77 T.C. 221">*221 OPINION

This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's motion to dismiss for lack of jurisdiction. After a review of the record, we agree with and adopt his opinion which is set forth below. ¹

1981 U.S. Tax Ct. LEXIS 86">*92 77 T.C. 221">*222 OPINION OF THE SPECIAL TRIAL JUDGE

Cantrel, Special Trial Judge: Petitioner brought an action for declaratory judgment pursuant to section 7428 and Rule 211, Tax Court Rules of Practice and Procedure, ² on the ground that respondent failed to make a determination with respect to petitioner's continuing classification as a nonprivate foundation as described in section 509(a)(1).

Petitioner is a testamentary trust established under the Will of J. David Gladstone, who died on June 14, 1971. As directed by Mr. Gladstone's will, petitioner was created as a medical research organization for the conduct of research in blood and vascular diseases.

On March 22, 1973, the trustees for petitioner submitted an Application for Recognition of Exemption, Form 1023, to the District Director, Internal Revenue Service, Los Angeles, 1981 U.S. Tax Ct. LEXIS 86">*93 Calif. The District Director, by letter dated June 7, 1973, as modified by letter dated June 15, 1973, determined that petitioner was an exempt organization under section 501(c)(3) and that petitioner was not a private foundation as described in section 509(a) because it was a medical research organization described in section 170(b)(1)(A)(iii).

On August 4, 1977, upon examination of petitioner's information returns submitted for the taxable years 1974 and 1975, the District Director, by letter to petitioner, proposed to revoke its status under section 509(a)(1) and determine that petitioner was a private foundation as described in section 509(a) and was not an operating foundation described in section 4942(j)(3) for the taxable years 1974 and 1975. Petitioner on September 2, 1977, filed a written protest with the District Director in Los Angeles, appealing and disagreeing with the proposed revocation of exempt status and requesting a conference with respondent's Regional Office. On November 18, 1977, a conference with the Regional Office was held. The Regional Office decided adversely to petitioner by letter dated March 14, 1978. On April 11, 1978, petitioner requested respondent's1981 U.S. Tax Ct. LEXIS 86">*94 National Office to review the Regional Office's determination and hold a conference. The National Office accepted petitioner's appeal 77 T.C. 221">*223 on July 14, 1978. A conference with the National Office was held on November 20, 1978. Petitioner was notified on January 23, 1980, by the National Office that it had decided the appeal adversely to petitioner and that the case had been remanded to the District Director, Los Angeles, for issuance of a final adverse determination letter. Petitioner has fully cooperated with the respondent throughout the appeal process in timely and expeditiously submitting all required documents in furtherance of its request for determination and in supplying all additional information requested by respondent.

On March 3, 1980, petitioner filed a petition in this Court seeking a declaratory judgment pursuant to section 7428. Therein, petitioner requests the Court to find that petitioner is not a private foundation described in section 509(a) but is an exempt organization described in section 509(a)(1) and section 170(b)(1)(A)(iii). On April 15, 1980, respondent filed a motion to dismiss for lack of jurisdiction, and it is that motion which is presently1981 U.S. Tax Ct. LEXIS 86">*95 before the Court for decision.

Subsequent to the filing of the petition in this Court, additional administrative action took place. On March 4, 1980, petitioner sent a letter and additional materials to the District Director in Los Angeles seeking reconsideration of his proposed adverse determination. That request was denied on May 28, 1980, on which date respondent issued a final adverse determination letter which determined that petitioner's private foundation status would be deemed to commence on January 1, 1976. Thereafter, petitioner filed a petition with this Court on August 25, 1980, based upon the final adverse determination letter, which was assigned docket No. 16256-80X.

At the outset, we think it necessary to discuss the effect of the issuance of the final adverse determination letter after the petition for declaratory judgment was filed with this Court. By his argument that an actual controversy did not exist at the time the petition in this case was filed but did mature into an actual controversy upon the issuance of the May 28, 1980, letter, respondent would have us hold that the petition filed in this case is premature. We do not agree with respondent that this1981 U.S. Tax Ct. LEXIS 86">*96 case is mooted by the issuance of that final adverse determination letter.

This Court has jurisdiction over declaratory judgment 77 T.C. 221">*224 actions concerning exempt organizations as provided in sections 7442 and 7428. We will discuss hereinafter the jurisdictional requirements of section 7428, which we have found that petitioner has met. We have held in some circumstances that once this Court obtains jurisdiction, events subsequent to the filing of the petition do not divest us of jurisdiction. See, e.g., McGowan v. Commissioner, 67 T.C. 599">67 T.C. 599 (1976) (jurisdiction is not removed through an attempted concession by one party); Fotochrome, Inc. v. Commissioner, 57 T.C. 842">57 T.C. 842 (1972) (under the Bankruptcy Act, the Tax Court was not deprived of jurisdiction because of a bankruptcy filing subsequent to the petition in the Tax Court being filed); Main-Hammond Land Trust v. Commissioner, 17 T.C. 942">17 T.C. 942 (1951), affd. 200 F.2d 308">200 F.2d 308 (6th Cir. 1952) (jurisdiction remains unimpaired despite the fact that the trust was terminated after the filing of the petition); Bowman v. Commissioner, 17 T.C. 681">17 T.C. 681 (1951)1981 U.S. Tax Ct. LEXIS 86">*97 (jurisdiction is not removed through waiver or disclaimer by respondent); Richter v. Commissioner, 16 B.T.A. 936">16 B.T.A. 936 (1929) (subsequent payment of additional tax did not deprive the Board of jurisdiction).

