Charity revoked for undocumented activity and personal expenses

Plain-English summary

The IRS revoked an organization's section 501(c)(3) status because it did not document activities that furthered an exempt purpose and did not substantiate that its president's expenditures served charitable purposes. The president had compensation from his employer deposited directly into the organization's bank account, while the organization paid food, travel, and other personal expenses without records connecting them to exempt activities. The examination report found that the organization had little or no documented charitable activity for multiple years, commingled its funds with the president's personal finances, and operated for private benefit and inurement. The IRS said a separate report would address possible excess benefit transactions under section 4958.

Ruling snapshot

• Question: Did the organization continue to qualify under IRC § 501(c)(3) when it lacked documented exempt activity and commingled organizational and personal funds?
• Outcome: Revocation of tax-exempt status
• Key authorities: IRC §§ 170, 501(c)(3), and 4958; Treas. Reg. § 1.501(c)(3)-1; Rev. Ruls. 68-489, 72-369, and 81-94

Full text (IRS public release)

Department of the Treasury                                      Date:
Internal Revenue Service                                        JAN 19 2023
IRS Independent Office of Appeals

Release Number: 202315011                                       Person to contact:
Release Date: 4/14/2023                                         Name:
                                                                Employee ID Number:
                                                                Phone:
                                                                Hours:
                                                                Employer ID number:

                                                                Uniform issue list (UIL):
                                                                0501.00-00

Certified Mail

Dear                         :

This is a final adverse determination that you do not qualify for exemption from federal income tax under
Internal Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3).

We have hereby revoked the favorable determination letter to you dated                         and you are no longer
exempt under IRC Section 501(a) effective                         .

We made the adverse determination for the following reasons:

You have failed to produce documents or otherwise demonstrate that you are operated exclusively for exempt
purposes. You have also failed to show that expenditures by your President were for exempt purposes.
Accordingly, you have failed to demonstrate that you are not 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. You have also failed to show that your net earnings do not inure in whole
or in part to the benefit of private shareholders or individuals.

Contributions to your organization are not deductible under IRC Section 170.

You're required to file federal income tax returns on Forms 1120, U.S. Corporation Income Tax Return. Mail
your form to the appropriate Internal Revenue Service Center per the form's instructions. You can get forms and
instructions by visiting our website at IRS.gov/forms or by calling 800-TAX-FORM (800-829-3676).

We'll make this letter and the proposed adverse determination letter available for public inspection under IRC
Section 6110 after deleting certain identifying information. We provided to you, in a separate mailing, Notice 437,
Notice of Intention to Disclose. Please review the Notice 437 and the documents attached that show our proposed
deletions. If you disagree with our proposed deletions, follow the instructions in Notice 437.

If you decide to contest this determination, you can file an action for declaratory judgment under the provisions
of IRC Section 7428 in either:

• The United States Tax Court,
• The United States Court of Federal Claims, or
• The United States District Court for the District of Columbia

Letter 1371 (Rev. 9-2022)
Catalog Number 40683R

You must file a petition or complaint in one of these three courts within 90 days from the date we mailed this
determination letter to you. You can download a fillable petition or complaint form and get information about
filing at each respective court's website listed below or by contacting the Office of the Clerk of the Court at one
of the addresses below. Be sure to include a copy of this letter and any attachments and the applicable filing fee
with the petition or complaint.

You can eFile your completed U.S. Tax Court petition by following the instructions and user guides available
on the Tax Court website at ustaxcourt.gov/dawson.html. You will need to register for a DAWSON account
to do so. You may also file your petition at the address below:

    United States Tax Court
    400 Second Street, NW
    Washington, DC 20217
    ustaxcourt.gov

The websites of the U.S. Court of Federal Claims and the U.S. District Court for the District of Columbia
contain instructions about how to file your completed complaint electronically. You may also file your
complaint at one of the addresses below:

    U.S. Court of Federal Claims
    717 Madison Place, NW
    Washington, DC 20439
    uscfc.uscourts.gov

    U.S. District Court for the District of Columbia
    333 Constitution Avenue, NW
    Washington, DC 20001
    dcd.uscourts.gov

Note: We will not delay processing income tax returns and assessing any taxes due even if you file a petition for
declaratory judgment under IRC Section 7428.

