Motion Picture Association of America v. CrystalTech Web Hosting Inc.

Filing 1294

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Motion Picture Association of America v. CrystalTech Web Hosting Inc. Doc. 1294 Att. 4 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA PRESCOTT DIVISION UNITED STATES OF AMRICA, ) ) ) ) Plaintiff, v. ELIZABETH A. GARDNER and FREDRIC A. GARDNER, each individually and LJ COpy ) Case No. ) CV05-3073-PCT-EHC ) d/b/a BETHEL AR MINISTRIES, ) ) Defendants. ) ) ) DEPOSITION OF ELIZABETH A. GARDNER Prescott, Arizona May 31, 2007 8:59 a.m. REPORTED BY: Eve K. Burton, RPR, CRR Certified Reporter No. 50261 ~ PLAINT II 3 I I EXIBI 043 LOTT REPORTING, INC. 316 North Alarcon Street Prescott, AZ 86301 928.776.1169 2 i 2 ELI ZABETH A. GARDNER INDEX PAGE 4 3 Examination by Mr. Shoemaker 4 Examination by Mr. Gardner 5 Further Examination by Mr. Shoemaker 6 7 8 130 l37 EXHIBITS . DESCRIPTION PAGE 9 NO. 10 11 11 12 Booklet: Corporation Sole vs. 501 (c) (3) Corporation by Elizabeth Gardner Corporation Sole Conference announcements 85 88 93 12 13 13 14 14 Bank spreadsheet 9/4/05 Statement of Fact of Rev. Kenneth Swenson 10/11/04 Affidavit of Larry Michael Baugher Printout of excerpts from www. corpsole. org 96 15 15 99 16 16 17 17 Re: Corporation Sole Corporation Sole Manual 101 18 1S 109 Hand-drawn diagrams by Mr. Shoemaker Updated Corporation Sole Manual 19 19 119 125 20 21 22 INFORMTION REQUESTED 23 Updated version of Exhibit II 24 Page Line 85 17 25 LOTT REPORTING, INC./928.776.1169 044 3 1 THE DEPOSITION OF ELIZABETH A. GARDNER, 2 taken on May 31, 2007, commencing at 8:59 a.m., at the 3 offices of Lott Reporting, Inc., located at 316 North 4 Alarcon Street, Prescott, Arizona, before Eve K. Burton, 5 Registered Professional Reporter, Certified Reporter 6 No. 50261, in the State of Arizona. 7 8 APPEARACES: 9 10 11 12 U _ S. DEPARTMENT OF JUSTICE By: Martin M. Shoemaker, Esq. Tax Division P.O. Box 723S Washington, D. C. 20044 Mrs. Elizabeth A. Gardner, In Propria Persona P.O. Box 2038 Dewey, Arizona 86327 Mr _ Fredric A. Gardner, In Propria Persona P.O. Box 2038 13 14 15 16 17 18 Dewey, Arizona 86327 19 20 21 22 23 24 25 LOTT REPORTING, INC./928.776.1169 045 4 1 ELIZABETH A. GARDNER, 2 a witness herein, having been first duly sworn by the 3 Certified Court Reporter to speak the truth and nothing / 4 but the truth, was examined and testified as follows: 5 6 7 8 EXAMINATION BY MR. SHOEMAER: Q. All right. Ms. Gardner, could you state your 9 full name, please. 10 11 A. Q. Elizabeth A. Gardner. Could you tell me your address, residential 12 address. 13 14 A. Q. The actual street address? Yes. 570 Apache, A-p-a-c-h-e, Knolls, K-n-o-l-l-s, 15 A. 16 Trail, T-r-a-i-l. 17 18 Q. In? MR. GARDNER: Dewey. Oh. 19 THE WITNESS: BY MR. Where? 20 21 22 SHOEMAKER: Q. Yes. Dewey. Dewey, A. Q. I'm sorry. 23 24 Arizona? A. Q. Yeah. 25 And what's the ZIP there? LOTT REPORTING, INC./928.776.1169 046 5 1 A. S6327. 2 3 4 Q. Do you use the post office for other personal purposes? A. Yeah. You can 1 t mail out there. Q. All right. What 1 s your mailing address? 5 6 7 8 9 A. Post Office Box 2038. Q. And that's in Dewey? A. Yes. Q. Have you had your deposition taken before? 10 11 A. Yes. Q. When was that? 12 A. 1997 or 15? '7. I'm sorry. 1997, I'm pretty 13 14 sure. Q. Around 10 years ago? 15 A. Yeah. Q. And what were those circumstances? A. It was an issue -- we had a lawsuit against the radio station. I had a lawsuit against a radio station. 16 17 18 19 Q. You sued a radio station? A. Yes, uh-huh. 20 21 22 Q. And they topk your deposition during that litigation? A. Yes, uh-huh. Q. All right. Then you understand I'm going to ask 23 24 25 you questions. LOTT REPORTING, INC ./928.776.1169 047 6 1 2 3 4 A. Oh, yes. Q. You're under oath. You're going to answer them. If you don't understand me, stop me. Don't talk over me. A. Okay. Q. i'll try not to talk over you. 5 6 7 8 A. Okay. Q. Everything will be taken down by the court reporter A. I understand. Q. and you'll have the opportunity to 9 10 review it 11 12 afterwards. Your phone number, ls that 928-775-5454? 13 14 A. Correct. Q. Is that a personal phone number? 15 A. No. It's a church phone number. Q. Do you have a personal phone number? 16 17 18 A . No. Q - You have a cell phone number, don't you? 19 20 21 A. Cell phone. Belongs to the church. Q. The cell phone belongs to the church? A. Uh-huh. Q - What's the cell phone number? 22 23 24 A. 928-710-3379. Q. And when you say "the church," what church are 25 you tal king about? LOTT REPORTING, INC./928.776.1169 048 7 rJ 1 A. Bethel, B-e-t-h-e- l, Aram, A-r-a-m, Ministries. 2 3 4 Q. And we'll be talking about -- is it Bethel Ar am -- A. Bethel Aram Ministries. 5 Q. All right. I'll probably mispronounce it. In fact, I'll probably call it Bethel Aram (pronouncing) Ministries, but that's what we i II be talking about. 6 7 8 Tell me your education since high school. 9 A. I've been to Bible college: Christ for the Nations Institute in Dallas, Texas. 10 11 12 Q. That is the Bible college, or is that -A. Uh-huh. Christ For the Nations Institute. Q. Anything else? 13 14 1S A. II ve been to -- well, yes. Actual -- been to a school, but I did Internet school: Suffield College. 16 17 Q. Suffield College was your Internet schooling? A. Yes, uh-huh. And that's a doctorate. Q. Where is Suffield? A. It's in Idaho. And I received my doctorate in 18 19 20 21 22 theology. Q. And lIve been Where to -- I forgot. did you receive a doctorate in theology? A. Q. 23 24 Suffield. Suffield? And I've been A. Q. 25 When were to Arizona Paralegal Institute. you at Arizona Paralegal Institute? LOTT REPORTING, INC. /928 . 776.1169 049 8 il 1 2 3 4 A. 193 through '96. MR. ' 94? ' 94 through ' 96 -- or not yeah. GARDNER: ' 97. THE WITNESS: '97. Excuse me. 5 6 7 8 BY MR. SHOEMAKER: Q. Did you get some sort of a certificate or diploma? A. Q. Yes, I did. You Diploma, yes. 9 passed the -- 10 11 12 A. Q. Yes. -- paralegal studies -Yes. A. 13 14 Q. or you, I guess -- ls there a license for a paralegal? 15 16 17 A. Arizona -- I have a degree. It's just a degree in paralegal/legal assistant. Q - So you're qualified to be a paralegal? 18 A. Oh, yes. Oh, yes. They don' t give you a license. They just give you a diploma, and you're 19 20 Q. When was the doctorate in theology? 21 A. Last year, '06, I finished it. Q. And the Bible college in Dallas, when was that? 22 23 24 A. 1976 through '78. 25 Q. And, okay, is that it? A . Tha t's it. LOTT REPORTING, INC. /928.776.1169 050 9 i 3 4 Q. All right. In any of these schools or courses, 2 did you have any tax courses? A. Q. / No. How about business courses? In paralegal. 5 6 7 8 A. Q. Basic business- law-type stuff? A. Q. Yeah. Law, law-based, business law. Did they touch on income taxes? 9 A. Q. Huh-uh. No. I'm sorry. Okay. Avoid 10 11 12 A. Q. Yes. -- that sort of thing. 13 14 A. Q. Okay. Could you go through your employment history for 15 the past 20 years. 16 A. 20 years? Last 20 years? 1 7 Q. Yes. 18 A. We owned a business called Cornerstone Christian 19 Center. It 1 S a Christian bookstore down in Phoenix, 20 Arizona. 21 Q. When did you -- you owned and operated it; is / 22 that correct? 23 24 A. Q. Yes. And when was this? 25 A. 1978 through 1993. No -- yeah. , 93. LOTT REPORTING, INC./928.776.1169 051 10 1 2 3 4 Q. All right. Was that your primary employment during that -- A. Yes. Q. -- 1S-year period? 5 6 7 8 A. Well, I was a minister also at this time. I owned it well, we had a company called Maranatha Enterprises that owned the business, but we operated but I also was on the evangelistic field preaching also. 9 Q. All right. Have you been a minister of some sort, I guess 10 11 12 A. Yes. I'm an ordained minister. Q. -- since '78? 13 14 A. Yes. Q. All right. Since' 93, what's been your primary 15 employment? A. We have none. Q. SO you're currently unemployed; 1S that correct? 16 17 18 A. Yes. Q. Where does your income originate? 