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relationship between the trade or business and the exempt
activity. It follows that income generated from pickle card
sales was derived from an unrelated trade or business.
Accordingly, pickle card sales income is UBTI for purposes
of section 512(a). Since all of petitioner's gross receipts were
derived from pickle card sales and the sale of pickle cards
constitute UBTI to petitioner, we sustain respondent's
determination that petitioner is not a publicly supported
organization described in section 509(a)(2), and is therefore a
private foundation.
We note petitioner's assertion that respondent accepted a
purported offer in compromise, in response to which respondent
allegedly agreed that the pickle card sales were not unrelated
business income (UBI) and is therefore barred from asserting that
the pickle card sales were UBTI. A fair reading of the contents
of the letter attached to petitioner's check leads us to conclude
that the letter merely constituted a settlement offer to resolve
the dispute resulting from the IRS audit of petitioner's 1993,
1994, and 1995 years. In any event, petitioner's so-called offer
in compromise does not comply with the specific requirements of
section 7122 and the regulations thereunder, and must also fail
for that reason. See Botany Worsted Mills v. United States, 278
U.S. 282, 288-289 (1929).
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