83 T.C. 20">*20 OPINION

In this action, petitioner seeks a declaratory judgment pursuant to section 7428(a)¹ that it qualifies for tax-exempt status under section 501(c)(3) and as a church under1984 U.S. Tax Ct. LEXIS 51">*53 section 509(a)(1). Upon completion of the administrative consideration of petitioner's status, the Internal Revenue Service issued a ruling in part as follows:

This is a final adverse determination with respect to your exempt status under section 501(c)(3) of the Internal Revenue Code.

The adverse determination was made because you are not operated exclusively in furtherance of one or more of the exempt purposes described in I.R.C. Section 501(c)(3) and the regulations promulgated thereunder. 83 T.C. 20">*21 Additionally, your activities are not exclusively in furtherance of any exempt purpose described in I.R.C. Section 501(c)(3) and the regulations promulgated thereunder. Additionally, the documents submitted by or on behalf of your organization fail to establish that you are operated exclusively as an organization which is described in Section 501(c)(3) and the regulations promulgated thereunder. Further, we have determined that if you were an organization described in Section 501(c)(3), you would be a private foundation because you are not a church within the meaning of Section 170(b)(1)(A)(i), the only basis on which you claimed1984 U.S. Tax Ct. LEXIS 51">*54 non-private foundation status.

Contributions made to your organization are not deductible under section 170 of the Internal Revenue Code.

Following the issuance of this ruling, petitioner timely instituted this action for declaratory judgment.

To qualify for exemption under section 501(c)(3), ² petitioner has the burden of showing (1) that it is organized and operated exclusively for religious or charitable purposes, (2) that no part of its earnings inures to the benefit of a private individual, and (3) that no substantial part of its activities consists of the dissemination of propaganda or otherwise attempting to influence legislation or engaging in political activity. Sec. 1.501(c)(3)-1, Income Tax Regs. Although they are separate requirements, the "private inurement" test and the "operated exclusively for exempt purposes" test prescribed by section 501(c)(3) often substantially overlap. Church of the Transfiguring Spirit v. Commissioner, 76 T.C. 1">76 T.C. 1, 76 T.C. 1">5 n. 5 (1981);1984 U.S. Tax Ct. LEXIS 51">*55 People of God Community v. Commissioner, 75 T.C. 127">75 T.C. 127, 75 T.C. 127">131 (1980).

An organization is not operated exclusively for an exempt purpose if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. Sec. 1.501(c)(3)-1(c)(1), Income Tax Regs.Western Catholic Church v. Commissioner, 73 T.C. 196">73 T.C. 196, 73 T.C. 196">208 (1979), affd. in an unpublished opinion 631 F.2d 736">631 F.2d 736 (7th Cir. 1980); Nat. Assn. of American Churches v. Commissioner, 82 T.C. 18">82 T.C. 18, 82 T.C. 18">28-29 (1984). Section 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs., 1984 U.S. Tax Ct. LEXIS 51">*56 provides that 83 T.C. 20">*22 an organization is not operated exclusively for exempt purposes unless it is operated for the benefit of the public rather than for the benefit of a private interest. Petitioner must therefore show that it is not organized or operated for the benefit of private interests such as those of its organizers. Basic Bible Church v. Commissioner, 74 T.C. 846">74 T.C. 846, 74 T.C. 846">856 (1980).

In support of his final determination, respondent contends that petitioner has not met its burden of showing that it is operated exclusively for exempt purposes within the meaning of section 501(c)(3). Respondent's contention is that, when petitioner starts its operations, they may be carried on for the benefit of its organizers rather than for the public benefit.

Petitioner has written many words to the Internal Revenue Service in its efforts to obtain tax-exempt status but, as far as we can tell from those words, petitioner has done little, if anything, else. After a careful review of the administrative record, we agree with respondent that petitioner has not shown that it is operated, or will be operated, exclusively for religious purposes within the meaning of 1984 U.S. Tax Ct. LEXIS 51">*57 section 501(c)(3). The available evidence does not show that petitioner's present or planned activities serve public rather than private interests. It is not, therefore, entitled to section 501(c)(3) exempt status.

