-42-
inurements should be treated as applying to only parts of these
years.
We hold, for respondent, that petitioner violated the
inurement prohibition in section 501(c)(3) in each of the years
in issue.
II. Retroactivity of Respondent’s Revocation of the Prior
Favorable Ruling Letter Issued to Petitioner
Petitioner contends that, under section 601.201(n)(6),
Statement of Procedural Rules, it was improper for respondent to
revoke the prior favorable ruling letter retroactively to October
1, 1983.
Respondent relies on the broad statutory discretion under
section 7805(b) and contends that petitioner operated in a manner
materially different from that originally represented, thus
justifying the retroactivity of the revocation.
We agree with respondent.
The Supreme Court has held that respondent has broad
discretion under section 7805(b)15 and its predecessor, in
15 Sec. 7805(b) provides as follows:
SEC. 7805. RULES AND REGULATIONS.
* * * * * * *
(b) Retroactivity of Regulations or Rulings.--The
Secretary may prescribe the extent, if any, to which any
ruling or regulation, relating to the internal revenue laws,
shall be applied without retroactive effect.
(continued...)
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