TAX COURT AFFIRMS DENIAL OF NONPROFIT'S EXEMPT STATUS.

Elizabeth Edwards, for respondent.

[2] Unless otherwise indicated, all section references are to sections of the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure.

[4] Petitioner's Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, was filed on May 14, 2001. Petitioner supplemented the information contained in Form 1023 through correspondence with respondent during the remainder of 2001 and into early 2002.

[5] The original articles of incorporation were restated on September 13, 2001, and January 9, 2002, to provide:

[10] An organization may seek tax-exempt status before it begins operations, but the administrative record must set forth sufficient detail about its prospective operations to provide the basis for the granting of the exemption. Nationalist Movement v. Commissioner, 102 T.C. 558, 572 (1994), affd. 37 F.3d 216 (5th Cir. 1994); La Verdad v. Commissioner, 82 T.C. 215, 219 (1984); World Family Corp. v. Commissioner, 81 T.C. 958 (1983); Church of Boston v. Commissioner, 71 T.C. 102, 105 (1978); Hancock Acad. v. Commissioner, 69 T.C. 488, 492 (1977).

[11] Petitioner has, for the most part, provided only generalizations in response to repeated requests by respondent for more detail on prospective activities. As petitioner states in its reply brief:

[12] The single activity for which petitioner did provide detail, raising money to award a prize to a manufacturing company that develops and builds a reliable car, was determined by respondent to promote the private interests of for-profit companies as opposed to public charitable purposes. In addition, respondent found that the activity would not lessen the burdens of the Government. Petitioner concedes that its activity will not lessen the burdens of the Government but contends it will relieve the poor and distressed by providing transportation less costly to purchase and maintain.

[13] Section 501(a)¹ exempts organizations described in section 501(c)(3) from Federal income tax. In order to qualify for an exemption under section 501(c)(3), the organization must be not only organized exclusively for exempt purposes but also operated exclusively for exempt purposes. Quality Auditing Co. v. Commissioner, 114 T.C. 498, 504 (2000). Respondent conceded that petitioner is organized for exempt purposes but denies that petitioner will be operated exclusively for exempt purposes.

[14] Exempt purposes are broadly stated in section 501(c)(3) to include religious, charitable, scientific, and educational purposes. "Charitable" is further defined in section 1.501(c)(3)-1(d)(2), Income Tax Regs., as follows:

[16] A nonexempt purpose can arise if an organization benefits private interests. See Am. Campaign Acad. v. Commissioner, supra at 1066. Section 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs., states:

[17] Car and truck manufacturers, who will receive the prize, are not members of a charitable class. Cf. Aid to Artisans, Inc. v. Commissioner, supra at 215. After examining the administrative record, we have no reasonable basis, other than speculation by petitioner, to conclude that the poor and distressed or any other charitable class would receive any benefit from the activity proposed. We conclude that the administrative record fully supports respondent's determination that petitioner is not entitled to exemption under section 501(c)(3).

[18] We have considered all of petitioner's contentions, arguments, and requests that are not discussed herein, and we conclude that they are without merit or irrelevant.

[19] To reflect the foregoing,

[20] Decision will be entered for respondent.