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of a $1 million, four-color printing press. The purchase of the
four-color press prompted petitioner and DM to amend the license
agreement to reduce the amount of the royalty payments. An
unrelated bank denied petitioner a loan for this press unless the
royalty payments were decreased. Although petitioner borrowed
the money from DM and the Meditation Center instead of the bank,
petitioner and DM still decreased the royalties to ensure that
petitioner would be able to repay the loan.
Tulku serves as honorary chairman of petitioner's board of
directors. Petitioner views Tulku's chairmanship as a public
endorsement of petitioner as a Nyingma organization. Petitioner
paid the following amounts to Tulku for his chairmanship in
taxable years ending May 31:
Year Compensation
1991 $25,440
1992 26,140
1993 26,640
Tulku is not active in petitioner's business operations and has
never attended a board meeting. However, Tulku frequently
discusses SMMT with Maitland.
During the years in issue, all of petitioner's directors
were associated with, had studied and practiced, or were
interested in, the Nyingma school of Tibetan Buddhism and the
general Buddhist teachings known as Dharma. In addition, most of
petitioner's directors lived at the various Nyingma
organizations. DM and petitioner had two common directors. Two
of petitioner's directors, one of which was Maitland, served as
directors of the Nyingma Centers Corp., an umbrella corporation
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