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conduct any gaming activity. According to its bylaws,
petitioner’s exempt purpose was (and is) to provide aid for all
forms of education. At some time between August 3, 1982, and
January 1, 1992, petitioner began a gaming operation (gaming
operation). The gaming operation was the idea of Parr, who
during the relevant years did not work for petitioner but whose
company sold to petitioner the supplies that petitioner used in
the gaming operation.
From 1992 until 1995, the years audited by respondent in
connection with his determination revoking petitioner’s
exemption, petitioner contributed $1,423,729 to various charities
generally for the purposes of starting educational programs,
building a school, and transporting handicapped individuals to
various schools. Petitioner’s contributions during the
respective years were $440,055, $323,088, $386,599, and $273,987.
Many of the recipients of these contributions were charities
controlled by petitioner’s president, James Clausing (Clausing).
Petitioner funded its contributions almost entirely through its
gaming operation.
Petitioner’s gaming operation consisted of its sale of bingo
cards and instant pull-tab tickets.3 Petitioner sold its bingo
3 Each of petitioner’s instant pull-tab tickets was a paper
ticket with a covered symbol. Upon purchasing an instant
pull-tab ticket and uncovering the symbol, the purchaser won a
prize if the symbol was one that was predesignated to win.
(continued...)
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