IRS determination 201121025: private foundation exemption revoked for serving its founder

View official IRS release (PDF)

Plain-English summary

The IRS revoked a private foundation's exemption under IRC § 501(c)(3), effective January 1 of the redacted year. The examination found no charitable activities or payments to the charities named in the trust, while the foundation's founder received a commission related to a life insurance policy and claimed charitable contribution deductions. The foundation had no bylaws, minutes, or complete books and records, and had filed excise tax returns for failing to distribute required income. The IRS concluded that the foundation served private interests rather than operating exclusively for exempt purposes, and directed it to file Form 1041 for future tax years.

Ruling snapshot

• Question: Did the private foundation operate exclusively for charitable purposes when it made no payments to named charities and primarily served its founder's financial interests?
• Outcome: Revocation.
• Key authorities: IRC §§ 170, 501(c)(3), 507, 508, 509, 6104(c), and 7428; Treas. Reg. §§ 1.501(c)(3)-1 and 1.508-1; Rev. Rul. 59-95.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE 501.03-00
TE/GE: EO Examination
1100 Commerce Street, MC: 4920 DAL
Dallas, Texas 75242

TAX EXEMPT AND
GOVERNMENT ENTITIES

DIVISION Date: February 28, 2011

Release Number: 201121025
Release Date: 5/27/2011

LEGEND
ORG = Organization name XX = Date Address = address
Employer Identification Number:
ORG Person to Contact/ID Number:
ADDRESS Contact Numbers:
Voice:
Fax:

CERTIFIED MAIL — RETURN RECEIPT REQUESTED

Dear

In a determination letter dated November 9, 20XX, you were held to be exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code (the Code).

We have determined you have not operated in accordance with the provisions of section 501(c)(3) of the Code. Accordingly, your exemption from Federal income tax is revoked effective January 1, 20XX. You agreed to this revocation by signing Form 6018, Consent to Proposed Action — Section 7428. This is a final adverse determination letter with regard to your status under section 501(c)(3) of the Code.

We previously provided you a report of examination explaining why we believe revocation of your exempt status is necessary. At that time, we informed you of your right to contact the Taxpayer Advocate, as well as your appeal rights.

Our adverse determination was made for the following reasons:

§ 1.501(c)(3)-1(d)(ii) of the Treasury Regulations provides that an organization is not organized or operated exclusively for one or more of the purposes specified in subdivision (i) of this subparagraph unless it serves a public rather than a private interest. Thus, to meet the requirement of this subdivision, it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals, the creator or his family, shareholders of the organization, or

persons controlled, directly or indirectly, by such private interests.

The Foundation serves only the private benefit of its founder, ORG. There are no charitable activities that further any exempt purposes described in section 501(c)(3) of the Code. Accordingly, you are not operated exclusively for one or more of the exempt purposes specified in section 501(c)(3) of the Code.

Contributions to your organization are no longer deductible under section 170 of the Internal Revenue Code.

You are required to file Federal income tax returns on Form 1041, U.S. Income Tax Return for Estates and Trusts, for tax years beginning January 1, 20XX, and thereafter. Form 990-PF is also required for each tax year until Private Foundation status is terminated under IRC § 507. Those returns should be filed with the appropriate service center.

Processing of income tax returns and assessment of any taxes due will not be delayed should a petition for declaratory judgment be filed under section 7428 of the Internal Revenue Code.

If you decide to contest this determination in court, you must initiate a suit of declaratory judgment in the United States Tax Court, the United States Claims Court or the District Court of the United States for the District of Columbia before the 91st day after the date this determination was mailed to you. Contact the clerk of the appropriate court for rules for initiating suits for declaratory judgment. You may write to the Tax Court at the following address:

You also have the right to contact the office of the Taxpayer Advocate. You can call 1-877-777-4778 and ask for Taxpayer Advocate assistance. If you prefer, you may contact your local Taxpayer Advocate at:

Taxpayer Advocate assistance cannot be used as a substitute for established IRS procedures, formal appeals processes, etc. The Taxpayer Advocate is not able to reverse legal or technically correct tax determinations or extend the time fixed by law that you have to file a petition in the United States Tax Court. The Taxpayer Advocate, can, however, see that a tax matter, that may not have been resolved through normal channels, gets prompt and proper handling.

We will notify the appropriate State Officials of this action, as required by section 6104(c) of the Internal Revenue Code.

If you have any questions in regards to this matter please contact the person whose name and telephone number are shown in the heading of this letter.

Thank you for your cooperation.

