                        T.C. Memo. 1999-262



                      UNITED STATES TAX COURT



ESTATE OF VESTA K. ALWARD, DECEASED, WILLIAM R. MCPIKE, EXECUTOR,
                           Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 5830-98.                      Filed August 4, 1999.



     William R. McPike (an executor), for petitioner.

     Caroline Tso Chen, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     PARR, Judge:   Respondent determined deficiencies in

petitioner's Federal estate tax in the amount of $33,750 and

generation-skipping transfer tax in the amount of $12,320.

     All section references are to the Internal Revenue Code in

effect as of the date of decedent's death, and all Rule
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references are to the Tax Court Rules of Practice and Procedure,

unless otherwise indicated.

     After a concession,1 the sole issue for decision is whether

petitioner may deduct for estate tax purposes a bequest of

$50,000 made in decedent's will to the Emerson Cemetery (the

cemetery) located in Emerson, Missouri.     We hold it may not.

     Some of the facts have been stipulated and are so found.

The stipulated facts and the accompanying exhibits are

incorporated herein by this reference.2

                         FINDINGS OF FACT

     Petitioner is the Estate of Vesta K. Alward.     Decedent died

a resident of Fresno County, California, on April 6, 1994.

William R. McPike (McPike or the executor) is the executor of

decedent's estate.   On the date the petition in this case was

filed, McPike was a resident of Auberry, California.

     On August 9, 1990, decedent executed her last will and

testament (the will) at Bakersfield, California.     The will was

modified twice by codicils executed on May 1 and July 3, 1992.

     The will originally provided:


     1
      Petitioner conceded that a $25,000 bequest made to the
Benevolent and Protective Order of Elks No. 266 (the Elks) in
Bakersfield, California, was not deductible for estate tax
purposes.
     2
      We have considered each of the parties' arguments and, to
the extent that they are not discussed herein, find them to be
unconvincing.
                              - 3 -


               *    *     *       *   *     *     *

     FOURTH:   RESIDUE.

          A.   I make the following charitable gifts from
     the residue of my estate after payment of taxes, costs,
     and expenses of administration:

               1.   To EMERSON BAPTIST CHURCH located in
     Emerson, Missouri, to be used for historical
     preservation and maintenance, I give a sum equal to
     twenty percent (20%) of the residue of my estate but
     not to exceed Two Hundred Thousand Dollars
     ($200,000.00); and

               2.   To the BAKERSFIELD SOCIETY FOR
     PREVENTION OF CRUELTY TO ANIMALS (SPCA) located in
     Bakersfield, California, to be used for its general
     charitable purposes, I give a sum equal to ten percent
     (10%) of the residue of my estate but not to exceed One
     Hundred Thousand Dollars ($100,000.00).

          B.   I make the following gifts to individuals
     from the residue of my estate after payment of taxes,
     costs, and expenses of administration:

               1.   To the EMERSON CEMETARY [sic] located in
     Emerson, Missouri, to be used for historical
     preservation and maintenance, I give a sum equal to two
     and one-half percent (2.5%) of the residue of my estate
     but not to exceed Twenty-five Thousand Dollars
     ($25,000.00);

               *    *     *       *   *     *     *

               16. To THE BENEVOLENT AND PROTECTIVE ORDER
     OF ELKS NUMBER 266 (B.P.O.E. No. 266) in Bakersfield,
     California, I give a sum equal to two and one-half
     percent (2.5%) of the residue of my estate but not to
     exceed Twenty-five Thousand Dollars ($25,000.00);

     The first codicil to decedent's will revoked the above

referenced fourth paragraph of the will in its entirety and

replaced it with the following:
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     FOURTH:   RESIDUE.

          A.   I make the following charitable gifts from
     the residue of my estate after payment of taxes, costs,
     and expenses of administration:

               1.   To EMERSON BAPTIST CHURCH located in
     Emerson, Missouri, to be used for historical
     preservation and maintenance, I give a sum equal to
     twenty percent (20%) of the residue of my estate, but
     not to exceed Two Hundred Thousand Dollars ($200,000);

               2.   To the BAKERSFIELD SOCIETY FOR
     PREVENTION OF CRUELTY TO ANIMALS (SPCA) located in
     Bakersfield, California, to be used for its general
     charitable purposes, I give a sum equal to two and one-
     half percent (2.5%) of the residue of my estate, but
     not to exceed Twenty-five Thousand Dollars ($25,000).

