for the burial of 'the indigent and poor of the Hebrew faith' and the devotion of any 'profit' to 'the care of the aged and the chronic ill'. The evidence amply supports the conclusion that these are the primary purposes for which plaintiff was organized and that its operations are carried on in fulfillment of such purposes.
The Court finds a close analogy between the operations of plaintiff and those of a non-profit hospital or home for the aged. The latter are regarded as tax-exempt by the Internal Revenue Service. See Rev.Rul. 56-185, CB 1956-1, p. 202;Rev.Rul. 61-72 1RB 1961-16. Like a non-profit hospital or home for the aged, plaintiff provides necessary services for those not able to pay. No one is denied a burial because of lack of funds, and payment is not expected from indigent families. Some pay nothing, others pay at rates which are at or below cost, and still others who are able to pay are charged a fee based on anticipated operating expenses. Plaintiff thus performs a community function by making available a necessary service to those who would otherwise not be able to provide for such service without financial hardship. If excess income is realized from operations, such excess, as previously mentioned, is dedicated to a similar charitable purpose -- the 'care of the aged and the chronic ill'.
Defendant also contends that plaintiff should be denied a tax exemption because part of its net earnings inures to the benefit of private individuals. Defendant argues that the effect of the 'extra charges', heretofore mentioned, on burials to those who do not belong to the synagogue or organization members of plaintiff, is to divert a portion of plaintiff's potential profit to those who do belong to such synagogues or organizations.
The words 'private shareholder or individual' in section 501(c)(3) of the Internal Revenue Code of 1954, have been defined to refer to 'persons having a personal and private interest in the activities of the organization'. Regulations § 1:501(a)-1(c). The obvious purpose of this provision is to deny exemption to an organization that pays a dividend, either directly or indirectly, to its members. See 6 Mertens, The Law of Federal Income Taxation, section 34.13. The extra charges in this case, although having the effect of decreasing plaintiff's earnings ($ 250.00 in 1954), cannot be said to be a dividend to the families of decedents who belong to the synagogue or organization members of plaintiff. Such extra charges are surely not a cover or subterfuge for the distribution of net earnings to a shareholder, since it is only by the occurrence of a death that the family of the decedent receives this limited economic advantage from plaintiff.
Upon a consideration of all the evidence, the Court finds the facts of the case, as stated in this opinion, amply support plaintiff's claimed tax exemption, and concludes, as a matter of law, that:
1. The Court has jurisdiction of this action under 28 U.S.C.A. § 1346(a)(1).
2. Plaintiff is a corporation organized and operated exclusively for charitable purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1954.
3. No part of the net earnings of plaintiff inures to the benefit of any private shareholder or individual.
4. No part of plaintiff's activities has ever been devoted to carrying on propaganda or otherwise attempting to influence legislation, nor has plaintiff at any time participated or intervened in any political campaign on behalf of any candidate for public office.
5. Plaintiff is an exempt organization under the provisions of section 501(c) (3) of the Internal Revenue Code of 1954.
Judgment for the 1954 tax year will be entered for plaintiff for $ 126.69, together with interest thereon from February 3, 1958.