## Facts

- Twin Oaks Community, Inc. was a Virginia nonstock corporation operating as a religious or apostolic organization whose members lived communally.
- The organization conducted various businesses for the common benefit of its members.
- All business earnings were deposited into a community treasury maintained by Twin Oaks, and members’ food, housing, medical care, and other needs were met from that common fund.
- Twin Oaks filed Form 1065 and issued Schedules K-1; members reported their pro rata shares of Twin Oaks’ taxable income as dividends.
- The Commissioner conceded that Twin Oaks was a religious or apostolic organization within I.R.C. § 501(d), conducted business for members’ common benefit, and that members included their full pro rata shares of taxable income in gross income each year.
- Twin Oaks did not require new members to take a vow of poverty or irrevocably transfer all real and personal property to the community; members could retain some separate property.
- The Commissioner determined income tax deficiencies for tax years 1977–1980 on the theory that Twin Oaks lacked a qualifying “common or community treasury” under § 501(d) absent a vow-of-poverty and total divestiture requirement.

## Issues

1. Whether an otherwise qualifying § 501(d) religious or apostolic organization fails the “common or community treasury” requirement if members are not required to take vows of poverty and irrevocably contribute all property to the organization.
2. Whether the “common or community treasury” requirement focuses on communal handling of organizational earnings rather than complete elimination of members’ separate property ownership.

## Decision

- The Tax Court held that “common treasury” or “community treasury” under § 501(d) refers to the organization’s communal operation and does not require members to take vows of poverty or irrevocably contribute all personal assets.
- The court found Twin Oaks maintained a qualifying community treasury because it pooled all business earnings into a common fund used to meet members’ needs.
- The court rejected the Commissioner’s deficiency determinations for 1977–1980, concluding Twin Oaks qualified for § 501(d) treatment for the years at issue.

## Legal Principles

- I.R.C. § 501(d)’s “common or community treasury” requirement is an operational test concerned with pooling and communal use of the organization’s income, not a mandate that members surrender all private property.
- A vow of poverty and total renunciation of individual property ownership is not a statutory prerequisite to § 501(d) status.
- Compliance with § 501(d)’s member-level inclusion rule—members reporting their entire pro rata shares of the organization’s taxable income, whether distributed or not—supports § 501(d) treatment when other statutory conditions are met.
- Administrative expectations about typical religious communes cannot add requirements not found in § 501(d)’s text.

## Conclusion

The Tax Court concluded that Twin Oaks satisfied § 501(d) because it operated a genuine community treasury funded by pooled business earnings used for members’ needs, and § 501(d) does not condition that status on member vows of poverty or complete divestiture of separate property.


Twin Oaks Cmty., Inc. v. Comm'r, 87 T.C. 1233 (1986)