19 20 21 22 23 24 2S A. We don't have any income. Q. All right. How do you pay the bills? A. I don't have any personal bills. Q . How about -- A. The ministry takes care of everything. Q. "The ministry, II being Bethel Aram Ministries? LOTT REPORTING, INC. /928.776.1169 052 11 1 A. Right. Q . It pays 2 3 4 S A. Yes. Q. -- transportation costs? A . Everything. 6 7 8 9 Q. Food, utili ties, housing? A. Yes. I've taken a vow of poverty. I don't know if you're familiar with that. Q. When was the vow of poverty? 10 11 12 A. 1993 -- or no. When did I -- 1997. I need my helper here. Q. Bethel Aram Ministries i 1ncome, where does that 13 14 come from? A. Donations. Q. Donations. All donations? 15 16 17 A. Yes. Q. Solely donations? A. Solely donations. 18 19 Q. Are most of the donations related to assisting and forming corporations sole? 20 21 22 A. No. Half and half, maybe. Q. What's the other half? A. We have a congregation. Q. And they just donate as a basic Sunday offering-type thing? 23 24 25 LOTT REPORTING, INC./928.776.1169 053 12 1 A . Yes, uh - huh. 2 Q. All right. Bethel Aram Ministries, tell me what 3 4 S that is. A. It1s a church. Q. Is it a corporation sole? 6 7 8 9 A. No. Q. Is it a ministry? A. It 1 S a church. Q. All right. A. You have to define to me what you mean by 10 11 12 "ministry. " Q. Well, I was golng to ask you if you know what I mean, or does that -- if I were to just say, Is ita ministry, would you answer it, or would you go into what 13 14 15 16 17 you're going into? A. Well, it's both. I mean, the church is a body of believers coming together with like-mindedness and it's 18 the ministering to -- ministering to people. Ministry is 19 the church. It's ministering to people. I can't -Q. All right. I've seen in some of your literature and in the CD you sent me that you essentially promote the idea that churches should be or can be formed or 20 21 22 23 24 structured as corporations sole. A. I think you don't understand. The church 1S not 25 the corporation sole. It's one person holding the office LOTT REPORTING, INC./928. 776 .1169 054 13 1 on behalf of the church. The church stands alone under 2 the Constitution of freedom of religion. The corporation 3 sole is like the administrator or the office, like bishop, / 4 pastor, whatever capacity that it holds, whatever office 5 it holds, whatever has been designated by the body of 6 believers that holds that office of corporation sole on 7 behalf of the ministry for the protection of assets and to 8 hold property, to buy and sell. 9 So this there's a lot of confusion about 10 corporation sole. A lot of people think the church is a 11 corporation sole. No, it's not the corporation sole. It 12 can be. Some statutes allow that, allow -- you know, say 13 that it can be the church. But in our position, it's the 14 office of one person, because 1S Q. A. Well, would it be an officeholder of the church? 16 17 18 There you go. Right. Correct. Q. A. Q. Okay. Well, do you have a corporation sole? I am a corporation sole, yes. 19 20 What is the name of it? Elizabeth -- Evangelist/Prophetess Gardner, A. 21 incorporation sole. The office is, I think, a prophetess. 22 Q. ~ All right. Is that registered with the State of 23 Nevada? 24 A. Q. Yes. And when was that set up? 25 LOTT REPORTING, INC. /928.776.1169 055 14 1 A. I think 2000 or 1999, I think. 2 3 4 Q. Was that your first corporation sole? A. Yes, uh-huh. Q. All right. A. Do you understand the Catholic church, their operation as a corporation sole? 5 6 7 8 9 Q. You know, I hear that a lot, but I've never really gotten confirmation of that. A. See, this is where corporation sole came from is 10 11 12 13 14 the Cathoic church. They are the ones that really brought it into view back in the 1400s or whatever. It's an ancient religious order that came up, and then now we developed the United States, and our similar state statutes took it here because the Catholic church is here. It's like the vicar of the Catholic church, the bishop, 15 16 17 they hold the office over the assets of the church, administrati ve. 18 Q. All right. I'm trying to get terms down. A . 0 kay . 19 20 21 22 Q. SO you're a corporation sole. A. I hold the pffice of corporation Q. You hold the office of corporation sole for -A. Yes. Q. -- Bethel Aram Ministries? 23 24 25 A. Correct. LOTT REPORTING, INC./928.776.1169 056 1S 1 Q. Okay. And the corporation sole you i re talking 2 about was established in 1999? 3 4 A. Q. Correct. When was Bethel Aram Ministries founded? 5 6 A. Q. - Oh, 1990 -- was that -- maybe it's not 1993. Can you tell me about the hierarchy of Bethel 7 Aram Ministries? 8 9 A. Q. Hierarchy? What do you mean by hierarchy? Sorry. Management. Who is in management, for 10 want of a better 11 A. There is no such thing as management in the 12 church. There 1S no such thing as management 1n the 13 church. That 1 s business. Church is not a business. It's 14 a -- church really means the ecclesiae, the called-out 15 ones, a group of people like-minded together that believe 16 in the same thing. 17 Q. All right. In a nonbusiness sense, who manages 18 Bethel Aram Ministries? 19 A. Well, there is -- the management -- the 20 corporation sole does the management. It's the overseer, 22 behalf of the church. We do have elders. I , 21 the administrator, o,f the assets that does the speaking on 23 Q. Are you the only person associated with the 24 corporation sole that you've been talking about, the 25 evangelist? LOTT REPORTING, INC. /928 .776. i i 69 057 16 1 A. Q. Evangelist (pronouncing). Evangelist (pronouncing). 2 3 4 A. Q. Okay. The sole, that's why it's called a "sole." Yes. s A. It 1 S one person. But we do have, quote-quote All right. A board of elders? 6 we could say, . for secular terms, a board of elders. .. 7 8 Q. - A. We call ita council of elders. See, 1n the 9 501 (c) (3), they call it a board. We call it a council. 10 Q. The council of elders, is that the council of 11 elders for Bethel Aram Ministries or for the corporation 12 sole-13 14 15 A. Q. No, no. -- that you're talking about? A. The corporation sole does n0~ function like a 16 regular corporation. A corporation sole is a religious 17 entity derived out of Christendom, out of the church, that 1 8 gives asset protection for the buildings, for the assets, 19 and someone to oversee everything. 20 The bishop, like -- or the vicar of the 21 Catholic church does. the same thing. Many, many -22 there's -- the synagogues have. a -- the Mormon church is a 23 corporation sole. There are many churches, quote-quote, 24 that were known, like denominational, that have 25 corporation sole. It's also in just small churches, too. LOTT REPORTING, INC./928.776.1169 058 17 i And that's what we are. We 1 re not a big denomination. 2 Q. Does your husband have his own corporation sole? 3 4 A. Q. No. There is no reason for it. So Bethel Aram Ministries has a council of 5 elders? 6 7 A. Q. . Uh-huh. Who are the elders? 8 A. Okay. Now you're getting into church questions. 9 Bethel Aram Ministries is not here to answer that 10 question. I don't think -11 12 Q. , Well, you're a pastor I am a pastor, of Bethel Aram Ministries, are you not? A. Q. 13 14 but -- Your husband is a pastor of Be.thel Aram 15 Ministries, correct? 16 17 A. Q. Correct. Is there another pastor in Bethel Aram 18 Ministries? 19 A. No. There 1 s an elder. 20 21 (' Q. And who is the elder? A. I can' t te~l you that. I don't know if that's 22 because a church has to stand on its own. Bethel Aram 23 Ministries is not being deposed today. I am. 24 Q. Are you refusing to answer the question? 25 A. Yes. I think Bethel Aram Ministries should LOTT REPORTING, INC./928.776.1169 059 18 1 answer that separately. 2 Q. I f I were to serve a subpoena on Bethel Aram 3 Ministries-" 4 S A. Q. Uh-huh. -- who would be the person who would -Our -- the attorney. 6 7 A. Q. who would testify on behalf of Bethel Aram 8 Ministries? 