U.S. TREASURY DEPARTMENT

Gentlemen:

Reference is made to your letter of August 30, 1949 forwarding an affidavit executed by Mr. S.K. Hostetter, Assistant to the President, with respect to your status for Federal income tax purposes. Your letter and attachment were in reply to office letter dated August 16, 1949 which was addressed to The Nittany Lion Inn requesting it to furnish certain evidence for use in determining its status for Federal income tax purposes.

The information furnished shows that The Nittany Lion Inn, owned by you in its entirety, having no separate corporate existence is used as a practical laboratory by the School of Home Economics. It is further shown that you are a governmental agency of the Commonwealth of Pennsylvania, operating under the land grant acts.

Based upon the information furnished, it is held that you are an instrumentality of the Commonwealth of Pennsylvania, and as such, you are not subject to Federal income tax. Accordingly, bureau ruling dated October 29, 1924, holding you to be entitled to exemption from Federal income tax under the provisions of section 101(6) of the Revenue Act of 1924 and corresponding provisions of prior revenue acts and bureau ruling dated April 29, 1938, affirming your exempt status under the provisions of section 101(6) of the Revenue Act of 1936m are hereby modified to that extent.

Contributions made to you are deductible by the donors in arriving at their taxable net income in the manner and to the extent provided by section 23(6) and (q) of the Internal Revenue Code, as amended, and corresponding provisions of prior revenue acts.

Bequests, legacies, devises or transfers, to or for your use are deductible in arriving at the value of the net estate of a decedent for estate tax purposes in the manner and to the extent provided by sections 912 (d) and 861 (a) (3) of the Code and/or corresponding provisions of prior revenue acts. Gifts of property to you are deductible in computing net gifts for gift tax purposes in the manner and to the extent provided in section 1004(1) (2) (3) and 1004 (b) (2) and (3) of the Code and/or corresponding provisions of prior revenue acts.

This ruling is also applicable to the Nittany Lion Inn which is one of your activities.

The collector of internal revenue for your district is being advised of this action

By direction of the Commissioner.

Very truly yours

Deputy Commissioner