BIR Ruling

May 16, 1968 Mr. Nominor B. Bote Wack Wack Golf & Country Club, Inc. Shaw Boulevard, Mandaluyong Rizal S i r : This refers to your letter dated May 15, 1968 stating as follows: "The Wack Wack Golf & Country Club, Inc., a non-profit club dedicated to the game of golf, is soliciting cash donations from several corporations such as the Esso and Caltex Gasoline Companies, to be given as cash prizes to champion golfers in the forthcoming Golf Championship to be held in this club. "May we inquire whether the said donation of those gasoline companies are deductible from their income tax and what will be the effect of the said donation to our club considering that the said cash donation will serve as prizes for champion golfers in a golf tournament." In reply, I have the honor to inform you as follows: The prize donors, we believe, in effect become part sponsors of the golf tournament and their acceptance of the offer to be donors is, we further believe, motivated by a business purpose on their part considering that as donors to such highlighted events as golf tournaments project their names to the frontlines especially in this era of when such events are projected to the television screens and to the radio receiving sets and to the metropolitan papers where they are usually given wide coverage. The projection of the names of the donors in such manner necessarily brings about tremendous business propaganda, and in the light of this viewpoint, this Office believes as it hereby holds that the cash prizes to be donated by the donor-corporations mentioned in your letter and others are deductible from their gross income as ordinary and necessary business expenses. In line with the foregoing observations and conclusion, the prize donations in question will not bring about any tax consequence to the club. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue