Wayne Baseball, Inc. - Page 5

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               of athletic facilities or equipment), or for the                       
               prevention of cruelty to children or animals, no                       
               part of the net earnings of which inures to the                        
               benefit of any private shareholder or individual,                      
               no substantial part of the activities of which is                      
               carrying on propaganda, or otherwise attempting,                       
               to influence legislation * * *, and which does not                     
               participate in, or intervene in * * *, any                             
               political campaign on behalf of any candidate for                      
               public office.                                                         
          The theory behind the exemption is that the Government is                   
          compensated for the loss of revenue by its relief from the                  
          financial burden that would otherwise have to be met from public            
          funds and that the Government realizes benefits resulting from              
          private promotion of the general welfare.  See H. Rept. 1860,               
          75th Cong., 3d Sess. (1938), 1939-1 C.B. (Part 2) 728, 742.                 
               Section 501(c)(3) sets forth three requirements for an                 
          organization to be exempt:  (1) The corporation must be organized           
          and operated exclusively for exempt purposes, (2) no part of the            
          net earnings of the corporation may inure to the benefit of any             
          shareholder or individual, and (3) the corporation must not                 
          engage in political campaigns or, to a substantial extent, in               
          lobbying activities.  See Hutchinson Baseball Enters., Inc. v.              
          Commissioner, 73 T.C. 144, 151 (1979), affd. 696 F.2d 757 (10th             
          Cir. 1982).  Only the first requirement is at issue in this case.           
               Respondent concedes that petitioner is organized exclusively           
          for exempt purposes within the meaning of section 501(c)(3).                
          Therefore, the only remaining question is whether petitioner is             

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