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thereafter, the petition was deemed timely. Id. at 163, 167.
Similarly, petitioner received the notice of determination only
after respondent sent a second notice by certified mail to
petitioner’s counsel on June 14, 2005. The petition was filed
within 90 days thereafter and, accordingly, was timely.
B. Whether Petitioner Is Entitled to Exempt Status
1. Statutory Provisions
An organization that is organized and operated exclusively
for charitable purposes, as described in section 501(c)(3), is
exempt from Federal income tax unless exemption is denied under
section 502 or 503. Sec. 501(a). The central issue in this case
is whether petitioner’s exemption is denied under section 502,
which deals with so-called feeder organizations. Section 502(a)
provides:
SEC. 502(a). General Rule.--An organization
operated for the primary purpose of carrying on a trade
or business for profit shall not be exempt from
taxation under section 501 on the ground that all of
its profits are payable to one or more organizations
exempt from taxation under section 501.
Section 502(b) excludes various types of activities from the
term “trade or business”. Of particular relevance here is
section 502(b)(1), which provides in part:
SEC. 502(b). Special Rule.-- For purposes of this
section, the term “trade or business” shall not
include--
(1) the deriving of rents which would be
excluded under section 512(b)(3), if section
512 applied to the organization * * *
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