-2-
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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