This rule is consistent with the general procedure in the Federal court system. "In general, federal jurisdiction depends on the facts as they exist at the time suit is commenced, and is not conferred or divested by later changes." Lanigan v. Boston Terminal Corp., 112 F. Supp. 957">112 F. Supp. 957, 112 F. Supp. 957">958 (D. Mass. 1953); Fairview Park Excavating Co. v. Al Monzo Construction Co., 560 F.2d 1122">560 F.2d 1122 (3d Cir. 1977). The same rule is applicable to the case presently under review. Thus, the issuance of a final adverse determination letter after the filing of a valid petition does not moot the original petition. See B.H.W. Anesthesia Foundation, Inc. v. Commissioner, 72 T.C. 681">72 T.C. 681 (1979). In that case, as in the one presently before us, the petition was filed on the basis of a failure to make a determination, and immediately after a petition was filed with this Court, respondent issued an1981 U.S. Tax Ct. LEXIS 86">*98 unfavorable ruling. The subsequent issuance of the unfavorable ruling did not divest the Court of jurisdiction in B.H.W. Anesthesia Foundation, nor does it so divest the Court in this case.

77 T.C. 221">*225 Section 7428(a)³ requires (1) an actual controversy (2) involving a determination or a failure to make a determination by the Secretary (3) with respect to an organization's initial or continuing qualification or classification as an exempt organization, a qualified charitable contribution donee, a private foundation, or a private operating foundation.

1981 U.S. Tax Ct. LEXIS 86">*99 Respondent insists that no actual controversy exists. Sec. 7428(a). "Actual controversy" is not defined by the Code nor by the legislative history of section 7428. However, guidance can be found in section 7476 to which the legislative history of the declaratory judgment provisions now under consideration made frequent reference. ⁴

Section 7476 created a declaratory judgment remedy for 77 T.C. 221">*226 organizations and individuals seeking qualification of certain retirement plans. When Congress was considering creating a declaratory judgment remedy with respect to the retirement plans, the House report defined what constituted an "actual controversy" within the meaning of section 7476. 1981 U.S. Tax Ct. LEXIS 86">*100 That section requires that the plan be put into effect, that notice be given to all interested parties, and that administrative remedies be exhausted. H. Rept. 93-807 (1974), 1974-3 C.B. (Supp.) 236, 342-344.

Similarly, section 7428 requires a request be made by the organization to the Secretary of the Treasury for a determination and the exhaustion of administrative remedies. Sec. 7428(b)(2).

However, respondent contends that an actual controversy requires a final adverse determination by him, implying that a proposed revocation is not sufficient. Respondent argues that, since petitioner's status at the time of filing its petition in this Court was that of a nonprivate foundation, petitioner seeks to obtain by declaratory judgment a status it already has, and he cites two cases in support for his position: Ohio County & Independent Agriculture Societies v. Commissioner, 610 F.2d 448">610 F.2d 448 (6th Cir. 1979), affg. an order of this Court, cert. denied 446 U.S. 965">446 U.S. 965 (1980); CREATE (Christian, Research, Education, Action, Technical Enterprise), Inc. v. Commissioner, 634 F.2d 803">634 F.2d 803 (5th Cir. 1981),1981 U.S. Tax Ct. LEXIS 86">*101 affg. an order of this Court.

In Ohio County, petitioner, which had an existing classification as a section 501(c)(3) organization, sought reclassification as a section 170(b)(1)(A)(v) organization as an instrumentality of the State of Ohio. The Court of Appeals for the Sixth Circuit agreed with our Court, concluding that we did not have jurisdiction under section 7428 because there was no actual controversy under section 501(c)(3). The Court's decision in Ohio County went to whether the controversy fit within the specific classifications Congress enumerated in section 7428(a)(1)(A) through (C). ⁵

In CREATE, petitioner's status was not in issue, but the question was whether a certain contributor was subject to a 2-percent 77 T.C. 221">*227 limitation on a charitable contribution. The case did not involve petitioner's initial or continuing classification.

Although petitioner retained its nonprivate foundation status throughout the administrative process, its continuing classification is unquestionably1981 U.S. Tax Ct. LEXIS 86">*102 in issue. If petitioner does not succeed in its timely and expeditious administrative efforts, its nonprivate foundation status will be revoked. Indeed, its classification was revoked more than 32 months after it began its administrative efforts as is manifest by the issuance of the final adverse determination letter sent petitioner on May 28, 1980. ⁶ An actual controversy existed on the date petitioner filed its petition herein.

Our interpretation of the meaning of "actual controversy" also comports with the general rule followed by the Federal courts. This Court has looked to the standards imposed by article III courts on previous occasions before allowing standing. See, e.g., Thompson v. Commissioner, 71 T.C. 32">71 T.C. 32, 71 T.C. 32">38-39 (1978). In Maryland Casualty Co. v. Pacific Coal & Oil Co., the Supreme Court defined actual controversy within the meaning of1981 U.S. Tax Ct. LEXIS 86">*103 the Declaratory Judgment Act, 28 U.S.C. sec. 400 (now sec. 2201): "Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." 312 U.S. 270">312 U.S. 270, 312 U.S. 270">273 (1941).