               3.   To the EMERSON CEMETARY [sic] located in
     Emerson, Missouri, to be used for historical
     preservation and maintenance, I give a sum equal to
     five percent (5%) of the residue of my estate, but not
     to exceed Fifty Thousand Dollars ($50,000);

               4.   To THE BENEVOLENT AND PROTECTIVE ORDER
     OF ELKS NUMBER 266 (B.P.O.E. No. 266) in Bakersfield,
     California, I give a sum equal to two and one-half
     percent (2.5%) of the residue of my estate, but not to
     exceed Twenty-five Thousand Dollars ($25,000).

     On Schedule O of Form 706, United States Estate (and

Generation-Skipping Transfer) Tax Return, McPike deducted the

gifts to the cemetery and the Elks from the gross estate as

charitable bequests.

     The Emerson Baptist Church was established on July 18, 1846.

It has a long history in the community, and several generations

have worshiped there.
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     On February 12, 1961, a group of interested persons met at

the Emerson Baptist Church for the purpose of forming a

corporation in order to improve the community cemetery.   On March

2, 1961, a certificate of incorporation was issued to the Emerson

Cemetery Association (the association) pursuant to The General

Not For Profit Corporation Act of Missouri, ch. 355 (1991).   The

articles of incorporation, also filed March 2, 1961, state that

the purpose for which the association is organized is:

          To maintain and beautify a public burying ground;
     to buy, lease, hold and sell real or personal property
     as may be necessary and convenient for the conduct of
     the association; to accept and hold, from any source,
     as trustees, any funds, moneys, personal or real
     property which may be put in trust for any purpose
     consistent with the activities of the association and
     to fully administer such trusts; to do each and every
     thing necessary, suitable, and proper for the purpose
     of this organization.

The association priced graves and grave openings, decided the

types of stones, erected and painted a caretaker's building, and

hired labor for the general maintenance of the cemetery, such as

mowing.

     The original bylaws of the association stated that any

person interested in its objectives and aims could become a

member by declaring his or her interest and signing the

membership roll.   After the enrollment of the original members,

new members had to be approved at the regular annual members'

meeting.   The original bylaws also stated that of the six
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directors of the association, two would be members of the Emerson

Baptist Church and two would be members of the Emerson Christian

Church.

     The Emerson Baptist Church is located on land that has the

following legal description:


     All of Lots Five (5), Six (6), Seven (7) and Eight (8),
     Block Nineteen (19), Emerson, Marion County, Missouri.


     The association land has the following legal description:


     All of Block Seven (7) and the West Half of Jefferson
     Street East of said Block Seven (7), and All of Lots
     One (1), Two (2), Three (3), Four (4), Five (5) and Six
     (6), Block Ten (10), all in Emerson, Marion County,
     Missouri.

     The parcels of real property owned by the Emerson Baptist

Church are separate and distinct from the parcels of real

property owned by the association.      There is no common ownership.

                               OPINION

     The Commissioner's determinations are presumptively correct,

and the taxpayer bears the burden of proving otherwise.     See Rule

142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

     Section 2055 provides in relevant part:

          (a) In General.--For purposes of the tax imposed
     by section 2001, the value of the taxable estate shall
     be determined by deducting from the value of the gross
     estate the amount of all bequests, legacies, devises,
     or transfers--
                                - 7 -


               (1) to   or for the use of the United
          States, any   State, any political subdivision
          thereof, or   the District of Columbia, for
          exclusively   public purposes;

               (2) to or for the use of any corporation
          organized and operated exclusively for
          religious, charitable, scientific, literary,
          or educational purposes * * *

     The fact that a corporation is organized under a nonprofit

corporation statute is not sufficient for it to qualify as a

recipient pursuant to section 2055(a)(2).      See Estate of Smith v.

Commissioner, T.C. Memo. 1961-242.      It must also be organized and

operated exclusively for religious, charitable, scientific,

literary, or educational purposes.      See sec. 2055(a)(2); sec.

20.2055-1(a)(2), Estate Tax Regs.; see also Estate of Smith v.

Commissioner, supra.

     It is well established that an estate is not entitled to a

deduction for a bequest made to a nonprofit cemetery unless the

cemetery is devoted to an exclusively charitable purpose.      See

Mellon Bank, N.A. v. United States, 762 F.2d 283 (3d Cir. 1985);

First Natl. Bank v. United States, 681 F.2d 534 (8th Cir. 1982);

Child v. United States, 540 F.2d 579 (2d Cir. 1976); Gund's

Estate v. Commissioner, 113 F.2d 61 (6th Cir. 1940); Estate of

Amick v. Commissioner, 67 T.C. 924 (1977); see also Linwood

Cemetery Association v. Commissioner, 87 T.C. 1314 (1986).

