Attorneys for Plaintiffs
NURIA SCHOENBERG NONO, RONALD R. SCHOENBERG, and LAWRENCE A. SCHOENBERG

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES

NURIA SCHOENBERG NONO, RONALD R. SCHOENBERG, LAWRENCE A. SCHOENBERG, individuals, Plaintiffs,

vs.

UNIVERSITY OF SOUTHERN CALIFORNIA, a nonprofit corporation; and DOES 1 through 10, inclusive, Defendants.

CASE NO: BC131528
(Assigned to Hon. William C. Beverly, Jr. - Department 46)

NOTICE OF HEARING ON DEMURRERS AND DEMURRERS OF PLAINTIFFS AND CROSS-DEFENDANTS NURIA SCHOENBERG NONO, RONALD R. SCHOENBERG AND LAWRENCE A. SCHOENBERG TO THE SECOND CAUSE OF ACTION IN CROSS-COMPLAINT FILED BY DEFENDANT AND CROSS- COMPLAINANT UNIVERSITY OF SOUTHERN CALIFORNIA

Date: April 15, 1996
Time: 8:30 a.m.
Dept.: 46
Trial Date: None
Motion Cutoff: None
Discovery Cutoff: None
 

TO DEFENDANT UNIVERSITY OF SOUTHERN CALIFORNIA AND ITS ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on April 15, 1996 at 8:30 a.m. in Department 46 of the Los Angeles Superior Court located at 111 N. Hill St., Los Angeles CA 90012-3117, Plaintiffs and Cross- Defendants Nuria Schoenberg Nono, Ronald R. Schoenberg and Lawrence A. Schoenberg ("Schoenbergs") shall and hereby do demur to second cause of action in the Cross-complaint filed by Defendant and Cross-Complainant University of Southern California (the "University"). Said demurrers are as follows and are based on the following grounds:

DEMURRERS TO THE SECOND CAUSE OF ACTION FOR BREACH OF TRUST, REPORT UNDER CALIFORNIA PROBATE CODE SECTION 16061, AND CONSTRUCTIVE TRUST

Pursuant to California Code of Civil Procedure ("C.C.P.") 430.10(e), the "Second Cause of Action for Breach of Trust, Report Under California Probate Code Section 16061, and Constructive Trust" fails to state facts sufficient to constitute a cause of action. The demurrers are based on the following legal grounds:

1. The second cause of action in the University's Cross- complaint is barred because there is no legal ground for the University to maintain that the purported tax consequences of the gift can alter the express terms of the Agreement. As the University has admitted, the 23-year-old written Agreement between the parties, which forms the basis for this action, explicitly provides that the copyrights and publication rights to the materials donated to the University were not included in the gift.

2. The second cause of action in the University's Cross- complaint is barred because, by law, the material objects donated to the University and the copyrighted works embodied in those objects are separate properties, and one may be donated, without at the same time donating the other. See Jarre v. Comm., 64 T.C. 183 (1975); Copyright Act, 17 U.S.C. ¤ 202. Therefore, the University is not entitled to any copyright royalties and any charitable deduction for the donation of the material objects would have been proper.

3. The second cause of action in the University's Cross- complaint is barred because the minimal rights reserved by the Schoenbergs in the Agreement concerning access, copying and participation in the governance of the Arnold Schoenberg Institute, would not have precluded a charitable deduction.

4. The second cause of action in the University's Cross- complaint is barred because the Copyright Act precludes the transfer of copyrights absent an express written agreement, which is lacking in this case. See Copyright Act, 17 U.S.C. ¤ 204.

5. The second cause of action in the University's Cross- complaint is barred by the three or four-year statute of limitations, since the University waited almost 23 years to bring its claim for royalties.

6. The second cause of action in the University's Cross- complaint is barred by the doctrine of laches, since the University waited almost 23 years to bring its claim for royalties.

