74 T.C. 1223 (1980), 14064-78X, The Southern Church of Universal Brotherhood Assembled, Inc. v. C.I.R.

Docket Nº:14064-78X.
Citation:74 T.C. 1223
Opinion Judge:WILBUR, Judge:
Party Name:THE SOUTHERN CHURCH of UNIVERSAL BROTHERHOOD ASSEMBLED, INC., PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
Attorney:W. L. Wooten, for the petitioner. Stephen E. Sokolic, for the respondent.
Case Date:September 10, 1980
Court:United States Tax Court
 
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Page 1223

74 T.C. 1223 (1980)

THE SOUTHERN CHURCH of UNIVERSAL BROTHERHOOD ASSEMBLED, INC., PETITIONER

v.

COMMISSIONER of INTERNAL REVENUE, RESPONDENT

No. 14064-78X.

United States Tax Court

September 10, 1980

Petitioner, having been denied tax-exempt status as a religious organization under sec. 501(c)(3), I.R.C. 1954, as amended, petitioned the Court for a declaratory judgment pursuant to sec. 7428. Petitioner's minister contributed virtually all of the church's income, and in turn, the church paid the minister's living expenses. Held: Petitioner is not entitled to tax-exempt status under sec. 501(c)(3). The administrative record does not establish that petitioner serves a public rather than a private purpose.

W. L. Wooten, for the petitioner.

Stephen E. Sokolic, for the respondent.

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OPINION

WILBUR, Judge:

This is an action for declaratory judgment pursuant to section 7428.[1] Petitioner, the Southern Church of Universal Brotherhood Assembled (TSCUBA, hereinafter referred to as the church), filed an application for recognition of exemption from Federal income tax on February 27, 1978, seeking exemption under section 501(c)(3) and claiming to be a church. Upon completion of the administrative consideration of petitioner's status, respondent on June 5, 1978, issued a proposed adverse ruling providing in part:

Based on all information submitted, it appears that part of your net earnings inure to the benefit of your minister since funds are provided to meet his personal expenses. Further, the organization appears to be serving a private rather than a public interest, since the funding of your organization almost entirely by contributions from one person, your minister, and the subsequent paying of expenses for his residence and his food expenses have the effect of reducing his Federal income tax liability.

Therefore, we have concluded that you are not an organization which is described in section 501(c)(3) of the Code. Accordingly, you are required to file income tax returns on Form 1120.

Following the issuance of the final adverse determination letter on December 12, 1978, petitioner timely filed the present action seeking a declaratory judgment that it is entitled to exemption as a church. The administrative record has been stipulated and the controlling facts are here summarized.

Petitioner was incorporated in Maryland in August 1976. The articles of incorporation recite that petitioner is organized to operate a church for religious purposes. The articles provide that the authorized number and qualification of members of the corporation, the different classes of membership, if any, and the voting and other rights and privileges of the members shall be set forth in the bylaws. Section 11 of the bylaws states that there shall be two classes of members of the corporation. Regular memberships are limited to 25 and consist of those persons elected by the board of trustees. Regular members are entitled to one vote at all membership meetings. Associate

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members include anyone affiliated with the corporation. Associate members are not entitled to vote.

Since the time of incorporation, petitioner has had the same five trustee-members, none of whom are related to each other by blood or marriage. All of the members are officers in the corporation. The president and minister is Mr. Wooten. The tenets of the church were described in its application for tax-exempt status as follows:

Our mission is to establish and operate a church dedicated to the Universality of the Brotherhood of man. Our continuing sermon will use as its text the Chesapeake Bay, its rivers and estuaries to demonstrate the indiscriminate provision of food, energy, water and minerals to all mankind resident within the tide water areas of the Bay by our bountiful Father.

The church's activities consist of meetings of members with reception, invocation, meditation, silent prayer, announcements, and benediction. No sacerdotal functions are performed, as they are not part of the tenets of the church. Petitioner also...

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