     Where a cemetery is owned, operated, and adjoined by a

church as the church burial ground, and the church is operated
                                 - 8 -


exclusively for religious purposes, a bequest for the maintenance

of the cemetery qualifies for a deduction.    See Estate of

Audenried v. Commissioner, 26 T.C. 120 (1956); Rev. Rul. 67-170,

1967-1 C.B. 272.    In addition, a bequest to a cemetery owned and

operated by a city or municipality may qualify for the estate tax

charitable deduction pursuant to section 2055(a)(1).    See Rev.

Rul. 79-159, 1979-1 C.B. 308, 309.

     Petitioner argues that the cemetery is owned by the Emerson

Baptist Church.    Therefore, petitioner argues, the cemetery is a

qualified recipient under section 2055 and the estate is entitled

to a deduction.3    To establish that the cemetery is owned by the

Emerson Baptist Church, petitioner introduced a document from the

Wells Abstract Co. in Hannibal, Missouri.    The document provided:

     1.   The Emerson Baptist Church has the following legal
     description:

                  All of Lots Five (5), Six (6),
                  Seven (7) and Eight (8), Block
                  Nineteen (19), Emerson, Marion
                  County, Missouri.

          a)   Lots Five (5) and Six (6), Block
          Nineteen (19) are shown to be vested as
          follows: Elijah D. Gullion, William F.
          McPike and Edward McPike, Trustees of Baptist
          Church of Emerson, and their successors, per
          Warranty Deed dated February 4, 1879 and
          filed of record February 7, 1879 in Book 82,
          Page 16, Marion County Records.


     3
      To eliminate any confusion, petitioner acknowledged at
trial and on brief that the $50,000 bequest to the cemetery was
paid to the association.
                               - 9 -


          b)   Lots Seven (7) and Eight (8), Block
          Nineteen (19) are shown to be vested as
          follows: Trustees of the Emerson Baptist
          Church, per Quit Claim Deed dated August 1,
          1889 and filed of record January 22, 1903 in
          Book 159, Page 397, Marion County Records.

     2.   The Emerson Cemetery Association land has the
     following legal description, per the Marion County
     Assessor's Office:

               All of Block Seven (7) and the West
               Half of Jefferson Street East of
               said Block Seven (7), and All of
               Lots One (1), Two (2), Three (3),
               Four (4), Five (5) and Six (6),
               Block Ten (10), all in Emerson,
               Marion County, Missouri.

          a)   After examining the records of the
          Recorder of Deeds office, we find no
          conveyance deed filed of record transferring
          the property known as all of Block Seven (7)
          to the cemetery or the Cemetery Association,
          yet the Assessor's Office records and maps
          show this property to be part of the Emerson
          Cemetery Association lands.

          b)   The lots in Block Ten (10) are shown to
          be vested as follows: Emerson Cemetery
          Association, a Corporation, per General
          Warranty Deed dated March 2, 1961 and filed
          of record December 18, 1961 in Book 497, Page
          401, Marion County Records.

     The abstract establishes that the parcels of real property

owned by the Emerson Baptist Church are separate and distinct

from the parcels of real property owned by the association.

There is no common ownership of real property between the Emerson

Baptist Church and the association.

     Other objective facts imply an inclusive community cemetery,

rather than one owned and operated exclusively by or on behalf of

the Emerson Baptist Church.   The association held its annual
                                - 10 -

meetings in July.4   From 1961 through 1965, the meetings were

held in alternate years at the Emerson Baptist Church and the

Emerson Christian Church.   The meetings between 1961 and 1965

featured guest speakers from various other churches and members

from the community at large, including a former teacher.   From

1966 through 1976, the annual meetings were held at the community

center.   In addition, the minutes from the 1972 annual meeting

stated that "It was reported there had been over 100 letters sent

to people interested in the cemetery."    The minutes from the 1974

annual meeting also state that the county was asked to gravel the

road on the east side of the cemetery.5   These facts imply that

although the cemetery may be religiously influenced, it is not

solely a church burial ground for the Emerson Baptist Church.

     We have concluded that the Emerson Baptist Church does not

own the cemetery.    We now consider whether the association is

devoted to an exclusively charitable purpose.    Petitioner has

failed to meet its burden of proving that the association is

devoted to an exclusively charitable purpose.    See Rule 142(a);

Welch v. Helvering, supra at 115.    Accordingly, the bequest to

the association does not qualify for the estate tax charitable

deduction under section 2055.    See Mellon Bank, N.A. v. United



     4
      The date for the 1975 annual meeting was changed to Aug. 2.
     5
      Petitioner does not argue, and the record does not
indicate, that the cemetery is owned by the county.
                             - 11 -

States, supra; First Natl. Bank v. United States, supra; Child v.

United States, supra; Gund's Estate v. Commissioner, supra;

Estate of Amick v. Commissioner, supra.

     For the foregoing reasons,

                                          Decision will be entered

                                   for respondent.
