- 11 -
102, 107 (1978)), affd. 37 F.3d 216 (5th Cir. 1994); see also
Copyright Clearance Ctr., Inc. v. Commissioner, 79 T.C. 793, 803-
804 (1982). Nonetheless, the presence of a single nonexempt
purpose, if substantial in nature, precludes exempt status,
regardless of the number or importance of truly exempt purposes.
Better Bus. Bureau v. United States, 326 U.S. 279, 283 (1945);
Redlands Surgical Servs. v. Commissioner, 113 T.C. 47, 71-72
(1999), affd. 242 F.3d 904 (9th Cir. 2001); Nationalist Movement
v. Commissioner, supra at 576; Am. Campaign Acad. v.
Commissioner, 92 T.C. 1053, 1065 (1989).
To satisfy the exclusivity requirement as it pertains to the
organizational test, the entity’s articles of organization must
limit its purposes to those which are exempt and must not
expressly empower it to engage, except in insubstantial part, in
activities not in furtherance of exempt purposes. Sec.
1.501(c)(3)-1(b)(1)(i)(a) and (b), Income Tax Regs. The articles
or applicable law must also ensure that, upon dissolution of the
organization, assets would not be distributed to its members or
shareholders. Sec. 1.501(c)(3)-1(b)(4), Income Tax Regs.
With respect to the operational test:
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.]
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: November 10, 2007