South Community Association - Page 10

                                       - 10 -                                         
          1.501(c)(3)-1(c)(1), Income Tax Regs.  “An organization will not            
          be so regarded if more than an insubstantial part of its                    
          activities is not in furtherance of an exempt purpose.”  Id.; see           
          also Orange County Agric. Socy., Inc. v. Commissioner, 893 F.2d             
          529, 532 (2d Cir. 1990), affg. T.C. Memo. 1988-380.                         
               Respondent revoked petitioner’s tax-exempt status effective            
          January 1, 1992.  Respondent advances the following grounds for             
          revocation:  (1) Petitioner had as its primary activity the                 
          operation of a trade or business, i.e., its gaming operation,               
          that was not in furtherance of its exempt purpose, (2) petitioner           
          operated as a “feeder organization” within the meaning of section           
          502, and (3) petitioner’s operation served the private interests            
          of its founder, Parr, and his company.  Petitioner argues in                
          response to respondent’s determination that petitioner was                  
          operated exclusively for an exempt purpose.  According to                   
          petitioner, its gaming operation should not be deemed unrelated             
          to its exempt purpose in that, it asserts, all of the work in               
          carrying on its gaming operation was performed by uncompensated             
          workers.  Cf. sec. 513(a)(1).  Respondent disputes that                     
          substantially all of the work in that operation was                         
          uncompensated.  We agree with respondent that petitioner’s                  
          carrying on of the gaming operation disqualified petitioner from            
          the tax exemption that it seeks to retain.                                  

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011