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the activities of the organization.
See sec. 1.501(c)(3)-1(c)(2), Income Tax Regs.
This definition is unchanged from Regs. 65, art. 517 (1924),
except that the older regulations use “individuals” and
“corporation”, instead of “persons” and “organization”,
respectively. Art. 517 of Regs. 65 is essentially similar to
Regs. 45, art. 517 (1920). In general, the case law appears to
have drawn a line between those who have significant control over
the organization’s activities and those who are unrelated third
parties. People of God Community v. Commissioner, 75 T.C. 127,
133 (1980).
We proceed to consider whether, and if so then to what
extent, W&H controlled petitioner’s activities.
On the one hand, neither W&H nor Watson nor Hughey was a
director or officer of petitioner, nor did any of them have a
formal voice in the selection of any director or officer of
petitioner.
On the other hand, in exchange for (a) funds to keep
petitioner operational and get it past its 1984 financial crisis
and (b) fundraising services, W&H received (1) compensation, (2)
effectively exclusive control over petitioner’s fundraising
activities, including supposedly separate computer activities,
and (3) substantial control over petitioner’s finances. The
amounts that W&H would advance for petitioner’s operational costs
and as capital for petitioner’s fundraising costs were not
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