Intellectual Property
Reg. 1.501(c)(3)-1(d)(5)(i) states that the determination of whether research is "scientific" for
purposes of IRC 501(c)(3) does not depend on whether such research is classified as
"fundamental" or "basic" as contrasted with "applied" or "practical." Therefore, for purposes of
IRC 501(c)(3), debates about "pure" science serve no useful purpose.
Another common distinction which is precluded is the one between the "hard" sciences, such
as physics or chemistry, and the social sciences, such as sociology or economics. Rev. Rul. 65-50,
1965-1 C.B. 231, holds that an organization engaged in research in the social sciences was
furthering educational and scientific purposes and was, therefore, entitled to exemption under IRC
501(c)(3).
Given these limitations, the scientific character of a particular activity cannot necessarily be
determined solely by reference to an accepted dictionary definition of the term "scientific."
However, courts often use such definitions as a starting place for their analysis of case problems.
The following example is from ITT Research Institute v. U.S., No. 655-80T, a U.S. Claims Court
case decided on October 15, 1985:
"The terms ’science’ and ’scientific’ are not defined in the Internal Revenue
Code, Congress apparently having chosen to rely on the commonly understood
meaning of the term. The McGraw-Hill Dictionary of Science and Technical
Terms, (Lapedes ed., 2d ed., 1978), p. 1414, defines ’science’ as a branch of
study in which facts are observed, classified, and verified; [or] involves the
application of mathematical reasoning and data analysis to natural
phenomenon.’ The Random House Dictionary of the English Language, p.
1279 (Stein ed., 1967), defines ’science’ as [knowledge, as of facts and
principles, gained by systematic study.’ Thus, in the context of this litigation,
’science’ will be defined as the process by which knowledge is systematized or
classified through the use of observation, experimentation, or reasoning. See
also Midwest Research Institute v. United States, 554 F. Supp. 1379, 1385-86
(W.D. Mo. 1983), aff’d 744 F. 2d 635 (8th Cir. 1984); Oglesby v. Chandler,
288 p. 1034, 1038, 37 Ariz. 1 (1930)."
b. Meaning of the Term "Research" as Used in Section 1.501(c)(3)-1(d)(5)
Section 1.501(c)(3)-1(d)(5)(i) states that the term "[research when taken alone is a word with
various meanings; it is not synonymous with ’scientific;’ and the nature of particular research
depends upon the purpose which it serves." In other words, the regulations do not draw any fine
distinctions among the types of information gathering that might be regarded as research. If a
questioned activity happens to be similar to an activity deemed to be "research" in a published
authority, the problem can be resolved by comparing the situation at hand to the one described in
the court case or revenue ruling. Absent such authority, specific definitional problems have to be
resolved in the context of the particular situations in which they arise.
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