9 A. It could be the elder. It could be me. I don't 10 know. Whoever the attorney -1 1 Q. But you're not going to tell me who 1S on the 12 council of elders; is that correct? 13 A. I don't think it's -- it' s privileged information 14 for the privacy of the church. That's private. 15 Q. All right. But you're telling me there's This has nothing -- the church is not involved 16 A. 17 with this. You're deposing me as a person, Elizabeth A. 18 Gardner, not Elizabeth Gardner as a person -19 Q. I'm deposing you based on all your knowledge, 20 however acquired. And it sounds like you know who is on 21 the council of eldeLs -- 22 A. Oh, of course, I do. 23 Q. -- but you i re simply refusing to answer it. 24 A _ I'm refusing to answer because it i S a church 25 1ssue, and the church 1S not a part of this lawsuit. LOTT REPORTING, INc./928.776.l169 060 19 1 Q. Isn 1 t one of your defenses that, Hey, we're getting into church issues, and we shouldn i t be? 2 3 4 A. Yes. Q. All right. A. The church has intervened 1n this lawsuit, as you know. 5 6 7 Q. Yes. Whose decision was it to try to intervene? A. It was my decision but -- and the board 18 8 9 decision. Q. Okay. So it sounds like well, iS there anyone other than yourself who has -- or 18 there anyone other than you who has more 10 11 12 knowledge of the goings on of Bethel 13 14 Aram Ministries? A. Ric and one of the elders, I think. Q. The unnamed elder? A. Well, really, they all do, because we talk about 15 16 17 ita lot. Q. All right. How many elders are there, total? 18 19 20 21 A. There's one other elder. Q. Okay. So there's Ric, you and one other person? A. Correct. Q. And who would be the decision 22 makers for Bethel 23 24 Aram Ministries? A. I would be, as the corporation sole. The final. I would say the final. 25 LOTT REPORTING, INC. /928.776.1169 061 20 All right. Does Bethel Aram have employees? 1 Q. 2 3 4 A. Q. No. Does it have workers? A. Q. What do you mean by "workers"? Well, anybody who does work for them. 5 6 7 8 9 A. Q. Well, we have ministers. I 1m a minister. Okay. Other than you and your husband -No. We i re the ministers of the corporation sole.' A. Q. All right. So you and your husband are the only 10 workers for -- 11 A. Well, if you want to -- we're not "workers." 12 Q. I'm using just common -- this isn i t a term of art 13 here. It's -- even the Internal Revenue Code doesn't i 4 really define "worker." 15 A. We -- I do the preaching. I preach. I counsel. 16 He does some, but I do it mostly. 11m general pastor. 17 Q. Who does like financial records or bookkeeping, 18 to the extent there is 19 20 21 22 A. Q. Oh, he does. administrative work? A. Q. He does. . Okay. "He," being your husband? I'm sorry. My husband, Ric. 23 24 A. Q. Okay. What 1S Bethel Aram Ministries i address? Same as my address. The church and the parsonage 25 A. L LOTT REPORTING, INC./928.776.1169 062 21 i is together. , 2 Q. All right. Do you have a separate structure, 3 like a church building? 4 A. Q. No. It 1 S all together. So you hold services in your home -- 5 6 7 8 A. Q. Uh-huh. -- is that correct? A; Uh-huh. And not 1n my home. It belongs to -- it 9 legally belongs to Bethel Aram Ministries. 10 Q. And you were going, "Uh-huh, uh-huh." Was that a 11 "yes"? 12 A. Q. What was the question, please? 13 What was the question? Do you hold serV1ces 1n l4 your home? l5 17 A. ~ Yes. Yes, we do. Every Sunday morn1ng and 16 Thursdays. Q. All right. And then you meant not your home; it 18 belongs to the church, but it's still 19 A. Q. 20 21 22 A. Q. to live there. It's still your residence? No, it's nO,t my residence. Allows me Well, where do you live? Well, Okay. 23 24 A. Q. that's where I live, but -- 25 A. Okay. LOTT REPORTING, INC./928.776.1169 063 22 1 Q. You reside there? I reside there. 2 3 A. Q. , All right. We just talked about this a little 4 bit. How do you and your husband split up your Bethel S Aram Ministries duties? 6 A. I don't think we really -- I do most of the -- I 7 do most of the talking on the phone, because I have more 8 education on the corporation sole, because I studied it 9 and researched it. And being an ex-nun, I know about the 10 Catholic church capacity of a corporation sole. So I do ii most -- I do most of the everything. He talks to 12 13 14 people and -MR. SHOEMAKER: Wha t ? THE WI TNESS : He's not allowed to speak, 15 right? MR. SHOEMAKER: 16 17 You can chime in, if you 1 d like. MR. GARDNER: 18 I'm sorry. Because I didn't 19 want to interrupt. But I do things -- the menial jobs, 20 things that are administrative, I guess you'd say. 21 BY MR. SHOEMAER: 22 Q. All right. I was going to say, it sounds like 23 you 1 re the face of the church. You do the public 24 speaking, seminars, sermons -25 A. What do you mean by "seminars"? LOTT REPORTING, INC./928. 776. 1169 064 26 1 A. No . Q. Any experience 1n tax-related matters? 2 3 .v A. No. 4 Q. Any education in tax-related matters? A. I would say yes. Q. And where was that? How did you -- how did that 5 6 7 8 9 come about? A. Just studying the stat- -- not the statutes -the code and -- 10 11 12 13 Q. Self-study? A. Self-study, yes. Q. All right _ You give talks, public speaking engagements, related to Internal Revenue Code Section SOl (c) (3); is that correct? l4 15 A. I give education on the difference between 16 17 18 corporation sole and SOL (c) (3) . Q. All right. And you wrote a book on that subject; is that correct? 19 A. Correct. Q. All right. So how did you obtain your expertise 20 21 22 1n SOl (c) (3)? A. Through the code. 23 24 2S Q. Self-study? A. Self-study. Q. All right. How did you first learn of the LOTT REPORTING, INC./928.776.1169 065 27 1 structure called corporation sole? 2 A. Through the Catholic church. 3 Q. Is Bethel Aram Ministries Catholic? 4 A. No. 5 Q. Were you raised Catholic? 6 A. Yes. I'm an ex-nun. ~ 7 Q. Oh. And what research have you done to educate 8 yourself as to what a corporation sole is? 9 A . Much. 10 Q. Much self-study again? i i A. Much research. 12 Q. Much research looking at books? 13 A. Catholic church dctrine, talking to bishops and 14 canon law lawyers, which -- canon law lawyers. And 15 researched statutes and case cites. 16 Q. Have you researched both state and federal law on i 7 that subject? 18 A. Yes, uh-huh. 19 Q. Now, you help people set up their own corporation 20 sole; is that correct? 21 A. I don't help them set it up. I help them 22 establish it. I yes. Not people. Just pastors and 23 ministers, those of the church leadership. 24 Q. Well, you've established a lot of corporation 25 soles for persons -LOTT REPORTING, INC. /928. 776.1169 066 29 1 2 V other churches, so I know that they are part of the church. / A. Oh, yes. Q. Do these references come from across the country? 3 4 5 6 7 Q. Is there a predominant geographic region where they come from, like locally? 8 9 A. No. Just various -- they're at various churches. Q. SO you might you are just as likely to get someone from Michigan as someone from 10 11 12 13 14 1- A. Florida. Q. -- Florida to -A. Texas or whatever. Q. -- call you up? A. Yes. Yeah. Q. All right. Okay. If someone were to call you and say, "Ms. Gardner" -- 15 16 17 Do they call you Reverend Gardner or just Ms. Gardner? 18 19 20 A. Just call me Elizabeth. Q _ All right. "Ellzabeth, I've been on this Web site or 21 22 23 24 25 I've heard about you. I'm interested in a corporation sole," could you walk me through how -- A. I would Q . -- how it happens? LOTT REPORTING, INC./928.776.l169 067 36 1 Q. -- religious articles, a corporation sole -- 2 3 4 A . Ri gh t . Q. -- manual. A. Like this would be (indicating) -- 1S that what you mean? S 6 7 8 Q. Yes. A. Yes. A package Q . A notebook 9 A. Notebook. There you go. Q. -- of materials? 10 11 ~ 12 A. Yes. Q. All right. Do you charge for this? 13 14 A. No. Q. Do you have suggested donations? 15 16 17 A. The church does. Q. All right. What i s the typical suggested donation for A. 1,200. 18 19 Q. $1,200 for a basic corporation sole? A. Uh-huh. Yes. Q. Now, is that donation mandatory? 