4
"Instant bingo" is a game of chance. A participant places a
wager by purchasing a card, the front of which is preprinted with
bingo card patterns and is covered with pull-tabs. The
participant removes the pull-tabs, and if the patterns revealed
on the front of the card match the winning patterns preprinted on
the back of the card, a prize is payable. A winning participant
collects the prize from a cashier or an usher.
Petitioners each leased premises for the purpose of
conducting bingo and "instant bingo" (sometimes referred
collectively as bingo activities) and carried on these bingo
activities approximately 3 times per week during the years in
issue. Petitioners' bingo activities were not substantially
related to their exempt functions or purposes.
Each petitioner maintained a separate checking account
(referred to as the bingo account) into which the gross proceeds
less prizes paid from bingo activities were deposited. During
the years in issue, petitioners made payments to outside
charities from bingo proceeds held in each organization's bingo
account. In addition, FSEP, Schoenstatt, ACADA, and WSA
transferred bingo proceeds from their respective bingo accounts
into their respective general operating bank accounts (referred
to as general accounts or general funds) for their organizations
during the years in issue. Some of these proceeds were paid to
third parties during the taxable years in issue. During the
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