Sincerely yours,

Nanette M. Downing
Director, EO Examinations

DEPARTMENT OF THE TREASURY
Internal Revenue Service

1616 Capitol Av Ste 450 Stop 4710 OMA
Omaha, NE 68102-4923

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

December 17, 2009

Taxpayer Identification Number:

ORG
ADDRESS Form:

Tax Year(s) Ended:
Person to Contact/ID Number:

Contact Numbers:
Telephone:
Fax:

Certified Mail - Return Receipt Requested

Dear

We have enclosed a copy of our report of examination explaining why we believe revocation of your exempt status under section 501(c)(3) of the Internal Revenue Code (Code) is necessary.

If you accept our findings, take no further action. We will issue a final revocation letter.

If you do not agree with our proposed revocation, you must submit to us a written request for Appeals Office consideration within 30 days from the date of this letter to protest our decision. Your protest should include a statement of the facts, the applicable law, and arguments in support of your position.

An Appeals officer will review your case. The Appeals office is independent of the Director, EO Examinations. The Appeals Office resolves most disputes informally and promptly. The enclosed Publication 3498, The Examination Process, and Publication 892, Exempt Organizations Appeal Procedures for Unagreed Issues, explain how to appeal an Internal Revenue Service (IRS) decision. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process.

You may also request that we refer this matter for technical advice as explained in Publication 892. If we issue a determination letter to you based on technical advice, no further administrative appeal is available to you within the IRS regarding the issue that was the subject of the technical advice.

Letter 3618 (04-2002)
Catalog Number 34809F

If we do not hear from you within 30 days from the date of this letter, we will process your case based on the recommendations shown in the report of examination. If you do not protest this proposed determination within 30 days from the date of this letter, the IRS will consider it to be a failure to exhaust your available administrative remedies. Section 7428(b)(2) of the Code provides, in part: "A declaratory judgment or decree under this section shall not be issued in any proceeding unless the Tax Court, the Claims Court, or the District Court of the United States for the District of Columbia determines that the organization involved has exhausted its administrative remedies within the Internal Revenue Service." We will then issue a final revocation letter. We will also notify the appropriate state officials of the revocation in accordance with section 6104(c) of the Code.

You have the right to contact the office of the Taxpayer Advocate. Taxpayer Advocate assistance is not a substitute for established IRS procedures, such as the formal appeals process. The Taxpayer Advocate cannot reverse a legally correct tax determination, or extend the time fixed by law that you have to file a petition in a United States court. The Taxpayer Advocate can, however, see that a tax matter that may not have been resolved through normal channels gets prompt and proper handling. You may call toll-free 1-877-777-4778 and ask for Taxpayer Advocate Assistance. If you prefer, you may contact your local Taxpayer Advocate at:

If you have any questions, please call the contact person at the telephone number shown in the heading of this letter. If you write, please provide a telephone number and the most convenient time to call if we need to contact you.

Thank you for your cooperation.

Sincerely,

Nanette M. Downing
Acting Director, EO Examinations

Enclosures:
Publication 892
Publication 3498
Report of Examination

Letter 3618 (04-2002)
Catalog Number 34809F

Form 886A Department of the Treasury Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/ Period Ended ORG 20XX, 20XX, & 20XX

LEGEND
ORG = Organization name XX = Date Address = address City = city State = state Founder = founder Trustee = trustee RA-1 & RA-2 = 1st & 2nd RA CO-1, CO-2, CO-3, CO-4, CO-5, CO-6, CO-7, CO-8, CO-9 & CO-10 =

1ST, 2ND, 3RD, 4TH, 5TH, 6TH, 7TH, 8TH, 9TH & 10TH COMPANIES

PRIMARY ISSUE: Whether the IRC § 501(c)(3) tax exempt private foundation status of ORG should be revoked, effective January 1, 20XX because it is not operated exclusively for tax exempt purposes.

FACTS:

Trust Document

The trust document dated August 16, 20XX, the ORG (the ‘‘Foundation’’) was created via a Declaration of Trust (the ‘“‘Declaration’’) entered into Founder as the Settlor ( aka ‘“‘Founder’”).

“The ORG is established, organized and shall be operated exclusively for charitable, educational, scientific or literary purposes, including, for such purposes, the making of distributions to organizational described in 170(c), 2055(a) and 2522(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the ““Code’’).”

The Foundation has a clause prohibiting private inurement. The trust is irrevocable.

The Foundation has a clause prohibiting engaging in any act of self-dealing IRC 4941, excessive business holdings, and all other Chapter 42 taxes.