According to a Form 1023, Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, petitioner has no assets, and contributions will not be received until the organization has obtained a ruling exempting it from tax. Similarly, petitioner's services and activities have been suspended pending the granting of exempt status. With the exception of the three members of the board of directors, petitioner has no identifiable congregation. It has performed no marriages, burials, baptisms, or other sacerdotal functions. It has no organized ministry; nor does it provide religious services or religious education for the young.

Petitioner has executed a document headed "Articles of Association" and has adopted a set of bylaws. The articles recite that: "This association is established for the purpose of operating a church for religious purposes." The articles state that the general management of petitioner's affairs "shall be under the control, 1984 U.S. Tax Ct. LEXIS 51">*58 supervision and direction of a board of directors which shall have three members." Petitioner has declared that: "Our Board of Directors controls the church." 83 T.C. 20">*23 Vacancies on the board of directors "shall be filled by a majority of the remaining directors or by the sole remaining director." The articles of association, bylaws, and materials to be used for "religious services" were taken from a form book entitled "Nonprofit Can Be Profitable," written by Theodore Swenson and published by the Mother Earth Church in 1978. ³

The original directors and founders of petitioner are: Bucky Carr, 621 Cherry Street, Denver, CO; Glenda Burnside, 4511 Bryant Street, Denver, CO; and B. Conklin, 3296 Raleigh, Denver, CO. B. Conklin is also referred to as Bill Conklin and William Conklin in the record before the1984 U.S. Tax Ct. LEXIS 51">*59 Court. Although Carr and Burnside use the title "Reverend" and are stated to have been "ordained by the spirit of Ethereal Joy through Eternal Essence," they have no religious training except such training as was derived "from within."

Bucky Carr is employed at Mercy Hospital in Denver. Glenda Burnside is employed as a teacher in the Jefferson County Public Schools, and William Conklin's principal occupation is described as that of "house-husband and homemaker." Conklin's occupation is also stated to be that of a member of the board of directors of Beyond Monogamy, Inc., Church of World Peace, and the Church of Ethereal Joy. He is also stated to be a member of the Universal Life Church and archbishop of the Church of World Peace.

According to the articles of association referred to above, these three members of the board of directors have complete control of all of petitioner's operations, whatever those operations may turn out to be. They are a small self-perpetuating group who could, without challenge, dictate petitioner's program and operations, prepare its budget, and spend its funds. And they could continue to do so indefinitely. Although control by such a small group may1984 U.S. Tax Ct. LEXIS 51">*60 not necessarily disqualify it for exemption, "it provides an obvious opportunity for abuse of the claimed tax-exempt status." Bubbling Well Church v. Commissioner, 74 T.C. 531">74 T.C. 531, 74 T.C. 531">535 (1980), affd. 670 F.2d 104">670 F.2d 104 (9th Cir. 1981). Given the information contained in the administrative record with respect to the activities of one of the members of the board of directors, we are not convinced that petitioner would not abuse its exempt status if such were granted.

83 T.C. 20">*24 The administrative record shows a close relationship between Conklin, one of petitioner's organizers and directors, and two other organizations, the Universal Life Church and the Church of World Peace. The address given for petitioner on the petition signed by Glenda Burnside and filed in this case is P.O. Box 12471, Denver, CO, and the telephone number shown on the petition is 303-433-0224. In a communication to an Internal Revenue Service appeals officer, this same mailing address is shown as that of Bill Conklin. The administrative record indicates that this post office box address is also used by the Universal Life Church. The record also contains communications1984 U.S. Tax Ct. LEXIS 51">*61 signed by Bill Conklin on the letterhead of the Church of World Peace which show the telephone numbers 303-433-0224 and 455-9023. An advertisement for the Church of World Peace gives Conklin's home address of 3296 Raleigh and his telephone number 433-0224.

The administrative record includes the following advertisement which appeared in the Denver Downtowner:

REDUCE INCOME TAX BY 70 PERCENT

In 1974, the IRS challenged the tax-exempt status of the Universal Life Church and lost in District Court. We have over 50,000 tax-exempt congregations without a successful challenge. You won't see many of our ads because we are growing so rapidly by word of mouth, but we believe that people who are not lucky enough to know a ULC minister also deserve to reap the blessings given to us by the Internal Revenue Code, so we advertise once in a while to give everyone a chance.

Universal Life Church

Denver Center Office

Denver, CO 80212

P.O. Box 12471

(303) 455-9023