- 15 -
(1980), affd. without published opinion 647 F.2d 163 (2d Cir.
1981).
Factors emerging repeatedly as indicative of prohibited
inurement and private benefit include control by the founder over
the entity’s funds, assets, and disbursements; use of entity
moneys for personal expenses; payment of salary or rent to the
founder without any accompanying evidence or analysis of the
reasonableness of the amounts; and purported loans to the founder
showing a ready private source of credit. See, e.g., Founding
Church of Scientology v. United States, supra at 1200-1202;
Church of Eternal Life & Liberty, Inc. v. Commissioner, supra at
927-928; Church of the Transfiguring Spirit, Inc. v.
Commissioner, supra at 5-6; Basic Bible Church v. Commissioner,
supra at 857-858; Bubbling Well Church of Universal Love, Inc. v.
Commissioner, supra at 534-538; Unitary Mission Church v.
Commissioner, supra at 513-515. As this Court has noted, such
circumstances provide “an obvious opportunity for abuse of the
claimed tax-exempt status” and make incumbent “open and candid
disclosure of all facts”; otherwise, “the logical inference is
that the facts, if disclosed, would show that petitioner fails to
meet the requirements of section 501(c)(3).” Bubbling Well
Church of Universal Love, Inc. v. Commissioner, supra at 535; see
also, e.g., Founding Church of Scientology v. United States,
supra at 1201; Basic Bible Church v. Commissioner, supra at 858.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: November 10, 2007