Powers of Trustee:

“(k) To take such action in collecting the proceeds of any life insurance payable to the Trustee (after deducting all charges by way of advances, loans or otherwise) as the Trustee deems best, paying the expense thereof from the trust property; and the insurance company shall not take notice of the provisions of this Trust Agreement or see to the application of the proceeds, and the Trustee’s receipt to the insurance company shall be a complete release for any payment made; and,

(l) In the event that the Trust enters into any agreement by which funds will be borrowed to purchase a life insurance policy(ies), to enter into and perform the obligations under any and all documents created there under, to obtain the loan(s), to purchase the life insurance policy(ies), and to pledge the rights to the life insurance policy(ies) as security for repayment of the loan(s).”

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service

Page: -1-

Form 886A Department of the Treasury- Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

Upon dissolution the assets will go to:

1/3 CO-1 City, State

1/3 CO-2 City, State

1/3 CO-3 City, State

The signatures were Founder, Settlor, and Trustee, Trustee. Bylaws

The Foundation has no bylaws.

Amendments

There are no amendments to the trust documents.

Determination Letter

Determination Letter states the Foundation received exemption on November 9, 20XX as a private foundation.

Determination Application

The determination application was signed on August 16, 20XX. “The purpose of the Trust is to financially assist schools, colleges, charitable civic organizations, and the poor. It is anticipated that the income generated in the Trust will be

distributed each year. The trustee shall determine the amount and the recipients each year.”

“The trust will hold an insurance policy on the life of the donor. Upon death, the Trust will receive the proceeds of that policy.”

Minutes
There are no minutes.
Publications

The Foundation has no publications.

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -2-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

Prior Examination

The Foundation has had no prior IRS examination.

Facility

The Foundation has no facility. The mailing address is Address which is the location of the CO- 4.

Correspondence

Note in the file:

“In 20XX, Founder paid a $ fee to CO-5 to finance a single premium annuity Letter of Credit. It should have been paid by the Foundation. We will claim a $ Donation for Founder & Foundation should report $ income and $ expense RA-1 4-7-XX.”

Per e-mail on 8/2/20XX from Founder to RA-1 -
"RA-1, I put the $ in the account and it only needed § so I pulled out the $."

Forms 990

The 990PF return for 20XX shows the Foundation on the cash basis of accounting. The 20XX, 20XX, & 20XX 990PF returns indicates the Foundation is on the accrual basis of accounting.

The 990PF return for 20XX the initial return box is checked and the Section 501(c)(3) exempt private foundation box is checked.

The 20XX, 20XX, & 20XX 990PF returns show the Section 4947(a)(1) nonexempt charitable trust box checked.

Based on discussion with POA, the Foundation is on the accrual basis of accounting and is a Section 501(c)(3) exempt private foundation. The boxes were checked incorrectly on the

returns.

Books and Records

The Foundation does not have the following:

e Journal

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -3-

ean 886A Department of the Treasury - Internal Revenue Service

Schedule No. or

Explanation of Items Exhibit
Name of Taxpayer Year/Period Ended
ORG 20XX, 20XX, &
20XX

e Ledger

e Working Trial Balance

e Check Register

e Minutes

e Bank Account until late 20XX

e Bank statements for 20XX and part of 20XX

e Cancelled checks for 20XX and part of 20XX

e Paid invoices and receipts

e Annuity and life insurance contracts

Expenditures

No payments were made to 501(c)(3) organizations in 20XX, 20XX, or 20XX.

Payments made to accountant:
CO-6
20XX12 20XX12 20XX12
Ck #
Ck#
Ck #

Ck# was drawn on the CO-7 bank account on 6/21/20XX.

Ck# was drawn on the CO-7 bank account on 12/5/20XX.
Summary of 990PF Returns

20XX12 20XX12 20XX12 20XX12

Line 1, Contributions
Line 11, Other Income

Total Income

Line 16a, Legal/Accounting Fees
Line 17, Interest

Line 18, Taxes

Line 23, Other Expenses

Total Expenses

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service

Page: -4-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

Net Income (Loss)

Total Assets
Total Liabilities
Equity

Total Liabilities + Equity

Summary of 4720 Returns

Forms 4720

20XX1
2 20XX12 20XX12

Tax on undistributed income

Summary of Bank Statements

There are no bank statements prior to November 8, 20XX since there was no bank account for

ORG.

