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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.
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