                         T.C. Memo. 1999-234



                       UNITED STATES TAX COURT



                OLIVER FAMILY FOUNDATION, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8346-96X.                        Filed July 19, 1999.



     William J. Tully (an officer), for petitioner.

     Kirk M. Paxson, for respondent.



                          MEMORANDUM OPINION


     LARO, Judge:    Petitioner petitioned the Court to declare

whether petitioner qualifies for exempt status under section

501(c)(3).    See sec. 7428.   The parties dispute whether

petitioner meets the operational test of section 1.501(c)(3)-

1(c), Income Tax Regs.    We hold it does not.    Unless otherwise

stated, section references are to the applicable versions of the
                                - 2 -


Internal Revenue Code.   Rule references are to the Tax Court

Rules of Practice and Procedure.

                             Background

     We decide this case on the basis of the entire

administrative record, see Rule 217(b)(1), which is incorporated

herein by this reference.   Petitioner's principal place of

business was in Ontario, California, when its petition was filed.

     William J. Tully is a promoter of tax-exempt entities, and

he was retained by William Shelby Oliver to form a tax-exempt

foundation under the control of the Oliver family.    Mr. Tully

formed a corporation named "Oliver Family Foundation" (petitioner

herein).    Petitioner's officers are Mr. Tully (vice president),

William Shelby Oliver (president), David S. Oliver (vice

president), Evelyn G. Oliver (secretary), and Robert W. Oliver

(treasurer).   Petitioner's officers also serve as its directors.

     Mr. Tully filed articles of incorporation for petitioner

with the Nevada secretary of state, and he prepared bylaws for

petitioner.    The articles state that petitioner's primary purpose

is "TO PROVIDE FINANCIAL ASSISTANCE FOR THE NEEDY."    The bylaws

state that petitioner's primary purpose is that set forth in the

articles.   The bylaws further state that "Nothing herein

contained shall be construed to prevent any Director from

receiving compensation for services to the Corporation rendered

in a capacity other than Director."
                                 - 3 -


     On February 22, 1994, petitioner filed with the Commissioner

a Form 1023, Application for Recognition of Exemption Under

Section 501(c)(3) of the Internal Revenue Code (application), in

which it sought recognition as a tax-exempt entity.     The

application reported that petitioner's activities were:

(1) Supplying money, goods, or services to the poor; (2) gifts or

grants to individuals; and (3) services for the aged.     The

information that petitioner provided to the Commissioner on and

with the application was vague as to the specifics of these

activities.     The application indicated that petitioner had not

currently begun any activity, except for organizational

activities.     The application stated, as to sources of financial

support, that

     At the present time this organization does not have any
     procedure for the generation of income other than * * *

                   *    *    *    *      *   *      *

          (a)     Direct donations from the general
                  public at large,

          (b)     Larger sums from various fund
                  raising activities,

          (c)     A possible "Thrift Store" type of
                  operation, and

          (d)     Donations of property (both
                  personal and real) which can be
                  turned into cash, and

          (e)     Various others as may be
                  recommended and implemented by the
                  organization.
                                - 4 -


       On June 14, 1994, the Commissioner mailed petitioner a

letter seeking clarification of the information included on and

with the application.    The letter specified the information that

the Commissioner needed to rule on petitioner's request for

exempt status and listed the name and phone number of a person at

the Internal Revenue Service to contact with any questions.

       On July 11, 1994, William Shelby Oliver responded to the

Commissioner's letter of June 14, 1994.    The response gave vague

answers to the questions set forth in the Commissioner's letter

and did not explain in detail petitioner's proposed activities or

operation.

       On September 20, 1994, the Commissioner mailed petitioner

another letter seeking specificity as to petitioner's

organization, activities, and operation.    The letter, citing and

quoting Rev. Proc. 90-27, sec. 5.02, 1990-1 C.B. 514, 515, stated

that

       "Exempt status will be recognized in advance of
       operations if proposed operations can be described in
       sufficient detail to permit a conclusion that the
       organization will clearly meet the particular
       requirements of the section under which exemption is
       claimed. A mere restatement of purposes or a statement
       that proposed activities will be in furtherance of such
       purposes will not satisfy this requirement. The
       organization must fully describe the activities in
       which it expects to engage, including the standards,
       criteria, procedures or other means adopted or planned
       for carrying out the activities, the anticipated
       sources of receipts, and the nature of contemplated
       expenditures. Where the organization cannot
       demonstrate to the satisfaction of the Service that its
                               - 5 -


     proposed activities will be exempt, a record of actual
     operations may be required before a ruling or
     determination letter will be issued. * * *" [Emphasis
     added in the letter.]

