IRS written determination 201428011

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TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
Number: 201428011
Release Date: 7
I 11 /2014
Date: April 18, 2014
UIL: 501.13-00
Legend:
2S
=
Trust A
=
Trust B
=
Dear
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
Contact Person:
Identification Number:
Telephone Number:
Employer Identification Number:
We have considered your
ruling request dated December 16, 2013, requesting a ruling under
Internal Revenue Code (I.R.C.)
§ 501(c)(13).
FACTS
You are a non-profit association that operates a cemetery and are recognized as exempt from
federal income tax under§ 501 (c)(13). Your sole activity is the care and maintenance of a
family cemetery for the lineal descendants (and their spouses) of 2S. a historical figure. Your
cemetery is located
in close proximity to the historic 2S family residence, contains the 2S family
remains, and is
of historical significance to your State.
You intend to acquire approximately 5 acres of undeveloped property adjacent to your existing
property. Two
trusts currently own the property as tenants
in common. Trust A owns an
undivided two-thirds interest
in the property. Trust B owns an undivided one-third interest in the
property. Your board members
include several beneficiaries of one or both trusts. The trusts
will sell you the property at its current fair market value. You state that, to achieve this result,
you will obtain an independent third party appraisal (MAl) from the American Institute of Real
Estate Appraisers.
You explain that the purpose
of the acquisition is to:
• Provide a land buffer between your existing cemetery property and nearby residential
and commercial property thereby acting as a deterrent to vandalism;
• Promote and preserve a sense of peace and tranquility
in the cemetery;
• Preserve your historical connection to the surrounding land; and

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• Provide additional space for memorial or contemplative gardens for the cemetery.
RULING REQUESTED
The acquisition
of the undeveloped property is consistent with, and will not adversely affect,
your tax-exempt status
as a cemetery company described in§ 501(c)(13).
LAW
I.R.C. §
501 (c)(13) provides an exemption from federal income tax for cemetery companies
owned and operated exclusively for the benefit of their members
or which are not operated for
profit; and any corporation chartered solely for the purpose of the disposal
of bodies by burial or
cremation which is not permitted by its charter to engage
in any business not necessarily
incidental
to that purpose, provided no part of the organization's net earnings inures to the
benefit
of any private shareholder or individual.
Rev. Rul. 76-91, 1976-1 C.B. 150, held that an organization will not jeopardize its exemption
under§ 501 (c)(3}, even though it deals with related parties in a commercial context, as long as
the dealings are at arm's length and prices are set by qualified and independent appraisers.
ANALYSIS
Section
501 (c)(13) prohibits cemetery companies from operating for any purpose other than the
disposal of bodies. You operate for the sole purpose of caring for and maintaining a family
cemetery for the lineal descendants (and their spouses) of~-Acquisition of the undeveloped
property will further this purpose
by: (1) providing a land buffer between your existing cemetery
property and nearby
residential and commercial property thereby acting as a deterrent to
vandalism; (2) promoting and preserving a sense of peace and tranquility in the cemetery; (3)
preserving your historical connection to the surrounding land; and (4) providing additional space
for memorial or contemplative gardens for the cemetery. For these reasons, acquisition of the
undeveloped property
is directly related to your holding and use of the land as burial ground.
Further, §
501 (c)(13) prohibits cemetery companies from allowing net earnings to inure to the
benefit of any private shareholder or individual. You intend to purchase undeveloped property
from two
trusts-Trust A and Trust B-the beneficiaries of which include several of your board
members. Accordingly, the purchase
of the undeveloped property will result in private
inurement unless the dealings are at arm's length and the prices are set by qualified
independent appraisers. Rev. Rul. 76-91.
In this case, you state that the trusts will sell you the
property at its current fair market value and that you will obtain an independent third party
appraisal (MAl) to ensure that you pay no more than fair market value for the property.
Therefore, no private inurement results from your purchase
of the undeveloped property.

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CONCLUSION
Based on the foregoing, we rule that the acquisition of the undeveloped property is consistent
with, and will not adversely affect, your tax-exempt status as a cemetery company described
in
§ 501(c)(13).
This
ruling will be made available for public inspection under section 6110 of the Code after
certain deletions
of identifying information are made. For details, see enclosed Notice 437,
Notice
of Intention to Disclose. A copy of this ruling with deletions that we intend to make
available for public inspection
is attached to Notice 437. If you disagree with our proposed
deletions, you should follow the instructions in Notice 437.
This
ruling is directed only to the organization
that requested
it. Section 611 O(k)(3) of the Code
provides that it may not
be used or cited by others as precedent.
This ruling is based on the facts as they were presented and on the understanding that there will
be no material changes
in these facts. This ruling does not address the applicability of any
section
of the Code or regulations to the facts submitted other than with respect to the sections
described. Because it could help resolve questions concerning your federal income tax status,
this ruling should be kept
in your permanent records.
If you have any questions about this ruling, please contact the person whose name and
telephone number are shown
in the heading of this letter.
In accordance with the Power of Attorney currently on file with the Internal Revenue Service, we
are sending a copy
of this letter to your authorized representative.
Enclosure
Notice 437
Sincerely,
Michael Seto
Manager, EO Technical