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Abstract

The Chief Counsel of the exempt organization division of the Internal Revenue Service concluded in the General Counsel Memorandum that each of these rulings should be revoked for three reasons: (1) The transactions violated the proscription against inurement of an exempt organization's earnings to any private individual; (2) the transactions infringed upon the doctrine that an organization must operate for public rather than private benefit in order to be exempt from the income tax; and (3) the transactions may violate federal law and that such violations are inconsistent with exemption from the income tax. Each of these theories is examined separately in detail below. The examination is then accompanied by a critical analysis of the Chief Counsel's interpretation of such doctrines in reaching his conclusions.

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