In Uncategorized on 04/30/2018 at 15:54

The popular advice from the personal finance bloggers is likely a good idea for the wage-earner and the self-employed, but is not the path to a 501(c)(3) approval, as we see today in Abovo Foundation, Inc., 2018 T. C. Memo. 57, filed 4/30/18.

Emmanuel C. Okonkwo. M. D., is a military veteran and board certified expert in patient safety and risk management. He seeks tax exemption for his Texas domestic nonprofit corporation, the petitioner herein. “Abovo’s primary purpose would be to deliver quality management consulting services to medical providers and advance Government programs through patient safety initiatives.  Its quality management services would include ‘defining, identifying, analyzing, measuring and controlling systems and processes to ensure desirable outcomes’.  In addition, Abovo would provide ‘uplifting services for the elderly and veterans’, housing for low-income individuals, and internal auditing services.” 2018 T. C. Memo. 57, at p. 2.

Sounds great, no?

Well, there’s a hitch that brings Abovo down. And here’s my chance to unveil my latest cognomen, after an exhaustive search and review, for Ch J-elect Maurice B (“Mighty Mo”) Foley.

Ch J-elect Mighty Mo: “Abovo would solicit donations and receive fees relating to its services.  Dr. Okonkwo, Abovo’s president, chief executive officer, and sole employee, would perform services provided to clients (i.e., at an hourly rate of $350), receive a $217,000 salary, and be eligible for an annual performance-based bonus (i.e., not to exceed $100,000).  While Abovo has not entered into any service contracts, its fee structure would be market based and dependent on the nature of the project and the expertise required to complete it.” Order, at p. 3.

For those of my readers who shouted out “inure to the benefit,” congratulations.

“Abovo contends and bears the burden of establishing that its services would advance Government programs pursuant to Federal patient safety laws and lessen the Government’s burden.  See Rule 142(a).  To the contrary, Abovo’s services would not serve an exempt purpose, would be commercial in nature, and would serve Dr. Okonkwo’s, rather than the public’s, interest.  The administrative record does not establish that Abovo would act on the Government’s behalf or that Abovo’s consulting services would lessen the Government’s burden. “ 20187 T. C. Memo. 57, at p. 4 (Citations omitted).

“In short, Abovo is a facade for Dr. Okonkwo’s consulting activities.” 2018 T. C. Memo. 57, at p. 4.

If you’re seeking tax-exemption and deductions for contributions, don’t pay yourself first.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: