Scientology's Assets Totaled in IRS Documents

Source: San Francisco Chronicle
Date: December 22, 1993

Holdings of $398 million include 440-foot cruise ship

The Church of Scientology holds assets of nearly $400 million, including a cruise ship used as a "seagoing religious retreat," according to a detailed portrait of the group's financial network provided to the Internal Revenue Service.

The papers, which fill nine file boxes, were submitted by the church as part of its 39-year-old attempt to gain tax-exempt status. The documents became public after the IRS granted an exemption to more than 20 Scientology organizations October 1.

The papers offer an unprecedented public view of the huge organization, which includes two publishing houses, a 2,845-acre California ranch used as a school for the children of church staff members and more than 45 buildings on 500 acres in Riverside County.

Other assets include reinforced vaults designed to preserve the church's teachings in case of earthquake or nuclear attack, the documents said.

The assets reported in the documents filed with the IRS totaled $398 million.

The Los Angeles-based church does not keep combined balance sheets but "the combined total, if kept, would be somewhere in the range you list," Scientology spokeswoman Leisa Goodman said in a written response to questions.


The church was founded in 1954 by science fiction writer L. Ron Hubbard, whose best-selling "Dianetics: The Modern Science of Mental Health" advocated the use of an electropsychometer - a lie detector-like device to purge negative images from people's minds.

The IRS recognized one branch, the Church of Scientology of California, as a tax-exempt religious organization in 1957. But it revoked that status in 1967, questioning, for example, the way the church charged for classes that are part of the religious practice.

None of the IRS letters in the files explained the legal reasoning behind granting tax exemption this year. Some noted, however, that the IRS found no evidence of "inurement," or private enrichment, which is barred under the tax law governing religious and charitable organizations.

Charitable Purposes

IRS spokesman Frank Keith said the agency concluded that the church "is operated exclusively for religious and charitable purposes."

The 440-foot cruise ship Freewinds is operated by Scientology's Flag Ship Service Organization as "a safe, distraction-free environment for the ministry of the highest and most confidential Scientology auditing level," the organization said in its application for tax exemption.

"Auditing" is a technique developed by Hubbard in which adherents are connected to the electropsychometer, which "measures the mental state and change of state in individuals," according to Scientology literature.

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