Administration. They are included in the schedule prepared by the General Accounting Office. But they raise a question as to whether there may be other documents which have not been included. We have not found others. As to property obtained from the Army Air Force under the donable program by the Bunker Hill School of Aeronautics, development of the information by the General Accounting Office shows that its total Government cost was $566,047.07, which works out to a total Government cost for both programs of $5,505,164.17. Inquiry by the General Accounting Office ascertained that the property transferred to the Bunker Hill School of Aeronautics by the War Assets Administration and the Army Air Force and undisposed of was located in various points in Michigan, Indiana, Ohio, and Illinois. It is our understanding that the Federal Security Agency is attempting to recover the available property, and that the Bunker Hill School officials have tentatively agreed to its return but require reimbursement in the amount of approximately $35,000, which represents the cost to the school and its officials for transportation of the property to various points from Bunker Hill School of Aeronautics at Bunker Hill, Ind., and also the cost of its maintenance and other matters pertaining to such cost. The report contains exhibits which have been submitted showing the manner in which some of this property has been maintainedphotographs taken by representatives of the General Accounting Office at the various points of storage. The supplemental report of the General Accounting Office also contains details as to the sale of various property to various individuals and as to joint ventures entered into of a similar nature, and specifically demonstrates the sale of 26 engines by Bunker Hill School of Aeronautics through Mr. Harrah, which were sold at a profit. As had been brought out, these engines were paid for in the amount of $10 to the War Assets Administration and sold in the amount of $175 each, I believe. Other sales were brought out at the past hearing, and there is other data in the report supporting sales. The supplemental report contains information as to the original agreement entered into between the Bunker Hill School, a nonexistent institution, and the War Assets Administration through the efforts of Mr. Pemberton, who signed the formal agreement, which was certified by Mr. Charles Shepler, trustee of Pipe Creek Township, Bunker Hill, Ind. The report further brings out later negotiations with the War Assets Administration by the Bunker Hill School of Aeronautics through which in June of 1947 a new agreement was entered into in the name of the Bunker Hill School of Aeronautics with the War Assets Administration. The report further brings out the requirement of section 101 (6) of the Internal Revenue Code, which was a requirement for tax exemption status in all of the programs with which property obtained by the Bunker Hill School of Aeronautics was concerned. The last section of the report contains various signed statements received by investigators of the General Accounting Office from Mr. Harry R. Curran, Jr., Mr. Wayne M. Ladd, who are officers of the Bunker Hill Corp., presently, I believe, operating the air base at Bunker Hill, Ind. I know that they were in early February, at the time we contacted them. Also, the report contains a statement of Mr. D. W. DeTray, vice president of the Bunker Hill School of Aeronautics, and documents obtained from the Navy Department records which are pertinent to this matter and deal with the situation in November and December of 1947. In addition to the material included in the supplemental reports we would like to submit for the subcommittee's information photostatic copies of data obtained from the Internal Revenue files in connection with the tax exemption application of the Bunker Hill School of Aeronautics and the Indiana School of Aeronautics, which was its successor. Mr. BONNER. They will be included in the record. (The documents referred to marked "Exhibits 25A, 25B, and 25C" follow :) EXHIBIT 25A APRIL 30, 1947. The BUNKER HILL SCHOOL OF AERONAUTICS, INC., Bunker Hill Air Base, Bunker Hill, Ind. GENTLEMEN: Reference is made to the information submitted in support of your claim to exemption from Federal income tax. The information discloses that you were incorporated on March 10, 1947, to establish and maintain a school for instruction in aeronautical pursuits and allied lines of endeavor. You are at present engaged in acquiring the neces sary equipment, setting up the various courses of instruction, and arranging for the housing of students and the employment of instructors. Your income is to be derived from tuition charged your students. Rulings of the Bureau with respect to the exempt status of organizations for Federal income tax purposes are based largely on the activities of the organizations over a period of time sufficient to disclose clearly the actual methods of operation. Inasmuch as you have been organized for only a short period and have not yet begun operating the school, no ruling will be made at this time. If, after you have actively operated the school for a period of 12 months, you will submit to the collector of internal revenue for your district an exemption affidavit, Form 1023, completely filled out and accompanied by the financial statements requested therein, further consideration will be given to your claim. It will not be necessary for you to again submit copies of your articles of incorporation and bylaws, but any amendments or changes thereto should be submitted. Internal Revenue Bureau, Washington, D. C. (Attention: Practice and Procedure Division) GENTLEMEN: Pursuant to my recent conversation with Mr. C. S. Forbes, I am happy to enclose herewith duly executed exemption certificate together with copies of articles of incorporation and bylaws. If any further information is desired, please do not hesitate to communicate with the undersigned. We are hopeful