Gaylord is a recently retired major league baseball pitcher. After a long and successful career, Gaylord decided to write his memoirs about his many years in professional baseball. Gaylord really doesnt need the money he expects to make from publishing his memoirs (he has a lush retirement package) and intends to direct any royalties he receives from the book to his favorite qualified charity, the Aardvark Animal Rescue (yes this is an actual 501(c)(3) organization). In this regard, Gaylord is vaguely aware there may be tax issues associated with the royalty arrangement he is contemplating. While Gaylord is presently in negotiations, when he approaches you for tax advice, he has not signed a book contract with any publishers.

Primary Issue: Can Gaylord avoid taxation on any royalty income he directs to a charity? If not, can he claim some sort of tax deduction? Which would you advise him is a better solution in most circumstances? Hint: Review Helvering v. Horst (61 S. Ct. 144) and Walter J. Moore (T.C. Memo 1968-110). Also, consider Rev. Rul. 71-33, 1971-1 C.B. 30.