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Petitioner has exhausted its administrative remedies within
the Internal Revenue Service.
OPINION
I. The Parties’ Positions
Respondent contends that petitioner is not operated
exclusively for charitable purposes because it operates for the
benefit of private parties and fails to benefit a broad cross-
section of the community. In support of its position, respondent
contends that the partnership agreements and related management
contract are structured to give for-profit interests control over
the Surgery Center. Respondent contends that both before and
after the General Partnership acquired an ownership interest in
it, the Surgery Center was a successful profit-making business
that never held itself out as a charity and never operated as a
charitable health-care provider.
Petitioner argues that it meets the operational test under
section 501(c)(3) because its activities with regard to the
Surgery Center further its purpose of promoting health for the
benefit of the Redlands community, by providing access to an
ambulatory surgery center for all members of the community based
upon medical need rather than ability to pay, and by integrating
the outpatient services of Redlands Hospital and the Surgery
Center. Petitioner argues that its dealings with the for-profit
partners have been at arm's length, and that its influence over
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