Deer Park Country Club - Page 4

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          taxable year ended October 31, 1986.  The remaining 4.8 acres               
          were subdivided into 14 homesites.  During petitioner's taxable             
          year ended October 31, 1987, 11 of the 14 homesites were sold to            
          petitioner's members for a total of $149,000.  Petitioner's tax             
          basis and development costs for the 11 homesites sold totaled               
          $5,742 and $21,190, respectively, leaving petitioner with a gain            
          of $122,068.  Petitioner used the proceeds from the sale of the             
          11 homesites to pay for the construction of the new recreational            
          facilities during the period beginning 1 year before and ending 3           
          years after the sale of the 11 homesites.3                                  
               Although petitioner originally intended that the entire                
          63.8-acre tract would be used for the development of new                    
          recreational facilities (following the expiration of the 5-year             
          restriction period), petitioner never used any part of the 4.8-             
          acre tract for recreational activities.  On the other hand, the             
          new recreational facilities constructed on the 59-acre tract have           
          been used by petitioner directly in the performance of its exempt           
          function.                                                                   
               Although petitioner filed a Form 990 (Return of Organization           
          Exempt from Income Tax) for its taxable year ended October 31,              
          1987, petitioner did not file a Form 990-T (Exempt Organization             



          3At the time this case was submitted, the three remaining                   
          homesites remained unsold.                                                  




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