Reference no: EM131752289

A store in Gaithersburg, MD is bothered by a homeless individual who hangs out at the store scaring the customers away. The owners of the store create a nonprofit organization to help indigent people who have a strong desire to leave Gaithersburg, MD. Based on the way the store owners submitted the Form 1023 the tax-exempt status was granted. After one-year the only beneficiary of the organization's exempt purpose is that homeless person who was hanging out at the store (who through the help of the charity found living quarters in Delaware). The donors to the organization were only the store owners. Discuss whether this organization is a public charity or not. Discuss whether on audit by the IRS the IRS would have any issue with the tax-exempt status of the organization and, if so, for what reason. If not, what might the IRS have to say about the future governance of the organization.

While answering this question in an essay format, You would have to back up the reasoning with Internal Revenue Code. The length should about 2 paragraphs.