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unrelated individuals selected from the community which SNI
serves. According to the IRS, this request for modification was
made to ensure that SNI would serve the interests of the public,
rather than the interests of a particular individual. Valfer
refused the IRS request, stating that he does not trust any Board
of Directors that might vote him out of the Salvation Navy, Inc.
On June 16, 2000, the IRS issued an initial adverse
determination letter to SNI. SNI appealed to the IRS Office of
Appeals, which issued to SNI a final adverse determination on
April 4, 2001, denying tax-exempt status to SNI under section
501(c)(3).
Discussion
Petitioner SNI bears the burden of proving that it is a
section 501(c)(3) organization. See Rule 217(c)(2)(A). In order
to meet this burden, SNI must show that the administrative record
contains sufficient evidence to overcome the grounds stated in
the notice of final adverse determination. See Nationalist
Movement v. Commissioner, 102 T.C. 558, 572 (1994), affd. 37 F.3d
216 (5th Cir. 1994); At Cost Servs., Inc. v. Commissioner, T.C.
Memo. 2000-329. The following reason was given in the Notice:
Your organization is not organized or operated
exclusively for charitable purposes. Additionally,
part of the net earnings of your organization inure to
the benefit of a private individual.
Section 501(a) provides tax-exempt status for organizations
described in section 501(c). Section 501(c)(3) includes
“Corporations, and any community chest, fund, or foundation,
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