Coaches 101 a NJ Nonprofit

United States Tax Court

T.C. Memo. 2025-106

COACHES 101 A NJ NONPROFIT,

Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent

__________

Docket No. 8630-23X. Filed October 15, 2025.

__________

Omar Dyer (an officer), for petitioner.

Ehsan A. Ali, Erika B. Cormier, and Marie E. Small, for respondent.

MEMORANDUM OPINION

NEGA, Judge: This case is before the Court on respondent’s

Motion for Summary Judgment (respondent’s Motion) filed July 8, 2025.

On April 5, 2023, respondent issued a final adverse determination to

petitioner finding that it is not exempt from federal income tax under

section 501(a)1 because it is not an organization described in section

501(c)(3). Petitioner filed its Petition on May 15, 2023, seeking a

declaratory judgment, pursuant to section 7428(a)(1)(A) and Rule 210(c),

that respondent erred in his determination. Respondent concedes that

petitioner exhausted all administrative remedies. See § 7428(b)(2); Rule

211(g)(4). For the reasons stated below, the Court will grant

respondent’s Motion and sustain the final adverse determination.

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the

Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and

Rule references are to the Tax Court Rules of Practice and Procedure. All amounts are

rounded to the nearest dollar.

Served 10/15/25

2

[*2] When the Petition was filed, petitioner’s principal office was in

New Jersey; absent stipulation to the contrary, appeal would lie to the

U.S. Court of Appeals for the Third Circuit. See § 7482(b)(1)(D), (2).

Background

On September 16, 2024, after the parties were unable to stipulate

to the Administrative Record, respondent certified and filed the

Administrative Record pursuant to Rule 217(b)(1). On September 25,

2024, petitioner filed its Motion to Supplement the Record. The Court

denied that Motion to Supplement the Record on October 10, 2024. On

November 4, 2024, petitioner filed two additional Motions to

Supplement the Record. Those Motions to Supplement the Record were

denied on December 19, 2024. For purposes of this proceeding, the facts

and representations in the Administrative Record are accepted as true

and incorporated herein. See Rule 217(b)(1).

Petitioner was incorporated on March 20, 2007, as a domestic

nonprofit corporation under the laws of the State of New Jersey. The

Certificate of Incorporation lists Omar Dyer as the registered agent, the

incorporator, and an initial member of the board of trustees of petitioner.

Several items listed on the face of the Certificate of Incorporation,

including the means of distributing the assets of the organization, are

described as being set forth only in petitioner’s bylaws. Its business

purpose is described as “a publication . . . to help children in all areas,

whether it is childrens [sic] books or getting high school students into

college. Coaches 101 is about getting the children the right education to

play in sports and conitue [sic] with there [sic] careers.”

Petitioner’s undated bylaws state that it is “organized exclusively

for charitable purposes, including, for such purposes, the making of

distributions to organizations that qualify as exempt organizations

under section 509(a)(1) and 170(b)(1)(A)(vi), or the corresponding section

of any future federal tax code.” However, the section titled “Specific

Objectives and Purposes” explains that petitioner’s purpose in raising

and distributing money is to advance “the aims and goals of the My Plan

Challenge Foundation Fund.” The bylaws also provide under the

“Distribution of Assets” heading:

Upon the dissolution of this corporation, its assets

remaining after payment, or provision for payment, of all

debts and liabilities of this corporation shall be distributed

for one or more exempt purposes within the meaning of

3

[*3] Section (c)(3) [sic] of the Internal Revenue Code or shall be

distributed to the federal government, or to a state or local

government, for public purpose. Such distribution shall be

made in accordance with all applicable provisions of the

laws of [the State of New Jersey].

Confusingly, the bylaws reference a board of directors, in contrast to the

board of trustees, and contain a restriction requiring that members of

that board have “direct lineage to Omar Dyer and his immediate family.”

A document titled “Profit Sharing Agreement / Employment” adds

further confusion by assigning conflicting roles to the board of trustees

and a board of directors but does not appear itself to be part of the

bylaws.

