Variety Club Tent No. 6 Charities, Inc. - Page 2

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               of returning it to petitioner.  In fiscal 1984 and fiscal              
               1985 petitioner paid $250 per bingo session rental for a               
               bingo hall to a corporation in which Z and P each held 20-             
               percent ownership interests.  In 1990 respondent revoked               
               petitioner’s favorable ruling letter, retroactive to the               
               start of fiscal 1984, and determined deficiencies for fiscal           
               1984, 1985, and 1986.                                                  
                    1.  Held:  Z and P were “insiders” for purposes of the            
               inurement provisions of sec. 501(c)(3), I.R.C. 1954 and                
               1986.                                                                  
                    2.  Held, further, Z’s and P’s theft of bingo proceeds            
               was not an inurement of petitioner’s net earnings.                     
                    3.  Held, further, petitioner’s fiscal 1987 payment to            
               an attorney was not an inurement for purposes of determining           
               petitioner’s status for fiscal 1984-1986.                              
                    4.  Held, further, petitioner’s fiscal 1986 payment to            
               an attorney was an inurement to Z, an insider.                         
                    5.  Held, further, P’s diversion of the $2,500 check              
               was essentially a theft and not an inurement of petitioner’s           
               net earnings.                                                          
                    6.  Held, further, petitioner failed to prove that its            
               $250 per session rental payments for fiscal 1984 and 1985              
               were not excessive; thus petitioner failed to prove that the           
               payments were not inurements of petitioner’s net earnings to           
               Z and P, insiders.                                                     
                    7.  Held, further, respondent’s 1990 revocation of the            
               favorable ruling letter back to the start of fiscal 1984 was           
               not an abuse of discretion.                                            


               Deborah J. Nicastro, for petitioner.                                   
               Katherine Lee Wambsgans, for respondent.                               


                       MEMORANDUM FINDINGS OF FACT AND OPINION                        
               CHABOT, Judge:  Respondent determined deficiencies in                  
          Federal corporate income tax against petitioner as follows:                 




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