REDLANDS SURGICAL SERVICES - Page 1




















                               UNITED STATES TAX COURT                                


                      REDLANDS SURGICAL SERVICES, Petitioner v.                       
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      


               Docket No. 11025-97X.                                                  

                    P is a nonprofit corporation.  Its sole activity                  
               is participating as co-general partner with a for-                     
               profit corporation in a partnership that is general                    
               partner of an operating partnership that owns and                      
               operates an ambulatory surgery center.  Held:  On the                  
               facts involved herein, P has ceded effective control                   
               over the operations of the partnerships and the surgery                
               center to private parties, conferring impermissible                    
               private benefit.  P is therefore not operated                          
               exclusively for exempt purposes within the meaning of                  
               sec. 501(c)(3), I.R.C. 1986.                                           
               James L. Malone III and Robert C. Louthian III, for                    
          petitioner.                                                                 
               Joan Ronder Domike and Elizabeth Purcell, for respondent.              








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