Education Athletic Association, Inc. - Page 1

                                 T.C. Memo. 1999-75                                   

                               UNITED STATES TAX COURT                                

                  EDUCATION ATHLETIC ASSOCIATION, INC., Petitioner                    
                   v. COMMISSIONER OF INTERNAL REVENUE, Respondent                    

               Docket No. 6396-98X.             Filed March 10, 1999.                 

                    E is an entity exempt from Federal income tax under               
               sec. 501(a), I.R.C., as an organization described in sec.              
               501(c)(3), I.R.C.  E's exempt activity involves primarily              
               the promoting of athletic education.  On its Form 1023,                
               Application for Recognition of Exemption, E checked sec.               
               509(a)(2), I.R.C., as the reason it was not a private                  
               foundation.  E's sole source of income for the 1993,                   
               1994, and 1995 years was from the sale of pickle cards, a              
               game of chance authorized by Nebraska statute.  E paid and             
               reported unrelated business income tax for 1993.  When E               
               transmitted its Forms 990-T, Exempt Organization Business              
               Income Tax Return, for the years 1993, 1994, and 1995, E               
               enclosed a check and attached a letter stating that the                
               check was being delivered as an offer in settlement of R's             
               audit of E's 1993 taxable year.  R cashed the check.                   
               Subsequently, R determined that E did not meet the exception           
               requirements of sec. 509(a)(2), I.R.C., and was therefore a            
               private foundation.                                                    
                    1.  Held: the sale of pickle cards is an unrelated                
               trade or business and income generated therefrom constitutes           
               unrelated business taxable income to E.  See secs. 512(a),             
               513(a), I.R.C.; Secs. 1.513-1(a) through (d), Income Tax.              

Page:   1  2  3  4  5  6  7  8  9  10  11  12  Next

Last modified: May 25, 2011