide public parking facilities in the general area of the businesses and properties of the contributors.

A city is engaged in a program of providing off-street parking facilities in the various business communities within the city. A group of merchants and property owners has voluntarily contributed money to the city to be used to acquire property for public parking facilities in the general area of the business and properties of the group. The property acquired will be owned by the city and the parking facilities will be for the use of the general public. Parking will not be limited to, nor will spaces be reserved for, the use of the contributors, or the tenants or customers of the contributiors. The amount of the contributions was not based on the proximity or probable use of the facilities by the contributors, their tenants or customers.

Section 170 of the Internal Revenue Code of 1954 provides for the deductibility of charitable contributions as defined in subsection (c), payment of which is made within the taxable year. A charitable contribution is defined, in part, in section 170(c)(1) of the Code as meaning a contribution or gift to or for the use of a State or one of its political subdivisions, but only if the contribution is for an exclusively public purpose.

In the instant case the payments are not consideration for an agreement on the part of the city to provide parking facilities for the use of the contributors since the facilities are not limited to, nor are parking spaces reserved for, the contributors, or the tenants or customers of the contributors. The parking spaces are for the use of the general public and the amount of the contributions was not based on proximity or probable use.

Based on all the circumstances described it is held the payments in the instant case are charitable contributions as defined in section 170(c)(1) of the Code, and are deductible only under section 170, subject to the prescribed limitations thereof.