that every effort will be made to expedite the issuance of a temporary exemption certificate, and we request that copy of such certificate as, if, and when issued be forwarded to Mr. Charles G. Lavin, Chief, Special Services Section, Public Interest Division, War Assets Administration, Washington, D. C. Respectfully, FORM 1023 TREASURY DEPARTMENT INTERNAL REVENUE SERVICE (Revised July 1945) LEONARD O. ZICK, Treasurer. EXEMPTION AFFIDAVIT FOR USE OF RELIGIOUS, CHARITABLE, SCIENTIFIC, LITERARY, OR EDUCATIONAL ORGANIZATION CLAIMING EXEMPTION FROM FEDERAL INCOME TAX UNDER SECTION 101 (6) OF THE INTERNAL REVENUE CODE AND THE CORRESPONDING PROVISIONS OF PRIOR REVENUE ACTS (To be made only by a principal officer of the organization claiming the STATE OF INDIANA, County of Starke, ss: James E. Short deposes and says that he is the President of the The Bunker Hill School of Aeronautics, Inc., located at Naval Air Station Bunker Hill, Bunker Hill, Indiana, and that the following answers and statements, including all statements attached hereto, are complete and true to the best of his knowledge and belief: 1. Is the organization incorporated? Yes. If so, under the laws of what State? Indiana. When? March 10, 1947. If not incorporated, state the man ner of organization and the date thereof 2. Is the organization the outgrowth or continuation of any form of predecessor? No. If so, state the name of such predecessor and the period during which it was in existence___ 3. Has the organization filed Federal income-tax returns? No. If so, for what year or years? 4. State briefly the specific purposes for which the organization was formed, (Do not quote from, or make reference to, the articles of incorporation or bylaws for this purpose.) To conduct a school for the vocational training for those interested in various phases of aeronautics, viz: flight training, motor rebuilding, equipment testing, et cetera, in cooperation with the Civil Aeronautic Board and Administration and with the services of the United States Government. 5. Is the organization authorized to issue capital stock? No. If so, state (1) the class or classes of such stock, (2) the number and par value of shares of each class outstanding, and (3) the consideration paid for outstanding shares. 6. If capital stock is outstanding, state whether any dividends or interest has been or may be paid thereon: No. If so, give facts in detail: No stock to be issued, 7. If any distribution of corporate property of any character has ever been made to shareholders or members, attach hereto a separate statement containing full details thereof, including (1) amounts or value, (2) source of funds or property distributed, and (3) basis of and authority for distribution. None. 8. State all sources from which the organization's income is derived Income to be derived from vocational training students which will defray expenses in connection with maintenance of equipment, instruments, and other proper expenses. 9. Does any part of the receipts represent payment for services of any character rendered by the organization? Yes. If so, explain in detail: Only insofar as teaching and the provision of facilities constitute services. 10. State all the activities in which the organization is presently engaged. (Explain in detail, using additional sheets as required-See footnote.) At present the organization is engaged in acquiring necessary equipment, setting up various courses of instruction, arranging for housing of students, the employment of instructors, et cetera. 11. What, if any, specific activities of the organization have been discontinued? (Explain fully, giving dates of commencement and termination and the reason for discontinuance.) None. 12. Is the organization now, or has it ever been, engaged in carrying on propaganda, or otherwise either advocating or opposing pending or proposed legislation? No. If so, furnish a detailed explanation of such activities, and furnish copies of literature, if any, distributed by the organization. (Use additional sheets as required-See footnote.) 13. (a) For what purposes, other than in payment for services rendered or supplies furnished, are the organization's funds expended? None. (b) If any payments are made to members or shareholders for services rendered the organization, attach a separate statement showing the amounts so paid and the character of the services rendered. See exhibit A. 14. Does any part of the net income of the organization inure to the benefit of any private shareholder or individual? No; except for the performance of services rendered as described in 13 (b) above. 15. If the organization is a hospital, attach a separate statement showing the number of full-pay, the number of part-pay, and the number of nonpay patients treated during the last complete year of operation. Not applicable. 16. In the event of the dissolution of the organization, what disposition would be made of its property? Pursuant to Indiana General Not For Profit Corporation Act pertinent facts of which are set forth in exhibit B. 17. Attach to this affidavit a classified statement of the receipts and expenditures of the organization during the last complete year of operation and a complete statement of the assets and liabilities as of the end of that year; a copy of the articles of incorporation, if incorporated, or if not incorporated, a copy of the constitution, articles of association, declaration of trust, or other document setting forth the aims and purposes of the organization; and a copy of the bylaws, or other similar code of regulations. If exemption is claimed as an exclusively educational organization and a regular curriculum and faculty are not normally maintained and a regularly organized body of pupils or students is not normally in attendance at the place where the educational activities are regularly carried on, there should also be attached specimen copies of any books, pamphlets, leaflets, or other printed matter issued or distributed during the latest