Rev. Rul. 71-449

A candidate seeking political office received contributions totaling $1,000 from individuals and organizations for use in his campaign for election to such office. During the campaign the candidate expended $600 of the contributed funds for campaign purposes. He used the balance of the campaign funds to reduce the mortgage on his personal residence.

Political funds are not taxable to a political candidate by or for whom they are collected if they are used for expenses of a political campaign or some similar purpose. However, any amount diverted from the channel of campaign activity and used by a political candidate for any personal purpose is income taxable to such candidate for the year in which the funds are so diverted.

Held, in the instant case the $400 which represents the portion of the fund which the candidate diverted to his personal use is includible in his gross income in the year so diverted. See Revenue Procedure 68-19, C.B. 1968-1, 810, which sets forth the factors considered by the Internal Revenue Service in determining the taxability of political funds.

Held further, contributions to a political candidate or a political organization are not deductible for Federal income tax purposes, since there is no provision in the Internal Revenue Code of 1954 that would allow such deductions.

I.T. 3276, C.B. 1939-1, 108, and Revenue Ruling 54-80, C.B. 1954-1, 11, are hereby superseded, since the positions set forth therein are restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.