Having found that an actual controversy exists, the question of whether the petition herein was validly filed depends on whether petitioner has made a request for a determination and has exhausted its administrative remedies.

Respondent makes an argument that a final determination with respect to petitioner's continuing classification has not been made as required by section 7428(a). He maintains that section 7428(a)(1) is satisfied only by the issuance of a final adverse determination letter. Therefore, he asserts that, because no final adverse determination letter was issued before the filing of the petition in this Court, petitioner's nonprivate foundation status has not been revoked. Respondent relies on New Community Senior Citizen Housing Corp. v. 77 T.C. 221">*228 , 72 T.C. 372">72 T.C. 372 (1979).1981 U.S. Tax Ct. LEXIS 86">*104 In New Community, the petitioner-organization, which was qualified under section 501(c)(3), had requested a ruling as to whether certain proposed transactions would jeopardize petitioner's exempt status. Within 90 days from the date the ruling was issued, petitioner-organization filed a petition with this Court under section 7428(a)(1)(A). In that case we said that "section 7428 is designed to provide a review only of respondent's final determinations affecting the tax qualification of a section 501(c)(3) organization." 72 T.C. 372">72 T.C. 375.

It is true that in both New Community and in the case presently under review, the petitioner's continuing qualification as a section 501(c)(3) organization and as a nonprivate foundation, respectively, had not been revoked at the time the petitions for declaratory judgment were filed. However, two critical points distinguish New Community from the present case. At the time petitioner in this case filed its petition, respondent had proposed to revoke petitioner's nonprivate foundation status, while in New Community, respondent had made no step toward revoking the status of petitioner. The ruling involved1981 U.S. Tax Ct. LEXIS 86">*105 was just advisory. Equally as important, petitioner does not base its claim on section 7428(a)(1) as the petitioner in New Community did, but, rather petitioner makes its claim under section 7428(a)(2) for failure to make a determination.

Respondent counters that he has not failed to make a determination under section 7428(a)(2). Rather, he takes the position that petitioner retained its nonprivate foundation status when it filed its petition in this Court. Petitioner vigorously maintains that respondent has failed to make a final determination with respect to its written protest to respondent's proposed revocation letter.

The legislative history of both section 7428 and section 7476 defines a failure to make a determination as a "failure to act" by the Internal Revenue Service with respect to a request for a determination. ⁷

1981 U.S. Tax Ct. LEXIS 86">*106 Respondent argues that section 7428 was not intended to 77 T.C. 221">*229 provide for declaratory relief from proposed revocations or reclassifications of foundation status because the purpose of the Tax Reform Act of 1976 was to protect potential contributions. Contributions to an organization are protected until a final adverse determination letter is issued, and even then, the organization can seek declaratory relief and obtain continued protection for contributions under section 7428(c). Therefore, in respondent's opinion, section 7428(a)(2) applies only to initial qualification cases where continued contributions would not be protected. Respondent cites 72 T.C. 372">New Community Senior Citizen Housing Corp. v. Commissioner, supra, to support his theory. Respondent's reliance on New Community is misplaced because that case only dealt with section 7428(a)(1). If Congress intended to so limit the reach of section 7428(a)(2), it would have explicitly so provided. Instead, Congress clearly intended that declaratory judgment actions as to tax-exempt status as charitable, etc., organizations be available remedies for revocation cases where final determinations were1981 U.S. Tax Ct. LEXIS 86">*107 made and where there has been a failure to make a determination. Sec. 7428(a)(2); see Joint Comm. on Taxation, 94th Cong., 2d Sess., General Explanation of the Tax Reform Act of 1976, 1976-3 C.B. (Vol. 2) 1, 415. Additionally, Rules 210-217 and the Notes appertaining thereto specifically provide for cases where there has been a revocation. 68 T.C. 1025">68 T.C. 1025, 68 T.C. 1025">1031-1051.

In fact, the two cases that prompted Congress to enact the declaratory judgment provision for exempt organizations were revocation cases. See Bob Jones University v. Simon, 416 U.S. 725">416 U.S. 725 (1974); Alexander v. "Americans United" Inc., 416 U.S. 752">416 U.S. 752 (1974); Joint Comm. on Taxation, 94th Cong., 2d Sess., General Explanation of the Tax Reform Act of 1976, supra, 1976-3 C.B. (Vol. 2) at 413. In our view, section 7428(a)(2) applies to both initial and continuing classification situations, and we so hold.

Finally, respondent argues that, even if it is determined that respondent has failed to make a determination with respect to petitioner's continuing classification as a nonprivate foundation, 1981 U.S. Tax Ct. LEXIS 86">*108 petitioner has failed to exhaust its administrative remedies. Sec. 7428(b)(2). Although petitioner has completed the protest and appeal procedures through the National Office, respondent contends that it must file an application requesting a new determination of its foundation status.