complete year of operations. See exhibit C. NOTE. If the space provided for the insertion of information or data under any of the above questions is inadequate for the purposes, additional sheets may be used which should be properly identified and securely attached hereto. A mere claim or contention by an organization that it is exempt from income tax under section 101 of the Internal Revenue Code and the corresponding provisions of prior revenue acts will not relieve the organization from filing income tax returns and paying the tax. Unless the Commissioner has determined that an organization is exempt, it must prepare and file a complete income tax return for each taxable year of its existence. Accordingly, every organization that claims to be exempt should furnish the information and data specified herein, together with any other facts deemed material to the question, with the least possible delay, in order that the Commissioner can determine whether or not it is exempt. As soon as practicable after the information and data are received, the organization will be advised of the Commissioner's determination, and, if it is held to be exempt. no further returns of income will be required. Additional exhibits: Exhibit D-Copy of Articles of Incorporation. JAMES E. SHORT. Subscribed and sworn to before me this 10th day of April 1947. Notary Public. My Commission Expires November 1, 1949. (This affidavit may be executed without cost before any Internal Revenue officer authorized to administer oaths.) EXHIBIT A 13. (b) It is not contemplated that membership in the corporation will be denied faculty members and other persons rendering services to the corporation. However, it is not the intention to limit memberships in the corporation to persons who are performing services for the corporation. It is anticipated that a very small percentage of the members of the corporation will be employed by the corporation as faculty members or for other services. EXHIBIT B Pertinent facts from Indiana General Not For Profit Corporation Act: ARTICLE 5. DISSOLUTION. DISSOLUTION PROCEEDINGS-SOLVENT AND INSOLVENT CORPORATIONS "Sec. 26. (a) Any solvent corporation (or any insolvent corporation with the written consent of all its creditors) may proceed to effect the dissolution of such corporations as follows: ** **(2) Any member of this corporation may receive the amount advanced or loaned to the corporation by him, together with simple interest at the rate of six percent per annum and no more; after which any member may receive an amount equal to the amount paid in by him as membership dues or otherwise, together with simple interest at the rate of six percent per annum and no more, none of which amounts shall be paid in whole or in part until all the creditors of the corporation shall have been paid in full. Any moneys or property remaining after all amounts designated in this section shall have been paid, shall escheat to the State of Indiana, and shall be paid into the general treasury of the State of Indiana, by the payment thereof to the treasurer of state, who shall issue his receipt to the corporation. * EXHIBIT C SAMPLE PROSPECTUS The need for an aeronautical trades school located in the Middle West on an operating airport, permitting students to have actual working contact with all types of aircraft including transport, military and private, has long been recognized. During the war years this need was very forcibly brought to the attention of Howard L. Pemberton in his work as a test pilot for the Curtiss-Wright Aviation Corp. and the Allison Engineering Co. Immediately on cessation of hostilities Mr. Pemberton started to do something about this matter. After 2 years of investigation, planning, and consultation on this subject, which included traveling throughout the United States discussing aeronautical schools with military instructors, airline officials, aircraft manufacturers, Civil Aeronautic Authority officials, Veterans' Administration administrators, board of education officers, and aeronautical school authorities, a plan for Bunker Hill School of Aeronautics was evolved. In order to make this survey in the most intelligent manner and to lay out an institution able to function for the greatest benefit of the students as well as the aeronautical industries, Mr. Pemberton retained Mr. E. C. Weaver of Western Michigan College, a vocational educator of 25 years' experience, highly regarded in his profession, and at present coordinator of all vocational training within the State of Michigan. Bunker Hill Naval Air Base, Bunker Hill, Ind., was selected as the most ideal location for such a school due to its central Midwest location and the already present extensive and complete facilities. Further the operation of the base as a civilian enterprise catering to the repair, maintenance, and reconversion of transport aircraft furnish the school with an ideal contact for students to start immediate practical application of their learning as well as augment their income while in school by practical application of their talents as acquired. The Bunker Hill School of Aeronautics will in no way attempt to compete with the course available at our State institutions of learning. Bunker Hill School of Aeronautics will be a vocational training center for aeronautical employment complete in every detail for functional educational training by personal accomplishment. Bunker Hill School of Aeronautics will qualify under the rules, requirements, and standard of the Indiana State Board of Education, the Civil Aeronautics Authority, and the Veterans' Administration Educational Division for education in aeronautical pursuits. The need for such type of training as is proposed to be offered is great. The Civil Aeronautics Authority officially predicts 750,000 new aviation jobs in the next 10 years. Mr. T. P. Wright, Civil Aeronautics Administrator, in a statement of the Associated Press describing 1946 as aviation's "biggest year" stated as follows: |