South Community Association - Page 9

                                        - 9 -                                         
          prove that it falls within the terms of the quoted text.5  See              
          Harding Hosp., Inc. v. United States, 505 F.2d 1068, 1071 (6th              
          Cir. 1974); see also Fla. Hosp. Trust Fund v. Commissioner, 103             
          T.C. 140, 146 (1994) (taxpayers generally bear the burden of                
          proving that the Commissioner improperly revoked an exemption               
          from tax under section 501), affd. 71 F.3d 808 (11th Cir. 1996).            
               In order for petitioner to prevail on the issue that we                
          decide herein, we must find that petitioner was both organized              
          and operated exclusively for one or more exempt purposes.  See              
          sec. 1.501(c)(3)-1(a), Income Tax Regs.  We focus on the                    
          statute’s requirement as to operation because the parties do not            
          dispute the statute’s requirement as to organization.  Under the            
          regulations, 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).”  Sec.                      

               5 Sec. 7491(a) was added to the Code by the Internal Revenue           
          Service Restructuring and Reform Act of 1998, Pub. L. 105-206,              
          sec. 3001(c), 112 Stat. 727, effective for court proceedings                
          arising from examinations commencing after July 22, 1998.  Sec.             
          7491(a)(1) provides that the burden of proof shifts to the                  
          Commissioner in specified circumstances.  We need not and do not            
          decide whether sec. 7491(a)(1) applies in the setting of a                  
          declaratory judgment action such as we have here.  Petitioner in            
          its posttrial brief makes no mention of sec. 7491(a)(1), and we             
          conclude that, even if sec. 7491(a)(1) did apply in the setting             
          of a declaratory judgment action, it would not apply here.  See,            
          e.g., sec. 7491(a)(2) (sec. 7491(a)(1) applies with respect to an           
          issue only if the taxpayer establishes certain requirements); see           
          also Mediaworks, Inc. v. Commissioner, T.C. Memo. 2004-177.                 

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011