Petitioner asserts that: (1) The clippings library is not an asset described in section 1221(3) and (2) even if it is such an asset, section 1221(3) does not apply to a corporate taxpayer. Respondent disputes both assertions. For the reasons hereinafter set forth, we disagree with petitioner and sustain respondent's determination that petitioner is not entitled to any deduction for its contribution 1991 U.S. Tax Ct. LEXIS 92">*98 of the clippings library to the California Historical Society.

We deal first with the question of the proper characterization of the clippings library. Clearly, it is not, in and of itself, a copyright, literary, musical, or artistic composition, and respondent does not argue that it is. Thus the characterization of the library depends upon whether it falls within the category of a "letter or memorandum, or similar property." The regulations state that the phrase "similar property":

includes, for example, such property as a draft of a speech, a manuscript, a research paper, an oral recording, a transcript of an oral interview or of dictation, a personal or business diary, a log or journal, a corporate archive, including a corporate charter, office correspondence, a financial record, a drawing, a photograph, or a dispatch. A letter, memorandum, or property similar to a letter or memorandum, addressed to a taxpayer shall be considered as prepared or produced for him. * * * [Sec. 1.1221-1(c)(2), Income Tax Regs.]

97 T.C. 445">*449 On two previous occasions, we have considered and sustained the foregoing regulation, albeit in somewhat different factual settings. Thus, in Glen v. Commissioner, 79 T.C. 208">79 T.C. 208 (1982),1991 U.S. Tax Ct. LEXIS 92">*99 we held that tapes of interviews conducted by the taxpayer constituted "similar property" because they fell within the characterization of "an oral recording" set forth in the regulation. See 79 T.C. 208">79 T.C. 214. Similarly, in Morrison v. Commissioner, 71 T.C. 683">71 T.C. 683 (1979), affd. per curiam 611 F.2d 98">611 F.2d 98 (5th Cir. 1980), we held that letters, copies of letters to or from a taxpayer and third person, and memoranda dealing with problems associated with his service as a Congressman fell within the proscription of section 1221(3) and the foregoing regulation.³

The parties have focused their arguments primarily on the categories of "corporate archive," "log or journal" or "office correspondence" embodied in the regulation. ⁴ Petitioner seeks to confine the meaning of the phrase "corporate archive" to corporate records such as minutes, financial statements, and possibly a chronological file of the1991 U.S. Tax Ct. LEXIS 92">*100 newspaper and points to the fact that such a file is separately maintained. "Archive" is defined in Webster's Third New International Dictionary (1981) as follows:

1 * * * a: a place in which public or institutional records (as minutes, correspondence, reports, accounts) are systematically preserved b: a respository for any documents or other materials esp. of historical value (as diaries, photographs, private correspondence) * * * c: any repository or collection esp. of information * * * 2:public or institutional records, historic documents and other materials that have been preserved. * * * [Emphasis added.]

While the first1991 U.S. Tax Ct. LEXIS 92">*101 category of this definition is limited as petitioner suggests, there is no such limitation in the remaining portions of the definition nor is there any indication that the definition is limited to materials presented in chronological sequence or that an institution can have only one form of archive. Clearly, the clippings library is a "collection of information" as well as an "institutional record" that has been preserved. Furthermore, we think it 97 T.C. 445">*450 significant that "archive" is considered to include "library." See Webster's New Dictionary of Synonyms (1968). Our examination of the legislative history, which we discuss in another context, see infra page 10-11, reveals nothing which would cause us to conclude that the use of the word "archive" in the regulation constitutes an unwarranted extension of section 1221(3)(B) nor does petitioner advance any such contention. We are satisfied that copies of petitioner's newspaper maintained in topical, as well as chronological, form fall within the scope of the ordinary meaning of "archive." We also note that the phrase "similar property" is not limited in any way by the statute and that the regulations state that the specific categories1991 U.S. Tax Ct. LEXIS 92">*102 set forth therein are merely examples of some types of materials which are included within this phrase. ⁵

We now turn to petitioner's second argument, namely, that section 1221(3) does not apply to corporations. Petitioner's argument rests almost entirely on the fact that the legislative history of section 1221(3) and its predecessor section 117(a)(1)(C) of the Internal Revenue Code of 1939, added by section 210(a) of the Revenue Act of 1950, ch. 994, tit. II, 64 Stat. 932, speaks of individuals and does not once mention a corporation as falling within the "taxpayer" category.

Concededly, the objective of these statutory provisions was to insure that individuals who disposed of the product of their personal efforts should be treated as having realized ordinary income and not capital gain. This objective is clearly revealed by the legislative history of section 514(a) of 1991 U.S. Tax Ct. LEXIS 92">*103 the Tax Reform Act of 1969, Pub. L. 91-172, 83 Stat. 643, which amended section 1221(3) to exclude a letter, memorandum, or similar property whether held by the taxpayer whose personal efforts created such property or a taxpayer for whom such property was prepared or produced. The report of the House Ways and Means Committee dealing with this amendment reveals its thrust as well as the thrust of the earlier provision:

Present law. -- Under present law, copyrights and literary, musical or artistic compositions (or similar property) are not treated as capital 97 T.C. 445">*451 assets if they are held by the person whose personal efforts created the property (or by a person who acquired the property as a gift from the person who created it). Thus, any gain arising from the sale of such a book, artistic work or similar property is treated as ordinary income, rather than as capital gain. Collections of papers and letters prepared and collected by an individual (including papers prepared for the individual), however, are treated as capital assets. Therefore, a gain from the sale of papers of this nature is treated as a capital gain, rather than as ordinary income.

