Tony and Susan Alamo Foundation v. Commissioner

According to the articles of incorporation of the Tony and Susan Alamo Foundation (foundation) (plaintiff), the foundation was organized in 1969 to operate as an evangelistic church. The foundation’s incorporating directors, Tony and Susan Alamo, were preachers, and the foundation was recognized as an exempt organization under § 501(c)(3) of the Internal Revenue Code. The Alamos encouraged those who attended their Los Angeles church services to live in a quasi-communal setting as the foundation’s members. Eventually, the foundation came to own a 196-acre property in California that included a church, stables, two motels, trailer courts, a lodge, and housing for members. In 1974, the foundation moved its principal place of operations to Arkansas, where foundation members built four homes for the Alamos. The foundation owned more than 300 acres of property where the members lived and worked. Daily prayer meetings and religious services were held. The foundation did not keep adequate financial records, and its federal tax returns reported that the Alamos’ expense accounts and other allowances were not ascertainable from the foundation’s books. The Alamos were the sole signatories on the foundation’s credit cards and generally had complete control over the foundation’s finances. In addition to the homes, the Alamos acquired jewelry, furs, clothing, automobiles, and antiques using foundation funds. In 1984, the commissioner of internal revenue (commissioner) (defendant) revoked the foundation’s tax-exempt status, and the foundation sought a declaratory judgment that it was entitled to the exemption.