The basis of the claim is that the defendant wrongfully refused to grant the League exemption from federal income taxes under Section a of the Internal Revenue Code of as an organization described in Section c 3 of the United States Code. Generally, in order to sustain a claim for exemption under Section c 3 , the taxpayer must prove: " 1 that it was organized exclusively for charitable purposes, 2 that it is operated exclusively for charitable purposes, 3 that no part of its net earnings inured to the benefit of any private shareholder or individual, and 4 that no substantial part of its activities consist of carrying on propaganda or otherwise attempting to influence legislation.
United States, F. South Dakota rev'd on other grounds F. There is no dispute as to 4 , and this court need only resolve the issues concerning 1 , 2 and 3. Both parties, pursuant to Rule 56 of the Federal Rules of Civil Procedure, have moved for summary judgment. The facts relating to this case are not in dispute and are as follows:. Its purposes, as originally stated in its charter, were set forth in Article B:.
The League is a non-stock, non-profit corporation organized under Virginia state law, with no members. It is governed by a self-perpetuating Board of Directors who serve without compensation, donating their services as a civic contribution.
Workers, who solicit memberships by the sale of seasonal tickets during membership campaigns, receive no compensation. Students interested in the theatre are used as ushers and receive free admission to the plays, but no compensation. The League has engaged and continues to engage services of various persons and organizations on a contractual basis in its operation. Such services include legal services, secretarial and clerical services, rental services of the E.
Glass High School Auditorium, services of the local newspaper to publish publicity and the services of a booking agent. The contract was for a term of one year, with an option for renewal by the plaintiff.
