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To come within the terms of section 501(c)(3), an
organization must be both “organized” and “operated” exclusively
for tax-exempt purposes. Sec. 1.501(c)(3)-1(a)(1), Income Tax
Regs. The presence of a single substantial nonexempt purpose
precludes exempt status for the organization, regardless of the
number or importance of exempt purposes. See Better Bus. Bureau
v. United States, 326 U.S. 279, 283 (1945). The actual purposes
of the organization, not necessarily limited to those purposes
stated in the organizing documents, are the appropriate focus.
See American Campaign Academy v. Commissioner, 92 T.C. 1053, 1064
(1989).
As stated in the regulations, the “operational test” is as
follows:
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. [Sec.
1.501(c)(3)-1(c)(1), Income Tax Regs.]
Of the exempt purposes listed in section 501(c)(3), petitioner
maintains that it operates for charitable purposes.
The term “charitable” is used in section 501(c)(3) in its
generally accepted legal sense and includes, but is not limited
to:
Relief of the poor and distressed or of the
underprivileged; advancement of religion; advancement
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