20 21 22 A. No. Q _ Is it ever negotiated? 23 24 A. Never. Once 1n a while, I may have someone, "You know, I can't afford it." I say, "Okay, that's fine." 25 LOTT REPORTING, INC./928.776.1169 068 ~ 1 37 Q. Do you do any for free? 2 3 4 S A. Yes. Q. What percentage are for free? A. Oh, very little. People are just happy to donate to the ministry to support our ministry. 6 7 8 Q. Is the same type of paperwork involved for a trust? Do you set up trusts for individuals? A. We establish trusts for church-related purposes and for estate planning for the pastors and ministers. We 9 10 11 only deal with pastors and ministers. We don't deal with the congregations or the general public. 12 Q. You don't register trusts with states; is that correct? 13 14 A. No. It's a church trust. Q. What's the typical suggested donation for setting up a church trust for someone? 15 16 17 A. 800, i think. Q. And the same line of questions for an LLC, or limited liability company. 18 19 20 21 22 A. The questions? Oh, they have to -- there's -it's a little different for the LLC. Q. All right. What's different? A. Well, you have to have a name, and we have to make sure the name is available. And so we have to call the state and see if that name is available. 23 24 25 LOTT REPORTING, INC. /928.776.1169 069 38 i 2 Q. All right. You register those with -- A. Q. Nevada. -- a state; 1S that correct? 3 4 S A. Q. Oh, yes. And you use Nevada -- 6 A. Q. Yeah. -- for your LLCs? 7 8 9 A. Q. Yes. What 1S the Nevada fee for registering LLCs? 10 11 12 A. Q. 155. And what's your suggested donation -- A. Q. 500. -- for LLCs? $500? 13 14 1S A. Q. Uh-huh. "Yes"? Yes. Are LLcs just set up for ministers? ;\ 16 17 A. Q. 18 A. Yes. Those who are -- usually, the LLCs - are set up for, like, a church or a ministry -- it's like a -- we 19 20 have for this -- it's a nursing -- this church wanted to do a nursing home far Christian people, a Christian 21 22 nursing home. So we suggested that they -- that the 23 church didn't do it. We try to keep business away from 24 church. So we told them to set up an LLC to run the 25 business, and then the net profits would be distributed to LOTT REPORTING, INC./928.776.ll69 070 40 1 Q. I was going to say, a church doesn't have to 2 be 3 4 A. Q. A church is not --- any entity But see -- S 6 A. Q. A. -- 1S that correct? 7 Don't get confused. A church is not 8 incorporated. It's just the office of one person. That's 9 why we do that. Because the SOL (c) (3) incorporates the 10 whole church, the whole body. 11 Q. Did I hear you misspeak? You said the church 1S 12 just the office of one person? 13 A. I'm sorry; you did mishear me. I i m sorry. A holds the office on behalf of the l4 corporation sole is 15 church. The church is separate from the corporation sole. 16 The church is a body of believers, as I told you earlier. 1 7 The corporation sole is one person 1n the body that's 18 appointed in this position to hold the assets, to carryon 19 administratively, the voice of the ministry. 20 21 22 Q. You've answered this, but I i II ask it anyway. A. Q. Okay. What states do you register your corporation 23 soles in? , 24 A. Q. Nevada. Solely Nevada? 25 LOTT REPORTING, INC./928.776.1169 071 41 1 A. Q. , Yes. Because it has the best statutes. And is that true also for your LLcs? 2 3 4 A. " Yes. Had you previously tried other states? Q. 5 A. We1ve been looking at Arizona. And we looked at 6 California. And California, forget it. Arizona, okay. 7 But really -8 Q. How about the State of Washington? 9 A. Q. No. I don't like their statutes at aii. There i S a lot of corporation soles incorporated 10 11 up there? 12 A. Oh, but they're bad corporation soles. MR. 13 14 GARDNER: Nasty. THE WITNESS: Illegal corporation soles. Can I 15 know about them. MR. GARDNER: MR. l6 17 I say something? you may. In t_he State SHOEMAKER: Yes, Okay. 18 MR. GARDNER: of 19 Washington -- the difference between the State of Nevada 20 is, Washington really uses corporation sole as a business 21 trust. 22 State of Nevada, the reason why we use it is 23 because it i S exclusively for church and church operations. 24 Their statute is specific in the fact that it can hold 25 church property and act on behalf of the church as far as LOTT REPORTING, INC./928.776.1169 072 42 1 the legal aspect of it goes, where the church can be 2 3 4 operated separately as the corigregation goes. Sort of like an unincorporated association, so to speak. So the assets are being protected. It's -- the statutes of Nevada are very strict on that that you don't use it for any other purpose except religious purposes. BY MR. SHOEMAKER: 5 6 7 8 Q. SO you've researched other states -A. Oh, yes. Q. -- and determined that Nevada is the best? 9 10 11 12 A. Correct. Q. Now, the term "business" has a commercial connotation, but, that aside, I'm going to ask you: Do you conduct most of your -- 13 14 15 A. Church business. Q. -- church business by telephone, by email, by mail, or can you split it up? 16 17 18 A. "Church business," meaning what? What kind of church business are you referring to? 19 20 21 22 Q. The church business involving LLCs, trusts and corporation soles. A. Well, usually if it's out of state -- I mean, we can't travel to every state -- we do it by email or sometimes telephone, fax, mail. 23 24 25 Q. Do you have many in-person meetings with persons LOTT REPORTING, INC./928.776.1169 073 47 1 Q. And then that registered agent, that's her 2 duty -A. Q. 3 Right. -- to get it to the actual entity or person -- .4 5 6 7 8 J 9 A. Q. Yes. or whoever she 1S serv1ng as a registered agent for? A. Correct. Q. How many corporation soles have you established? 10 11 A. Oh, approximately? I can 1 t tell you exactly, because I didn't keep a count. 12 13 14 15 Q. Give me an approximate. A. About 300. Q. Over what period of time? 16 17 A. Oh, '97, so 10 years. Q. 300 in the last 10 years? A. Yeah. Q. How many in the past year? 18 19 20 A. About two a month. Say about 24. Q. Is that usually how it goes, about two a month? '721 22 A. Yeah. Sometimes one a month. Q. In the past -A. Sometimes none a month. Q. In the past 10 years, has there been for whatever reason any particular year a spike or where you did three 23 24 25 LOTT REPORTING, INC./928.776.1169 074 48 i times or four times 1n a month? 2 A. When we first started, I think it was a spike. 3 It was like a spike because people were all interested. ) 4 And now they're pretty much getting it. But I think a lot 5 has to do with the situation of the lawsuit. I think when 6 that's cleared up -.J 7 Q. Now, at your husband's deposition, I'm gOlng to 8 ask how many corporation soles he has established. 9 MR. GARDNER: None. 10 BY MR. SHOEMAKER: 11 12 Q. A. Q. Okay. So you're the I'm the - - I' m it. -- the establisher? 13 14 A. Q. Yeah. Is that true also for LLCs and trusts? 15 16 i7 A. Q. A. Uh-huh. I s that a "yes"? Yeah, that's a yes, but -- and a no exact, 18 19 because he does some of the trust work, because he 1S an 20 estate planner, certified estate planner, so he does most 21 of the trusts. And he does some of the LLcs, too. Lt 22 Q. When 1S the last time you filed a Form 1040? 23 24 A. Q. 1993. 1993? 25 A. Uh-huh. LOTT REPORTING, INC./928.776.i169 07i--A 59 1 2 3 4 Q. All right. And your legal department is being set up so that -- to assist those persons who you lve helped establish these entities for if they face IRS problems? 5 6 7 A. Correct. MR. GARDNER: THE WITNESS: May I interj ect? No. 8 9 BY MR. SHOEMAKER: Q. Do you assist persons in having their corporation soles declared exempt from local property taxes? 