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(4), (5), (7), (8), (10) or (19) organizations may apply for a
license to conduct a lottery by the sale of pickle cards. Id. at
sec. 9-326 (1997).
A licensed manufacturer of pickle cards sells or supplies
the pickle cards to licensed distributors, who then sell them to
licensed organizations. Id. at secs. 9-307 (1997), 9-313 (1997),
9-331 (Supp. 1997), 9-332 (Supp. 1997), 9-340 (1997). Only
licensed organizations may sell the pickle cards to licensed
pickle card operators. The pickle cards may be sold to the
public only (1) by licensed organizations or (2) by licensed
pickle card operators. See Neb. Rev. Stat. secs. 9-328 (1997),
9-329.02 (Supp. 1997), 9-329.03 (Supp. 1997), 9-340.02 (1997), 9-
345.01 (1997). Petitioner was a licensed organization under
Nebraska law.
On September 27, 1996, petitioner submitted to respondent
Forms 990-T, Exempt Organization Business Income Tax Return, for
the years 1993, 1994, and 1995. Petitioner reported its income
from the sale of pickle cards as unrelated business taxable
income (UBTI). Petitioner's gross receipts from its pickle card
sales for 1993, 1994, and 1995 were $70,251, $57,944, and
$26,675, respectively. Petitioner reported and paid unrelated
business income tax (UBIT) in the amount of $3,825 for 1993.
Petitioner further reported that it did not have UBIT liability
for 1994 and 1995.
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