The opinion of the court was delivered by: EAST
The Washington Trust Bank, as Trustee above (Trust Bank), seeks to recover on behalf of the Endowment Care Fund of Greenwood Memorial Terrace Company (Greenwood Trust) a refund of federal income taxes paid to the United States of America (Government) for the calendar years of 1963 and 1964 in the amounts of $21,819.95 and $5,162.65, respectively, together with interest thereon as allowed by law.
This Court has jurisdiction under the provisions of Title 28, United States Code Section 1346.
1. Whether Greenwood Trust is exempt from federal income taxation under Section 501(a) of the Code as a "cemetery (company) . . . which . . . (is) . . . not operated for profit; . . ." described in Section 501(c)(13).
2. Whether Trust Bank can raise in its P.T.O. Contentions and advance at trial, as alternative grounds for recovery, subsections of the Internal Revenue Code which were not specifically set forth in their claims for refunds, namely:
(a) Whether Greenwood Trust qualified for federal tax exemption as a charitable trust described in Section 501(c)(3) of the Internal Revenue Code of 1954.
(b) Whether Greenwood Trust is entitled to a Section 642(c) deduction for capital gains realized in 1963 and 1964 as amounts permanently set aside for charitable uses.
I find from the admitted facts contained in the pretrial order and all of the evidence in the case that:
1. At all times material herein, Greenwood Memorial Terrace Company or its predecessors (Greenwood Corporation) was a Washington profit-making corporation, with its principal place of business in Spokane, Washington, engaged in the operation of a cemetery and related services near Spokane, Washington, since the early 1890's;
2. As a part of its operation Greenwood Corporation sells burial lots and mausoleum compartments, however, does not promise or agree to provide perpetual care for the same;
4. The original trust agreement was amended for the first time on January 19, 1961, to designate The Old National Bank of Spokane as successor trustee (Tr. Ex. 2)
and again amended on December 14, 1961 (Tr. Ex. 3);
5. The Amendment of January, 1961, acknowledges that the maintenance and operation of Greenwood Trust had been and was regulated by the General Cemetery Act of the State of Washington, R.C.W. 68.44.010 et seq.;
6. In 1961 the Greenwood Trust applied to Internal Revenue Service for an exemption from federal income taxation as a cemetery company under the provisions of Section 501(c)(13). The application was denied, and the trustees were formally notified of the denial of their application for an exemption by letter dated August 25, 1961 (Tr. Ex. 16);
7. The Old National Bank of Spokane acted as trustee of the Greenwood Trust from January 19, 1961, until July 19, 1963, when the board of directors of the Greenwood Corporation unanimously adopted a resolution appointing Mason Letteau, Ronald C. Waranch, and A. J. Dietsch as successor trustees (Tr. Ex. 5) who served as trustees of the Trust Fund until January 4, 1966, when Ronald C. Waranch and A. J. Dietsch resigned and were replaced by Betty Letteau and J. R. MacFadden (Tr. Ex. 6) who, along with Mason Letteau, served as trustees from January 4, 1966, until March, 1968;
8. The present trustee (Trust Bank) was appointed by order of the Superior Court of Spokane County on or about March 22, 1968, and the Superior Court approved a new Trust Agreement on April 30, 1968 (Tr. Exs. 7 and 8).
9. The Greenwood Corporation was reorganized and its stock changed hands on July 20, 1962, and from then on through January, 1966, the following persons served as officers of the Greenwood Corporation and as members of its board of directors:
Paul W. Trousdale (Chairman)
Herbert Meline (until 5/14/64)
Paul W. Trousdale (Chairman, Board of ...