10 11 A. No, I can't do that. Q. Are you familiar with the Web site www. corpsole. org? l 12 13 14 A. Let me see. Yes. Q. Is that your Web site? 15 16 17 18 A. No. It's the church1s Web site. Q. It's Bethel Aram Ministries' Web site? A. Correct. Q. Who started the Web site? 19 20 21 22 23 24 A. The church did. Q. When was it started? THE WITNESS: Four years ago? Four years ago. BY MR. SHOEMAKER: 25 Q. 2003? LOTT REPORTING, INC./928.776.1169 075 l i 2 3 4 60 A . Yeah. Q. Who is 1n charge of the content that's on the Web site? A. A pastor from Australia. Q. Who is that? What's his name? 5 6 7 A. Martin Spratt. Q. What's his connection with Bethel Aram 8 9 Ministries? A. He 1 s a corporation sole, and he has a church. He was here, and he had a church here. And then he now is a missionary and working and is now 1n Australia and lives 1n Australia. 10 11 12 13 14 Q. Does Bethel Aram Ministries just use him as the computer person to input or change -- 15 16 17 18 A. Correct, yeah. Q .-- or modify -- A. Yes. He controls the Web site. Q. Well, who makes decisions about what goes on the Web site? 19 20 21 22 A. The church. And -- and I have input, too, because I do a lot qf writing. I do all the writing, in fact, on behalf of the church. 23 24 Q. If something were to be removed from the Web si te, who has the authority to move it -- remove it? 25 A . I do. LOTT REPORTING, INC./928.776.ll69 076 61 1 Q. You do? Uh-huh. "Yes" ? 2 3 4 A. Q. A. Q. Yes. Does your husband? Oh, 5 6 7 8 A. sure. Well, he would refer to me first. MR. GARDNER: BY MR. We'll talk it over. SHOEMAKER: 9 Q. On the Web site,, I've seen some biographical data about you and your husband. 110 i i : 11 A. As pastors? Q. As pastors. Is that information correct? ! 12 I 13 ! A. Correct. MR. SHOEMAER: All right. Let's take a little break here, about 5 minutes. (Recess taken from 10:00 a.m. to 10:04 a.m.) 14 i j I 15 16 17 I I I BY MR. SHOEMAER: 18 Q. Mrs. Gardner, are you familiar with legal problems faced by other corporation sole promoters? i 19 20 21 22 I A. Yes. Q. You underst,and the IRS 1S kind of going after corporation soles? I I 23 24 ,; A. Oh, yes. Oh, yes. I didn't know that at first, but when it started, everybody says, "Do you know what's 25 going on?11 I said, "What?" I couldn i t imagine that LOTT REPORTING, INC ./928.776.1169 077 T 1 69 Q. Now, why is a corporation sole for church purposes better than another tyPe of corporation or a regular type of corporation? 2 3 4 A. Corporation sole is not the church. It's one person holding the office on behalf of the church. And the reason why we prefer corporation sole is because we don't want to be a SOl (c) (3), but we still want to be 5 6 7 8 recognized as nonprofit in the general public and to 9 recei ve Q. Well, a church that qualifies or is tax exempt 10 11 12 13 14 under soi (c) (3) is going to be tax exempt regardless of its structure; is that correct? A. A church is not exempt under 501 (c) (3). It's exempt under S08. A church is -- SOS gives the exemption. The church does not have to file a SOl (c) (3). There's no is 17 18 l6 law, there i s no statute, that a church has to be a 501 (c) (3) . Q. All right. I think that's where there 1 s some misunderstanding, because I understand S08 as just saying churches don't have to file an application with the IRS -- 19 20 21 22 A. To be Q. to be a SOl(c) (3). A . No, not to be -- to be exempt. 23 24 2S Q. To be exempt under SOl (c) (3)? A. Right. Right. There is no law -- you can talk LOTT REPORTING, INC./928.776.ll69 078 70 J 1 to the Treasury Department. There 1 s no statute, no federal law stating that a church has to file. 2 3 4 Q. All right. But what I'm saY1ng is a corporate church A. Corporate church? Q. -- a church that's formed as a corporation -- 5 6 7 A. Nonprofi t corporation. Q. -- doesn't have to file that application either. 8 9 A. No. 10 Q. And a church that's under the ausp1ces of a corporation sole, it doesn't have to file that application 11 12 13 14 1S ei ther A. No. Q. and that's because all these entities are churches. A. Correct. Or a parachurch. Q. SO what benefits does a corporation sole church have over a nonprofit corporation church? 16 17 18 19 20 21 A. Number one is, not incorporated. The Bible -- if you want to get into the spiritual aspects of it, the Bible says make no covenant with the nations. 22 Q. But it's still registered with the state? A. No, no, no. The. 23 24 corporation sole is not -- it's not remember, one person is not the church. The corp- -- the 501 (c) incorporates the whole body, the 25 LOTT REPORTING, INC./928.776.1169 079 71 v 1 church. 2 The corp sole only incorporates one person. 3 And that's why we want it that way, because it does not 4 bring the body under an entity. It doesn't become "it." 5 As you know, a corporation is an "it." And when you 6 become -- and this is our spiritual it's a spiritual 7 8 if you want me to go into it and a religious belief with us, that we do not want to be -- we want to keep separation of church and state pure and go all 9 the way. 10 11 12 13 14 And the church should be free under a constitutional right of religion. It has no filing requirements. It does not have to incorporate. It just is the church. And so when -- Q. But a corporation sole has filing requirements. lS 16 17 A. Correct. That's -- but that's the office of one person. That's not the church. Remember, we're sitting here; I'm a corporation sole. We i re all -- and everyone 18 of us is part of the church. But only I hold the office of corporation sole. You don 1 t. Ric doesn't, and neither does this young lady. 19 t 20 21 22 Q. All right. ; What tax benefits, if any, does a corporation sole have that a nonprofit corporation -- 23 24 A. There is no difference. Q. -- does not have? 25 A. There is no difference. LOTT REPORTING, INC. /928.776.1169 080 74 1 corporation sole program? 2 3 A. Q. " Yes. There is no -- we don 1 t have no program. But you're not denying that you set up 4 corporation soles for individuals? 5 A. I establish -- I help them establish corporation 6 soles for church and ministry. 7 Q. And you've established over 300 1n the past 8 decade? 9 A. Yes. For church and ministry, which is totally All right. Well, nobody said it wasn't. 10 legal. 11 12 13 14 Q. A. Q. Okay. All right. So this -- I don't have seminars, number one. I A. 15 don't promote anything. I'm only -- when I speak on 16 corporation sole versus SOl (c) (3), Ilm invited to the 17 church, to a church where church ministers and leaders are 18 there, and it's usually a conference of -- for church 19 business. We'll say that word, "business." My booklets 20 have nothing to do with tax. It just gives the code as 21 for church -22 Q. The title has a tax section on it. 23 A. Well, because, you know, when you write a book, 24 you have to grab ahold of -25 Okay. Almost every page of the book -Q. LOTTREPORTING, INC. /928.776.1169 081 80 1 Q. All right. So if the interrogatory would have been reworded to state: Stat the number of corporation sole packages you have established during the past five 2 3 4 years, you would have answered that in probably, what, 150 or something like that? 5 6 7 8 9 A. Well, I don't even know if I would have answered it that way, also, because I donlt do it. The church does it. I do it for the church. So itls really Bethel Aram Ministries that's doing the corporation sole. 10 11 12 Q. Okay. Bethel Aram Ministries -A . I am the -It writes them. It does the, you know -- 13 MR. GARDNER: Agen t . THE WITNESS: -- agent. The agent, if you want to call it that, the pastor. l4 15 16 BY MR. SHOEMAER: Q. Have I asked how many LLCs you 1 ve established in the last decade? d/17 18 19 A. Did you ask that question here? No, you haven't asked me that. 20 21 22 Q: How many? A. None. Q. How many has Bethel Aram Ministries established? 23 24 A. Maybe four or five. MR. GARDNER: In the last decade? LOTT REPORTING, INC. /928.776.1169 25 082 81 1 THE WITNESS: BY MR. In the last decade? 2 3 4 S SHOEMAKER: Q. Ever. 18? THE WITNESS: MR. Really? 18. 18? That many? GARDNER: 6 7 8 THE WITNESS: MR. GARDNER: THE WITNESS: BY MR. Over 10 year s , yeah. Over 10 years. Are you sure? 9 SHOEMAKER: 10 11 Q. Bethel Aram Ministries has established 18 LLCs in the past 10 years? 