9
in the taxable year. In order to be fully deductible under
section 512(a), petitioners' claimed items of deduction must
qualify for deduction as business expenses under section 162
rather than as charitable contributions under section 170, South
End Italian Independent Club, Inc. v. Commissioner, 87 T.C. 168,
175 (1986), and must have a proximate and primary relationship to
the carrying on of petitioners' "instant bingo" activities, sec.
1.512(a)-1(a), Income Tax Regs.
The State of Texas authorizes qualified organizations to
conduct bingo and "instant bingo" games. Under Texas law, net
proceeds from bingo activities must be devoted to "charitable
purposes". Tex. Rev. Civ. Stat. Ann. art. 179d, sec. 11(d) (West
1987 & Supp. 1990).5 Under the Act and the rules and regulations
promulgated thereunder, by the end of each quarter an
organization must disburse an amount equal to 35 percent of the
adjusted gross receipts from the last preceding quarter, less a
certain amount of authorized expenses.6 Renewal of a license may
5 Sec. 11(d) of the Bingo Enabling Act, as effective for the
years 1987 through 1989, provided in part: "The net proceeds of
any game of bingo * * * shall be exclusively devoted to the
charitable purposes of the organization permitted to conduct the
game." Tex. Rev. Stat. Ann. art. 179(d), sec. 11(d) (West 1987).
In 1990, the sec. was amended to provide in part: "The net
proceeds of any game of bingo * * * shall be exclusively devoted
to charitable purposes." Tex. Rev. Stat. Ann. art. 179(d), sec.
11(d) (West Supp. 1990).
6 In 1987, the bingo rules required: "By the end of each
quarter, each licensed authorized organization shall disburse for
charitable purposes an amount not less than 35 percent of the
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011