MEMORANDUM OPINION
TIETJENS, Judge: Respondent determined that petitioner is not exempt from Federal income tax under section 501(c)(3), 1 and that petitioner is not a church. The prerequisites for declaratory judgment having been satisfied, 2 petitioner has, pursuant to section 7428, invoked the jurisdiction of this Court.
The issues for our determination are (1) whether petitioner is organized exclusively for one or more exempt purposes delineated in section 501(c)(3); (2) whether petitioner is operated exclusively for one or more of those exempt purposes; (3) whether any part of petitioner's net earnings inures to the benefit of a private shareholder or individual; and (4) whether petitioner is a church as described in section 170(b)(1)(A)(i).
The case was submitted on a stipulated administrative record under Rules 122 and 217, Tax Court Rules of Practice and Procedure. The stipulated record, which is assumed to be true for the purpose of this proceeding, is incorporated herein by reference.
Petitioner, an unincorporated organization established in 1974 as the Work of Life Tabernacle and subsequently changing its name to Truth Tabernacle, has its principal meeting place in Richmond, Maine. Prior to respondent's issuing an adverse ruling letter to petitioner, no Application for Recognition of Exemption was filed. 3
On March 9, 1979, respondent issued to petitioner a final adverse ruling letter which denied petitioner tax-exempt status for the following reasons:
that Truth Tabernacle fails to meet the organizational test of Section 1.501(c)(3)-1(b) of the Regulations ince its assets are not dedicated to an exempt purpose.
Truth Tabernacle also fails to meet the operational test set forth in section 1.501(c)(3)-1(c) of the Regulations since it has not established that it is a church. No information has been furnished to show that the organization conducts religious services and has a regular congregation of persons who meet regularly. You maintain neither a seminary nor a bible school, and your members are drawn from many churches and remain affiliated with those churches. It appears that you seek converts to the principals [sic] of christianity generally.
Moreover, Truth Tabernacle fails to meet the operational test since the information submitted indicates that it is serving the private interest of the Reverend Judah Gatling, its General Overseer, who virtually operates and controls the church at his will. In addition it also serves the private interest of other trustees.
Furthermore, Truth Tabernacle has not maintained proper financial records so that it can be determined that its expenditures are used for charitable purposes. No information has been provided with respect to income and contributions received by you. The general statement of expenses for 1976 that was provided by Truth Tabernacle only discloses that the majority of money spent by the organization was for maintenance and upkeep of the property.There is, as a result, insufficient information to determine whether Truth Tabernacle is operated exclusively for any exempt purpose.
There are no written articles of association or corporate charter. Under the bylaws, the General Overseer, a position held by the Reverend Judah Gatling (Gatling), determines qualifications for active and associate membership, the suspension of any member, the number of meetings (apart from one annual meeting, undescribed in nature, on March 10th of each year), the nomination and removal of officers, the composition of the Mothers of Israel Committee who are in charge of cleaning and maintaining the association's building, who instruct young women in the Word of God, and who are in charge of the children's and ladies' activites. Essentially, the General Overseer's duties, according to the organization's bylaws, are "to supervise, control and direct the affairs of the association." Gatling is also a trustee of petitioner and has exclusive control of petitioner's property.The bylaws lack a statement regarding petitioner's purpose. 4
Unaffiliated with any organized religious denomination, petitioner does not subscribe to any formal creed or dogma. Petitioner has approximately 56 members, but members are not required to meet any formal conditions or to renounce their former, or other, religious beliefs.
Petitioner's beliefs include the infallibility of the Christian Bible. Gatling states, "We do not have a creed but Christ. No law but love. No book but the Bible." Evangelical services are conducted on a weekly basis.
Petitioner is situated on Highway 201, in Richmond, Maine on 5 acres of land. Gatling resides in an apartment of one of the buildings on a rent-free basis. Petitioner, in addition, pays all the utilities for this apartment. Petitioner also provided three of its other trustees with cabins for use as their residences although each was responsible for paying his own maintenance and utilities costs. 5 No information was provided to show the amount of time and effort spent by Gatling and the other trustees for petitioner's work.
Petitioner performs Christian rites, such as baptisms, communion services, foot washing, weddings and burials, but Gatling has no civil authority to perform marriage ceremonies. Ministers are not required to attend any particular Bible school but must be well versed in the scriptures and holy living. Petitioner maintains no religious school or seminary for the ordination of ministers.
Petitioner maintains no formal accounting records, no records of contributions and no documentation to verify ownership of its property or the use of its funds. Petitioner furnished respondent only with a statement of expenditures for 1976, which showed that most payments were for utilities, mortgage, automobile, construction, insurance, and maintenance of its buildings.
Petitioner, which has not submitted a brief, maintains that it is a church and an organization described in section 501(c)(3).
Respondent, by contrast, contends that petitioner fails both the organizational and operational tests of section 501(c)(3) because (1) it is not organized exclusively for one or more exempt purposes; (2) it does not operate exclusively for one or more exempt purposes; and (3) all or part of its net earnings inure to the benefit of a private shareholder or individual.
