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pay rent for a hall to conduct its bingo games and contends that,
under Ohio law, the $250 per session that it paid was a
reasonable rent.
We agree with respondent.
An organization’s payment of reasonable rent to an insider
for the organization’s use of the insider’s property would not
constitute inurement of net earnings but payment of an excessive
amount in the form of rent would. Founding Church of Scientology
v. United States, 188 Ct. Cl. 490, 412 F.2d 1197, 1202 (1969);
Texas Trade School v. Commissioner, 272 F.2d 168, 169 (5th Cir.
1959), affg. 30 T.C. 642, 647 (1958).12 Whether the payment in
question exceeds a reasonable rental is a question of fact.
Harmon City, Inc. v. United States, 733 F.2d 1381, 1385 (10th
Cir. 1984); Southeastern Canteen Co. v. Commissioner, 410 F.2d
615, 619 (6th Cir. 1969), affg. on this issue and revg. on
another issue T.C. Memo. 1967-183.
During petitioner’s fiscal 1984 and part of fiscal 1985
petitioner paid $250 per bingo session to P&R to rent the Center
for bingo fundraising. We have held that Zeve and Popovic are
insiders, in particular with regard to petitioner’s bingo
fundraising activities. Zeve and Popovic each owned 20 percent
of P&R. If petitioner was paying more than reasonable rent to
12 To the same effect is Bramson v. Commissioner, T.C.
Memo. 1986-273.
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