Opinion ID: 2603509
Heading Depth: 2
Heading Rank: 1

Heading: Private Benefit.

Text: The Department quotes from Hopkins, The Law of Tax-Exempt Organizations 209 (4th ed 1983), that in order to maintain tax-exempt status an organization must establish that it is not organized and operated for the benefit of private interests such as designated individuals, the creator or his or her family, shareholders of the organization, persons controlled (directly or indirectly) by such private interests, or any person having a personal private interest in the activities of the organization. [5] Though this quotation accurately reflects some of the general requirements for tax exemptions, the Department's claims of self-dealing and private gain are not borne out by the evidence. The Department asserts that Roy Masters was not forthcoming about his private income. The salient fact here is that the only testimony presented (that of Masters) establishes that Masters' personal wealth did not derive directly or indirectly from the Foundation sources. The Department states that Masters was involved in numerous boat purchases. The evidence shows (again, solely Masters' testimony) that these purchases were made with Masters' personal money, including savings from his salary as a minister with the Foundation, and not with improperly distributed Foundation resources. The Department claims that it was improper for Masters to sell his personal automobile to the corporation; however, the Department presented no evidence and makes no claim that the sale price did not represent a fair market value. Masters testified that he received gifts of personal property from radio listeners and supporters. The value of these gifts, approximately $1,500$2,000 per year, was not reported as income to Masters or to the Foundation. Masters' annual Foundation salary and housing allowance, when added to the value of these gifts, total approximately $50,000 which Masters receives as a minister of the Foundation. There is no evidence that this is an excessive salary. The Department points to expenditures made on behalf of Masters by the Foundation and claims that some appear to be personal in nature. We find the evidence insufficient, however, to support this allegation. In addition to the above, the Department points to the facts that Masters controls the board of directors which, in turn, controls the Foundation's financial affairs, that six out of nine board members are members of the Masters family, that Masters' wife Ann's salary was reduced in consideration of the relative tax consequences to her, and that the Foundation regularly consults its tax experts to maintain its exempt status. Neither private inurement nor self-dealing is necessarily inferred from any of this evidence. We find that the Foundation's nonprofit status is established.