Corporation May Not Deduct Matching Contributions to Its PAC

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In a recent private letter ruling LTR 201616002, the IRS responded to a request for ruling as to whether contributions made by the Taxpayer pursuant to a political action committee charity match program were deductible as ordinary and necessary business expenses.

The taxpayer was a Corporation that would be prohibited by the Federal Election Campaign Act (FECA) from contributing to federal election campaigns. Therefore, the Corporation established a Political Action Committee (PAC) which is funded by the employees of the Corporation and its subsidiaries. The PAC was a political organization exempt from taxation under Section 527 of the Code. To incentivize …read more

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