Miss Elizabeth D. Leckie Scholarship Fund v. Commissioner

87 T.C. 251 (1986)

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Miss Elizabeth D. Leckie Scholarship Fund v. Commissioner

United States Tax Court
87 T.C. 251 (1986)

Facts

Ettie Cheatham founded the Miss Elizabeth D. Leckie Scholarship Fund (fund) (plaintiff), an exempt organization under § 501 of the Internal Revenue Code (code), with an initial endowment of about $135,000. The fund’s only annual income was approximately $6,600 in investment interest, approximately $6,000 of which the fund spent on scholarships. The scholarships went to students at Butler County High School. The fund chose recipients on the basis of economic need. Moreover, the fund’s board of trustees, on a volunteer basis, provided additional support to scholarship recipients, such as by arranging summer jobs and connecting recipients with local business and community leaders. The fund applied to the Internal Revenue Service (IRS) (defendant) to be deemed an operating foundation for the purposes of §§ 509 and 4942(j)(3) of the code. The IRS denied the fund status as an operating foundation, and the fund challenged the IRS in the United States Tax Court.

Rule of Law

Issue

Holding and Reasoning (Gerber, J.)

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