CO-5
Account;

Opened 11/8/20XX
12/1/20XX
CO-5
Account
20XX

1/1/20XX
2/1/20XX
3/1/20XX
4/1/20XX
5/1/20XX
6/1/20XX
7/1/20XX
8/1/20XX
9/1/20XX

Deposits Withdrawals Balance

Deposits Withdrawals Balance

Form 886-A (Rev. 4-68)

Department of the Treasury - Internal Revenue Service

Page: -5-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX 10/1/20XX 11/1/20XX 12/1/20XX

Loans of the Foundation

1) Loan # at CO-8, Address, City, State, beginning date 5/7/20XX, maturity date 5/7/20XX,

amount $$, stated rate, 7.75%.

The purpose of the loan is “TO REPAY ORG”.

No collateral, personal guaranty of Founder.

2) Loan # at CO-8, Address, City, State, beginning date, 11/10/XX and maturity date

11/10/21, amount $$, stated rate 7.75%.

The purpose of the loan is “PURCH IMMED. ANNUITY FOR RA-2”.

LIFE INSURANCE POLICY:

This was a premium financed policy and premiums were paid before 20XX.

20XX12
Amount paid for policy
Interest earned on the policy

Interest wired to CO-10 on the
loan

Check form CO-9 paid to CO-10
on 10-9-20XX

Paid off the loan 10-15-20XX

Difference - Loan Secured by
Foundation

Founder, Founder received a commission of $

for the purchase of the $ insurance policy in 20XX.

20XX12

Form 886-A (Rev. 4-68)

Department of the Treasury - Internal Revenue Service

Page: -6-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

The Insurance Policy was cashed in for $$ on 10-9-20XX but the loan amount was $ which was more than the policy was worth so the investment was a loss of $ which they had to obtain a loan. The policy no longer exists. This was one of the items mentioned the taxpayer has no records. Self-dealing and Jeopardy of Investments were considered.

Applicable Tax Law:

REGS, §1.501(c)(3)-1. Organizations organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals

REGS, § 1.501(c)(3)-1(d)(ii) An organization is not organized or operated exclusively for one or more of the purposes specified in subdivision (i) of this subparagraph unless it serves a public rather than a private interest. Thus, to meet the requirement of this subdivision, it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals, the creator or his family, shareholders of the organization, or persons controlled, directly or indirectly, by such private interests.

REGS, §1.501(c)(3)-1. Organizations organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals

Regs. § 1.501(c)(3)-1(c)(1) Operational test

(1) Primary activities. —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.

IRC § 509. PRIVATE FOUNDATION DEFINED.

Section 509(a) GENERAL RULE. —For purposes of this title, the term “private foundation” means a domestic or foreign organization described in section 501(c)(3) other than —

Section 509(a)(1) an organization described in section 170(b)(1)(A) (other than in clauses (vil) and (vili));

Section 509(a)(2) an organization which —

Section 509(a)(2)(A) normally receives more than one-third of its support in each taxable year from any combination of —

Section 509(a)(2)(A)(i) gifts, grants, contributions, or membership fees, and

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -7-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

Section 509(a)(2)(A)(ii) gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity which is not an unrelated trade or business (within the meaning of _section 513), not including such receipts from any person, or from any bureau or similar agency of a governmental unit (as described in _section 170(c)(1)), in any taxable year to the extent such receipts exceed the greater of $5,000 or 1 percent of the organization's support in such taxable year, from persons other than disqualified persons (as defined in _section 4946) with respect to the organization, from governmental units described in section 170(c)(1), or from organizations described in _ section 170(b)(1)(A) (other than in clauses (vil) and (viii)), and

Section 509(a)(2)(B) normally receives not more than one-third of its support in each taxable year from the sum of —

Section 509(a)(2)(B)(i) gross investment income (as defined in subsection (e)) and

Section 509(a)(2)(B)(ii) the excess (if any) of the amount of the unrelated business taxable income (as defined in section 512) over the amount of the tax imposed by section 511;

Section 509(a)(3) an organization which —

Section 509(a)(3)(A) is organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified organizations described in paragraph (1) or (2),

Section 509(a)(3)(B) is —

Section 509(a)(3)(B)(i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2),

Section 509(a)(3)(B)(ii) supervised or controlled in connection with one or more such organizations, or

Section 509(a)(3)(B)(iii) operated in connection with one or more such organizations, and Section 509(a)(3)(C) is not controlled directly or indirectly by one or more disqualified persons (as defined in section 4946) other than foundation managers and other than one or more

organizations described in paragraph (1) or (2); and

Section 509(a)(4) an organization which is organized and operated exclusively for testing for public safety.

