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in that it was operated for the benefit of private interests and
a part of net earnings inured to the benefit of its founder
Ms. Fennell.
OPINION
I. General Rules--Exempt Status
Section 501(a) exempts from Federal income taxation
organizations described in section 501(c). Among the
organizations so described are those set forth in section
501(c)(3):
(3) Corporations * * * organized and operated
exclusively for religious, charitable, scientific,
testing for public safety, literary, or educational
purposes, or to foster national or international
amateur sports competition * * * , or for the
prevention of cruelty to children or animals, no part
of the net earnings of which inures to the benefit of
any private shareholder or individual * * *
In order to be exempt under section 501(c)(3), an
organization must be both organized exclusively for one or more
of the exempt purposes specified in the section, known as the
organizational test, and operated exclusively for such purposes,
known as the operational test. See sec. 1.501(c)(3)-1(a)(1),
Income Tax Regs. Failure to satisfy either test forecloses a
section 501(c)(3) exemption. Id.
In application of the organizational and operational tests,
“exclusively” does not mean “‘solely’” or “‘absolutely without
exception’”. Nationalist Movement v. Commissioner, 102 T.C. 558,
576 (1994) (quoting Church in Boston v. Commissioner, 71 T.C.
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Last modified: November 10, 2007