Taxpayer rights and sources for assistance
The Internal Revenue Code (IRC) gives taxpayers specific rights. The Taxpayer Bill of Rights groups these into
10 fundamental rights. See IRC Section 7803(a)(3). IRS employees are responsible for being familiar with and
following these rights. For additional information about your taxpayer rights, please see the enclosed Publication 1,
Your Rights as a Taxpayer, or visit IRS.gov/taxpayer-bill-of-rights.

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and
protects taxpayers' rights. TAS can offer you help if your tax problem is causing a financial difficulty, you've
tried but been unable to resolve your issue with the IRS, or you believe an IRS system, process, or procedure
isn't working as it should. If you qualify for TAS assistance, which is always free, TAS will do everything
possible to help you. To learn more, visit taxpayeradvocate.IRS.gov or call 877-777-4778.

Tax professionals who are independent from the IRS may be able to help you.

Low Income Taxpayer Clinics (LITCs) can represent low-income persons before the IRS or in court. LITCs can
also help persons who speak English as a second language. Any services provided by an LITC must be for free
or a small fee. To find an LITC near you:

• Go to taxpayeradvocate.IRS.gov/litmap;
• Download IRS Publication 4134, Low Income Taxpayer Clinic List, available at IRS.gov/forms; or
• Call the IRS toll-free at 800-829-3676 and ask for a copy of Publication 4134.

Letter 1371 (Rev. 9-2022)
Catalog Number 40683R

State bar associations, state or local societies of accountants or enrolled agents, or other nonprofit tax professional
organizations may also be able to provide referrals.

TAS assistance is not a substitute for established IRS procedures, such as the formal appeals process. TAS
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.

If you have questions, contact the person at the top of this letter.

                                                Sincerely,

                                                Doug O'Donnell
                                                Acting Commissioner
                                                By

                                                Valeria B Farr
                                                Appeals Team Manager

Enclosures:
Publication 1
IRS Appeals Survey

cc:

Letter 1371 (Rev. 9-2022)
Catalog Number 40683R

Department of the Treasury                                      Date:
Internal Revenue Service                                        April 26, 2022
Tax Exempt and Government Entities                              Taxpayer ID number:

                                                                Form:

                                                                Tax periods ended:

                                                                Person to contact:
                                                                Name:
                                                                ID number:
                                                                Telephone:
                                                                Fax:
                                                                Address:

                                                                Manager's contact information:
                                                                Name:
                                                                ID number:
                                                                Telephone:
                                                                Response due date:
                                                                May 26, 2022

CERTIFIED MAIL – Return Receipt Requested

Dear                         :

Why you're receiving this letter
We enclosed a copy of our audit report, Form 886-A, Explanation of Items, explaining that we
propose to revoke your tax-exempt status as an organization described in Internal Revenue Code
(IRC) Section 501(c)(3).

If you agree
If you haven't already, please sign the enclosed Form 6018, Consent to Proposed Action, and
return it to the contact person shown at the top of this letter. We'll issue a final adverse letter
determining that you aren't an organization described in IRC Section 501(c)(3) for the periods
above.

After we issue the final adverse determination letter, we'll announce that your organization is no
longer eligible to receive tax deductible contributions under IRC Section 170.

If you disagree

1.  Request a meeting or telephone conference with the manager shown at the top of this
    letter.

2.  Send any information you want us to consider.

3.  File a protest with the IRS Appeals Office. If you request a meeting with the manager or
    send additional information as stated in 1 and 2, above, you'll still be able to file a protest
    with IRS Appeals Office after the meeting or after we consider the information.

