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On August 6, 1985, petitioner’s board of trustees authorized
a payment of $2,500 to Ohio Boys Town to set up Elyria Hall for
bingo games and to buy equipment that Ohio Boys Town could use in
operating bingo games in Elyria Hall. Pursuant to this
authorization, petitioner gave a $2,500 check, dated August 6,
1985, to Ohio Boys Town. The check was signed by Plants and
Zeve. Ohio Boys Town determined that it would not conduct bingo
games at Elyria Hall. It endorsed the check in blank, and
Popovic then endorsed the check in blank. On September 7, 1985,
the check was deposited by AmeriTrust Co. to an account at the
Cuyahoga Savings Association.
For each year in issue, petitioner filed a Form 990
disclosing its income, expenses, and other organizational and
financial information. Petitioner failed to disclose in its 1984
or 1985 Forms 990 that it was leasing property from P&R, a
corporation with which a principal officer of petitioner was
affiliated. Petitioner failed to disclose on its 1986 Form 990
that it had paid a retainer for legal services on behalf of Zeve.
On February 9, 1990, respondent issued to petitioner a final
notice of revocation of the favorable ruling letter, retroactive
to October 1, 1983. The determination was based on a finding
that all or part of petitioner’s net earnings had inured to the
benefit of private shareholders or individuals. On the same day,
respondent also issued to petitioner a notice of deficiency with
respect to its income taxes for its fiscal 1984, 1985, and 1986.
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