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arm’s-length negotiations may have a significant bearing on the
fairness of the Contract, but they do not inoculate W&H against
insider status.
Mailers makes a further argument along this line by pointing
out that--
even the definition of self-dealing provides that the term
does not include ‘a transaction between a private foundation
and a disqualified person where the disqualified person
status arises only as a result of such transaction.’ Treas.
Reg. �53.4941(d)-1(a).
However, the cited regulation explains this rule in the very
next sentence, as follows:
For example, the bargain sale of property to a private
foundation is not a direct act of self-dealing if the seller
becomes a disqualified person only by reason of his becoming
a substantial contributor as a result of the bargain element
of the sale.
Thus, the cited regulation (which does not apply to public
charities anyway) focuses on the “one-shot deal” and does not
appear to immunize a substantial course of dealing merely because
the substantial course of dealing is pursuant to one contract
(and its amendments and extensions).
We conclude that the cited regulation, fashioned in an
environment of “disqualified persons” and “prohibited
transactions”, is distinguishable from what we face in the
instant case, viz, “insiders” and “inurement”.
We hold, for respondent, that W&H was an insider with regard
to petitioner.
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