7. The second cause of action in the University's Cross- complaint is barred by sections 16463 and 16464 of the Probate Code which provide that a beneficiary may not hold the trustee liable for breach of trust if the beneficiary consented to the act or omission alleged to give rise to the breach of trust. Cal. Probate Code ¤ 16463(a) and ¤ 16464(a).

These demurrers shall be based on this notice of motion and motion, the attached memorandum of points and authorities, as well as the pleadings and other papers on file herein, oral argument of counsel, and all other matters that properly come to the attention of the Court.

KATTEN MUCHIN ZAVIS & WEITZMAN

By: E. Randol Schoenberg
Attorneys for plaintiffs
NURIA SCHOENBERG NONO, RONALD R. SCHOENBERG and LAWRENCE A. SCHOENBERG
 

MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION.

In 1973, the Schoenbergs donated the extremely valuable collection of manuscripts inherited from their father, the world- renowned composer Arnold Schoenberg, to the University of Southern California. The donation was made pursuant to an Agreement, which provided that the University would build and establish an Institute to house the Schoenberg legacy, and would support and operate the Institute for the purpose of furthering research and scholarship and promoting understanding of Arnold Schoenberg's works. The Cross-complaint filed by the University of Southern California against the heirs of Arnold Schoenberg is merely the latest in a series of efforts designed to harass and annoy the Schoenbergs and to deprive them of their contractual rights. The second cause of action in the Cross-complaint seeks to recover all of the royalties received by the Schoenbergs for the copyrights to their father's works since December 1973, despite the fact that in the Agreement the copyrights were expressly excluded from the donation to the University. The second cause of action is meritless and is riddled with logical and legal impediments which cannot be overcome. It must be dismissed with prejudice and without leave to amend.

II. REQUEST FOR JUDICIAL NOTICE OF THE 1973 AGREEMENT REFERENCED IN THE CROSS-COMPLAINT.

On demurrer, the Court may consider and take judicial notice of admissions, exhibits and inconsistent statements made by the University in other pleadings in this case. Del E. Webb Corp. v. Structural Materials Co., 123 Cal.App.3d 593, 604 (1981). Therefore, pursuant to Code of Civil Procedure ¤ 430.70 and Evidence Code ¤¤ 452(d) and 453, the Schoenbergs request that the Court take judicial notice of the 1973 Agreement between the parties that forms the basis for this action, and is attached as Exhibit A to the Schoenbergs' First Amended Complaint (Ex. 1), admitted in the University's Answer (Ex. 2, | 5), and expressly referenced in (but not attached to) the Cross-complaint (Ex. 3, | 6).

III. LEGAL ARGUMENT.

Like a bad mathematical theorem, the University's second amended complaint can be disproved in a number of different ways. The crux of the University's argument is that although paragraph 1.7 of the 1973 Agreement provided that the copyrights to the donated materials were not included in the gift, fn.1 today, 23 years later, the University is entitled to all of the royalties from those copyrights (in the form of a constructive trust) because the Schoenbergs purportedly took a charitable deduction on their income taxes as a result of the gift to the University. The University's argument is so nonsensical and contrary to established law, it is sanctionable under Code of Civil Procedure ¤ 128.5.

A. The Agreement Determines The Tax Consequences, Not The Other Way Around.

The first fundamental flaw in the University's argument is that it assumes that the substance of the Agreement is determined, not by the intent of the parties or the terms of the Agreement, but by the purported tax consequences that one of the parties allegedly obtained. This is a "tail wagging the dog" type of argument. In fact, just the opposite of the University's position is true; it is the substance of the agreement that determines the tax consequences. Weiss v. Stearn, 265 U.S. 242, 254, 44 S.Ct. 490, 492 (1924) ("Questions of taxation must be determined by viewing what was actually done, rather than the declared purpose of the participants"). fn.2 Whether or not the Schoenbergs were able to take a charitable deduction from their personal income taxes as a result of the Agreement with the University has no bearing on what was actually given to the University.

