-3-
Year1 Deficiency
1984 $17,957
1985 19,719
1986 3,818
1 Taxable years ending September 30 of each of the years in
issue. References in this opinion to petitioner’s fiscal years
are to years ending on September 30 of the indicated years.
After concessions1 the issues for decision are as follows:
(1) Whether any part of petitioner’s net earnings
inured to the benefit of private shareholders or
individuals, within the meaning of section 501(c)(3).2
1 Petitioner does not dispute the correctness of
respondent’s notice of deficiency calculations of the deficiency
for any year as to which we hold petitioner was not tax-exempt.
At trial, respondent contended that petitioner was not
exempt because petitioner failed the statutory inurement test and
also because petitioner failed the test of sec. 1.501(c)(3)-
1(c)(2), Income Tax Regs., to the effect that an organization is
not operated exclusively for one or more exempt purposes if its
net earnings inure in whole or in part to the benefit of private
shareholders or individuals. On opening brief, respondent notes
the overlap between the two contentions and states that its
argument “is confined to private inurement.” Thereafter,
respondent deals only with the statutory inurement test. We
treat this as respondent’s abandonment of the regulatory
operational test.
2 Unless indicated otherwise, all section references are
to sections of the Internal Revenue Code of 1954 or the Internal
Revenue Code of 1986 as in effect for the period of time referred
to.
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