Despite its incorporation in 2007, petitioner purportedly

remained dormant until July 2020. Restrictions during the COVID–19

pandemic that required petitioner’s founder, Mr. Dyer, to remain at

home led to a renewed interest in petitioner. On July 10, 2020, Mr.

Dyer, on behalf of petitioner, filed Form 1023, Application for

Recognition of Exemption Under Section 501(c)(3) of the Internal

Revenue Code, with the Internal Revenue Service (IRS) seeking

recognition of exempt status for petitioner. The application describes

petitioner as “a family owned organization” and reiterates the same

familial restriction found in the bylaws that affects board of trustee

membership.

The application explains that petitioner “was basically organized

to act as the license holder of Omar Dyer as a literary agency.” It further

explains that on January 1, 2020, Mr. Dyer created a “social media based

foundation” called “My Plan Challenge Foundation Fund” with the goal

of pursuing blogs, podcasts, and other entertainment media related to

Mr. Dyer’s Mad Comedian project. The application states: “The future

plans of this company is [sic] to be a foundation that is directed around

the new face of the company in Mad Comedian.”

At some point, as the application notes, Mr. Dyer “changed his

status from a volunteer to actual employee getting wages.” It also

explains that petitioner maintains a “Profit Sharing Program” (PSP)

and Simplified Employee Pension Plan (SEP IRA) for the benefit of its

employees. As described, the PSP provides that “executive employees

will be have [sic] an agreement with the organization for personal funds

used by the organization, and given back to the employee once when the

organization creates a profit.” The specific agreement between

4

[*4] petitioner and Mr. Dyer provides that “[a]ny and all profits after

expenses . . . are eligible for profit-sharing. Profits will be calculated as

sales operations for that period minus expenses for that time

period . . . .”

On October 30, 2020, the State of New Jersey, Department of the

Treasury, reinstated petitioner to resume business in the state; Mr.

Dyer was listed as president of petitioner, but no longer a trustee. On

November 17, 2020, Mr. Dyer, under penalty of perjury, signed Letter

1312, Information Request First Request, stating he was “an officer,

director, trustee, or other governing body member (not an authorized

representative),” in response to an October 23, 2020, inquiry from the

IRS with regard to the Form 1023 submitted by petitioner.

On April 5, 2023, the IRS issued a final adverse determination to

petitioner finding that it does not qualify for federal income tax

exemption under section 501(a) as an organization described in section

501(c)(3). Respondent noted petitioner’s organization is not organized

or operated for an exempt purpose. Specifically, the IRS’s final adverse

determination found:

[Petitioner’s] activities involve a substantial amount of

commercial activities including the sale of merchandise

(sneakers, books, etc [sic]), marketing services (including

advertising services with a $9.99 subscription fee), media

production, stock investing, and insurance services.

[Petitioner] appear[s] to be engaged in inurement and/or

private benefit with [its] founder in that [it] reported

studen [sic] loan cancellation income on [its] return, [it]

claim[s] to hold a license, service mark and perhaps other

intellectual property rights of the founder in relation to the

founder’s Mad Comedian and Fan DJ endeavors among

others, and [its] founder intends to report any royalty

income on [its] return.

On May 15, 2023, petitioner filed its Petition seeking a

declaration with respect to its initial qualification as an organization

described in section 501(c)(3) that is exempt from tax under section

501(a). The Petition also raises claims related to other purported notices

giving rise to additional causes of action, which the Court has previously

dismissed for lack of jurisdiction. On May 2, 2024, respondent filed his

5

[*5] Answer to which he attached a complete index to the

Administrative Record.

On July 8, 2025, respondent filed the present Motion contending

that as a matter of law petitioner is not entitled to a declaratory

judgment. On July 9, 2025, the Court ordered that on or before August

11, 2025, petitioner, if it disagrees with respondent’s Motion, must

“point out the specific points in dispute” and if it “disagrees with

respondent’s argument as to the law, then any such response should also

set forth petitioner’s position on the disputed legal issues.” Because

petitioner is not represented by counsel, the Court provided a letter to

petitioner with the contact information of local tax clinics that might

assist petitioner in responding to the present Motion.

