- 46 -
American Campaign Academy v. Commissioner, supra at 1068. The
proscription against private benefit encompasses not only
benefits conferred on insiders having a personal and private
interest in the organization, but also benefits conferred on
unrelated or disinterested persons. See id.; Christian
Stewardship Assistance, Inc. v. Commissioner, 70 T.C. 1037
(1978).
The mere fact that an organization seeking exemption enters
into a partnership agreement with private parties that receive
returns on their capital investments does not establish that the
organization has impermissibly conferred private benefit. The
question remains whether the organization has a substantial
nonexempt purpose whereby it serves private interests. Compare
Plumstead Theatre Socy., Inc. v. Commissioner, 675 F.2d 244 (9th
Cir. 1982), affg. per curiam 74 T.C. 1324 (1980) (a nonprofit
arts organization furthered its charitable purposes by
participating as sole general partner in a partnership with
private parties to produce a play), with Housing Pioneers, Inc.
v. Commissioner, 49 F.3d 1395 (9th Cir. 1995), affg. T.C. Memo.
1993-120 (a nonprofit corporation’s participation as co-general
partner in low-income housing partnerships, structured to trade
off its tax exemption to secure tax benefits for its for-profit
partners, had a substantial nonexempt purpose and impermissibly
served private interests).
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