Letter 3618 (Rev. 8-2019)
Catalog Number 34809F

    The IRS Appeals Office is independent of the Exempt Organizations division and
    resolves most disputes informally. If you file a protest, the auditing agent may ask you to
    sign a consent to extend the period of limitations for assessing tax. This is to allow the
    IRS Appeals Office enough time to consider your case. For your protest to be valid, it
    must contain certain specific information, including a statement of the facts, applicable
    law, and arguments in support of your position. For specific information needed for a
    valid protest, refer to Publication 892, How to Appeal an IRS Determination on Tax-
    Exempt Status.

    Fast Track Mediation (FTM) referred to in Publication 3498, The Examination Process,
    generally doesn't apply now that we've issued this letter.

4.  Request technical advice from the Office of Associate Chief Counsel (Tax Exempt
    Government Entities) if you feel the issue hasn't been addressed in published precedent
    or has been treated inconsistently by the IRS.

    If you're considering requesting technical advice, contact the person shown at the top of
    this letter. If you disagree with the technical advice decision, you will be able to appeal to
    the IRS Appeals Office, as explained above. A decision made in a technical advice
    memorandum, however, generally is final and binding on Appeals.

If we don't hear from you
If you don't respond to this proposal within 30 calendar days from the date of this letter, we'll
issue a final adverse determination letter.

Contacting the Taxpayer Advocate Office is a taxpayer right
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can
help protect your taxpayer rights. TAS can offer you help if your tax problem is causing a
hardship, or you've tried but haven't been able to resolve your problem with the IRS. If you
qualify for TAS assistance, which is always free, TAS will do everything possible to help you.
Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

For additional information
You can get any of the forms and publications mentioned in this letter by visiting our website at
www.irs.gov/forms-pubs or by calling 800-TAX-FORM (800-829-3676).

2                                                   Letter 3618 (Rev. 8-2019)
                                                    Catalog Number 34809F

If you have questions, you can contact the person shown at the top of this letter.

                                                Sincerely,

                                                Lynn A. Brinkley
                                                Acting Director, Exempt Organizations
                                                Examinations

Enclosures:
Form 886-A
Form 6018
Publication 892
Publication 3498

3                                                   Letter 3618 (Rev. 8-2019)
                                                    Catalog Number 34809F

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

ISSUES:

1. Whether                         , continues to qualify for exemption as
   an organization described in the Internal Revenue Code (IRC) Section 501(c)(3) as a Public
   Charity.

2. Whether                         engaged in transactions for personal
   benefit rather than exclusively for charitable purposes.

FACTS:

Organizational History:

                         applied for tax-exempt status by filing Form 1023,
Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,
on                         . The Service determined on                         the organization will be classified as
exempt under 170(b)(1)(A)(vi) of the Internal Revenue Code as an organization described in
section 501(c)(3).

The organization has been filing Form                         since                         .

Operation History

During the review of the original Form 1023 dated                         , and per the bylaws,
“                         is a metropolitan and central city faith organization
designed to reinstall moral values and normative principles in culture and community through
education and vocational equipping efforts. The                         initiatives are carried out through inner
city outreach nurture and educational training modules involving youth and young adults-and
through re-integrative training and recovery support projects which involve recovering substance
abusers and displaced veterans. The primary focus of the organization and its ministry is aimed at
reviving values in culture and the re-integration of the misplaced in society and community.”

“Through these services, the organization is committed to outreach their initiatives to involve the
youth and young adults in the inner city in educational training, re-integrative training and recovery
support projects.”

The organization would conduct fundraising events and secure fundraising through foundation
grants, government grant solicitations and other methods.

Catalog Number 20810W                           Page 1                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Current Operations

On                         , conducted a phone interview with, President                         , who states that
“he works with the organization around                         hours a week, supervisors all the activities/event of the
organization and controls all the financial documents of the organization.”

The Organization has                         officers, including himself,                         , Treasurer (who is also the
Organization's power of attorney) and                         , Secretary. There are no other officers
in the Organization and there is no Board of Directors.                         controls all the Organizations
operations, fundraising activities, and financial information.

