At Cost Services, Inc. - Page 6

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          also receive 10 percent of the gross profit from the sale of the            
               Financial information included in petitioner’s application             
          for exempt status shows that it had occupancy expenses in 1994 of           
          $6,240 and itemized expenses of $2,230.  The occupancy expenses             
          were for an apartment that served as the office of petitioner,              
          the office of the LLC, and the personal living quarters of                  
          Fondel.  Petitioner intends to obtain a building, either by lease           
          or gift, where it can perform job training and job placement                
          services in one location.                                                   
               On April 4, 1995, petitioner submitted its Form 1023,                  
          Application for Recognition of Exemption Under Section 501(c)(3)            
          of the Internal Revenue Code.  Respondent issued an initial                 
          adverse determination on October 23, 1995.  Petitioner appealed             
          to the Internal Revenue Service Office of Appeals, which gave a             
          final adverse determination on April 17, 1996, denying tax-exempt           
          status to petitioner under section 501(c)(3).  The Commissioner’s           
          reasons for denial stemmed from the determination that operations           
          of petitioner serve the private interests of Fondel, petitioner             
          is operated for private benefit rather than exclusively for                 
          public purposes, and petitioner has failed to establish that it             
          is operated exclusively for exempt purposes.  Petitioner                    
          challenges that determination in this action for declaratory                

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