There can be no dispute that the parties did not intend the University to obtain any of the copyrights to the collection. This fact alone should be dispositive of the entire cause of action. The University has pled no facts which would allow it to avoid the express provisions of the Agreement. Evidence Code section 622 (facts recited in written instrument conclusively presumed to be true); Fundin v. Chicago Pneumatic Tool Co., 152 Cal. App. 3d 951, 955, 199 Cal. Rptr. 789 (1984). Even assuming that the Schoenbergs were not entitled to a deduction for their gift, the remedy would be for the tax authorities to deny the deduction or otherwise penalize them, but not to rewrite the Agreement some 23 years later and give the copyrights to the University.

B. Copyrights Are Separate Property And Therefore Any Deduction Would Have Been Absolutely Proper.

The Schoenbergs have freely admitted that the intent of the parties was that the gift to the University would qualify as a charitable deduction on their income taxes. Indeed, the University's attorneys helped draft the Agreement with that purpose in mind. The University admits that the Schoenbergs were "entitled" to a $3 million deduction as a result of the gift made "pursuant to the Agreement." fn.3 (Ex. 3, | 6-8.) Even though it should not be relevant, and without waiving any privilege, or admitting that any such deduction was or was not taken, fn.4 and although it requires a lengthy and involved discussion of the Copyright Act and certain arcane provisions of the Internal Revenue Code, the fact is that any charitable deduction, if taken, would have been completely proper.

The University's recitation of selective portions of the Internal Revenue Code is misleading and in error. The Copyright Act states that original works of literature, art or music and their copyrights are treated as separate properties. Ownership of a copyright, or any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object. . . . 17 U.S.C. ¤ 202; Nika v. City of Kansas City, Mo., 582 F.Supp. 343, at 367 (D.C.Mo. 1983). Therefore, as explained below, a person may take a charitable deduction for the donation of the manuscript of a musical work without also donating the copyright. Charitable deductions for income tax purposes are governed by section 170 of the Internal Revenue Code at 26 U.S.C. ¤ 170 (which is incorporated into California law by Revenue & Taxation Code ¤ 17201).

Donors routinely contribute original manuscripts to libraries and universities and take charitable deduction under section 170, without at the same time giving up their copyrights to the works embodied in the original manuscripts. For example, in Jarre v. Comm., 64 T.C. 183 (1975), the composer Maurice Jarre contributed manuscripts and other related materials, such as the score to "Dr. Zhivago," to the University of Southern California in 1967 and 1968 and took a charitable deduction. "The following property rights were not conveyed as part of the 1967 and 1968 gifts: all copyrights,; rights of publication in book form; rights of serialization; magazine and newspaper rights; reprint rights; and book club rights or dramatization rights." Id. at 185. The tax court determined the fair market value of the manuscripts donated to the University and permitted a charitable deduction in the amounts of $45,000 and $31,000. Id.

Consistent with Jarre and numerous other cases, if the Schoenbergs were permitted by the IRS to take a sizable deduction for the value of the manuscripts donated to the University while at the same time retaining the copyrights, this deduction must have been considered proper by the IRS based on a review of the Agreement and the applicable law. The University's citation at paragraph 34 of the Cross- complaint to a portion of the Treasury Regulation ¤ 1.170A- 7(b)(1)(i) concerning "original historic motion picture films" is not applicable at all. The basis for this comment, and the distinction with this case, can be found in Transamerica Corp. v. U.S., 15 Cls. Ct. 420, 88-2 USTC (CCH) | 9501 (1988), aff'd by Transamerica Corp. v. U.S., 902 F.2d 1540 (Fed. Cir. 1990). In that case, the Court held that an income tax deduction could not be taken for the donation of original nitrate film negatives to the Library of Congress, since there was no market value for the highly explosive nitrate film negatives, and the Library of Congress had agreed to expend over $1 million making new negatives, to which Transamerica exclusively retained all of the commercial rights and even the exclusive right to make prints from the new negatives. In other words, since the old nitrate film negatives were not even directly viewable, and would disintegrate in a short period of time, and the new negatives could only be used by Transamerica, the Library of Congress obtained nothing but the right to expend over $1 million to restore the films for Transamerica's benefit. The Court properly denied the deduction. Transamerica, 902 F.2d 1541-45.