77 T.C. 221">*230 Petitioner argues that it has exhausted its administrative remedies since it submitted a written protest to respondent's proposed revocation and has completed the appeal process through the National Office as required by Rev. Proc. 76-34, 1976-2 C.B. 657. Respondent contends that the protest and appeal procedure is separate and distinct from the procedure of making a request for a new determination of foundation status. In support of that contention, respondent cites sections 601.201(n)(2)(iii) and 601.201(n)(6), Statement of Procedural Rules; Rev. Proc. 76-34, 1976-2 C.B. 657, secs. 3 and 4, and secs. 5, 6, and 7; Rev. Proc. 77-21, 1977-1 C.B. 586, sec. 6.02; ⁸New York County Health Services Review Organization, Inc. v. Commissioner, an unreported case ( D. D.C. 1980, 45 AFTR 2d 80-1552, 80-1 USTC par. 9398).1981 U.S. Tax Ct. LEXIS 86">*109

Section 7428(b)(2) requires that an organization exhaust administrative remedies available to it within the Internal Revenue Service before a declaratory judgment can be issued. The organization will have exhausted its administrative remedies if 270 days have expired after a request for a determination has been made and the organization has taken, in a timely manner, all reasonable steps to secure a determination. ⁹

Under the procedure for declaratory judgments set forth in the rules, there is no distinction made between1981 U.S. Tax Ct. LEXIS 86">*110 requests for initial qualification cases and proposed revocation cases. To exhaust its administrative remedies, an organization must first file an application for exemption or a request for a determination of foundation status, comply with all requests for additional information, and complete the protest and appeal procedure. ¹⁰

1981 U.S. Tax Ct. LEXIS 86">*111 77 T.C. 221">*231 The rules also provide procedures for requests for a new determination, sec. 601.201(n)(2)(iii), Statement of Procedural Rules, and proposed revocation of exempt status, sec. 601.201(n)(6), Statement of Procedural Rules.

In this case, the Internal Revenue Service proposed to revoke petitioner's nonprivate foundation status. The respondent is contending that a declaratory judgment action cannot be initiated after the procedure for a proposed revocation is followed. Instead, respondent argues that the procedure for a request for a new determination must also be completed.

We see no reason why either procedure when completed should not allow availability of the declaratory judgment remedy. The legislative history makes it crystal clear that section 7428 was intended to provide some relief to organizations that are initially denied exemption and to organizations whose status is revoked or modified. Joint Comm. on Taxation, 94th Cong., 2d Sess., General Explanation of the Tax Reform Act of 1976, supra, 1976-3 C.B. (Vol. 2) at 413 (citing 416 U.S. 725">Bob Jones University v. Simon, supra, and Alexander v. "Americans United Inc.," supra.)

In both 416 U.S. 725">Bob Jones University v. Simon, supra,1981 U.S. Tax Ct. LEXIS 86">*112 and Alexander v. "Americans United Inc.," supra, respondent revoked or attempted to revoke the organization's status. The organization 77 T.C. 221">*232 sued for injunctive relief; however, the Supreme Court found that the courts did not have jurisdiction as required by the Anti-Injunction Act, sec. 7421(a). The declaratory judgment statute for exempt organizations was explicitly enacted to provide relief to organizations in those situations. In those cases, the procedure did not initiate with a request for a new determination but rather from action taken by respondent. 416 U.S. 725">416 U.S. at 727, 755.

Furthermore, although the rules do provide for different procedures, their differences are minimal. The requirements for a request for a new determination are that the request must be made in writing and made to the key District Director for the District in which the principal offices of the organization are located. Sec. 601.201(n)(2)(iii), Statement of Procedural Rules. If the District Director issues an adverse determination, the organization can pursue its protest and appeal rights by filing within 30 days a statement of facts, law, and argument.

Similarly, in1981 U.S. Tax Ct. LEXIS 86">*113 the proposed revocation situation, the District Director advises the organization in writing of his proposed action and reasons for doing so. The organization has the same rights of protest and appeal. Sec. 601.201(n)(6)(ii), (iii), and (iv), Statement of Procedural Rules.

Thus, it appears that the major distinction between the two procedures is that one is initiated with an adverse determination made by respondent, while the other is initiated by the organization which is seeking reclassification or redetermination of its status. Beyond this initial step, both procedures provide for the same degree of review. ¹¹

We observe that, although respondent contends1981 U.S. Tax Ct. LEXIS 86">*114 that an appeal from a proposed revocation does not meet the exhaustion of administrative remedies test, he agrees that once petitioner has received a final adverse determination letter, without the filing of a "request for a new determination," its remedies will be exhausted.

Indeed, the purpose of the exhaustion of administrative remedies requirement was to provide the Court with a full and 77 T.C. 221">*233 complete administrative record on which to base its decision. S. Rept. 94-938 (1976), 1976-3 C.B. (Vol. 3) 49, 626. Animal Protection Institute, Inc. v. U.S., Court of Claims docket No. 609-77 (Trial Div. order dated Sept. 19, 1978, 42 AFTR 2d 78-5850, 78-2 USTC par. 9709). See also the Notes to Rules 210 and 217, 64 T.C. 1177, 1178-1179. If the issuance of a final adverse determination letter as a result of a proposed revocation is sufficient to vest this Court with jurisdiction, then respondent's argument is unfounded, for the statute clearly provides for the situation where "the Secretary fails to make a determination." Sec. 7428(a)(2). Additionally, several cases decided by this 1981 U.S. Tax Ct. LEXIS 86">*115 Court have found jurisdiction in a declaratory judgment action where a final adverse determination letter was issued as the result of the issuance of a proposed revocation. See, e.g., Industrial Aid for the Blind v. Commissioner, 73 T.C. 96">73 T.C. 96 (1979); Hutchinson Baseball Enterprises v. Commissioner, 73 T.C. 144">73 T.C. 144 (1979), on appeal (10th Cir., Jan. 24, 1980); Western Catholic Church v. Commissioner, 73 T.C. 196">73 T.C. 196 (1979), affd. without published opinion 631 F.2d 736">631 F.2d 736 (7th Cir. 1980), cert. denied 450 U.S. 981">450 U.S. 981 (1981). There is no other interpretation but that the written protest from a proposed revocation was deemed a "request for a determination" in those cases. In these circumstances we hold that petitioner's written protest of September 2, 1977, is a request for determination within the intendment of section 7428(b)(2). ¹²

