The opinion
*764 OPINION.
Marquette:
The sole question for decision is whether the petitioner should be permitted to deduct from its gross income its contributions of the Washington Community Chest. Such a contribution when in the nature of a gift is deductible to a limited ex *765 tent from tlie gross income of an individual.. Sec. 23 (n) (2), Eevenue Act of 1928. No such deduction is allowed to a corporation. But either may deduct such a contribution when it is shown that the contribution is in fact a business expense. American Rolling Mill Co. v. Commissioner, 41 Fed. (2d) 314; Killian Co., 20 B.T.A. 80 . Since a contribution may be either a charitable gift or a business expense, a taxpayer in order to secure -a deduction as a business expense must show by sufficient evidence that the expenditure had in a direct sense a reasonable relation to its business. (Thomas Shoe Co., 1 B.T.A. 124 ) or, as said in Killian Co., supra, it must be “ reasonably motivated by or related to the proper conduct of the business.” See also American Rolling Mill Co. v. Commissioner, supra. Tested by these standards we think that the petitioner has shown that its contributions were ordinary and necessary expenses within the meaning of section 23 (a) of the Eevenue Act of 1928. Harris & Co. v. Lucas, 48 Fed. (2d) 187.
The petitioner depends on its advertising revenue for its profits and these in turn depend on the circulation of the Star. By a long and consistent policy of advocating those causes and policies, civic and political, which its management believed to be for the good of the residents of Washington, this paper now enjoys the largest circulation of any paper in that city. Its advocacy of the community chest was in direct line with this policy. It could not have done otherwise without to some extent forfeiting the good will of its readers. It advocated and insisted on giving by all, rich and poor, and giving until it hurt. While other papers also took part, the Star took the lead — a course to be expected of this family newspaper, devoted especially to local interests. This was not only a proper policy; it was good publicity. It was the same character of publicity by which the Star had previously advertised itself and which has secured for it the prestige it enjoys. These contributions were given publicity by the workers in the campaign and advertised by the Star on its front pages “ shamelessly ”, to use the word of its •business manager.
The contributions were reasonable in amount when compared with the net income of the petitioner. In our opinion they had a reasonable and direct relation to its business. They were the result of a policy long continued with the results shown in our findings. In view of the attitude of this paper to the people of the city, it could not well have declined to take the lead in the campaign for subscriptions and, having taken the lead, it could not have afforded to refuse to do what it-was urging others to do. Such was-the judgment of the petitioner’s directors who viewed the matter as a purely business proposition. After a mature consideration of all the facts presented we concur.
*766 Counsel for the respondent points out that the petitioner’s witnesses were unable to show any specific gain in dollars arising from the contributions. This is an unreasonable demand. Alexander Sprunt & Son, Inc., 24 B.T.A. 599 ; Matson Navigation Co., 24 B.T.A. 14 . It is sufficient that the directors had reasonable grounds to believe that their actions would be beneficial to the corporation. It was not necessary for them to expect additional gain. It was sufficient that they, with reasonable grounds, expected that it would prevent a loss. Kornhauser v. United States, 276 U.S. 145 . Under either aspect we think the petitioner is entitled to the deductions claimed.
Reviewed by the Board.
Judgment will he entered under Rule SO.