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