1981 U.S. Tax Ct. LEXIS 86">*116 Moreover, the District Court for the District of Columbia has also held that jurisdiction in a declaratory judgment action under section 7428 is proper where the organization has received a final adverse determination letter as a result of a proposed revocation. Prince Edward School Foundation v. United States, 478 F. Supp. 107">478 F. Supp. 107 (D. D.C. 1979), affd. per curiam in an unreported opinion (D.C. Cir. 1980), cert. denied 450 U.S. 944">450 U.S. 944 (1981), 47 AFTR 2d 81-910, 81-1 USTC par. 9203; Consumer Credit Counseling Service of Alabama, Inc. v. United States, an unreported opinion ( D. D.C. 1978, 44 AFTR 2d 79-5122, 78-2 USTC par. 9660).¹³

77 T.C. 221">*234 Furthermore, the Internal 1981 U.S. Tax Ct. LEXIS 86">*117 Revenue Service publications, which are sent to taxpayers to advise them of the procedure to be followed in an appeal of a proposed revocation, provide for a declaratory judgment remedy. Both publications 892 and 898 state:

If the organization does not exercise its appeal rights within the time provided, it will be considered by the Internal Revenue Service as a failure to exhaust available administrative remedies. A declaratory judgment under section 7428 of the Code will not be issued in a case subject to that provision unless a court with jurisdiction determines that the organization involved has exhausted its administrative remedies available within the Internal Revenue Service.

Respondent also relies on New York County Health Services Review Organization, Inc. v. Commissioner, supra. In that case, petitioner-organization already had a favorable section 501(c)(3) determination letter and the Secretary had made no final determination regarding the proposed modification of petitioner's status at the time its petition for declaratory relief was filed. The court held that the organization's challenge to the proposed modification was not sufficient to constitute exhaustion1981 U.S. Tax Ct. LEXIS 86">*118 of its administrative remedies. The court said the taxpayer must file a substantially completed Form 1023 if it wants its tax-exempt status redetermined. We think that the filing of another Form 1023 would be wasteful and, where an original Form 1023 is on file for the organization, the organization has substantially completed the administrative process by protest and appeal. A new Form 1023 would only supply the same information. If a new Form 1023 was required to be filed and an adverse determination was attained therefrom, the organization would be required to complete another protest and appeal procedure before it would be deemed to have exhausted its administrative remedies. Of what value is this additional appeal procedure where it is simply a rehashing of the same issues and facts involved in the first appeal procedure initiated as a result of the proposed revocation? The respondent's position would not change, but petitioner would suffer additional delays in obtaining a final ruling from a court. ¹⁴

1981 U.S. Tax Ct. LEXIS 86">*119 77 T.C. 221">*235 Petitioner also contends that, even if it has failed to exhaust its administrative remedies, it has taken "all reasonable steps to secure a determination" which is all that is required by section 7428(b)(2). Petitioner emphasizes the delays experienced in the appeal process (consuming over 900 days in total) and suggests that the hardships caused thereby make this case ripe for a declaratory judgment. At least two prior decisions of this Court have found jurisdiction even though no final adverse determination letter was issued on or before the date the petitions were filed where respondent has unduly delayed in making a decision. 72 T.C. 681">B.H.W. Anesthesia Foundation, Inc. v. Commissioner, supra; BBS Associates, Inc. v. Commissioner, 74 T.C. 1118">74 T.C. 1118 (1980).¹⁵

Although the statute requires that respondent be given a minimum of 270 days, ¹⁶ we have held that1981 U.S. Tax Ct. LEXIS 86">*120 the elapse of 270 days does not automatically grant the right to petition for declaratory relief. Prince Corp. v. Commissioner, 67 T.C. 318">67 T.C. 318, 67 T.C. 318">326 (1976).

As we said in 67 T.C. 318">Prince Corp. v. Commissioner, supra at 327:

Our task then is to determine whether, on all of the facts and circumstances presented, petitioner may be deemed to have exhausted its administrative remedies due to respondent's purported failure to process its request expeditiously. Prior judicial determinations of this nature have refused to require exhaustion only in rare cases involving extreme delays. See, e.g., Walker v. Southern R. Co., 385 U.S. 196">385 U.S. 196 (1966) (delays up to 10 years anticipated); Smith v. Ill. Bell Tel. Co., 270 U.S. 587">270 U.S. 587 (1926) (2 years); Sunshine Publishing Co. v. Summerfield, 184 F. Supp. 767">184 F. Supp. 767 (D. D.C. 1960) (1 1/2 years). * * *

In this case, more than 29 1981 U.S. Tax Ct. LEXIS 86">*121 months passed between the issuance of the proposed revocation letter and the filing of the petition in this Court, and more than 21 months elapsed while the case was in consideration at the National Office. The 900 days consumed in this case clearly exceed the 2 years which elapsed in 72 T.C. 681">B.H.W. Anesthesia Foundation v. Commissioner, supra, and the 21 months in 74 T.C. 1118">BBS Associates, Inc. v. Commissioner, 77 T.C. 221">*236 , which were deemed inordinately long by this Court.

