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incorporated non-stock social club to repair and improve the
club's building held to be capital contributions even though the
club's principal business was providing services to its members);
Lake Forest, Inc. v. Commissioner, T.C. Memo. 1963-39 (payments
by members to a cooperative housing corporation to meet mortgage
amortization obligations were held to be capital contributions
even though members also leased property from the corporation).
Because petitioner's members have a dual role as users of the
CBOT services and facilities and holders of equity interests in
the CBOT, we must determine whether the payments were made in
consideration of the receipt of goods or services from petitioner
or as an investment in the capital of the corporation.
Respondent argues that the transfer fees are payments in
consideration of obtaining access to the trading facilities and
thus are ordinary income. We disagree. Petitioner charges its
members a separate transaction fee for each trade executed on the
exchange. A transaction fee is paid in consideration of the use
of the trading facilities every time a trade is executed. The
transaction fees amounted to more than $40 million in each of the
3 years in issue and are petitioner’s primary source of revenue.
We are not persuaded that the transfer fees, amounting to less
than 1 percent of the transaction fees charged for actual use of
the trading facilities, are payments in consideration of the use
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