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purposes. “Charitable” is further defined in section
1.501(c)(3)-1(d)(2), Income Tax Regs., as follows:
The term “charitable” is used in section 501(c)(3) in its
generally accepted legal sense and is, therefore, not to be
construed as limited by the separate enumeration in section
501(c)(3) of other tax-exempt purposes which may fall within
the broad outlines of “charity” as developed by judicial
decisions. Such term includes: Relief of the poor and
distressed * * * lessening of the burdens of Government;
To operate “exclusively” for exempt purposes does not mean
that there must be an absence of nonexempt purposes. Quality
Auditing Co. v. Commissioner, supra at 504; Nationalist Movement
v. Commissioner, supra at 576. A single activity might be
directed to both an exempt and a nonexempt purpose. Our inquiry
must determine whether the nonexempt purpose is incidental and
not substantial. If the nonexempt purpose is substantial, the
organization will not satisfy the operational test regardless of
the number or importance of truly exempt purposes. See Better
Bus. Bureau v. United States, 326 U.S. 279, 283 (1945); Am.
Campaign Acad. v. Commissioner, 92 T.C. 1053, 1065 (1989); Church
of Scientology v. Commissioner, 83 T.C. 381 (1984), affd. 823
F.2d 1310, 1315 (9th Cir. 1987); see also sec. 1.501(c)(3)-
1(c)(1), Income Tax Regs.
A nonexempt purpose can arise if an organization benefits
private interests. See Am. Campaign Acad. v. Commissioner, supra
at 1066. Section 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs.,
states:
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