In Zabrishie Estate 96 Col App 3d 571, 158 Cal Rptr 154. (1979) the legal definition of a corporation sole states, “A corporation sole is the incorporation of the bishop, chief priest, presiding elder, or other presiding officer of any religious denomination, society or church for the purpose of administering and managing the affairs, property and temporalities thereof.  The will and judgment alone of the presiding officer regulates his acts, like any other individual acting in his own right.  Historically, a corporation sole consists of one person only and his successors, in some particular station, who are incorporated by law in order to give them legal capacities and advantages, particularly that of perpetuity, which is their natural persons they could not have.”  The phrase “or other presiding officer of any religious denomination, society or church” provides allowances for a variety of acceptable titles/office within the church.

In most cases, an established board of directors controls a corporation according to certain specific guidelines as set forth in the articles of incorporation.  The corporation’s owner or shareholders usually elect the board of directors and have the power to remove them from office. The articles on incorporation usually require the election of a secretary, treasurer and other officers and force them to perform certain duties in a particular manner.

However, a corporation sole operates under exclusive direction of the individual holding the office without any other officers or any established internal procedures.  In this case, there are no by-laws to regulate how the corporation sole operates or a board of directors to dictate the course of action.  The person holding the office of corporation sole exercises their own will and judgment alone to manage the affairs of the corporation sole, like any other individual acting in his own right.

The power to conduct the affairs of the corporation sole rests entirely with one specific person at the complete direction of the Most High, Yahshua.  In the case of a corporation sole overseeing a body of believers, private by-laws (rules) within that body for behavior and manners may be established by the corporation sole and the congregation according to the law of the Gospel.

The first question that comes in everyone’s mind is, “How does the IRS tax law recognize a corporation sole?”

IRS in publication 557, it states on page 16 of Chapter three concerning 501(c)(3) organizations under the heading Dedication and Distribution of Assets, “Asset of the organization must be permanently dedicated to an exempt purpose.  This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the federal government or to a state or local government for a public purpose.”

In chapter three, page 15, those that are immune automatically are those that meet the requirements of the 501(c)3 section of the IRC, which include: CHURCHES, interchurch organizations, auxiliaries of church…..”

IRS publication 1828 on page 3, it states, “Churches may be legally organized in a variety of ways under state law, including………corporation sole.”  The IRS is stating that a church is recognized as the same status as a 501(c)3 corporation that is under a corporation sole that is organized under state law although it is not organized as 501(c) (3) corporation.  It meets the requirements of the 501(c)(3) section of the IRS code.

In Title 26 and Income Tax Regulations Section 1511-2(u) the term “CHURCH” includes,  a religious order, a religious organization if such order or organization is (a) an part of  “Church” – Religious Order and (b) is engaged in carrying out the functions of church whether as a Civil Law Corporation 501(c)(3) or OTHERWISE. (Otherwise: Apart from; aside from; not including) Corporation sole is the “otherwise” organized under state law. In the IRS Code 508(c)(1)(a) the corporation sole cannot file for a status that it already enjoys.  Because the corporation sole is recognized as the same status as the 501(c)3 corporation and in the category of the 508, the 501(c)(3) Corporation can donate all the assets to corporation sole because it meets the ruling of IRS publication 557 under “Distribution of Assets.”

On page 15 of publication 557 it states: “A church, interchurch organization, religious schools, order, etc and its associations IS NOT required to file form 1023 to be exempt from federal income tax or to receive a tax deductible contribution.  They are automatically immune.  The IRS specifically excludes the church from the need to file for tax-exempt status.

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