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C. Petitioner’s Use of Artwork Lent by the University
The lease agreement between petitioner and the University
restricts to the Building the use of all leased artwork,
furniture, and fixtures. Respondent contends that this
restriction unduly limits petitioner’s operations.
We disagree. The terms of the lease agreement are somewhat
restricting, but the lease agreement expires after 3 years.
Moreover, respondent concedes that displaying artwork on loan is
a common practice of museums. Respondent further concedes that
petitioner is not paying the University an excessive amount for
its use of the artwork. In fact, petitioner is not paying the
University anything for its use of the artwork. Based on these
facts, we conclude that the lease agreement does not confer an
impermissible private benefit on the University.
D. Excessive Control
Respondent contends that persons on petitioner’s board of
directors who are affiliated with the University will manage
petitioner for the purpose of benefiting the University. There
are no bright-line standards that address the effect on exempt
status, if any, of overlapping boards of directors. In Rev. Rul.
66-358, 1966-2 C.B. 218, the Commissioner concluded that a
nonprofit organization spun off from a taxable corporation was
tax exempt even though the nonprofit organization’s directors
consisted of the taxable corporation’s officers. Thus, the
Commissioner has recognized that overlapping boards of directors
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