However, by contrast, at the same time it denied the deduction for the nitrate film negatives, the trial court permitted a deduction for the donation of a great deal of other property and memorabilia, as well as 35mm acetate negatives of 2,229 television episodes, to the University of Wisconsin under similarly restrictive terms. The United States challenged the deduction based on Transamerica's "retention of all rights for commercial exploitation of the films, together with the retained right of access to the negatives for printing purposes." Transamerica, 88-2 USTC (CCH) at 85,448. The Court permitted the deductions and found that the donor's retention of rights met the "minimal restrictions" standard set forth in Lawrence v. United States, 75-1 USTC (CCH) | 9165 (1974). The Ziv-TV original 35mm negatives, moreover, have qualities that enforce their eligibility as a gift. Unlike the nitrate negatives given to the Library, the television negatives were on acetate film, would not self-destruct over time, and did not require explosion- proof storage facilities. Properly stored, the physical film and the motion picture image thereon would last indefinitely. The University obtained materials that contributed to its establishment as a national archive in the entertainment field. For the foregoing reasons, defendant's contention that there was no gift within the meaning of I.R.S. ¤ 170 as to the Ziv original 35mm negatives is rejected. Transamerica, 88-2 USTC (CCH), at 85,448. In Lawrence, the tax court had approved a contested deduction for a gift of theatrical materials to the New York Public Library, even though the gift agreement provided that the materials could not be removed or copied without permission from the donors and the donors retained the right to access and make copies for themselves. Lawrence, 75- 1 USTC (CCH), at 86,211-4.

As in Jarre, Transamerica and Lawrence, the Schoenbergs' donation of materials to the University of Southern California certainly qualified for a charitable deduction, and the retention of copyrights and certain minimal rights regarding access and copying did not preclude such a deduction.

C. The Schoenbergs' "Reservation" of Certain Limited Rights Did Not Defeat The Gift Agreement.

The University seeks to avoid the written terms of the Agreement by stating that the Schoenbergs' retention of certain limited rights were contrary to the Internal Revenue Code, and specifically the provisions of section 170(f)(3)(B)(ii) concerning the donation of "an undivided portion . . . of each and every substantial interest or right owned by" the donor. (Ex. 3, | 33.) First, this argument is irrelevant, since the tax consequences do not determine the substance of the transaction. But second, the limited rights retained by the Schoenbergs would not have disqualified the gift from a charitable deduction. The University alleges that the Schoenbergs retained "a number of substantial rights." (Ex. 3, | 30.) These include, "reserving three of the seven seats on the ASI's Board of Advisors," "requiring advance notice of events," retaining the ability to "reject and block" courses by obtaining injunctive relief, "reserving to themselves, in their individual capacity, the copyrights and publication rights to all of the donated materials," and retaining "the right to remove the Archive materials." (Ex. 3, | 30, 33.)

As set forth above, and in the Jarre, Transamerica and Lawrence cases, the retention of copyrights, and certain minimal rights concerning access, copying and publication, does not prevent a charitable deduction. Further, the right to transfer upon material breach of the Agreement is also permitted under the Internal Revenue Code. Treasury Regulation 26 C.F.R. ¤ 1.170A- 7(a)(3) provides: A deduction shall not be disallowed under section 170(f)(3)(A) and this section merely because the interest which passes to, or is vested in, the charity may be defeated by the performance of some act or the happening of some event, if on the date of the gift it appears that the possibility that such act or event will occur is so remote as to be negligible. See paragraph (e) of ¤1.170A-1. Treasury Regulation ¤ 1.170A-1(e) provides the example of a transfer of land to a city government for as long as the land is used for a park. "If on the date of the gift the city does plan to use the land for a park and the possibility that the city will not use the land for a public park is so remote as to be negligible, [the donor] is entitled to a deduction under section 170 for his charitable contribution."

