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A realistic look at the operations of these two entities,
however, shows that the activities of * * * [the taxpayer]
and the Pastime Lounge were so interrelated as to be
functionally inseparable. Separate accountings of receipts
and disbursements does not change that fact.
* * * Since the record in this case does not show that
the * * * [taxpayer] was operated exclusively for exempt
purposes, but rather indicates that it benefited private
interests, exemption was properly denied. [Fn. ref.
omitted.]
Id.
The manner in which petitioner is operated benefits private
interests, KJ's Place and its owners. Like P.L.L. Scholarship
Fund v. Commissioner, supra, petitioner's lottery tickets are
sold at a single location, KJ's Place. As in P.L.L. Scholarship
Fund v. Commissioner, supra, the lottery tickets are sold during
KJ's Place's regular business hours, their sale overseen by the
owners of KJ's Place, Hurd and Gould. While in KJ's Place,
lottery ticket purchasers are solicited for beverages. As in
P.L.L. Scholarship Fund v. Commissioner, supra, the accounts of
petitioner and KJ's Place are kept separate and apart.
Despite these similarities, petitioner contends that two
factors distinguish it from P.L.L. Scholarship Fund v.
Commissioner, supra. First, the board of directors is
responsible for running petitioner, and the majority of the board
members are not related to the owners of KJ's Place. Second,
KJ's Place has allegedly lost money as patrons prefer to purchase
lottery tickets rather than beverages.
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