Yuen v. International Revenue Service Reply Brief for Plaintiff-Appellant

    PAUL 

WRITER'S DIRECT O1AL NUMBER June 11, 1970 

(212) 

NEALE M ALBERT 

10 Colum 
N York, 

or the reasons stated below, it is our opinion 

are a "publicly supported" organization within the 

Code of 1954. As such, you are not a "private foundation" for 
We 

the Code. Furthermore, contributions to you by 

iduals ar deductible subject to the "50 percent" limita- 

ther than the 20 percent limitation) set forth in 

ection 170(b)(1) of the Code, and are eligible for carryover 

pursuant to section 170(d)(1) of the Code. In 

tion of such foundations 

under section 4942 of the Code to make an annual minimum amount 

of "qualifying distributions". 

The Treasury Regulations provide that a charitable 

NAACP Legal Defense and Educational Fund, 

A/ I.R.C. of 1954, § 509. 



PAUL. WEISS, GOLDBERG, RIFKIND, WHARTON 8 GARRISON 

June ll, 

Supported" if it meets 

mechanical 
its public 

mes" test. Support for 

does not include income 

from the performance of its exempt 

clude investment or other income received 

Under the mechanical test, an organization will be 

considered to be publicly Supported for its current taxable 

€ taxable year, if for the four taxable 

years preceding the current taxable year its total support from 

governmental units and from donations from the general public 

e of the organization's total support 
ird or 

U7 
od. Donations during the four preceding 

equalled one-th 

during that pe 

ars from any one non-governmental contributor or 

related group of such contributors may be counted toward meeting 

rd requirement only to the extent that the contribu- 

tions from that contributor, or group of contributors, do not 

2/ Reg. § 1.170-2(b)(5) (441) (a). 

B/> IGk.Ce Of 1954, § 170(b)(1)(A) (vi); Reg. § 1.170-2(b)(5) (44). 

ih Reg. § 1.170-2(b) (5) (444) (b). 



PAUL. WEISS, GOLDBERG. RIFKIND, WHARTON 8 GARRISON 

June 11, 1970 

percent of the organization's 

iod. An organization may 

the mechanical test only 

changes in the organiza- 

3 ct $ fe) fo a ° be ° »peration. 

circumstances" test, an organi- 

publicly supported if it receives substan- 

upport from a "representative number of persons in the 

area in which it operates" (determined in light 

r not the organization limits its activities to 

eld which can be expected to appeal to a limited 

pursuant to its organizational 

operation, it makes bona fide solicita- 
5/ 

ublic support". The proportion of 

contributio om public sources to total support necessary 

to qualify as a publicly supported organization under the 

"facts and circumstances" test may be considerably less than 

the proportion necessary to so qualify under the mechanical 

test. In examples given by the regulations to illustrate 

application of the "facts and circumstances" test, an art 

ich solicited from the general public contributions 

totaling $10,000 in each of its four most recent 

and for the same taxable years received investment 

§ 1.170-2(b) (5) (444) (e) (3). 



A 5) 

PAUL. WEISS, GOLDBERG, RIFKIND, WHARTON 8 GARRISON 

ituting 75 

held publicly supported; and 

Stra was held publicly supported which received $10,000 

contributions unrelated individuals (88.9 

pport), and an additional $5,000 

pport) from a "community chest" 

You have furnished us with financial statements and 

a breakdown of your sources of support for each of the years 

1966 through 1969. This information shows aggregate support 

9,087,310, of which $3,487,386, for that four-year period of 

or approximately 38 percent, was derived from contributions 

from individuals of not more than $1,000 each, contributions 

received from "out of town campaigns" of not more than $500 each, 

and net revenue from theatre benefits. 

In light of the foregoing, it is virtually certain 

ical test for your current taxable year ending December, 1970 

and will be such for the following year, provided that there 

bstantial changes in your character, purposes or 

methods of operation during those years. However, to determine 

with complete certainty whether you are publicly supported under 

6/ Reg. § 1.170-2(b)(5) (411) (c)(5), examples 3 and 4. 



s + 
PAUL. WEISS, GOLDBERG, RIFKIND, WHARTON 8 GARRISON 

st would require a ming detailed 

of support. We do not believe of your various source 

to undertake such a detailed analysis, 

in our opinion, that you are in any 

event a publicly supported organization under the "facts and 

As noted above, the amount of support that you derive 

from contributions from the general public is very substantial, 

and as a percentage of your total support. 

level of general support through broad-based 

fund raisi using mail solicitation, dinners, and receptions, 

under tt sional fund raisers. Your current 

volume of mail solicitation involves a mailing of over 2,000,000 

itation letters annually, including mailing to approximately 

70,000 persons who have made contributions to you within the 

ng 30 montk to approximately 1,800,000 

prospects obtained from other mailing lists. 

ing, it is our opinion that you 

"bona fide solicitations for broad-based public support," 

that you receive substantial support from "a representative 

" persons," and that you are a publicly supported 

"facts and circumstances" test. 



~ PAUL. WEISS, GOLDBERG, RIFKIND, WHARTON 8 GARRISON 

p ve ere 

V. vot LA. WL YZ