                         states, “the solicitation for fundraising has not been performed and therefore no
documents were associated with fundraising activities”.

                         also states “the organization holds                         events per month, but there is no publication or
documents on events held by the organization that further the exempt purpose. The events are
held at                         places, my residence, my church, and at my former place of employment,
                         ”.

According to                         , during the tax year of                         , he was employed at the
                         as a                         . The people that attended meetings held by the Organization at the
                         , some were patients and others were not. The Organization held
meetings during the normal operating hours of the                         .

During meetings, individuals that attended were served food and drinks supplied by the
Organization. The Organization provided documents related to food expenses. (Refer to
Attachment A, for tax year ending                         )

The Organization provided documents related to travel expenses. (Refer to Attachment B, for tax
year ending                         )

The Organization provided financial records with                         and the Organization's name on the
account.                         states “I have had direct deposits from my                         salary placed in
the account to fund the 501(c)(3) for its operations during the year                         . My personal salary was
used to fund the exemption purpose.”

                         also stated that the board approved of his personal income, to be used for funding the
Organization. He also states, “Since around                         , to the best of my knowledge, deposits from my
                         have been deposited into the organizations account. However, after being
advised by a reviewer in the year                         , the practice of deposit from the                         into
the account no longer occurs and was discontinued in                         and                         ”.

Catalog Number 20810W                           Page 2                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

The Organization has                         bank accounts; the total amount from all                         accounts, per bank statements,
shows income of $                         out of that amount in the Organization's bank account, $
                         was supplied by                         compensation from his W2 employer, as his compensation was direct
deposited into the Organizations account.

                         provided a Leave and Earrings Statement from his employer,
                         , for the month of                         of                         .

Listed below are the direct deposits from                         employer directly into the to the
Organization's bank account by date, depositor, amount:

Date                         Depositor                         Amount

Total $                         

Catalog Number 20810W                           Page 3                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Listed below are personal expenses of                         paid by the Organization's account by date,
description and amount:

Date                         Description                         Amount

Total                         $

Catalog Number 20810W                           Page 4                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

During the                         , interview the Revenue Agent asked the Treasurer (also the POA) about
the preparation of the                         tax return.                         states “he reviews the Organization's bank
statements and expense records sent to him by                         , but since the Organization's gross
receipts are less than $                         , no return is required to be filed”. When asked if the documents are
examined and questioned for any inaccurate information, by                         he replied “No, I do not
question the documents sent by                         ”.

LAW:

IRC section 170(b)(1)(A) In the case of an individual, the deduction provided in subsection (a)
shall be limited as provided in the succeeding subparagraphs.
    Any charitable contribution to—
        (i)   a church or a convention or association of churches,
        (ii)  an educational organization which normally maintains a regular faculty and
curriculum and normally has a regularly enrolled body of pupils or students in attendance at the
place where its educational activities are regularly carried on,

        (iii) an organization the principal purpose or functions of which are the providing of
medical or hospital care or medical education or medical research, if the organization is a hospital,
or if the organization is a medical research organization directly engaged in the continuous active
conduct of medical research in conjunction with a hospital, and during the calendar year in which
the contribution is made such organization is committed to spend such contributions for such
research before January 1 of the fifth calendar year which begins after the date such contribution
is made,

        (iv)  an organization which normally receives a substantial part of its support (exclusive
of income received in the exercise or performance by such organization of its charitable,
educational, or other purpose or function constituting the basis for its exemption under section
501(a)) from the United States or any State or political subdivision thereof or from direct or indirect
contributions from the general public, and which is organized and operated exclusively to receive,
hold, invest, and administer property and to make expenditures to or for the benefit of a college or
university which is an organization referred to in clause (ii) of this subparagraph and which is an
agency or instrumentality of a State or political subdivision thereof, or which is owned or operated
by a State or political subdivision thereof or by an agency or instrumentality of one or more States
or political subdivisions,

        (v)   a governmental unit referred to in subsection (c)(1)

Catalog Number 20810W                           Page 5                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

IRC section 501(c)(3) exempts from federal income tax organizations which are organized and
operated exclusively for religious, charitable, scientific, testing for public safety, literary, or
educational purposes, or to foster national or international amateur sports competition (but only if
no part of its activities involve the provision of athletic facilities or equipment), or for the prevention
of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any
private shareholder or individual, no substantial part of the activities of which is carrying on
propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in
subsection (h)), and which does not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of (or in opposition to) any candidate
for public office.