On July 10, 2025, petitioner filed three separate Responses to

respondent’s Motion: (1) an Objection to Motion for Summary Judgment

(petitioner’s Objection); (2) a Brief in Support of Objection to Motion for

Summary Judgment (petitioner’s Brief in Support); and (3) a First

Supplement to Objection to Motion for Summary Judgment (petitioner’s

First Supplement). 2

Discussion

I. Scope of Inquiry and Summary Judgment

Section 7428(a)(1)(A) confers jurisdiction on the Court to make a

declaration regarding a determination by the Commissioner “with

respect to the initial qualification or continuing qualification of an

organization as an organization described in section 501(c)(3) which is

exempt from tax under section 501(a).” In general, the Court’s scope of

inquiry is limited to the administrative record and “to the propriety of

the reasons given by [the Commissioner] for denying [the taxpayer’s]

application for exempt status.” Aid to Artisans, Inc. v. Commissioner,

71 T.C. 202, 208 (1978) (citing Hou. Law. Referral Serv., Inc. v.

Commissioner, 69 T.C. 570, 573 (1978)); see also Rule 217(a). An action

for declaratory judgment may be decided by summary judgment. Rule

217(b)(2); see, e.g., Church in Bos. v. Commissioner, 71 T.C. 102, 105

(1978); Sols. Plus, Inc. v. Commissioner, T.C. Memo. 2008-21, 95 T.C.M.

(CCH) 1097, 1100.

2 Petitioner originally filed this Response as a Motion to Vacate Motion for

Summary Judgment. By order served August 5, 2025, the Court recharacterized the

filing.

6

[*6] The purpose of summary judgment is to expedite litigation and

avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp.

v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant

summary judgment on all or any part of the legal issues in controversy.

Rule 121(a)(1). In cases in which judicial review is based solely on the

administrative record, a motion for summary judgment and any

response in opposition must include a statement of facts with references

to the administrative record. Rule 121(j). In deciding whether to grant

summary judgment, the Court construes factual materials and draws

inferences therefrom in the light most favorable to the nonmoving party.

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17

F.3d 965 (7th Cir. 1994). However, the nonmoving party may not rest

upon mere allegations or denials in his pleadings but, rather, must set

forth specific facts showing that there is a genuine dispute for trial. Rule

121(d); see Sundstrand Corp., 98 T.C. at 520.

II. Entitlement to Exempt Status

Section 501(a) exempts organizations described in section

501(c)(3) from federal income tax. Organizations described therein

include “[c]orporations . . . organized and operated exclusively for

religious, charitable, scientific, testing for public safety, literary, or

educational purposes, or to foster national or international amateur

sports competition (but only if no part of its activities involve the

provision of athletic facilities or equipment), . . . no part of the net

earnings of which inures to the benefit of any private shareholder or

individual.” § 501(c)(3). The requirements that an organization be both

“organized” and “operated” exclusively for exempt purposes are referred

to as the organizational test and operational test, respectively. See

Treas. Reg. § 1.501(c)(3)-1(a)(1), (b), (c). An organization that fails to

satisfy either test is not entitled to an exemption under section

501(c)(3). 3 See Treas. Reg. § 1.501(c)(3)-1(a)(1).

When applying the operational test, the Court may examine any

of three aspects of the operation of an organization seeking exemption:

(1) the primary activities of the organization, (2) the distribution of

earnings from the organization (private inurement), and (3) whether the

organization is an “action organization” as defined by the regulations.

See Treas. Reg. § 1.501(c)(3)-1(c)(1)–(3), (d)(1)(ii). Whether an

3 Application of the operational test alone is sufficient here to establish that

petitioner is not entitled to tax-exempt status under section 501(a). The Court need

not reach the issue of whether the organizational test is satisfied given our application

of the operational test.

