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Los Angeles, March 25, 1952 30-11 80 Mr# Calvin M, Gory: Enclosed is copy of letter from Mr, House dated March 20, 1952, and attached letter from Mr. Sutton dated March 19, 1952, dealing with the question of whether it would be advisable to make a sale or dona­tion of a water system to the Las Vegas Valley Water District, I am doing some research on the question asked by Mr, House and should like to have the bene­fit of any Nevada decisions bearing upon the question of whether the Las Vegas Valley Water District is a political subdivision of the State of'Nevada-within the meaning of Section 23(q)(l) of the Internal Reve­nue Code and whether, if the transfer of the proper­ties were made to the District, the transfer could be said to be made exclusively for public purposes. As you know, the above mentioned section of the Internal Revenue Code permits corporations to deduct from their gross income contributions or gifts for the use of "the United States, any state, territory, or political subdivision thereof, • . • , for exclusively public purposes". The regulations under this section found in Title 26, Code of Federal Regulations, Sec­tion 29.23(q-l), refer to the regulations under Sec­tion 22(b)(4) of the Internal Revenue Code for the definition of "political subdivision". The last men­tioned section provides that there is excluded from the gross income of taxpayers interest upon "the ob­ligations of a state, territory or any political sub­division thereof". The regulations under this section provide as follows: "The term Apolitical subdivision,* within the meaning of the exemption, denotes any division off- the State or Territory, which is a municipal corporation, or to which has been delegated the right to exercise part of the sovereign fower of the fftate or Territory, As thus de-? ined, a political subdivisionof a State or