In other words, the Schoenbergs' right to transfer the collection to another institution upon a material breach of the Agreement by the University would not disqualify the gift as a charitable deduction, unless there was a more than a negligible probability that the University would materially breach the Agreement at the time the donation was made. The University does not and cannot allege such facts. Of course, even if it did, this might have been an issue for the IRS in reviewing the charitable deduction at the time it was taken, but it has absolutely no bearing on the University's current attempt to rewrite the terms of the Agreement. The Schoenbergs and the University also agreed that the Institute building would be used "exclusively" for the Institute, so that it could not be converted by the University for unrelated purposes. (Ex. 1, Ex. A, | 5.3.) As explained above, an agreement to use the donated property only for a specific purpose does not defeat a charitable deduction. 26 C.F.R. ¤ 1.170A- 7(a)(3). The Schoenbergs have steadfastly insisted that the University adhere to this restriction, as is their right. fn.5

Finally, the Agreement provides that the Schoenbergs be given three of seven seats on the Institute Board of Advisors. The University cites the gift tax regulations contained in 26 C.F.R. ¤ 25.2511-1 and -2 (Ex. 3, | 31-33) and argues that the Schoenbergs did not relinquish dominion or control of the donated materials, or if they did, the retained rights (including the copyrights) are held in a fiduciary capacity. Of course, if this were true, the Schoenbergs would hardly have had to file a lawsuit to enforce their rights to transfer the collection to a new institution. But, be that as it may, the Schoenbergs certainly did not retain dominion or control of the collection by maintaining a minority position on the Board of Advisors or by any of the other contractual rights discussed above. As section 25.2511-2(e) makes clear, a donor generally does not have a retained power over the property if the power is only exercisable in conjunction with any person having a "substantial adverse interest" in the property. Of course, that is the situation here, since with only three of seven seats the Schoenbergs do not have any power to control the Institute Board of Advisors. (Ex. 1, Ex. A, | 7.4.) The four remaining members, all to be selected by the University, are clearly "adverse" to the Schoenbergs. Further, the University's citation at paragraph 32 of the Cross-complaint to section 25.2511-1(g)(2) is not at all applicable to this case, since it only refers to the rules on when a gift by a trustee with an interest in the trust property is taxable.

The University has gone quite far afield in its attempt to rewrite the Agreement between the parties. The simple fact is that the tax consequences of the donation cannot change the terms of the Agreement for the University. In any case, the retention of the copyrights and certain minimal rights did not defeat the gift and any charitable deduction would have been absolutely proper. As a matter of law, the University's cause of action has no merit.

D. Copyrights Cannot Be Transferred Without An Express Written Agreement.

In effect, the University asks this Court to imply a transfer of the Schoenbergs' copyrights to the University, despite an express contractual provision to the contrary. However, in order to transfer ownership of a copyright in 1973, federal and state law required a written transfer instrument signed by the transferor. See 17 U.S.C. ¤ 28 (former law applicable prior to 1978); Cal. Civ. Code ¤ 982(c). fn.6 Here, the written instrument expressly excludes the copyrights from the donation. (Ex. 1, Ex. A, | 1.7.) This Court may not imply a transfer of copyrights contrary to federal law. Pamfiloff, 794 F.Supp. at 936-37 (no equitable power to transfer copyrights without written instrument).

E. The University Cannot State A Claim Under California Probate Code Section 16440.

Not content with its mis-reading of the Internal Revenue Code, the University also mistakenly relies on the California Probate Code sections concerning breach of trust. Of course, as explained above, there is no factual or legal basis for concluding that the Schoenbergs hold the copyrights to the collection materials in trust for the University. But further, any claim under the California Probate Code is untenable on the face of the Cross-complaint.