We agree with respondent.
Petitioner has the burden of proving respondent's determination is wrong. Hancock Academy of Savannah, Inc. v. Commissioner, 69 T.C. 488 (1977); Rule 217(c)(2)(i), Tax Court Rules of Practice and Procedure.
In order to be exempt under section 501(c)(3), an organization must qualify under both the organizational and the operational tests. Sec. 1.501(c)(3)-1(a)(1), Income Tax Regs.
Under the organizational test, an organization's articles of organization 6 must limit its purposes to one or more exempt purposes and not specifically empower the organization to engage, except insubstantially, in activities not in furtherance of one or more exempt purposes. Sec. 1.501(c)(3)-1(b)(1), Income Tax Regs. An organization will not meet the organizational test unless its assets are dedicated to an exempt purpose; upon dissolution, its assets must, by operation of law or because of a provision in the organization's articles, be distributed for one or more exempt purposes and not distributed to its members or shareholders. Sec. 1.501(c)(3)-1(b)(4), Income Tax Regs.
Petitioner has submitted no charter or articles of association. Its bylaws, moreover, do not state its purpose or provide for the distribution of its assets upon dissolution.Unlike in Elisian Guild, Inc. v. United States, 412 F.2d 121 (1st Cir. 1969), 7 petitioner's bylaws do not "clarify any ambiguity that might otherwise exist in the Articles," id. at 124; rather they provide little, if any, information to distinguish petitioner as an exempt organization as defined by section 501(c)(3).
While the circuit court in Elisian Guild, Inc., supra, has held that an organization's purpose may be inferred from its operation, petitioner has not shown through its operations 8 that its purpose is a religious or charitable one.
The laws of the State of Maine provide that a charitable organization incorporated under that state's laws must devote its assets upon dissolution only to charitable purposes. Me. Rev. Stat. ch. 13, sec. 939 (1980 Supp.). Petitioner, however, is not incorporated under the laws of theState of Maine. Petitioner, moreover, has not established that it exists for and serves a charitable purpose. Under these circumstances, we find that petitioner's assets are not dedicated to an exempt purpose as required by sec. 1.501(c)(3)-1(b)(4), Income Tax Regs.
Likewise, petitioner has failed the operational test.The operational test requires that an organization's activities be primarily those which accomplish one or more exempt purposes as specified in section 501(c)(3) and not, except to an insubstantial part, those which do not further an exempt purpose. Sec. 1.501(c)(3)-1(c)(1), Income Tex Regs. Moreover, an organization is not operated exclusively for one or more exempt purposes unless it serves a public rather than private interest. Sec. 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs. See Baltimore Health and Welfare Fund v. Commissioner, 69 T.C. 554 (1978); CallawayFamily Association v. Commissioner, 71 T.C. 340 (1978). An organization must, therefore, prove that it is not operated for the benefit of private interests of individuals such as the creator and his family. Basic Bible Church v. Commissioner, 74 T.C. 846 (1980).
Gatling, as General Overseer, has exclusive control of petitioner's property. Petitioner maintains no formalized set of accounting records, no records of contributions and no documentation of the use of its funds. The statement of expenditures furnished for 1976 discloses that most of petitioner's expenditures for that year were made for utilities, mortgage payments, and maintenance of property used by Gatling. With this paucity of information, petitioner has failed to prove that it serves a public rather than a private purpose. See Church of The Transfiguring Spirit, Inc. v. Commissioner, 76 T.C. 1 (1981); Southern Church of Brotherhood v. Commissioner, 74 T.C. 1223 (1980); Western Catholic Church v. Commissioner, 73 T.C. 196 (1979), affd. in an unpublished opinion 631 F.2d 736 (7th Cir. 1980).
Finally, the petitioner has not proved that all or a part of its net earnings did not inure to the benefit of a private shareholder or individual as required by section 1.501(c)(3)-1(c)(2), Income Tax Regs. Net earnings may include more than net profits; additionally, the amount or extent of such benefit is not determinative of a finding of private inurement. Unitary Mission Church v. Commissioner, 74 T.C. 507 (1980), affd. in an unpublished opinion F.2d (2d Cir., Feb. 17, 1981). A private shareholder or individual is a person who has a personal and private interest in the activities of the organization. Sec. 1.501(a)-1(c), Income Tax Regs.
Gatling and two other members of petitioner, Lawrence Liebau and Richard F. Taylor, live rent free on church property. Petitioner pays all of Gatling's expenses and he has unrestricted control over petitioner's property.
The information in this administrative record thus fails to demonstrate that no part of petitioner's earnings inure to the private benefit of individuals. See Church of The Transfiguring Spirit, Inc. v. Commissioner, supra; Bubbling Well Church v. Commissioner, 74 T.C. 531 (1980), on appeal (9th Cir., July 7, 1980); Unitary Mission Church v. Commissioner, supra.
Because petitioner fails both the organizational and operational tests, 9 it clearly does not qualify for exemption from Federal taxation under sections 501(a) and 501(c)(3).
An appropriate decision will be entered.