Income Tax Regulations (“Treas. Reg.”)

Treas. Reg. Section 1.501(c)(3)-1(d)(i) states that an organization may be exempt as an
organization described in 501(c)(3) if it is organized and operated exclusively for one or more of
the following purposes: religious, charitable, scientific, testing for public safety, literary,
educational, or prevention of cruelty to children or animals.

Treas. Reg. Section 1.501(c)(3)-1(a)(1) of the regulations provides that in order to be exempt as
an organization described in section 501(c)(3) of the Code, the organization must be one that is
both organized and operated exclusively for one or more of the purposes specified in that section.

Treas. Reg. Section 1.501(c)(3)-1(c)(1) of the regulations provides that 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)

Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii) is 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.

Revenue Ruling 72-369 states, in part, that in order for an organization to pass the operational
test, the organization's resources must be devoted to purposes that qualify as exclusively
charitable.

Revenue Ruling 68-489, an organization will not jeopardize its exemption under IRC 501(c)(3) if it
distributes funds to nonexempt organizations provided it retains discretion over the use of funds
for IRC 501(c)(3) purposes

Catalog Number 20810W                           Page 6                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Revenue Ruling 81-94, A “church” that was formed by a professional nurse (who is also the
“church's” minister, director, and principal officer) and that is used primarily as a vehicle for
handling the nurse's personal financial transactions is not exempt from tax under section 501(c)(3)
of the Code.

Christian Manner International Inc. V. Commissioner, 71. T.C. 661, exemption denied because
principal activity not verified as in furtherance of exempt purpose. Principle activity not an
education purpose activity.

Mysteryboy Inc. v. Comm'r, 2010 Tax Ct., exemption was denied because the corporation was
not exempt from tax under section 501(a) because it was not an organization described in section
501(c)(3).

P.L.L. Scholarship Fund v. Commissioner, court finds that the petitioner has not carried its
burden of showing that it was operated exclusively for an exempt purpose under the required
standards.

Basic Bible Church v. Commissioner, court determined that petitioner is not exempt from
Federal income tax under section 501(c)(3),1 and that petitioner is not a church described in
section 170(b)(1)(A)(i)[*847].

Southern-Church of Universal Brotherhood Assembled v. Commissioner, concluded that the
organization is not described as in section 501(c)(3) of the Code. The organizations 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.

TAXPAYER'S POSITION:

Issue 1:

The Organization stated they qualify for exemption under 501(c)(3).

Issue 2:

The Organization has not provided a response to engaging in transactions for personal benefit
rather than exclusively for charitable purposes.

Catalog Number 20810W                           Page 7                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Government Position:

Issue 1:

The Organization does not qualify for exemption under IRC section 501(c)(3) as organized and
operated exclusively for one or more of the following purposes: religious, charitable, scientific,
testing for public safety, literary, educational, or prevention of cruelty to children or animals.

The Organization has stated that they do not have documentation that furthers the exempt
purpose of the Organization and did not provide any documentation that furthers exemption.

The Organization received income in the form of compensation from the Officer's Employer. The
Officer had W2 compensation direct deposited into the Organization's bank account from tax
years                         , through                         .

The Service section 501(c)(3) tax exempt status of                         
should be revoked because it is not being operated exclusively for tax exempt purposes pursuant
to the requirements set forth in section 1.501(c)(3)-1(c)(1) of the regulations.

The Organization's lack of activities for more than three years also stands in contrast to section
1.501(c)(3)-1(c)(1) of the regulations in that the lack of operations is evidence that there is no
furtherance of any exempt purpose.