7

[*7] organization satisfies the operational test is a question of fact to be

resolved on the basis of all the evidence presented by the record. See

Manning Ass’n v. Commissioner, 93 T.C. 596, 603 (1989); Church of

Scientology of Cal. v. Commissioner, 83 T.C. 381, 474 (1984), aff’d, 823

F.2d 1310 (9th Cir. 1987). In this case respondent’s Motion focuses on

the primary activities and private inurement and thus is consistent with

the two-pronged approach previously applied by the Third Circuit. See,

e.g., Presbyterian & Reformed Publ’g Co. v. Commissioner, 743 F.2d 148,

152 (3d Cir. 1984), rev’g 79 T.C. 1070 (1982).

A. Petitioner’s Primary Activities

When examining the primary activities of an organization under

the operational test, Treasury Regulation § 1.501(c)(3)-1(c)(1) provides:

An organization will be regarded as operated exclusively

for one or more exempt purposes only if it engages

primarily in activities which accomplish one or more of

such exempt purposes specified in section 501(c)(3). An

organization will not be so regarded if more than an

insubstantial part of its activities is not in furtherance of

an exempt purpose.

In this context, “exclusively” does not mean “solely” or “absolutely

without exception.” See Nationalist Movement v. Commissioner, 102

T.C. 558, 576 (1994) (quoting Church in Bos., 71 T.C. at 107), aff’d per

curiam, 37 F.3d 216 (5th Cir. 1994). The “critical inquiry” is whether

the primary purpose of an organization’s activities is an exempt purpose

described in section 501(c)(3) “or whether its primary purpose is the

nonexempt one of operating a commercial business producing net profits

for [the organization].” See B.S.W. Grp., Inc. v. Commissioner, 70 T.C.

352, 356–57 (1978) (“[T]he purpose towards which an organization’s

activities are directed, and not the nature of the activities themselves,

is ultimately dispositive of the organization’s right to be . . . exempt from

tax . . . .”). The presence of a single substantial nonexempt purpose will

preclude exemption from tax under section 501(a) regardless of the

number or importance of other truly exempt purposes. See Better Bus.

Bureau of Wash., D.C., Inc. v. United States, 326 U.S. 279, 283 (1945).

This is not a case that might otherwise require balancing the

substantiality of a nonexempt activity against numerous exempt ones;

examples of petitioner’s profit-driven activities pervade the

Administrative Record. Petitioner’s commercial ventures apparently

8

[*8] include selling tickets to live events, selling “credits” for

autographing of merchandise, selling “subscriptions” to the “My Plan

Challenge,” selling purported option contracts, selling books and CDs

authored by the organization’s founder, and other activities consistent

with operating a for-profit business enterprise.

For instance, petitioner’s website advertises Mad Comedian

shoes, designed by the organization’s founder, with one design listed at

$189 per pair, but notes there is an additional “auction registration fee

attached to the price of the shoe; [sic] of $25 and a $1 processing fee.”

Nowhere in the description of the shoes is there a hint of any exempt

purpose; instead the description notes that Mr. Dyer “created this

unique shoe in order to celebrate Mad Comedian’s life on social media.”

In describing the goals of the My Plan Challenge Foundation,

petitioner states that the “main goal” is to “raise close to $1 million

dollars selling products” and “to pursue projects that involves [sic] the

marke [sic] character and face of the foundation. [sic] Mad Comedian.”

In turn, a 2017 document titled “Ownership Statement” describing Mad

Comedian explains that the “desired outcome” of Mad Comedian is to

create a “social media empire to stream content, and produce content.”

It plans to accomplish this by “produc[ing] and sell[ing] short films,

music videos and feature films” including targeted advertisements to a

“global market audience.” In the description of the activities of Mad

Comedian, there is no indication of a proper exempt purpose. In sum,

Mad Comedian’s activities appear consistent with petitioner’s admission

on its Form 1023 that, at least in substantial part, petitioner hopes to

build a profitable business capable of funding its profit-sharing

program.

