CRSO - Page 8

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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)            
                    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                        
                    (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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