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With respect to the first prong set forth above, we have
stated that “This rule generally applies only to situations where
the supporting organization actually engages in activities that
benefit the supported organization, such as performing a specific
function for one or more publicly supported organizations.” Roe
Found. Charitable Trust v. Commissioner, T.C. Memo. 1989-566. In
a similar vein, respondent maintains that the but-for subtest
applies only in cases where the involvement of the supporting
organization extends beyond merely making grants or monetary
donations. Petitioner, on the other hand, contends that
“activities” in section 1.509(a)-4(i)(3)(ii), Income Tax Regs.,
should be construed in a manner consistent to its use elsewhere
in the regulations under section 509(a), with the result that the
term should encompass grant making. Petitioner cites section
1.509(a)-4(e)(1), Income Tax Regs., which uses the word and then
explains: “Such activities may include making payments to or for
the use of, or providing services or facilities for, individual
members of the charitable class benefited by the specified
publicly supported organization.”
We, however, need not resolve this dispute. Even if we were
to assume arguendo that grant making is properly characterized as
an activity for purposes of section 1.509(a)-4(i)(3)(ii), Income
Tax Regs., a matter which is by no means clear, the
administrative record establishes that petitioner cannot satisfy
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