Tate Family Foundation - Page 2




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          section references are to the applicable versions of the Internal           
          Revenue Code.  Rule references are to the Tax Court Rules of                
          Practice and Procedure.                                                     
                                     Background                                       
               We decide this case on the basis of the entire                         
          administrative record, see Rule 217(b)(1), which is incorporated            
          herein by this reference.  Petitioner's mailing address was in              
          Ontario, California, when its petition was filed.                           
               William J. Tully is a promoter of tax-exempt entities.                 
          Michael D. Tate and his wife, Sylvia A. Goesele Tate                        
          (collectively, the Tates), attended a seminar presented by Mr.              
          Tully and retained him to organize a tax-exempt family foundation           
          for them.  Mr. Tully organized a corporation named "Tate Family             
          Foundation" (petitioner herein).  Petitioner's officers are Mr.             
          Tully (vice president), Mr. Tate (president and treasurer), Ms.             
          Goesele Tate (secretary), James O. Goethe (vice president), Karl            
          H. Goesele (chief financial adviser), and Ann Villanueva (vice              
          president).  Karl H. Goesele is Ms. Goesele Tate's father, Ann              
          Villanueva is Mr. Tate's mother, and James O. Goethe is a cousin            
          of the Tates.  Most, if not all, of petitioner's officers also              
          serve as directors on its board.                                            
               Mr. Tully filed articles of incorporation for petitioner               
          with the Nevada secretary of state, and he prepared bylaws for              
          petitioner.  The articles state that petitioner's primary purpose           





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