The Administrative Record reflects that petitioner’s primary

activities are commercial in character and “that fact weighs heavily

against exemption.” B.S.W. Grp., Inc., 70 T.C. at 359. Further, “[t]his

is not the typical case where an organization, concededly conducting

substantial educational, scientific, or charitable activities, also conducts

a trade or business related to its exempt functions.” Id. The only

activities petitioner puts forward that could plausibly, taken at face

value, qualify as exempt activities are vague assertions it “helped” host

an event for children and wrote a handful of recommendation letters for

high school students. These do little to overcome the abundant evidence

that petitioner’s primary activities are commercial ventures designed to

earn a profit with no apparent connection to an exempt purpose. See id.

at 356–57. The Court will sustain respondent’s finding that petitioner

9

[*9] fails the operational test, on the basis of the activities it has

engaged in and plans to continue in the future.

B. Private Inurement of Proceeds of Petitioner

An organization will likewise fail the operational test “if its net

earnings inure in whole or in part to the benefit of private shareholders

or individuals.” See Treas. Reg. § 1.501(c)(3)-1(c)(2). In particular, the

organization seeking exempt status must establish that its operation is

not “for the benefit of private interests such as . . . the creator or his

family.” Id. para. (d)(1)(ii).

Among the examples provided by the regulations, the following

seems markedly applicable:

Example 2. (i) O is an art museum. O’s principal

activity is exhibiting art created by a group of unknown but

promising local artists. O’s activity, including organized

tours of its art collection, promotes the arts. O is governed

by a board of trustees unrelated to the artists whose work

O exhibits. All of the art exhibited is offered for sale at

prices set by the artist. Each artist whose work is exhibited

has a consignment arrangement with O. Under this

arrangement, when art is sold, the museum retains 10

percent of the selling price to cover the costs of operating

the museum and gives the artist 90 percent.

(ii) The artists in this situation directly benefit from

the exhibition and sale of their art. As a result, the

principal activity of O serves the private interests of these

artists. Because O gives 90 percent of the proceeds from its

sole activity to the individual artists, the direct benefits to

the artists are substantial and O’s provision of these

benefits to the artists is more than incidental to its other

purposes and activities. This arrangement causes O to be

operated for the benefit of private interests in violation of

the restriction on private benefit in paragraph (d)(1)(ii) of

this section. Based on these facts and circumstances, O is

not operated exclusively for exempt purposes and,

therefore, is not described in section 501(c)(3).

Id. subdiv. (iii). On its Form 1023 petitioner states: “The company was

basically organized to act as the license holder of Omar Dyer as a

literary agency.” The example from the regulation appears to mirror

10

[*10] how petitioner envisions its own operations. By petitioner’s

admission, it continues to sell Mr. Dyer’s works; then apparently those

moneys are “waged” back to Mr. Dyer on Form 1099. Further, petitioner

freely admits in its application that “[t]he future plans of this company

is [sic] to be a foundation that is directed around the new face of the

company in Mad Comedian,” a fictional character created and owned by

Mr. Dyer. This is precisely the type of private inurement expressly

forbidden by section 501(c)(3).

Mr. Dyer also admits that certain actions that petitioner took

were designed to provide him with a direct personal benefit. What Mr.

Dyer terms the Profit (Revenue) Sharing Program 4 was designed with

the purpose of allowing him “to be hired as an employee of the company

and paid a minimum wage.” Yet the structure of the program appears

to allow him to draw on the funds of the organization through “cash

advances” as he sees fit, without consequence, and on terms preferential

to those of other participants. Apparently this was all in an effort to

circumvent what he recognizes as “limitations set forth by the tax code,

in which I can’t benefit personally.”

Petitioner’s SEP IRA device fares similarly and appears as just

another means for assets of petitioner to find their way to Mr. Dyer or

his immediate family members. This approach is also evident in

petitioner’s Form 990, Return of Organization Exempt from Income Tax,

for taxable year 2019 where it reported $17,831 of “Student Loan

Cancellation” as miscellaneous revenue, apparently related to Mr.

