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§ 10.4 CONDITIONAL GIFTSthe costs of construction, the contributions will be returned to the donors. If thecontributions received exceed the necessary amount, the organization will retainthe excess funds for general program purposes. Thus, as of the date of the gifts,the transfers for charitable purposes depend on the performance of an act or thehappening of a precedent event to become effective. Furthermore, whether thecontributions will be returned depends solely on whether the donors contributean amount equal to the difference between the cost of constructing the buildingand the amount already in the building fund. Under these circumstances, the possibilitythat the charitable transfer will not become effective is not so remote as tobe negligible. Consequently, the gifts are not deductible as of the time of the transfer,but will become deductible at the time the condition is satisfied or eliminated(that is, when the public gifts are transferred to the building fund, because theneeded amount was raised, or are retained by the organization to be expended forgeneral program purposes). 131As another example, a person contributed a patent to a tax-exempt universitysubject to the condition that a named faculty member of the institution (whowas an expert on the technology covered by the patent) continue to be a memberof the faculty of the university during the remaining life of the patent. Under theterms of this gift, if the individual ceased to be a faculty member of the universitybefore the patent expired, the patent would revert to the donor. The patentwas to expire 15 years after the date of the contribution. On the date of the contribution,the likelihood that the specified individual would cease to be a memberof the faculty of the university before the patent expired was not so remoteas to be negligible. The IRS ruled that a charitable contribution deduction wasnot allowable for this gift. 132In some instances, a condition may affect only a portion of the gift. Forexample, the Department of Parks, Recreation, and Tourism of a state obtainedsponsors who agreed to pay any deficit that the department might incur in conductingan international steeplechase race to promote tourism. The departmentrepresented to the sponsors that any funds not used to meet the deficit would bereturned to the sponsors on a pro rata basis. Thus, only the pro rata portion ofany sponsorship advance that the department used for racing expenses was apayment to the state for exclusively public purposes. Therefore, only the portionof each advance actually used to meet the deficit was deductible by the sponsoras a charitable contribution. No portion of the advance was considered to be apayment of a contribution until such time as the net amount actually going tothe state was definitely determined by a final accounting. 133A condition or battery of conditions may be so extensive that the matter goesto the question of the donor’s intent. In one instance, a gift of land was burdenedwith so many conditions, including sale of the land, that a court found that the“donor,” at best, had an intent to make a gift of future sales proceeds rather thanan intent to make a present gift of the land. 134131 Rev. Rul. 79-249, 1979-2 C.B. 104.132 Rev. Rul. 2003-28, 2003-11 I.R.B. 594.133 Rev. Rul. 72-194, 1972-1 C.B. 94.134 Dayton v. Commissioner, 32 T.C.M. (CCH) 782 (1973). 373