1. The Statute Of Limitations Is Three Years.

The Agreement was signed on or about December 11, 1973. (Answer, Ex. 2, | 5.) Generally, the statute of limitations on an action for breach of trust under the Probate Code is three years. Cal. probate Code ¤ 16460. If no report on an account held in trust is ever sent by the trustee, the statute of limitations is four years from the date of discovery by the beneficiary. Di Grazia v. Anderlini, 22 Cal.App.4th 1337 (1994). The Agreement between the parties is almost 23 years old. There is no statement in the Cross-complaint as to when the University learned of the purported breach of trust, but on the face of the Cross-complaint, the claim is certainly barred. Furthermore, pursuant to the Agreement, the University has never received any periodic accounts or royalties for copyrights related to the donated materials, despite the knowledge -- admitted in the Cross-complaint and the Agreement itself -- that the Schoenbergs were retaining the copyrights. Therefore, the University cannot plead around the statute of limitations and the breach of trust action must be barred.

2. The Cross-Complaint Is Barred By Laches.

The defense of laches in neglecting to enforce a trust for a long time may be raised by demurrer in an action on such a trust. Ewald v. Kierulff, 175 Cal. 363 (1917). Where a trustee for a long time treats the property as his own, with the knowledge of the beneficiary, who makes no conflicting claim, and the long delay works to the prejudice of the trustee to a third party, the beneficiary is barred of relief by laches. Fleming v. Shay, 19 Cal. 276 (1912). Here, the University waited almost 23 years before bringing its claim on an implied trust, derived from its tortured reading of the Internal Revenue Code. There is no excuse for this delay alleged in the Cross-complaint, nor can any excuse exist. The University has known for almost 23 years that the Schoenbergs retained their copyrights when they donated the collection to the University. Even if the University at one time had a claim, which it most certainly did not, the University's current claims are barred by the doctrine of laches.

3. The Breach Of Trust Action Is Barred By The Terms Of The Agreement.

Sections 16463 and 16464 of the Probate Code provide that a beneficiary may not hold the trustee liable for breach of trust if the beneficiary consented to the act or omission alleged to give rise to the breach of trust. Cal. Probate Code ¤ 16463(a) and ¤ 16464(a). Of course, that is the case in this action, since the University consented and agreed in writing in the 1973 Agreement that the Schoenbergs were not donating the copyrights related to the collection materials. (Ex. 1, Ex. A, | 1.7.) Therefore, as a matter of law, the University is barred from claiming a breach of trust based on the Schoenbergs' retention of the copyrights pursuant to the Agreement.

IV. CONCLUSION.

The second cause of action in the University's Cross- complaint is merely an attempt to further harass and annoy the Schoenbergs, who donated an extremely valuable collection of materials to the University pursuant to an Agreement which the University is now breaching. There is no legal or factual basis for any of the claims in the second cause of action. The second cause of action should be dismissed, as well as the prayer for relief (numbers 2-5) associated with it.

KATTEN MUCHIN ZAVIS & WEITZMAN

By:  E. Randol Schoenberg
Attorneys for Plaintiffs
 

fn.1 See Cross-complaint, Ex. 3, | 30, 13:27-14:1; Agreement attached to First Amended Complaint, Ex. 1, p. 32, Ex. A, | 1.7.

fn.2 All federal cases and statutes cited in this brief are included in the accompanying Appendix of Federal Authorities.

fn.3 Note that the $3 million value did not include the value of the copyrights expressly retained under the Agreement.

fn.4 Although the Schoenbergs have nothing to hide, the tax consequences of the Agreement are private matters between the Schoenbergs and the IRS, and do not concern the University or have any bearing on the express provisions of the Agreement. Webb v. Standard Oil Co. of Calif., 49 Cal.2d 509 (1957) (tax returns are privileged under California law).