Dyer’s student loans.

Thus the operation of petitioner results in its earnings flowing

directly to its founder, Mr. Dyer, who appears to be the primary

beneficiary of its activities, directly or indirectly, and the purpose for its

existence. The Administrative Record contains repeated examples of

admissions by Mr. Dyer, in his own regard and as president of petitioner,

as to private inurement for his benefit, whether by “wages” earned,

royalties transferred to him, or simply promotion of his performance

career and the sale of his products. As a result, respondent’s finding of

the potential for substantial private inurement is sustained, precluding

any entitlement to exemption under section 501(a).

4 An “Angel Investor Program” is also discussed but, together with the

“Revenue Sharing Program” and “Profit Sharing Program,” appears to be one concept

created by Mr. Dyer to accomplish the same purpose.

11

[*11] III. Petitioner’s Objections to Summary Judgment

Rule 121(d) sets forth that “[t]he nonmovant must respond,

setting forth specific facts . . . to show that there is a genuine dispute of

fact for trial.” As previously stated, “any response in opposition to a

motion for summary judgment must include a statement of facts with

references to the administrative record.” Rule 121(j). Where a party

fails to properly address an assertion of fact, the Court may (1) “consider

the fact undisputed for purposes of the motion” and (2) “grant summary

judgment if the motion and supporting materials (including the facts

considered undisputed) show that the movant is entitled to it.” Rule

121(f). “Disputes over facts that are not outcome determinative do not

preclude the entry of summary judgment.” Carpenter v. Commissioner,

T.C. Memo. 2012-1, 103 T.C.M. (CCH) 1001, 1003–04 (citing Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)), supplemented by T.C.

Memo. 2013-172.

Despite the Court’s warning in the July 9, 2025, Order, none of

petitioner’s responsive filings appropriately addresses the issues raised

in respondent’s Motion. To the extent that the Court understands

petitioner’s arguments, they are divided roughly along two lines, those

in its Objection and First Supplement and those in its Brief in Support.

Turning first to petitioner’s Objection and First Supplement,

petitioner argues that the notice it received with respect to respondent’s

filing his Motion was inadequate, that certain purported procedural

errors with respect to respondent’s choice of counsel were made, and

that respondent’s Motion improperly relies on extrarecord evidence.

Petitioner’s arguments are misguided. Its argument with regard

to extrarecord evidence seems to contend that William M. Paul, Acting

Chief Counsel of the IRS, is somehow a “new witness” in this case; this

misunderstanding of Mr. Paul’s position has no relevance to petitioner’s

claim. Petitioner seems similarly confused with the timing and other

requirements for filing motions for summary judgment in this Court as

it repeatedly cites the Federal Rules of Civil Procedure instead of this

Court’s Rules (or when referring to the correct Rules does so

incoherently). Regardless, petitioner has not identified any defect in the

service of respondent’s Motion or that Motion’s compliance with our

Rules. Similarly, there is no merit to petitioner’s grievances with

respondent’s choice of counsel to prepare the Motion.

12

[*12] Petitioner’s Brief in Support is equally unhelpful; that document

is simply a refiling of petitioner’s September 25, 2024, Brief in Support

of Motion to Supplement the Record. The Court’s October 10, 2024,

Order addressed those arguments, and the Court need not revisit them

here.

Petitioner has otherwise declined this Court’s invitation to

address the merits of respondent’s Motion and put forward a genuine

dispute that would necessitate trial in this case.

IV. Conclusion

Petitioner has failed to adequately respond to respondent’s

Motion, and the Court could enter a decision against it for that reason

alone. See Rule 121(d). Nevertheless, the Court has considered

respondent’s Motion on its merits. The Court’s review of the

Administrative Record shows that respondent’s Motion is well made; his

determination that petitioner does not qualify for exempt status as an

organization described in section 501(c)(3) was not erroneous. He is

entitled to summary judgment as a matter of law.

To reflect the foregoing,

An appropriate order and decision will be entered.