Internal Revenue Service
Rev. Rul. 64-109
1964-1 C.B. 190
A cemetery company exempt from Federal income tax under section 501(a) of
the Internal Revenue Code of 1954 as an organization described in section
501(c)(13) of the Code, will be subject to the loss of its exempt status by
the establishment and operation of a mortuary on the cemetery grounds, or
Rev. Rul. 64-109
Advice has been requested whether a tax-exempt cemetery company may
establish and operate a mortuary without losing its exempt status.
The instant organization, which has been held to be exempt from Federal
income tax under section 501(a) of the Internal Revenue Code of 1954 as an
organization described in section 501(c)(13) of the Code, was formed for
the purpose of procuring and holding lands to be used exclusively for a
cemetery or place for the burial of the dead. It now proposes to establish
and operate a mortuary on the cemetery grounds.
Section 501(c)(13) of the Code describes certain organizations which are
exempt from tax under section 501(a) of the Code and provides, in part, as
Cemetery companies owned and operated exclusively for the benefit of their
members or which are not operated for profit, and any corporation chartered
solely for burial purposes as a cemetery corporation and not permitted by
its charter to engage in any business not necessarily incident to that
purpose , no part of the net earnings of which inures to the benefit of any
private shareholder or individual. (Emphasis added.)
The Income Tax Regulations in setting forth the requirements for exemption
under section 501(c)(13) of the Code, use language similar to that above.
See section 1.501(c)(13)-1 of the regulations.
In construing these provisions, it is the position of the Internal Revenue
Service that an organization claiming exemption under section 501(c)(13) of
the Code may not engage in activities which are not necessarily incident to
its burial purposes. The operation of a mortuary is not considered
necessary to the procuring, sale, holding, and use of land solely as a
burial ground. Accordingly, in the instant case, the organization will
become subject to the loss of its exempt status if it establishes and
operates a mortuary on the cemetery grounds, or elsewhere.