                         T.C. Memo. 1999-224



                       UNITED STATES TAX COURT



             RESOURCE MANAGEMENT FOUNDATION, Petitioner v.
              COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 23090-96X.                       Filed July 8, 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,

Income Tax Regs.    We hold it does not.   Unless otherwise stated,
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section references are to the applicable versions of the 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 mailing address was in

Ontario, California, when its petition was filed.

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

organized a corporation named "Resource Network Foundation"

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

president), David Lira (president), Salvador Lira (vice

president), Elizabeth A. Miller (secretary), and Marilyn Stewart

(vice president).   David Lira, Salvador Lira, and Mr. Tully serve

as directors on petitioner's board.

     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 vocational enhancement programs."    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."
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     On April 27, 1993, 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) A school,

college, trade school, etc., (2) other student aid, and (3) job

training, counseling, or assistance.       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.        As to

sources of financial support, the application stated:

     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
                opera-
                tion, 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.

     On December 13, 1993, the Commissioner mailed petitioner a

letter seeking clarification of the information that it had
                                - 4 -


provided him 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 March 10, 1994, the Commissioner received a response to

his letter.   The response, which was written by Mr. Tully, 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 August 2, 1994, the Commissioner mailed petitioner

another letter seeking specificity as to petitioner's

organization, activities, and operation.    The letter explained

that the Commissioner needed specific information before he could

rule that petitioner was exempt from taxation under section

501(c)(3).    The letter, citing and quoting Rev. Proc. 90-27, sec.

5.02, 1990-1 C.B. 514, 515, states 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
                               - 5 -


     expenditures. Where the organization cannot
     demonstrate to the satisfaction of the Service that its
     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.

     On October 5, 1994, petitioner responded to the

Commissioner's letter of August 2, 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 on the prior

response.

     On December 13, 1994, the Commissioner issued to petitioner

a 30-day letter reflecting the Commissioner's 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.   On February 2, 1995, petitioner notified the

Commissioner that it was appealing that determination, and

approximately 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
                                 - 6 -


     the primary purpose of the foundation, as stated in its
     oroginal [sic] application for exemption, * * * [was]
     amended to read as follows:

          "The primary purpose of the foundation will be to
     raise funds for financially strap families living
     within the immediate area of the foundation's base of
     operation with all funds being administered by other
     IRS approved 501(c)(3) charitable organizations such as
     the Salvation Army, United Way and the Catholic
     Church".

     * * * the foundation will limit its currect [sic] fund
     raising activities to raising funds directly from its
     officers, directors and their immediate familites
     [sic], friends and business associates.

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 April 9, 1996, the Commissioner mailed a letter to

petitioner explaining that it had not yet described its

operations in sufficient detail.    The letter set forth four items

of information that the Commissioner lacked as to petitioner,

including a definition of the term "financially strap" as set

forth in the second Form 1023.

     By way of an undated letter, Mr. Tully responded to the

Commissioner's letter of April 9, 1996.   The response was

generally vague as to the information sought.   As to the

definition of the term "financially strap", the letter stated:

          This organization defines the term "financially
     strap" as a temporary condition wherein the person, or
                              - 7 -


     family, under consideration is without "immediate funds
     in sufficient amount to provide the very necessities of
     life for the present day, or week, at most".

          It is not to bail out any person or family from
     their current financial psoition [sic]. Rather, it is
     a temporary means of relief that is intended to assist
     that person or family in their immediate need of foods
     and or lodging for at least a day or two, perhaps a
     week at the most until they can get on relief or find
     other assistance, if that be the case.

          It is to make sure that the person or persons in
     question do not have to go hungry over night or not
     have a safe place to stay.

          Included in this immediate need might be
     considered a doctor appointment for life threatening
     situations.

     On July 24, 1996, the Commissioner issued to petitioner a

final adverse determination letter.   The letter stated:

     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.

                           Discussion

     We must decide whether petitioner qualifies for exempt

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

same issue adversely to four other entities also formed and

represented by Mr. Tully, in cases having administrative records
                              - 8 -


virtually identical to the administrative record at hand.    See

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 also 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.

     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.
