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there is no doubt that petitioner is a bona fide museum that
furthers educational purposes.
II. Private Benefit Factors
We now turn our attention to the specific factors cited by
respondent as the basis for her final adverse determination.
A. Petitioner’s Payment of Rent to the University
Respondent contends that petitioner’s payment of rent to the
University confers on the University an impermissible private
benefit. Respondent states:
This [fundraising by the museum] will result in
direct economic benefit to Bob Jones University because
tax-deductible contributions made to Petitioner will be
used to reimburse Bob Jones University for rental of
the building on the University campus where the art
collection is housed. This will relieve Bob Jones
University of the cost of operating the museum itself,
and will allow Bob Jones University to have the benefit
of the museum on its campus financed by tax-deductible
contributions.
The principal inquiry in determining whether rental
arrangements create private benefit or inurement is whether the
rental payments are excessive. See B.H.W. Anesthesia Found. v.
Commissioner, 72 T.C. 681, 686 (1979) (focusing on “whether
comparable services would cost as much if obtained from an
outside source in an arm’s-length transaction”). In the present
case, petitioner is to pay the University $105,600 per year,
which is substantially less than the Building's fair market
value. Respondent contends that payments for less than fair
market value can create private inurement. For support,
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