Fat, Judge:
The respondent determined a deficiency in the petitioners' income tax for the year 1958 in the amount of $8,777.47.
The respondent has stipulated that the petitioners are entitled to one of the deductions disallowed in the deficiency notice.
The only issues remaining for decision are whether the petitioners are entitled to a charitable deduction in 1958 for the fair market value of an unsecured negotiable demand note given to a tax-exempt charitable foundation in that year, and if so, what was the fair market value of the note on the date of the gift.
FINDINGS OP PACT
All of the evidentiary facts are stipulated and are found as stipulated.
The petitioners are husband and wife who reside in Clovis, N. Mex. Both are engaged in musical entertainment and the recording profession and derive income from record royalties and musical contracts. The petitioners filed a joint individual income tax return with the district director of internal revenue, Albuquerque, N. Mex., for the calendar year 1958. The petitioners maintained their books and reported their income for Federal income tax purposes on the cash basis of accounting for the year 1958.
The Norman Petty Foundation was created during 1958. By letter ruling dated May 26, 1961, the Commissioner ruled that contributions to the Norman Petty Foundation were, based upon the information furnished him, deductible by the donor as provided in section 170 of the Internal Revenue Code of 1954. Gifts to the Norman Petty Foundation do qualify for the deduction provided in section 170 of the Internal Revenue Code of 1954.
On December 31, 1958, Norman Petty executed and delivered an unsecured negotiable demand promissory note in the amount of $15,000 to the Norman Petty Foundation. The note bore interest in the amount of 5 percent per annum.
On December 31, 1958, Norman Petty had cash in the bank in the amount of $19,803.89. After receipts and disbursements, in January 1959 he had cash in the bank of $14,605.52. On December 31, 1958, Norman Petty had a net worth of $76,054.82.
The note was paid on April 15, 1959, together with $215 accrued interest.
OPINION
The respondent contends that the petitioner is not entitled to a deduction for the value of the note given to the Foundation. We must agree with the respondent.
Section 170(a) (1) of the Internal Revenue Code of 1954 provides:
SEO. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS. (a) Allowance op Deduction.—
1 GeneRAi rule. — There shall be allowed as a deduction any charitable contribution (as defined in subsection (c)) payment of which is made within the taxable year. A charitable contribution shall be allowable as a deduction only if verified under regulations prescribed by the Secretary or his delegate. [Emphasis added.]
Subsection (c) provides: "For purposes of this section, the term 'charitable contribution' means a contribution or gift to or for the use of [various types of bodies] — " (Emphasis added).
This case has been argued on brief by both parties largely upon the question of whether the giving of a note constitutes "payment." In our view of the case it is unnecessary for us to reach the question whether the giving of the promissory note constituted payment. The statute requires that to be entitled to a deduction a taxpayer must make a "contribution or gift." The word "contribution" is not defined in the statute, but we think that it is clear that whatever is meant it would at least require some right be relinquished or some obligation incurred by the contributor. See Shaw et al. v. Camp, 160 Ill. 425, 43 N.E. 608 (1896); Dougherty v. Salt, 227 N.Y. 200, 125 N.E. 94 (1919). The same requirements would apply to the term "gift." Under the law of New Mexico, a note given without consideration is unenforceable by the recipient unless he acts to his detriment in reliance upon it. Miller v. Preston, 4 N.M. [Gild.] 396, 17 Pac. 565 (1888). The same factors are considered with respect to a promise made to a charity, In re Chavez's Estate, 35 N.M. 130, 290 Pac. 1020 (1930). Therefore, we conclude that in the absence of consideration or action in reliance upon the note the Foundation would not have been able to enforce it against the petitioner. The petitioner has the burden of proof and has not established that consideration was given for the note or that the Foundation took any action in reliance upon it, nor has he shown that the note was ever negotiated to a holder in due course. For these reasons, we do not believe that the giving of the note here can be considered a "contribution or gift." In view of this conclusion, it is unnecessary for us to consider whether the giving of the note constitutes "payment."
Reviewed by the Court.
Decision will be entered imder Rule 50.
Dkennen, J., dissents.