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assets or activities was delegated to W&H, petitioner’s board of
directors exercised due diligence in supervising W&H’s actions.
Mailers contends that, if a charity and an “outsider”
negotiate a contract at arm’s length, then the contract does not
make that person an insider for inurement purposes with respect
to that contract. The contract between petitioner and W&H was
negotiated at arm’s length and was “market rate”, Mailers
asserts, and so W&H was not an insider and there was no inurement
to W&H.
American-Sector contends that “the case law often labors to
craft metaphysical distinctions between these requirements”--the
ban on “private inurement”, the ban on “private benefit”, and the
general requirement that a charity be organized and operated
“exclusively for an exempt purpose”.
We agree with respondent’s conclusion.
The term “private shareholder or individual” appears at
present in sections 170(c) (three places), 501(c) (eight places),
528(c)(1)(D), 833(c)(3)(A)(vi), 2055(a), 2522 (four places), and
4421(2)(B). This term has been unchanged since the Revenue Act
of 1924, Pub. L. 176, 68th Cong., 1st. Sess., ch. 234, 43 Stat.
253, 271, 282. The Revenue Act of 1921, Pub. L. 98, 67th Cong.,
1st Sess., ch. 136, 42 Stat. 227, 241, 253, used the term
“private stockholder or individual”, as did the prior Revenue
Acts back to the Tariff Act of 1913, Pub. L. 16, 63d Cong., 1st.
Sess., ch. 16, 38 Stat. 114, 172. The term “private stockholder
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