In contrast to section 1.501(c)(3)-1(d)(ii) of the regulations which calls for an organization to be
organized and operated for a public rather than a private benefit, the Organization has not
operated or engaged in any charitable activities in the last                         years based on lack of activities
performed by the organization with relation to exempt purposes.

The Organization does not pass the operational test as specified in section 1.501(c)(3)-1(c) of the
regulations because the lack of activities means they were not operated exclusively for one or
more exempt purposes. To be considered as operating exclusively for exempt purposes, the
Organization would have had to engage primarily in activities which accomplish one or more of
such exempt purposes as specified in section 501(c)(3) of the Code.

The Organization's activity relates to “Revenue Ruling 81-94”; where the principal officer formed
an organization, and it was used primarily as a vehicle for handling the Officer's personal financial
transactions.

As the Organization has not operated exclusively for charitable purposes for an extended period,
the tax-exempt status of the Organization should be revoked.

Catalog Number 20810W                           Page 8                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Issue 2:

The President co-mingled his personal income with the income of the Organization, by having his
W2 compensation direct deposited into the Organizations bank account every month from tax
years                         to                         .

Section 501(c)(3) prohibits private benefit and inurement. Co-mingling of the funds between an
exempt organization and the president's personal finances may result in the funds of the
organization inuring to the benefit of a private individual. Although, according to “Revenue Ruling
68-489”, an organization will not jeopardize its exemption under IRC 501(c)(3) if it distributes funds
to nonexempt organizations provided it retains discretion over the use of funds for IRC 501(c)(3)
purposes.

However, during the                         , interview, the President stated that the Organization has no
documents to further an exemption purpose and the reason for depositing non-exempt income in
the Organization's account, was to fund the Organization.

In the Organizations                         bank accounts, the combine income was $                         , with                         % been provide
from                         personal compensation from his W2 employer,                         % coming from interest and
other income that cannot be detected. The documents provided by the Organization to show the
income received, did not display that they retain discretion over the use of the funds.

The Organization provided spread sheets of expenses relating to food and travel, along with credit
card payment receipts that were listed on the bank statements. It is unknown if the expenses
incurred for food and travel were paid with the Organization's credit card. There was no given
explanation for food and travel by the Organization, to show how these expenses further the
Organizations exemption's purpose.

All the Organization's gross income and expenses were not used exclusively for charitable
purposes of the organization as described in Treas. Reg. Section 1.501(c)(3)-1(c)(1). All of the
income and expenses incurred by the Organization was used for the benefit of private interests.

Catalog Number 20810W                           Page 9                           www.irs.gov             Form 886-A (Rev. 5-2017)

Form 886-A                 Department of the Treasury – Internal Revenue Service                 Schedule number or
                                      Explanations of Items                                      exhibit

                                      Tax Identification Number (last 4                         Year/Period ended
                                      digits)

Conclusion:

Issue 1

                         is not operating exclusively as a Charitable
Foundation as described in IRC Section 501(c)(3). The Organization's activities are not consistent
with been organized and operated exclusively for religious, charitable, scientific, testing for public
safety, literary, or educational purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the provision of athletic facilities or
equipment), or for the prevention of cruelty to children or animals.

The Organization's net earnings are a private benefit as the income and expenses serve no
exempt purpose of the organization. The net earnings of the Organization serve as personal
income and expenses of the Officer,                         .

The Organization should be revocation and organization should file a Form 1120 for tax year
                         and all subsequent years.

Issue 2

                         is not operating exclusively as Charitable Foundation
as described in IRC Section 501(c)(3); since all its income and expenses were used for personal
purposes.

The issue of excess benefit transaction pursuant to IRC section 4958 for payments to a
disqualified person will be addressed in a separate report.

As a result, the organization has inurement that serves private interest, we have proposed
revocation for tax year                         and all subsequent years.

Catalog Number 20810W                           Page 10                          www.irs.gov             Form 886-A (Rev. 5-2017)