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assumption that the funds so collected will be used for capital
purposes; and, three, the funds must be accounted for at the time
of payment and held for that purpose and for no other purpose.
Using this test, the court held that the earmarking requirement
had not been met because the club used the amounts in the capital
accounts for operating expenses. The court held that this use
related back to and invalidated the initial purported earmarking.
In light of this history, we conclude that petitioner’s
procedures for the collection, accounting, and use of the
transfer fees provide sufficient assurance that the transfer fees
are dedicated to the required purpose of reducing petitioner’s
mortgage debt, in accordance with the requirements of rule 243.
As in Maryland Country Club v. United States, supra, petitioner’s
rule 243 illustrates petitioner’s definite commitment to engage
in a capital use with the funds; i.e., the retirement and
redemption of the CBOT building indebtedness, which was incurred
to finance capital construction projects. Both petitioner and
its members are aware that the transfer fees are collected for a
designated purpose. Prospective members are given a copy of, and
tested on, petitioner’s rules, including rule 243. Finally, the
fees are accounted for separately from operating revenues. They
are accounted for by book entries as “restricted capital”. The
funds are held in these accounts until petitioner makes a
mortgage principal payment in an amount greater than the amounts
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