IRS Questions to Skyaid Organization 11/01

01. Your organization was asked to submit copies of minutes of board meetings from the inception of the organization. Your organization responded on October 2, 2001 stating, "The Skyaid Organization Board meets (or has resolutions in lieu of a board meeting) often enough to keep in good standing as state of Washington corporation."
    a. Has your organization had any board meetings?
    b. Please provide copies of the minutes of the board meetings or the resolutions in lieu of board meetings.

02. Your organization was asked to modify its board of directors and responded by stating, "The Skyaid Organization Board meets (or has resolutions in lieu of a board meeting) often enough to keep in good standing as state of Washington corporation." This answer does not address the need for your organization to modify its board of directors. Please expand your board of directors as stated below.

Your organization appears to be controlled by related individuals. Section 1.501(cX3)-l(d)(l)(ii) of the Income Tax Regulations states that an organization which serves private interests rather than public purposes does not qualify for exempt status. To ensure that your organization will serve public interests, you should modify your Board of Directors and officer positions to place control of the organization in the hands of unrelated individuals selected from the community you will serve.

Also, your organization's bylaws, Section 1, states, "The corporation shall have a at least 5 directors and collectively they shall be known as the Board of Directors."

Please submit names and qualifications of the new board members, as well as a statement signed and dated by each that they will take an active part in your operations.

03. Your organization did not provide responses to page 6 of the IRS letter dated August 27, 2001. Please answer the following and/or provide the information

a. On Form 1023, Part II, #1, your organization indicated that one of its activities would be the preliminary design of ultrasafe avionics for air vehicle use in 2005.

(1) Will Skyaid own an interest in the air vehicle? If yes, please provide any contracts or agreements that discuss the terms of the ownership interest.

(2) Will any of the officers or board members of Skyaid or related parties (of officers or board members of Skyaid) own an interest in the air vehicle? If yes, please provide any contracts or agreements that discuss the terms of the ownership interest.

(3) Provide any contracts or agreements between your organization and the organization developing the air vehicle.

(4) Who will own any patents, copyrights, tradename, technology, other ownership rights, etc. related to the air vehicle? Please provide copies of any contracts or agreements related to the patents, copyrights, tradename, technology, other ownership rights, etc.

(5) Please discuss the amount of funding Skyaid will provide to the organization building the air vehicle?

(6) Are any board members or officers of Skyaid or related parties (of any board members or officers of Skyaid) related to any board members or officers of the organization creating the air vehicle? If yes, please list the name and relationship.

(7) Are any board members or officers of Skyaid or related parties (of any board members or officers of Skyaid) on the board or an officer or an advisor or consultant of the organization creating the air vehicle? If yes, please list name of the individual, duties, and compensation received from the organization creating the air vehicle.

(8) Do any board members or officers of Skyaid or related parties (of board members or officers of Skyaid) have an ownership interest in the organization creating the air vehicle? If yes, please state name of individual and percentage of ownership.

(9) In what geographical area will the air vehicle be offered?

(10) With regards to using the air vehicle in the year 2005, is this a realistic expectation?

(11) This activity appears to be a high-risk investment. Investing in something speculative and subsidizing the development of an experimental aircraft is not a 501(cX3) activity.

    (a) How will this activity further your organization's exempt purpose?

    (b) How is this high-risk investment a tax-exempt activity?

    (c) Please provide court cases, revenue rulings, etc. to support your position.

b. Provide a listing of support your organization has received from inception of the corporation to the present time. Please include the date of the contribution, name of contributor, and amount of contribution.

c. On Form 1023, Part II, #4, your organization indicated that it has not determined the amount of compensation to be received by officers or board members.

    (1) When will Skyaid determine the amount of compensation to be received by officers or board members?

    (2) What will the compensation to officers or board members be based on?

04. Your organization indicated that LifeWatch will be public domain and that no contracts or agreements related to patents, copyrights, tradename, technology, other ownership rights, etc. have been made.

To qualify under section 501(cX3) your organization can either make LifeWatch public domain or obtain a patent for LifeWatch. The patent would have to be owned by LifeWatch and all royalties related to LifeWatch should remain with Skyaid Organization.

1. If you organization will make the LifeWatch design public domain, please have two officers or board of directors sign and date the enclosed resolution that states the LifeWatch design will be public domain,
2. If your organization will obtain a patent for LifeWatch, please have two officers or board members sign the enclosed resolution stating that it will obtain a patent for LifeWatch and all of the royalties from the patent will remain with Skyaid Organization.