KJ's Fund Raisers, Inc. - Page 9

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                  Petitioner stresses that the board of directors, independent                        
            of Hurd and Gould, controls the distribution of proceeds raised                           
            by the sale of the lottery tickets.  While the board does decide                          
            which charities will receive funds, it is clear from the record                           
            that Kristine Hurd and James Gould control sales of the lottery                           
            tickets as they relate to KJ's Place.  It is also clear that                              
            their control is realistically independent of the board.  In a                            
            protest letter to the IRS dated July 18, 1994, petitioner                                 
            concedes that the officers of KJ's Place appear able to control                           
            petitioner but defend it as necessary.                                                    
                  It is our opinion, however, that KJ's Fundraisers, Inc.                             
                  would fold without the original founders of the organization                        
                  as officers and local charities would go unfunded.  * * *                           
                  [Emphasis added.]                                                                   
                  Before July 1, 1994, Hurd and Gould received wages and KJ's                         
            Place received rent from petitioner.  Although those practices                            
            ceased and are not in issue here, the current board of directors                          
            is composed of at least the majority of the same members who                              
            allowed those amounts to be paid.  This strongly suggests that                            
            Hurd and Gould are free to set policy for their own benefit                               
            without objection from the board.  Nothing in the record since                            
            July 1, 1994, indicates otherwise.                                                        
                  Petitioner also contends that KJ's Place actually lost                              
            money, since patrons preferred to buy lottery tickets rather than                         
            use their money to purchase beverages.  Thus, petitioner argues,                          
            there was no actual benefit.  While all facts must be accepted as                         

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