CRSO - Page 1

                                   128 T.C. No. 12                                    

                               UNITED STATES TAX COURT                                

                                 CRSO, Petitioner v.                                  
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 11804-05X.             Filed April 30, 2007.                

                    P is a nonprofit corporation.  Its sole activity                  
               involves renting out its two parcels of debt-financed                  
               commercial real estate and distributing the profits to                 
               a sec. 501(c)(3), I.R.C., organization.                                
                    P applied for tax exemption under sec. 501(c)(3),                 
               I.R.C.  In 2003, R sent a final adverse determination                  
               letter to P at an incorrect address; P did not receive                 
               the letter until R sent it to P’s counsel in 2005.  P                  
               filed its petition within 90 days of receiving the                     
               final adverse determination letter.                                    
                    Held:  Because R’s initial, misdirected adverse                   
               determination letter was ineffective for purposes of                   
               triggering the 90-day period under sec. 7428(b)(3),                    
               I.R.C., P’s petition was timely.  Held, further,                       
               because P’s rental activity is not excluded from                       
               classification as a “trade or business” under sec.                     
               502(b)(1), I.R.C., P is a feeder organization under                    
               sec. 502, I.R.C., and is not operated exclusively for                  

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Last modified: November 10, 2007