12 13 14 A. I didn't think that many. That seems ridiculous. No way. THE WITNESS: Where did you get that number? In the last 10 years. 15 MR. GARDNER: THE WITNESS: 16 17 Honey, we have not done that -- I mean, hardly any. Welve done, I'd say, maybe 18 eight. MR. GARDNER: You're talking 10 -- 19 20 21 22 BY MR. SHOEMAER: Q. All right. Let me just cut you off here. Your husband believes the number is about 18? A. I believe it i S maybe 10, at the most. 23 24 2S Q. And you believe itls maybe 10, at the most? A. Yeah. LOTT REPORTING, INC./928.776.1169 083 119 1 .v 2 this next exhibit is Exhibit 18. (Document marked previously as Government Exhibit No. 18 was presented.) BY MR. SHOEMAKER: 3 4 5 6 7 8 9 Q. It's two pages, handwritten by me -- A. Handwritten by you. Okay. Q. based on A. My -- what I say. Q. what you said in that -A. Video. Q. -- video. 10 11 12 A. Okay. That's good. Q. And, one, I just want you to look at it, and we'll go through it and see if it's accurate. 13 14 1S A. Okay. Q. You gave an example -- 16 17 A. Uh-huh. Q. -- in your speech -- 18 19 A. Uh-huh. 20 21 22 Q. and you talked about the relationship essentially between? corporation sole, LLc and a trust. A. Uh-huh. 23 24 25 Q. And you talked about the first page there of Exhibit 18. A. Remember, this lS an example. LOTT REPORTING, INC./928.776.1169 084 120 ~ 1 Q. Yes. 2 A . 0 ka y . Q. You said there is an individual businessman, and he conducts XYZ Business_ 3 4 5 6 7 8 A. Uh-huh. Q. And it's a good idea to put the XYZ under the name of the LLC or operate the business through the LLc. LLC is a pass-through entity. 9 A. Uh-huh. Q. And then you talked about, the LLC had to have at least two members. And it would be a good idea to make one of the members a trust, which you or Bethel Aram would 10 11 12 13 14 15 set up A. Q. Uh-huh. -- along with the LLC -- 16 17 A. Q. Uh- huh. -- and the corporation sole. 18 19 A. Q. Uh-huh. Okay. And in your example, in your speech, you 20 21 22 said the individual would be the managing member but own 10 percent -- A. As an example. 23 24 25 Q. as an example. The trust would own 90 percent. And is that pretty much what that first page represents? LOTT REPORTING, INc./928.776.1169 085 ~ 1 121 A. Yes. Want to go to page 2? 2 Q. Yes. Go to page 2. 3 4 Okay. In your example, you said let 1 s say the business has income, net income, of $100,000 for a particular year. 5 6 A. Uh-huh. 7 8 Q. 10,000 of it, 10 percent of it, goes to the individual businessman. 9 A. Uh-huh. 10 11 Q. And then 90 percent of it, $90,000, go to the 90 percent owner, the trust? 12 A. Uh-huh. 13 14 Q. And then there is a separate corporation sole? A. Ministry, yeah. Q. And I take it the individual businessman has that 15 16 17 corporation sole. It's-- A. Yeah, when I say corporation sole -- in fact, we're going to redo that video -- it's going to be 18 19 ministry. It 1 S really when I -- I think it says on there ministry. It says church ministry on there. It doesn't say corporation sole. It says church ministry. This is 20 21 22 23 24 incorrect. Q. Okay. So the corporation sole could be changed -- and I will change it. 25 A. It should be church ministry. LOTT REPORTING, INc./928.776.1169 086 122 J 1 Q. Should just be changed to church? 2 3 4 A. Q. ,/ Church, yeah. Church or church ministry? Either one, yeah. A. 5 6 7 8 9 MR. GARDNER: Church. THE WITNESS: Church, parachurch. Do you understand parachurch? BY MR. SHOEMAER: Q. But it could also be a corporation sole, couldn't it? Or does it matter? 10 11 12 A. No. The corporation sole is a person. I mean, he could hold it. He does. He holds the assets for the church. But it's for the church. 13 14 Q. And, well, the church that's listed on the second page of that exhibit now is the church that the individual businessman is the corporation sole for? 15 16 17 A. Right. 18 Q. Okay. Going further into the example -A . 0 ka y . Q. -- you talk about an individual can glve up to SO percent of theirAGI, adjusted gross income, to a 19 20 21 22 charity. 23 24 A. Correct. Q. SO in this example, the person takes his $10,000 distribution, gives 50 percent of it to the church 25 LOTT REPORTING, INC./928.776.1169 087 123 ~ i ministry, gl ves $5, 000 to it, so he 1 s left wi th $5,000. 2 The trust can give 100 percent -- 3 A. Correct. Per IRS 642. 4 Q. Is that a publication or a statute? 5 A. Statute. 6 Q. -- could give 100 percent to a -- 7 A. Nonprofi t. 8 Q. -- nonprofit. So in this example, it gives 9 100 percent, 90,000, to the church ministry. So the end 10 result is, the church ministry has $95,000 to do its 11 deeds? 12 A. Right. 13 Q. The individual businessman has $5,000 -- 14 A. To live on. 1S Q. and it's your position that he's taxable -i 6 A. Oh, yeah. 17 Q. -- he's taxed on that 5,000? 18 A. Well, he's taxed on the 10,000, but after his 19 deduction he could -- on his Schedule C, I think it is, he 20 could take whatever he donates to the ministry. 21 Hel s taxable on his -Q. 22 23 24 2S A. Q. A. Q. His income. Well, AGI 1S Adj usted gross. -- above tax. LOTT REPORTING, INC./928.776.1169 088 124 1 MR. GARDNER: Uh-huh. BY MR. SHOEMAER: Q. SO he's going to be taxed on the 5, OOO? 2 3 4 A. Yeah. After the deduction. Q. All right. And in the example, I believe, he had a spouse who earned 20,000. 5 6 7 8 9 A. Right. She works. Then she 1 s got to add that to that amount. Q. All right. Just so it sounds like I at least followed you. And does that Exhibit 18, from what you can tell, match what you speak about or spoke about at least in that? 10 11 12 13 14 A. Yeah. Not totally, but it gives an illustration, yes. l5 16 17 18 Q. Okay. Okay. All right. A. Now, this business is for -- if this church wants -- wants to use a business, sometimes, like I told you earlier, the church will start a business, say, 19 selling widgets, to support its ministry. Like we have a lot of on-the-street ministries. We have food ministries, para 20 21 22 church ministri~s that support -- they form a company. They'll' sell widgets to support that ministry, and that's 23 24 what this illustration s for. We have a pastor that has, like I told you, 25 a nursing home, and this is the illustration we tell them. LOTT REPORTING, INC ./928.776.1169 089 0 .~ . ti ~ 0. u .II ~" 0.A u z 0 In .. 0 II z 0 i- Z ~ ~ - ~ a~ . . ~ . rJ (. 0 a: "- ~ = lJ ~ ~ ~ ~ ~ N ~ ~ == ~- 1 i ~! -.. z! ac :i .. lUX or .N lifUU'.1..9Ni. o) C ~ au 090 " ( 1997 Bethel Aram Ministries All Rights Reserved Printed in the United States of America Second Printing (Q 1999 Bethel Aram Ministries Third Printing ~ 2000 Bethel Aram Ministries Fourth Printing ( 2005 Bethel Aram Ministries Fifth Printing ~ 2006 Bethel Aram Ministries No par of ths book may be reproduced in any manner without i: ~$ the writtenpemssion from the publisher except in the case of brief quotations in critical aricles and reviews. ~; ~; ~ a h, "'. ";'. ~ "":'"..-., ~i "..1",':~ CD (' ~............. 