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Petitioner maintains that (1) “the inurement doctrine
applies only to insiders who receive an impermissible benefit
from the organization, not to third parties with whom the exempt
organization contracts for services” (emphasis in original); (2)
petitioner was independent of W&H, and the two entities “had no
common directors, officers or employees;” and (3) petitioner--and
not W&H--had “control” in that (a) petitioner directed its
charitable program, (b) petitioner “renegotiated the contract
with W&H in mid-stream, gaining an important financial
advantage,” (c) petitioner “diligently exercised its right of
review over all proposed mail copy, mailing lists, vendor’s
invoices, and volume and frequency of mailings”, and (d)
petitioner “exercised ultimate ‘control’ by terminating its
relationship with W&H.”
Respondent contends that “an ‘insider’s’ control consists of
a meaningful opportunity to influence any portion of the
organization’s activities that could readily be manipulated to
the benefit of the insider.” Respondent asserts that in the
instant case “the record clearly shows that W&H controlled most
of * * * [petitioner’s] income and assets, including controlling
most uses of (and all rental income from) * * * [petitioner’s]
donor and non-donor names, even after the five-year term of the
contract.”
Petitioner rejoins that its board of directors retained
ultimate control, and, to the extent that any control over any
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