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -8-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3).

Section 509(c) STATUS OF ORGANIZATION AFTER TERMINATION OF PRIVATE FOUNDATION STATUS. —For purposes of this part, an organization the status of which as a private foundation is terminated under section 507 shall (except as provided in section 507(b)(2)) be treated as an organization created on the day after the date of such termination.

IRC § 508(a) NEW ORGANIZATIONS MUST NOTIFY SECRETARY THAT THEY ARE APPLYING FOR RECOGNITION OF SECTION 501(c)(3) STATUS. —Except as provided in subsection (c), an organization organized after October 9, 1969, shall not be treated as an organization described in section 501(c)(3) —

Section 508(a)(1) unless it has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of such status, or

Section 508(a)(2) for any period before the giving of such notice, if such notice is given after the time prescribed by the Secretary by regulations for giving notice under this subsection.

Section 508(b) PRESUMPTION THAT ORGANIZATIONS ARE PRIVATE FOUNDATIONS. —Except as provided in subsection (c), any organization (including an organization in existence on October 9, 1969) which is described in section 501(c)(3) and which does not notify the Secretary, at such time and in such manner as the Secretary may by regulations prescribe, that it is not a private foundation shall be presumed to be a private foundation.

IRC § 508(e) GOVERNING INSTRUMENTS. —

Section 508(e)(1) GENERAL RULE. —A private foundation shall not be exempt from taxation under section 501(a)unless its governing instrument includes provisions the effects of which are

Section 508(e)(1)(A) to require its income for each taxable year to be distributed at such time and in such manner as not to subject the foundation to tax under section 4942, and

Section 508(e)(1)(B) to prohibit the foundation from engaging in any act of self-dealing (as defined in section 4941 (d)), from retaining any excess business holdings (as defined in section 4943(c)), from making any investments in such manner as to subject the foundation to tax under section 4944, and from making any taxable expenditures (as defined in _section

4945(d)).

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -9-

Form 886A Department of the Treasury - Internal Revenue Service Schedule No. or Explanation of Items Exhibit Name of Taxpayer Year/Period Ended ORG 20XX, 20XX, & 20XX

GOVERNMENT’S POSITION:

The IRC § 501(c)(3) tax exempt status of the ORG (the “Foundation”) should be revoked because it is not operated exclusively for tax exempt charitable purposes. The Foundation has no bylaws, minutes, books and records, and there were not any payments made to the charitable organizations named in the Trust document from the inception of the Foundation. There were no charitable activities to further their exempt purpose. This has been proven by the Foundation because they filed the Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code and have paid the excise tax for the failure to distribute income for December 31, 20XX to 20XX tax periods. Per Section 508(e)(1)(A), the Foundation is to operate in a manner as not to be subject to the tax under Section 4942 which required the filing of the Form 4720 for four consecutive years.

More than an insubstantial part of the Foundation’s operation is to serve the financial needs of its Founder, Founder. The Founder received commission for the purchase of the $ insurance policy of $ in 20XX which would have been reported on his personal return. Founder, the Founder, of the Trust document has taken charitable contributions on his personal tax return for the contributions given to this Foundation that has not performed any charitable acts. The total charitable contributions were taken on his 20XX to 20XX personal returns were $. There is no interest to the public only private interest to the Founder per Regs.1.501(c)(3)-1(c)(1).

TAXPAYER’S POSITION:
Taxpayer agrees with revocation.

CONCLUSION:

Accordingly, the IRC § 501(c)(3) exempt private foundation status of the ORG (the “Foundation”) should be revoked, effective January 1, 20XX, because it does not operate exclusively for exempt purposes. The Foundation was set up to distribute income to three charities. The Founder did make contributions from 20XX to 20XX. From 20XX to 20XX, the Foundation has not given one dollar to any of the named charities listed in the Trust. They failed to distribute their qualified distribution amounts. The Foundation filed and paid the excise tax for section 4942, failure to distribute income, on the Form 4720 from 20XX to 20XX. The Foundation has not operated with a charitable purpose. The only person that benefited from the Foundation was the Founder being able to take charitable contributions from 20XX to 20XX.

Form 1041, U.S. Income Tax Return for Estates and Trusts, should be filed for future tax years ending December 31, 20XX. Subsequent returns are due no later than the 15th day of the 4th month following the close of the trust’s accounting period.

Note: Form 990-PF is required for each tax year until Private Foundation status is terminated under IRC § 507.

Form 886-A (Rev. 4-68) Department of the Treasury - Internal Revenue Service Page: -10-