Bob Jones University Museum and Gallery, Inc. - Page 12

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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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