William B. Cammarano and Louise Cammarano, His Wife v. United States

Appellants, partners in a wholesale beer distributing concern in Tacoma, Washington, made a contribution to the Washington Beer Wholesalers Association, Inc., Trust Fund. The Trust Fund had been established December 17, 1947, to carry on an extensive state-wide publicity program, directed by an Industry Advisory Committee, on behalf of wholesale and retail beer and wine dealers to defeat proposed initiative legislation in the State of Washington. The measure, if enacted into law, would have placed the retail sale of wine and beer exclusively in state owned and operated stores.

The Association assessed its members amounts based upon their volume of business. The funds received from the contributions, appellants’ contribution included, were used in an effort to defeat the initiative legislation.

On their income tax returns appellants claimed a deduction for the contribution made as an ordinary and necessary business expense within the meaning of § 23(a) (1) (A), Internal Revenue Code of 1939. The Commissioner of Internal Revenue disallowed this deduction on the ground that the contribution was used for lobbying purposes a.nd the promotion or defeat of legislation, and therefore…