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New York Law School Law Review

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This essay is organized as follows: Part I describes the entity model of the corporation as developed in corporate and ethical theory, showing how that model is embodied in the Code and how variations in that model produce different conclusions about the legitimacy of the charitable contribution deduction for corporations. It discusses some issues that arise when corporate philanthropy is considered in the context of the entity theory and how the tax law might respond to those issues. Part II explains how the nexus-of-contracts conception of the corporation, applied as an analytical tool, challenges the tax law's treatment of corporate philanthropy. This more contemporary model of the corporation deconstructs the corporate entity and suggests the possibility that taxpayers other than the corporation, such as shareholders, managers, and employees, might more appropriately claim the charitable contribution deduction for corporate giving. By reconsidering the taxation of corporate philanthropy, this essay concludes that the Code, by allowing a deduction at the corporate level for charitable donations financed from the corporation's coffers, contains behavioral biases that encourage giving by corporations rather than by the individuals who make up corporations. It suggests that changes to current law might better allocate income among taxpayers, neutralize those biases, and reconcile some concerns of both corporate and tax policy.