Women of the Motion Picture Industry, et al. - Page 16

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               Respondent argues that Texas law only requires that 35                  
          percent of net "instant bingo" proceeds from the prior quarter be            
          expended for charitable purposes and that any payments in excess             
          of the 35-percent requirement (excess contributions) were                    
          voluntary and not directly connected with petitioners' "instant              
          bingo" activities, and thus are not deductible under sections                
          162(a) and 512(a).                                                           
               Petitioners argue that their position is supported by South             
          End Italian Independent Club, Inc. v. Commissioner, 87 T.C. 168              
          (1986).  On the other hand, respondent maintains that this case              
          is distinguishable from South End Italian Independent Club, Inc.             
          with respect to excess contributions.                                        
               In South End Italian Independent Club, Inc., the Court                  
          considered whether a social club’s donations from beano game                 
          proceeds were deductible as business expenses in determining                 
          UBTI.  Massachusetts law provided that the profits from beano                
          "'shall be used for charitable, religious or educational                     
          purposes, and shall not be distributed to the members of such                
          organization.'"  Id. at 169 (quoting Mass. Gen. Laws Ann. ch. 10,            
          sec. 38 (West 1980).  In holding that the donations were not                 
          charitable contributions, the Court stated:                                  
                    First, petitioner’s payments were made in compliance               
               with a Massachusetts law requiring the donation of the "Net             
               Proceeds" of petitioner's beano games.  Given the legal                 
               compulsion surrounding petitioner's making of the donations,            
               they can hardly qualify as voluntary charitable                         
               contributions.  * * *                                                   





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