Source: http://openjurist.org/670/f2d/104/bubbling-well-church-of-universal-love-inc-v-commissioner-of-internal-revenue
Timestamp: 2016-12-11 04:15:48
Document Index: 505180916

Matched Legal Cases: ['§ 501', '§ 501', '§ 501', '§ 501', '§ 170', '§ 501']

670 F2d 104 Bubbling Well Church of Universal Love Inc v. Commissioner of Internal Revenue | OpenJurist
670 F. 2d 104 - Bubbling Well Church of Universal Love Inc v. Commissioner of Internal Revenue HomeFederal Reporter, Second Series 670 F.2d.
670 F2d 104 Bubbling Well Church of Universal Love Inc v. Commissioner of Internal Revenue 670 F.2d 104
82-1 USTC P 9258
BUBBLING WELL CHURCH OF UNIVERSAL LOVE, INC., Petitioner-Appellant,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
No. 80-7358.
Argued and Submitted Nov. 12, 1981.Decided Nov. 27, 1981.
Bubbling Well Church of Universal Love (the Church) appeals the Tax Court's denial, 74 T.C. 531, of its application for tax exempt status under I.R.C. § 501(c)(3). Because the Church failed to show that no part of its net income inured to the benefit of private individuals, we affirm.
A precondition to I.R.C. § 501(c)(3) tax exempt status is that no part of an organization's net earnings inure to the benefit of a private person. Salaries may be paid, but unreasonable salaries constitute inurement of benefit. Birmingham Business College v. Commissioner, 276 F.2d 476, 480 (5th Cir. 1960). The Church supplied no evidence showing that the payments to its controlling members were reasonable. We agree with the Tax Court that the potential for abuse created by the Harberts' control of the church required open and candid disclosure of facts bearing on the exemption application. See Parker v. Commissioner, 365 F.2d 792, 799 (8th Cir. 1966); Founding Church of Scientology v. United States, 412 F.2d 1197, 1201-02 (Ct.Cl.1969) cert. denied, 397 U.S. 1009, 90 S.Ct. 1237, 25 L.Ed.2d 422 (1970) (unexplained transaction with controlling individual supports finding of inurement of benefit). Basic Unit Ministry of Alma Karl Schurig v. United States, 511 F.Supp. 166 (D.D.C.1981). A taxpayer must demonstrate that he is entitled to a § 501(c) exemption. Senior Citizens Stores, Inc. v. United States, 602 F.2d 711 (5th Cir. 1979); Christian Echoes National Ministry, Inc. v. United States, 470 F.2d 849 (10th Cir. 1972), cert. denied, 414 U.S. 864, 94 S.Ct. 41, 38 L.Ed.2d 84 (1973).
Because the Church is disqualified from § 501(c)(3) status on the inurement criterion, we do not reach the issues of whether it was a church within the meaning of I.R.C. § 170(b)(1)(A)(i) or whether it met the additional § 501(c)(3) requirements of being organized and operated exclusively for charitable purposes