fn.5 As the Schoenbergs argued successfully on two temporary restraining orders and two preliminary injunctions in this case, donors have the right to insist that the terms of their agreement be enforced. See Walton v. City of Red Bluff, 2 Cal. App. 4th 117, 136 (1991) (enforcing restriction against use of library building for non-library purposes); Save the Wellwood Memorial Library Com. v. City Council, 215 Cal. App. 3d 1003 (1989) (same); Carpenter Foundation v. Oakes, 26 Cal.App.3d 784 (1972) (upheld injunction to protect gift of literary materials for use only by "qualified" church members); Roberts v. City of Palos Verdes Estates, 93 Cal. App. 2d 545 (1949) (restrictive provisions of the gift must be "guarded zealously"); Holt v. College of Osteopathic Physicians & Surgeons, 61 Cal.2d 750, 754 (1964) ("charitable contributions must be used only for the purposes for which they were received in trust").

fn.6 The current federal copyright law, which became effective in 1978, also provides that a written agreement is required to effectuate a transfer of copyright. 17 U.S.C. ¤ 204(a); Pamfiloff v. Giant Records, Inc., 794 F.Supp. 933 (9th Cir. 1990). Further, under California law, "any ambiguity with respect to the nature or extent of the rights conveyed shall be resolved in favor of the reservation of rights by the artist or owner, unless in any given case the federal copyright law provides to the contrary." Cal. Civ. Code ¤ 988(b).

Addendum

With regard to the separate treatment of original works and their copyrights, 26 U.S.C. ¤ 2055(e)(4) provides as follows: (A) In general.--In the case of a qualified contribution [to a 501(c)(3) organization] of a work of art, the work of art and the copyright on such work of art shall be treated as separate properties for the purposes of paragraph (2). (B) Work of art defined.--For purposes of this paragraph, the term "work of art" means any tangible personal property with respect to which there is a copyright under Federal law. Paragraph (2) of section 2055(e), referred to in section 2055(e)(4)(A) above, provides that an estate tax deduction is not permitted "[w]here an interest in property (other than an interest described in section 170(f)(3)(B))" passes to one person for charitable purposes, and an interest in the same property passes to another person for non-charitable purposes. Section 170(f)(3), referred to in section 2055(e)(2), is the section relied on by the University in its Cross-complaint. Section 170(f)(3) pertains to contributions of partial interests. Section 170(f)(3)(A) provides that deductions for contributions of less than an entire interest shall be allowed only to the extent that it would be allowable as a deduction if the interest had been transferred in trust. Section 170(f)(3)(B), to which section 2055(e)(2) refers, provides certain exceptions to the partial interest rule. When one looks at these sections together, it is clear that the provisions of 2055(e)(2) and 170(f)(3)(A) have the same purpose, namely, to limit deductions for partial interests less than the entire interest owned by the donor. Both sections refer to section 170(f)(3)(B) for their exceptions. Therefore, consistent with gift and estate tax (26 U.S.C. 2055(e)(4)) and federal copyright law (17 U.S.C. ¤ 202), a copyright is separate property and the retention of a copyright in the donation of a material object does not create a partial interest under section 170(f)(3). There is no authority for the contrary result proposed by the University in its Cross-complaint.
 

In the Cross-complaint, the University also refers to regulations under 26 U.S.C. ¤ 2511 which concerns gift and estate taxes. While not completely analogous to income tax deductions, there is some overlap between gift and estate tax rules and the rules for charitable deductions for income tax. In particular, the gift and estate tax sections of the Code and the Treasury Regulations promulgated thereunder, including section 2055 (transfers for public, charitable and religious uses) and 2522 (charitable and similar gifts), can be illustrative of the similar provisions in section 170 (charitable contributions and gifts). Indeed, the code sections and regulations often cite back and forth to each other. See, e.g., 26 U.S.C. ¤ 170(f)(7)(B) ("For purposes of this paragraph [concerning reformable interests], rules similar to the rules of section 2055(e)(3) apply.")