## Facts

- Ruth K. Dowell and her husband sought admission to University Village, a retirement community affiliated with the Oral Roberts Evangelistic Association (the Association) in Tulsa, Oklahoma.
- University Village’s construction was financed partly through funds loaned by the Association; the Village aimed to repay construction financing through “sponsorship gifts” associated with cottage and apartment units.
- Dowell was informed she and her husband had been granted admission to University Village.
- Shortly thereafter, Dowell paid $22,500 to the Association, labeled a “sponsorship gift.”
- Dowell later moved into University Village and paid rent and other costs; the sponsorship payment did not reduce rent or operate as prepaid rent.
- Prospective residents were told sponsorship gifts were voluntary and not a legal condition of admission; payment did not entitle a resident to lower rent.
- The Association and related entities were qualified organizations under I.R.C. § 170.
- The Dowells claimed a $22,500 charitable deduction on their 1971 federal income tax return.
- The IRS disallowed the deduction and assessed a deficiency, asserting the payment was tied to admission or other benefits (quid pro quo).
- Dowell paid the deficiency, sued for a refund, and won after a bench trial; the United States appealed.

## Issues

1. Whether the $22,500 “sponsorship gift” was a deductible “charitable contribution or gift” under I.R.C. § 170, or a non-deductible payment made in exchange for admission or other material benefits.
2. Whether the district court’s finding of donative intent and lack of quid pro quo was clearly erroneous on appeal from a bench trial.

## Decision

- The Tenth Circuit affirmed the judgment for Dowell and upheld the tax refund.
- The court held that the district court’s finding that the payment was a charitable gift, not consideration for admission or other economic benefits, was not clearly erroneous.
- The court emphasized that credibility determinations and resolution of conflicting evidence in a bench trial are primarily for the trial judge.
- Because the district court’s conclusion was permissible in light of the evidence, the appellate court would not reweigh the record.

## Legal Principles

- I.R.C. § 170 permits a deduction for a “contribution or gift” to a qualified organization, but not for amounts paid in a bargained-for exchange for specific benefits.
- Whether a payment is a charitable gift depends on donative intent and the absence of a quid pro quo; the presence of temporal proximity to a benefit is not dispositive.
- In a bench trial, findings of fact (including mixed fact-law determinations grounded in credibility and intent) are reviewed under the clearly erroneous standard; an appellate court does not retry the case or reweigh evidence.

## Conclusion

The Tenth Circuit upheld the deduction for a “sponsorship gift” to a qualified charity where the trial court permissibly found, based on the evidence and witness credibility, that the payment was voluntary and not exchanged for admission or economic benefits, and therefore was a deductible charitable contribution under § 170.


Dowell v. United States, 553 F.2d 1233 (10th Cir. 1977)