0 rf ~ ~ 0 ~ ~ Z 0 i- ~ ~ rr . ~ 0, e ~ ~ 0 ~ ~ 0 e,, ~ 'U '1" 0 li z 0 i- - z. ~ ~ :: .. f0 ~ i: ~ N r .. ~ ~ N ~ - 092 ABOUT THE AUTHOR ELIZBETH GARDNER holds ordination with the FROM THE AUTHOR ~ In America today, most churches and minstries are licensed, regulated business enterprises. Most churches in America have incorporated with the state and have obtained taxexempt status from the Internal Revenue Service under Title 26, U.S. Code, Section 50l(c)(3). Incorporation has become ,so Independent Assembly of God, the Full Gospel Fellowship International, Brothers of Christ International and Bethel Aram Ministries. She attended Christ for the Nations Bible Institute and has been an ordained ITnister since 1978. She completed her doctorate in Theology with Suffield University in 2006. She ministered as an evangelist for three and a half years and is active as a pastor in Dewey, Arizona. She also attended The Paralegal Institute of Arizona and has a dpgre as a Certified Paralegalgal Assistant. She specialized common that such a practice is rarely questioned, and to speak out publicly against incorporation wil often subject the critic to immediate censure and verbal abuse. In spite of the fact that there is no justifiable reason for a church to incorporate under a government charer (contract) as a business entity and to seek tax-exempt status; the church seems in Contracts, Business Organizations, Litigation and Trial ..i " Practice. to be blind to this reality. It has become a state government business agency. It is, by statute and IRS code, immune from She is the author of several books including: Lord, Why Me?; Christmas, A Christian Holiday, Or is It?; Corporation Sole vs. taxes and not required to incorporate for any reason. In most cases, attorneys and accountants have convinced the clergy to file for this status to gain alleged benefits and privileges offered by the government, such as: (a) Limited Liability - clergy and members are not liable for church actions (b) Perpetuity _ continuous succession, irrespective of changes in membership 501 (c)(3) Corporation; and a booklet, How to Protect Everything You Own in This Life and After. Since 1997, Elizabeth has been writing Aricles of Incorporation .""~!:- - for the office of corporation sole within the Canon Law for (c) Tax Exemption - government exemption from property, sales, and income taxes, etc.: and (d) Tax Deduction - for charitable organizations - for income tax purposes. Many thousands of churches in America have joined in a churches and various ministries. She has been dedicated to warning and teaching the body of Messiah of the trappings of 501 (c )(3) Corporation and how they can release themselves legally from the worldly system of Babylon. Her ministry embraces the church's obligation to come back under the headship of the Master Yahshua, and stil remain as a tax exempt status to those who desire to have a donation acknowledgment for the gifts they give to the ministry. contractual agreement with the Babylonian System and have incorporated as non-profit businesses functioning as statutory business corporations under the control of the state government and the Internal Revenue Service. Prior to 1954, this. incorporation status was virtually not known. We now have to judge whether Y ahshua/J esus, the Messiah, is the sovereign .,.! head of His called-aut-ones or the State is. They aren't really the "ecclesia", the called-aut-ones, by our Lord Yahshua. The true church cannot enter into a contract 5 4 o (0 w , of submission and collusion with the world and remain called out and in union with the .Messiah. If it does, it desires to be other than the church of the Most High, the called-out-ones. The true church is represented as sojourners. Its citizenship lies in the heavenly region. This earhly region in which it is traveling is a foreign country. As Israel was instructed not to .make any covenant with the foreign countries they passed through on the way to the Promised Land, so we as citizens of ., the same Kingdom are under the same mandate. This book is addressed to the called-out-ones who desire to be separate people and in total submission to the Lord Messiah and to remain the "ecclesia." It is for those who have incorporated and have become a state agent of government but now want to. be unincorporated. This book is for those who have never incorporated but desire to put in order "their calling" in the ministry to encourage privacy back to the church and provides for an arrangement in the church in which the house of God may not be divided against itself. .-.. If, after reading this book, you have any questions please contact: Bethel Aram Ministries , P. O. Box 2038 * Dewey, AZ 86327 Phone: 928-775-5454 * Fax: 928-775-9899 E-Mail: bethelaram( Website: 6 (0 ~ a ~ . '.;' " ,.' and (b) SHALL NOT applies to: (a) Churches. their integrated W the same status and category as a non-profit c.. ../Jration, without being one, and without being under their jurisdiction. They understand the difference between a church, the calledout-ones, and a non-profit business corporation. The Benefits of the canon law corporation sole are: 1. They are not subject to the "public policy" rule auxilaries, and conventions or associations of churches. IRS Code Section 6033(a) provides church "Mandatory Exceptions" from the need for filing returns of any kind. It also .l acknowledges the church has complete immunity to disclosure. page 33. The regulations explain that it is not necessary to maintain records of any kind. In Section 6033(1 )(g)( l)(i) it states that annual returns II II way. and regulations governing the 50l(c)(3) noted on 2. They are not created by the government and are not under any government agency including the IRS. are not required to be filed by an organization described in section 501(c)(3), which has established its right to exemption from taxation under 501(a) and which is organized and operated exclusively for religious purposes. In Section 6033(2)(a)(i)(iii) of the Code it states: (a) Mandatory Exceptions, (i) Churches, their integrated auxiliaries, i etc. (iii) exclusively religious activities of a Religious Order. As stated, the corporation sole has complete immunity to 3. They are subject to the private government of those who create them. 4. The only rules for their government are the laws and constitution as signed by the founder. 5. The government is not able to interfere in any , 6. The government may not alter or amend the charer/covenant. disclosure. The regulations explain that it is not necessar to maintain records of any kind except for the organizations' own purposes and reasons. In Section 170(B) provides for Chartable Contributions and gifts that can be deducted for an individual. . 7. All church workers are no longer classified as employees, but considered as ministers of the gospel. In Section 170 B(1)(a)(i) it states: (1) Individuals (a) 8. No government control of the administration. 9. There are no filing requirements of any kind. 10. There are no withholding or self-employment General Rule for any charitable contribution to: (i) A church or association of churches. The church/ministr (called-aut-ones) are recognized under Section 170 for charitable contribution. taxes or income tax with corporation sole. 11. The corporation sole can receive donations and give tax-deductible receipts. 12. The corporation sole can do and operate as any Since the IRS Codes are subject to the First Amendment to .the United States Constitution, there are NO requirements for a corporation sole of'he church or the church related ministries individual can in this world, but at the same time not to apply to the IRS for recognition of tax exemption or tax- be par of it. exempt status. In fact, the codes themselves provide a specific EXCEPTION to reporting and taxation for churches/ministry. The IRS Codes are for corporations, i.e. non-profit and for-profit business corporations. The corporation sole is NOT a !I 13, Most of all, the headship becomes Messiah and not the government. A benefit of the corporation sole is its abilty to support business corporation of any kind. Even though it is not a business corporation, IRS recognizes the corporation sole as in the ministr with income earned outside the ministry by the 49 48 (J a (0 ',. essence, a corporation sole is self-governing withi.Ahe church like a sovereign nation; the holy kingdom of the Most High. We choose to record the corporation sole in the state of corporation sole offce and at the same time drastically reduces your income taxes. If you are a corporation sole and you are also a W-2 employee for a company, you may donate 50% of your adjusted gross income you earned to the ministry of the corporation sole and take the deduction off your 1040 form. If your spouse is also working outside the ministry and is a W-2 employee, he/she may also donate 50% of hislher gross income Nevada. The reason being is they are the only state that wil