KJ's Fund Raisers, Inc. - Page 5

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                  501(c)(3).  You have failed to establish that your                                  
                  operation will not result in more than incidental                                   
                  private benefit.  Furthermore, for the period prior to                              
                  July 1, 1994, you have failed to establish that your                                
                  net earnings will not inure to the benefit of private                               
            Petitioner seeks a declaratory ruling that, as of July 1, 1994,                           
            petitioner is exempt from taxation under section 501(c)(3).                               
                  Section 501(a) provides that "An organization described in                          
            subsection (c) * * * shall be exempt from taxation under this                             
            subtitle".  Subsection (c)(3) includes "Corporations * * *                                
            organized and operated exclusively for * * * charitable * * *                             
            purposes * * * no part of the net earnings of which inures to the                         
            benefit of any private shareholder or individual".                                        
                  Section 1.501(c)(3)-1(a)(1), Income Tax Regs., requires that                        
            for an entity to have exempt status it "must be both organized                            
            and operated exclusively for one or more of the purposes                                  
            specified" in section 501(c)(3).  Respondent has conceded that                            
            petitioner meets the organizational test.  Petitioner must                                
            demonstrate that it operates exclusively for exempt purposes.                             
                  Sec. 1.501(c)(3)-1(c)(1), Income Tax Regs., provides:                               
                  An organization will be regarded as "operated                                       
                  exclusively" for one or more exempt purposes only if it                             
                  engages primarily in activities which accomplish one or                             
                  more of such exempt purposes specified in section                                   
                  501(c)(3).  An organization will not be so regarded if                              
                  more than an insubstantial part of its activities is                                
                  not in furtherance of an exempt purpose.                                            
            An organization is not operated exclusively for exempt purposes                           
            unless it serves "a public  rather than a private interest."                              

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