University Medical Resident Services, P.C. - Page 18

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          better achieve the organizations’ exempt purpose.  Hospital                   
          Bureau of Standards & Supplies v. United States, supra (involving             
          a corporation that took over the purchasing of hospital supplies              
          in order to achieve volume discounts for its members); Council                
          for Bibliographic & Info. Technologies v. Commissioner, supra                 
          (involving a corporation that took over operation and maintenance             
          of a computerized library research system enabling member                     
          libraries to better perform their exempt functions).  In the                  
          present case, petitioners are superfluous corporate shells that               
          make no cognizable contribution to the education of residents.                
          Despite petitioners' incorporations, all funds continue to be                 
          provided by the Schools and hospitals, and all program-related                
          decisions continue to be made through the Consortium.  The                    
          Schools and the hospitals continue to supervise and train the                 
          residents and pay their salaries.  In addition, the Consortium                
          continues to make the policy decisions, just as it has since                  
          1983.  The only change since the incorporation of petitioners is              
          that the money used to pay residents is funneled through                      
          petitioners before it reaches the residents.  As the                          
          Consolidation Contract states, the Consortium has “overall                    
          management and program control” with respect to the education of              
          residents.  Petitioners are merely "corporations controlled by                
          * * * [the Consortium]."  In substance, petitioners appear to be              
          appendages rather than integral parts.                                        

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