General reasons 1991 U.S. Tax Ct. LEXIS 92">*104 for change. -- * * *

Your committee believes that collections of papers and letters are essentially similar to a literary or artistic composition which is created by the personal effort of the taxpayer and should be classified for purposes of the tax law in the same manner. In the one case, a person who writes a book and then sells it is treated as receiving ordinary income on the sale of the product of his personal efforts (i.e., compensation for personal services rendered). On the other hand, one who sells a paper or memorandum written by or for him is treated as receiving capital gain on the sale, even though the product he is selling is, in effect, the result of his personal efforts.

Explanation of provision. -- Your committee's bill provides that letters, memorandums, and similar property (or collections thereof) are not to be treated as capital assets, if they are held by a taxpayer whose personal efforts created the property or for whom the property was prepared or produced (or by a person who received the property as a gift from such taxpayer). For this purpose, letters and memorandums addressed to an individual are considered as prepared for1991 U.S. Tax Ct. LEXIS 92">*105 him. Gains from the sale of these letters and memorandums, accordingly, are to be taxed as ordinary income, rather than as capital gains. [H. Rept. 91-413 (Part I) (1969), 1969-3 C.B. 200, 293; emphasis added.]

The report of the Senate Finance Committee contains almost identical language. S. Rept. 91-552 (1969), 1969-3 C.B. 423, 549. See also Staff of Joint Comm. on Taxation, General Explanation of the Tax Reform Act of 1969, at 171 (Comm. Print 1970). ⁶

We are not disposed to adopt petitioner's position. The structure and language of section 1221(3), see supra page 6, belies any such restrictive interpretation. Thus, subparagraph (A) is clearly limited to a taxpayer 1991 U.S. Tax Ct. LEXIS 92">*106 "whose personal efforts created such property." However, subparagraph (B) is not so limited and equally clearly covers a taxpayer who did not create the property. Similarly, 97 T.C. 445">*452 subparagraph (C) is also not limited, covering any taxpayer whose basis is determined by reference to the basis of the property in the hands of a taxpayer described in subparagraph (A) or (B). In light of the foregoing and the fact that the word "taxpayer" is broadly defined by section 7701(a)(14) as "any person subject to any internal revenue tax" and "person" is defined by section 7701(a)(1) to include a corporation, we have no hesitancy in concluding that petitioner's corporate status does not preclude it from being covered by section 1221(3).

Petitioner makes no claim that the 20 percent of the materials derived from non-Chronicle sources should be treated differently from the materials prepared for petitioner by its staff. Nor has petitioner sought to avoid the impact of section 1221(3) by arguing that its newspaper and therefore the clippings library represented the product of a business enterprise in its totality because it was derived from personal efforts (for which full value was paid and also from1991 U.S. Tax Ct. LEXIS 92">*107 other elements not involving personal efforts -- an argument as to which we express no opinion). Cf. Rev. Rul. 55-706, 1955-2 C.B. 300, superseded by Rev. Rul. 62-141, 1962-2 C.B. 182, and the comment thereon in Priv. Ltr. Rul. 8042121 (July 25, 1980). See also Commissioner v. Ferrer, 304 F.2d 125">304 F.2d 125, 304 F.2d 125">132 (2d Cir. 1962), revg. in part and remanding on other grounds 35 T.C. 617">35 T.C. 617 (1961).

It may well be that a library of the clippings of a newspaper's articles in the hands of the publisher of the newspaper ought not to be included within the scope of section 1221(3) and ought to be considered a capital asset. But this involves a question of policy and is not for us to decide given the ordinary meaning of the language used in section 1221(3)(B). Cf. Hanover Bank v. Commissioner, 369 U.S. 672">369 U.S. 672, 369 U.S. 672">687, 8 L. Ed. 2d 187">8 L. Ed. 2d 187, 82 S. Ct. 1080">82 S. Ct. 1080 (1962); Kern Co. Electrical Pension Fund v. Commissioner, 96 T.C. 845">96 T.C. 845, 96 T.C. 845">853 (1991), on appeal (9th Cir., Aug. 16, 1991).

We conclude that, by virtue of section 1221(3)(B) and the regulation thereunder (see supra pages 6 and 7), the clippings library was not 1991 U.S. Tax Ct. LEXIS 92">*108 a capital asset and that, consequently, section 170(e) prevents petitioner from obtaining a charitable 97 T.C. 445">*453 deduction for its contribution to the California Historical Society.

An appropriate order will be issued.