The letter asked for specific information that the Commissioner

needed to rule on petitioner's request for exemption and listed

the name and phone number of the person at the Internal Revenue

Service to contact with any questions.

     By way of an undated letter, petitioner responded to the

Commissioner's letter of September 20, 1994.   This response was

no more informative than the prior response as to the specifics

of petitioner's organization, activities, or operation.     The

latest response repeated many of the statements set forth in the

prior response.

     On December 13, 1994, the Commissioner issued to petitioner

a 30-day letter reflecting his determination that petitioner did

not qualify under section 501(c)(3) because it failed the

operational test of section 1.501(c)(3)-1(c), Income Tax Regs.

One month later, petitioner notified the Commissioner that it was

appealing that determination, and 6 months after that, Mr. Tully

met with one of the Commissioner's Appeals officers to discuss

petitioner's case.   On or about August 10, 1995, petitioner filed

with the Commissioner a second Form 1023.   Petitioner's second

Form 1023 stated that

     the primary purpose of the Oliver Family Foundation,
     for certification on its application to the IRS as a
                               - 6 -


     non-profit organization be amended, as follows: The
     primary purpose of the Oliver Family Foundation shall
     be to fund a chair (full professorship) at Overlin
     [sic] College, Oberlin, Ohio, in any department that
     the college so names.

                  *    *   *    *      *   *    *

     all fund raising carried on by the foundation, in the
     future, be raised within the immediate family, their
     friends and business associates, and not from members
     of the public at large.

The second Form 1023 did not list specifics as to petitioner's

operations, including the manner in which petitioner would effect

its primary purpose.   The second Form 1023 did not address any

safeguards against private inurement.

     On November 8, 1995, the Commissioner mailed a letter to

petitioner explaining that it had not yet described its

operations in sufficient detail.    Three months later, the

Commissioner issued to petitioner a final adverse determination

letter stating:

     Our adverse determination was made for the following
     reason(s):

          You did not meet the operational test under
          section 1.501(c)(3)-1 of the Income Tax
          Regulations. In order to qualify under Code
          section 501(c)(3), an organization must be
          both organized and operated exclusively for
          one or more purposes specified in that
          section. You did not describe your proposed
          activities in sufficient detail as required
          by section 1.501(c)(3)-1 of the Regulations.
                              - 7 -


                           Discussion

     We must decide whether petitioner qualifies for exempt

status under section 501(c)(3).   We have recently decided the

same issue adversely to six other entities formed and represented

by Mr. Tully, in cases with administrative records which were

virtually identical to the administrative record at hand.    See

Hart Found. v. Commissioner, T.C. Memo. 1999-228; Resource

Management Found. v. Commissioner, T.C. Memo. 1999-224; Share

Network Found. v. Commissioner, T.C. Memo. 1999-216; Tamaki

Found. v. Commissioner, T.C. Memo. 1999-166; Tate Family Found.

v. Commissioner, T.C. Memo. 1999-165; Larry D. Bowen Family

Found. v. Commissioner, T.C. Memo. 1999-149.    In each of those

cases, we held that the administrative record upon which the case

was to be decided did not contain enough evidence to support a

finding that the taxpayer met the operational test of section

1.501(c)(3)-1(c), Income Tax Regs.    We noted that each of the

taxpayers had failed to prosecute its case properly, including

the fact that none of the taxpayers had filed a brief, as ordered

by the Court and required by Rule 151, or had explained its

failure to do so.
                              - 8 -


     We apply the reasoning of those cases and hold that

petitioner fails to qualify for exempt status under section

501(c)(3).   Accordingly,

                                           Decision will be entered

                                      for respondent.