Finally, petitioner argues that section 7428 was intended to provide a remedy for hardships caused by undue administrative delays in securing private foundation determinations. We agree. Petitioner has been unable to obtain a ruling on a proposed transaction while the proposed revocation proceedings have been pending. This resulted in a 3-year delay in the closing of the Gladstone Estate. Of course, the uncertainties about petitioner's tax liabilities if a private foundation are also present.

Under these circumstances, the statute, the legislative history, and the procedural rules, we conclude that this Court has jurisdiction to make a declaration with respect1981 U.S. Tax Ct. LEXIS 86">*122 to petitioner's continuing qualification as a nonprivate foundation pursuant to the petition filed in this case.

An appropriate order will be issued.

Simpson, J., concurring: I agree with the majority that the first petition filed by the Gladstone Foundation was sufficient to invest this Court with jurisdiction to decide the issue of whether the Gladstone Foundation is a private foundation. However, prior to the hearing on the Commissioner's motion to dismiss, the Commissioner issued his determination revoking the classification of the organization, and a second petition was filed by the Gladstone Foundation; the Commissioner concedes that under such petition, we have jurisdiction to decide the same issue. Since the Commissioner concedes that the second petition properly invokes our jurisdiction, there is a question as to why we have chosen to decide whether the first petition confers jurisdiction upon us. I wish to add a statement of my reasons for concluding that such concession did not make the first petition moot.

In explaining why we have chosen to retain jurisdiction of the first petition, the majority states that, as a rule, once the 77 T.C. 221">*237 Court's jurisdiction1981 U.S. Tax Ct. LEXIS 86">*123 is properly invoked, subsequent events do not divest the Court of jurisdiction. However, we know that the Court's jurisdiction is limited to deciding "real issues" ( Roderick v. Commissioner, 57 T.C. 108">57 T.C. 108, 57 T.C. 108">113 (1971)); we do not have jurisdiction to answer abstract or academic questions ( Cohen v. Commissioner, 20 B.T.A. 647">20 B.T.A. 647, 20 B.T.A. 647">648 (1930); see generally 9 J. Mertens, Law of Federal Income Taxation, par. 50.47, p. 121 (1977 rev.)), and ordinarily we do not decide moot issues (compare LTV Corp. v. Commissioner, 64 T.C. 589">64 T.C. 589, 64 T.C. 589">594-595 (1975), with McGowan v. Commissioner, 67 T.C. 599">67 T.C. 599, 67 T.C. 599">604-608 (1976)). In my opinion, the statement of the majority fails to explain why these principles are not applicable in this case when the Commissioner has conceded that we have jurisdiction under the second petition.

In my view, there are at least two compelling reasons for deciding the question of whether this Court has jurisdiction under the first petition for declaratory judgment filed by the Gladstone Foundation. First, there will probably be other situations in which the IRS indicates1981 U.S. Tax Ct. LEXIS 86">*124 that it proposes to revoke or modify an organization's tax exemption, and in which there is undue delay by the IRS in issuing a final notice of determination with respect to the matter. Therefore, we should decide at this time whether in such situations exempt organizations can bring a petition in this Court before a final notice of determination is issued. Second, Rule 217(c)(2) provides that when a petition seeking declaratory judgment is filed in this Court, "The burden of proof shall be upon the petitioner * * * as to the grounds set forth in the notice of determination," but that "If the respondent has not issued a notice of determination, he shall bear the burden of proof as to every ground upon which he relies to sustain his position," other than jurisdictional and similar grounds. Thus, whether this Court has jurisdiction in this case under the first petition presumably will determine the party upon which the burden of proof will lie. See Rule 217(c)(2)(ii). For such reasons, the issue of whether the first petition was sufficient to invoke our jurisdiction is not academic or moot.

77 T.C. 221">*238 Featherston, J., dissenting: I respectfully dissent. 1981 U.S. Tax Ct. LEXIS 86">*125 I would follow the decision of the District Court in New York County Health Services Review Organization, Inc. v. Commissioner ( D. D.C. 1980, 45 AFTR 2d 80-1552, 80-1 USTC par. 9398), and thus avoid the jurisdictional uncertainties created by declining to give effect to the procedural rules on exemption revocations. The merits of the substantive issue can be litigated in the second case filed by petitioner.

Chabot, J., dissenting: Up to now, declaratory judgment jurisdiction under section 7428 has been thought to lie (1) where an organization has sought a status (qualification or classification) previously unacknowledged by the Internal Revenue Service and (2) where the Internal Revenue Service has revoked an organization's favorable status ruling. The majority now add the situation where the organization has sought no change in status and the Internal Revenue Service has not revoked its favorable ruling. From this expansion I respectfully dissent.