accept the ecclesiastical canon law corporation sole written as an office and not as an entity. In statutory form surrounding both types of corporation to the corporation sole, thus reducing yoUr tax responsibility drastically and adding more proceeds to the corporation sale for They are: Alabama Alaska " . . . sole, seventeen states in the United States of America have corporation sole separtely, directly and openly in there statutes. Code Section 10-4-Ito 9 (1975) Stat. Section 10.40.060 (1985) the purpose of the llnistr. There is no tax liability for_ the corporation sole working within the ministry. Eared income of a private business outside the ministry that has no relationship to the corporation sale is taxable. If you are a corporation sole and operate your own business and want Arwna ",. Revised Stat. 42-10-11901-1011908 Corp. Code Sees. I 0000 to support the ministr by using monies of the business, you to 100 1 5 wil want to form a Parnership LLC (Limited Liabilty Rev. Stat. 7-52-101 to 104 Rev. Stat. Section 419-1 to 9 Company) to operate the outside business and form a canon law trst to be the majority member. , The LLC has no corporate IRS return accountabilty, California Colorado Hawaii Idaho Michigan Code Section 30-304 Compo Laws Ann. Section 458.1-2, 458.271-27 (West 1983) only the parners do. A 1065 K -1 report is fied for the LLC. Code Ann. 35-3-101 to 209 (1985) Rev. Stat. Section 84.010-080 (1985) In a parnership LLC, a trust can be the majority member (parner) of the LLC, which in turn according to IRS 7701.4 can , Rev. Stat. Ann. Sec. 306.6-8(1984) Code Ann. Section 33-31- 140 Code Ann. Sec. 16-7-1 to 12 (1973) pass 100% its income to a nonprofit entity. Whatever the percentage amount of the other parner is is that parners tax liabilty. The percentage passed to the ministry of the corporation sole is tax free to the ministry and totally supports Montana Nevada New Hampshire South Carolina Utah Washington Wyoming Rev. Code ann. Sec. 24.12.010-040 Stat. Section 17-8-109 to 1 i 3 (1977) the ministry. t. The corporation sole presiding within the church is as follows: Christ is the-head of the church. Under the headship of Christ, is the congregation (body of Christ). and within the At least nine other states or jurisdictions have at least one corporation sole created under special or private charer, sometimes dating before the time of the passage of a general incorporation statute. They are the District of Columbia, llinois, Kentucky, Maine, Marland, Massachusetts, Nebraska, Rhode congregation, is the administrative Offce (Pastor, Elder, Bishop, Apostle, Minister, Deacon, Prophet, etc.) of corporation sole_ The Aricles of Incorporation of the Offce only is recorded !' Island and Texas. No authoritative listing has been found listing in the Secretar of State for a Certificate of Existence as an ambassador of the Kingdom of God. The congregation is not 50 the states which have corporations sole under private law or special incorporation. The foregoing nine jurisdictions were drawn from cases citing a corporation sole in a judicial opinion, 51 recognized by the State or any of its adllnistrations. In (J a (0 incorporated, not the person, not thp, Church Ministr, nor the congregation. Question: Answer: ., Are there by-laws in a corporation sole? No. The corporation sole does not have the usual trappings of a corporation, Le., 501(c)(3). It does CORPORATION SOLE name. not have by-laws, a board of directors, offcers, stock, stockholders, official minutes, or corporate QUESTIONS AND ANSWERS Question: of incorporation? Question: Answer: Answer: What is a corporation sole? A corporation sole is an offce consisting of one Does the corporation sole have a charter/articles 1;he older corporation soles are devoid of a royal charer or other formal approved characteristics. Since then the state acknowledgment later person only, and his successors in some parcular position within the Body of Christ or religious order to give them sole legal capacities and advantages, paricularly that of perpetuity, which in their natural person they could not have had. became an alleged requirement, or at least a state policy, a theory had to be developed to justify the corporation sole existence of the ancient church. " Question: Answer: Question: Answer: , How are the articles of incorporation sole written? What is an offce of corporation sole? The office of a corporation sale is an official administrational position of a person succeeding one another in some offcial positions They can be written by following the statutes requirements of the paricular state but are (officeholders) within the Church Ministry for the work of the ministry. Example: Pastor, Elder, Bishop, Apostle, Prophet, Prophetess, written out of the ecclesiastical, canon law. If Missionary. Question: Answer: W'at is a corporation sole formed for? Corporation Sole may be formed to acquire, hold they are written out of the state statutes, they are a corporation sole of the state. If they are written out of the canon law, they are pre-dating of its existence of an ancient religious order and not par of the state. The fiing is for recognition as a . non profit by the state only. Question: Answer: and dispose of Church or religious society property and for the benefit of religion, for eleemosynary works (charity), for education, Can a corporation sole receive donations and L give tax deductions? scientific research and for public worship. Yes. Because a corporation sole is in the same status (standing) as a 501(c)(3) corporation. Question: Answer: 54 Is the Church Ministry incorporated? No. The office of corporation' sole is according to the IRS ode as a non profit organization, it can receive and give tax 55 a CD -. deduction receipts as a state granted Church must donate the assets to anc.. A' exempt purpose described in this chapter, or to the G Ministry can. Question: Can a corporation sole be fonned to' do federal government or to a state or local government for a public purpose." In chapter three, page 15 of publication 557 those that are buszness? ". Answer: NO! There are a lot of promoters that are exempt automatically are exempt if they meet the requirements of the 501(c)(3) section making wild claims that corporation sole can be used for business. In reality the IRS wil look at sole proprietorship or at least a business of the IRC include: churches, interchurch organizations, auxilares of church. "IRS . publication 1828 states on page 3, "Churches may be this as trust. In both cases the taxation benefit is totally lost. A true corporation sole is not an entity or legally organized in a variety of ways an organization or a trst. under state law, including . . . . . .corporation sole." The IRS is stating that a Church Ministry ..Question: Can a corporation sole be formed for estate that is under a corporation sole is recognized as the same status as a 501(c)(3) corporation. Thus planning? Answer: NO! There are a lot of promoters that are the assets of the 501(c)(3) corporation can be donated to the corporation sole without loss of assets. promoting corporation sole as an estate planning tool. A corpration sole is not an instrument for estate planning. Question: Answer: Can the corporation sole purchase property? Question: If i am in ministry as a corporation sole and my spouse is my successor and I die, and my Yes. Holding property for Church in the corporation sole is one of the purposes for establishing a corporation sole. This includes: spouse succeeds my offce, when my spouse dies, how wil shelhe get our hereditaments to our children? Answer: parsonage, vehicles, and buildingsJor the Church Ministry. Does the IRS recognize a corporation sole? If you have heirs to pass hereditaments to, a Canon Law Trust can be formed. Your children/ heirs are the beneficiaries, thus receiving the Question: Answer: hereditaments by

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