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organize and to acquire exempt organization status for
petitioner. Dr. Oliver paid Dr. Tully $10,000 for this service.
On December 14, 1993, Dr. Tully filed petitioner's articles of
incorporation (articles) with the State of Nevada's secretary of
state. Petitioner was established as a Nevada nonprofit
corporation. Dr. Tully was one of the original five directors of
petitioner. For each of the years 1994 through 1996, petitioner
filed required documents with the Nevada secretary of state
listing its directors and officers. On each of the documents,
Dr. Tully signed as petitioner's vice president.
Dr. Tully filed the necessary forms seeking to obtain
section 501(c)(3) exempt organization status for petitioner. The
Internal Revenue Service (IRS) did not grant petitioner's request
for exempt organization status.
As petitioner failed to receive exempt organization status,
Dr. Oliver asked Dr. Tully to return his $10,000 fee. As
payment, Dr. Oliver received a note from Dr. Tully in the amount
of $10,000. To secure the note, Dr. Tully also executed a grant
deed in favor of Dr. Oliver for a house in Michigan.
When the foundation was originally formed, each of the
directors prepared and signed undated resignation letters that
were kept with the corporate books. In October 1995, Dr. Oliver
dated Dr. Tully's resignation letter October 13, 1995, and
forwarded it to the IRS. Also in October 1995, Dr. Tully sent
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Last modified: May 25, 2011