The majority apparently view the foundation of declaratory judgment jurisdiction in the instant case as the failure by the Secretary to make 1981 U.S. Tax Ct. LEXIS 86">*126 a determination with respect to an issue referred to in paragraph (1) of section 7428(a); the issue referred to evidently is the one in subparagraph (B) of this paragraph (1), i.e., "with respect to the initial classification or continuing classification of an organization as a private foundation (as defined in section 509(a))." ¹

However, at the time the petition was filed in the instant case, there was outstanding a determination that petitioner was a public charity. Indeed, the determination even dealt with the particular category of public charity. Petitioner wanted to be classified as a medical research organization 77 T.C. 221">*239 described in section 170(b)(1)(A)(iii), and the only outstanding determination put petitioner precisely1981 U.S. Tax Ct. LEXIS 86">*127 into that category. Cf. Friends of Soc. of Servants of God v. Commissioner, 75 T.C. 209">75 T.C. 209 (1980). At that time, there had been no "failure to make a determination" with respect to petitioner's private foundation classification; it had a determination classifying it favorably.

The majority's conclusion that there can be a "failure to make a determination" within the meaning of section 7428(a)(2) at a point when there is outstanding a completely favorable determination as to petitioner does not appear to be consistent with the intended meaning of that phrase in the statute.

The majority assert (majority opinion, at p. 234 supra) that in this case, involving a proposed revocation of petitioner's nonprivate foundation status, to require the filing of a new Form 1023, Application for Recognition of Exemption, in order to exhaust administrative remedies would be "wasteful." I believe that it would not only be "wasteful" here, but totally inappropriate for petitioner (which was not requesting a change in its existing classification at the time the petition in this case was filed) to file a new Form 1023, 1981 U.S. Tax Ct. LEXIS 86">*128 or for that matter, any form of request for determination.

This serves to highlight the majority's failure to recognize the inherent difference between (1) a revocation case and (2) a situation where an organization asks respondent to recognize a status (qualification or classification) previously unacknowledged by respondent. This failure causes the majority to blur the distinction drawn by our Rules between revocation case protests and nonrevocation case requests for determination.

Our Rules are premised on an understanding that normally a revocation results from an audit where the Internal Revenue Service is making its own investigation, not upon the request by an organization for a determination; in the latter case the Internal Revenue Service accepts the facts as stated in the request without investigating them. See the Notes accompanying Rules 213(a)(2) and 217(a), 68 T.C. 1042, 1048. Consequently, Rule 217(a) provides that in an action for declaratory 77 T.C. 221">*240 judgment which does not involve a revocation, the Court will ordinarily ² look only to the administrative record; but, disposition in a revocation case may be made solely on the basis of 1981 U.S. Tax Ct. LEXIS 86">*129 the administrative record only where the parties agree that that record contains all the relevant facts and that these facts are not in dispute. Similarly, for purposes of framing an answer, Rule 213(a)(2) recognizes that in revocation cases the Internal Revenue Service will rely upon facts outside the administrative record. See Rule 212 and the accompanying Note. 68 T.C. 1041">68 T.C. 1041.

On page 233 of their opinion, the majority cite several cases ³ involving declaratory judgment actions, in which we reached the merits 1981 U.S. Tax Ct. LEXIS 86">*130 where a final adverse determination letter was issued in the context of the Internal Revenue Service's revocation of the organization's exempt status. In none of these cases did the Court recognize or mention any jurisdictional issue before reaching the merits. From this, the majority conclude that in these cases, as well as the instant case, there is "no other interpretation" but that the organization's written protest "is a request for determination."

1981 U.S. Tax Ct. LEXIS 86">*131 Each of the cases cited by the majority on this point was a revocation case. We have not required a request for determination as a basis for declaratory judgment jurisdiction where the 77 T.C. 221">*241 dispute before us was whether respondent was correct in revoking a favorable determination. Indeed, the Court, in its 1977 revision of its Rules as to declaratory judgments (which went into effect more than 2 years before the earliest of the cited cases), had already observed that "Where the situation is one of revocation by the Service, it is not likely that there will have been a request for a determination." Note accompanying Rule 211, 68 T.C. 1040.

The reason the opinions in the three cases cited by the majority are silent on this point is simply that there is no such requirement where there has been a revocation. ⁴ The majority attempt to create the requirement now, point to the three revocation cases as evidence that the requirement of a request for determination can be met by a protest, and then use the protest as the measuring point for an exhaustion of remedies analysis in a case where there was no revocation.

1981 U.S. Tax Ct. LEXIS 86">*132 The Byzantine nature of the majority's analysis should not be allowed to obscure the conflict between that analysis and the understanding reflected in our Rules and prior practice. ⁵1981 U.S. Tax Ct. LEXIS 86">*133 77 T.C. 221">*242 The Rules recognize the distinction between protests and requests for determination. See Rules 210(b)(10) ⁶ and 211(e)(2). ⁷ The majority effectively obliterate the distinction.

