Exogeneity vs. Endogeneity in Section 170’s Quid Pro Quo Test

This article advances an exogenous-endogenous distinction for purposes of determining and calculating quid pro quos under section 170. This test holds that exogenous benefits — benefits that arise independently of, or arise outside of, the taxing authority — are properly considered quid pro quos (and should reduce the amount deductible); whereas, endogenous benefits — benefits that arise from or within the specific federal or state taxing authority — are not quid pro quos and should not be considered in determining the amount deductible under section 170. 

The exogenous-endogenous distinction advanced by this article comports with the policy and intent of section 170, provides a way to demarcate quid pro quos in a consistent manner (irrespective of donee), and clarifies why section 170 need not consider the federal tax benefit associated with it, but must consider any associate state tax benefit.