-3-
solely for purposes of deciding the motion and are not findings
of fact for this case. Fed. R. Civ. P. 52(a); Sundstrand Corp.
v. Commissioner, supra at 520.
1. Background
Petitioner was originally incorporated in 1951 as a for-
profit corporation to operate a long-term care psychiatric
hospital in Tarpon Springs, Florida. Petitioner later amended
and restated its articles of incorporation in 1957 to become a
nonprofit corporation. During the years at issue, petitioner's
principal place of business was Tarpon Springs, Florida.
In 1981, petitioner proposed to sell its assets to a Florida
for-profit organization established and owned by members of
petitioner's board of directors. Prior to entering this
transaction, petitioner obtained a letter ruling from the
National Office of the Internal Revenue Service (IRS) dated May
27, 1982, stating that, under the facts alleged by petitioner in
its request for a ruling, the sale of its assets would not
jeopardize its tax-exempt status. In 1983, petitioner sold the
assets to its board of directors for $6,318,000; the sale price
included a $1,818,000 liability assumption by the board of
directors. Two years later, the board of directors sold the
assets to an unrelated third party for $29,587,000. On its 1983
return, petitioner reported a total sale price of $4,500,000.
As a result of these transactions, a RICO civil action suit
was filed in the U.S. District Court of the Northern District of
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