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do not automatically prevent an organization from qualifying for
exempt status.
Two factors in the present case weigh in petitioner’s favor.
First, the University controls less than 50 percent of the votes
on petitioner’s board of directors. Only two of petitioner’s
five directors, Bob Jones and Bob Jones III, are employed by the
University. Second, we agree with petitioner that the issue of
control would be relevant only if petitioner and the University
were to engage in transactions in which petitioner paid the
University unreasonable amounts for goods or services. See
Bubbling Well Church v. Commissioner, 74 T.C. 531, 537 (1980)
(“If members of the Harberts family [which made up the entire
board of directors] were actually engaged in performing
employment services, compensating them in reasonable amounts for
those services would not disqualify petitioners for exemption.”),
affd. 670 F.2d 104 (9th Cir. 1981). Given that University
officials do not control a majority of petitioner’s board of
directors and that the record does not lead us to believe that
petitioner will make unreasonable payments to the University, we
conclude that the current composition of the board does not
preclude petitioner from satisfying the requirements of section
501(c)(3).
E. Location
Respondent contends that petitioner’s location on the
University’s campus confers a private benefit on the University.
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