## Facts

- Bilingual Montessori School of Paris, Inc. was a nonstock, nonprofit corporation organized under Delaware law.
- The corporation operated a private bilingual Montessori school in Paris, France.
- The corporation conducted no activities in the United States and had no U.S.-based officers, directors, or employees.
- Contributions received by the corporation were used to pay expenses of the Paris school.
- The IRS recognized the corporation as exempt under I.R.C. § 501(c)(3) but determined that contributions were not deductible under I.R.C. § 170, asserting the entity was not a qualifying domestic organization and functioned as a conduit for a foreign school.
- The corporation petitioned the Tax Court for declaratory relief under I.R.C. § 7428 challenging the adverse deductibility determination.

## Issues

1. Whether a nonprofit corporation incorporated in Delaware, but operating entirely in France, is “created or organized in the United States” and thus a “domestic” organization under I.R.C. § 170(c)(2).
2. Whether contributions to such a corporation are nondeductible because it allegedly acts as a mere conduit for a foreign organization.

## Decision

- The Tax Court entered declaratory judgment for the corporation.
- The court held the corporation was “domestic” for § 170(c)(2) purposes because it was organized under Delaware law.
- The court rejected the conduit characterization, concluding the corporation itself operated and controlled the educational activities and the use of contributed funds.
- Contributions to the corporation therefore qualified as deductible charitable contributions under § 170, assuming satisfaction of the other § 170(c)(2) requirements.

## Legal Principles

- For I.R.C. § 170(c)(2), “domestic” status turns on place of creation or organization under U.S. law (including state law), not on the geographic location of the organization’s charitable activities.
- A U.S.-organized charity conducting programs abroad does not lose deductibility treatment solely because its operations are overseas.
- Conduit concerns arise when an ostensible domestic recipient lacks discretion and merely forwards donations to an independent foreign organization; where the domestic corporation itself conducts and controls the charitable program and expenditures, contributions may remain deductible.

## Conclusion

The Tax Court held that a Delaware-incorporated nonprofit operating a school in France qualified as a domestic organization under § 170(c)(2) and was not a conduit; accordingly, contributions to it were deductible under § 170.


Bilingual Montessori School of Paris, Inc. v. Commissioner, 75 T.C. 480 (1980)