Section 7428(b)(2) provides, in pertinent part, that --

An organization requesting the determination of an issue referred to in subsection (a)(1) shall be deemed to have exhausted its administrative remedies with respect to a failure1981 U.S. Tax Ct. LEXIS 86">*134 by the Secretary to make a determination with respect to such issue at the expiration of 270 days after the date on which the request for such determination was made if * * *

Section 7476(b)(3), relating to retirement plans, is similar. The legislative histories of both sections also define a failure to make a determination as a "failure to act" by the Internal Revenue Service with respect to a request for a determination. ⁸

Inasmuch as a request for determination is inappropriate where an organization does not request a change in its existing status, there can be no failure to make a determination as defined in the legislative history. Consequently, subsection (a)(2) does not 1981 U.S. Tax Ct. LEXIS 86">*135 give us declaratory judgment jurisdiction over the instant case.

In the instant case there is a further difficulty with the majority's conclusion that there has been a failure to make a 77 T.C. 221">*243 determination with respect to petitioner's protest, which the majority are pleased to treat as a request for a determination.

The protest in question states as follows:

The J. David Gladstone Foundation (hereinafter referred to as "taxpayer"), whose address is 9777 Wilshire Boulevard, Suite 610, Beverly Hills, California, disagrees with the determination that taxpayer is a private foundation within the meaning of sec. 509(a) of the Internal Revenue Code (hereinafter called the "Code") for its taxable years ended December 31, 1974 and 1975, proposed by the District Director in the above described determination letter and accompanying report of examination, and hereby appeals therefrom.

In respondent's final adverse determination, dated May 28, 1980, he conceded his proposal to reclassify petitioner as to 1974 and 1975, the only years put in dispute by the protest. Thus, at that point not only was there no failure to make a determination as to the matter put in issue by the protest, but petitioner1981 U.S. Tax Ct. LEXIS 86">*136 received a favorable ruling on that limited point.

Of course, a dispute remains. However, that dispute is framed by the revocation letter of May 28, 1980 -- not by the protest. The instant case should properly be treated as a revocation case based on that letter; it should not be treated as a failure to make a determination case, based on petitioner's protest.

On page 235 of their opinion, the majority cite two cases ⁹ involving declaratory judgment actions where we found that we had jurisdiction even though no final determination letter was issued on or before the date the petitions were filed, where more than 270 days had elapsed after the respective requests for determination. However, these cases are initial qualification or determination cases where the petitioners sought a determination of a status previously unacknowledged by the Internal Revenue Service. These cases have no application to the situation we face in the instant case; their citation is 77 T.C. 221">*244 another example of the majority's failure to distinguish between revocation and nonrevocation cases.

The administrative record in the instant case includes a copy of a notice of deficiency to petitioner, dated May 29, 1980, which determines a deficiency in section 4940(a) excise tax (investment income of private foundations) for 1976 in the amount of $ 43,161. Thus, petitioner has had its "ticket to the Tax Court" ¹⁰ for a year. No petition has been filed in this Court with respect to this notice of deficiency. The record in the instant case does not disclose whether a refund suit has been filed in a District Court or in the Court of Claims with respect to this tax.

The legislative history underlying section 7428, enacted by section 1306(a) of the Tax Reform Act of 1976, Pub. L. 94-455, 90 Stat. 1717, states that "This1981 U.S. Tax Ct. LEXIS 86">*138 provision is intended to facilitate relatively prompt judicial review of the specified types of exempt organization issues; it is not intended to supplant the normal avenues of judicial review (redetermination of a deficiency or suit for refund of taxes) where those normal procedures could be expected to provide opportunities for prompt determinations." (Emphasis added.) Furthermore, the legislative history indicates plainly that we are to look to certain events occurring after we properly obtain jurisdiction in the first instance over such a case, such as the filing of a petition regarding a redetermination of a related deficiency. H. Rept. 94-658, p. 286 (1975), 1976-3 C.B. (Vol. 2) 695, 978; ¹¹ S. 77 T.C. 221">*245 Rept. 94-938, pp. 588-589 (1976), 1976-3 C.B. (Vol. 3) 49, 626-627; Staff of the Joint Committee on Taxation, General Explanation of the Tax Reform Act of 1976, p. 404, 1976-3 C.B. (Vol. 2) 1, 416.

1981 U.S. Tax Ct. LEXIS 86">*139 The authorities and analysis presented by the majority (at pp. 223-224 of their opinion) are designed to show that this Court does not necessarily lose jurisdiction merely because respondent issued a final adverse determination after a valid petition was filed with us. However, the majority ignore the notice of deficiency. This notice puts in petitioner's hands the right and opportunity to travel "the normal avenues of judicial review (redetermination of a deficiency or suit for refund of taxes)" and does so at a time "where those normal procedures could be expected to provide opportunities for prompt determinations."

Indeed, one may wonder whether there is any purpose to further proceedings in the instant case other than petitioner's evident desire to gain the possible tactical advantage adverted to in Judge Simpson's concurring opinion. I find it disturbing that petitioner appears to be using this important relief measure, in direct contravention of the Congress' stated purpose of enactment, merely to enable petitioner to avoid the burden of proof, or to gain a possible tactical advantage by cutting short an audit (see note 5 supra) or restricting respondent's right to introduce1981 U.S. Tax Ct. LEXIS 86">*140 evidence outside the administrative record (see note 2 supra). I find it more disturbing that the majority are putting this Court's imprimatur on such misuse of the statute.

The instant case should not be here. It does not fit into the statutory scheme as we have understood it in our Rules. It is contrary to the basic purpose for which the Congress enacted the declaratory judgment procedure.

I would grant respondent's motion to dismiss.