Piety, Inc. v. Commissioner of Internal Revenue

82 T.C. 193 (1984)

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Piety, Inc. v. Commissioner of Internal Revenue

United States Tax Court
82 T.C. 193 (1984)

Facts

Piety, Inc. (plaintiff) was a Nebraska corporation organized to raise funds for charitable groups, religious groups, and nonprofit ambulance-service groups that were tax-exempt under § 501(c)(3) of the Internal Revenue Code. Piety conducted bingo games and then gave the profits from those games to the tax-exempt organizations. Piety conducted the games in a rented building in Council Bluffs, Iowa; Piety’s lease indicated that Piety’s rental payments covered both the use of the building and all labor costs for the bingo-game workers. Piety applied to the Commissioner of Internal Revenue (the commissioner) (defendant) for recognition as a tax-exempt organization under § 501(c)(3), but the commissioner denied Piety’s request. The commissioner asserted that Piety did not qualify as an exempt organization because under § 502(a) of the Internal Revenue Code, an organization operated for the primary purpose of carrying on a for-profit trade or business could not qualify as exempt just because it paid its profits to exempt organizations. Piety challenged the commissioner’s determination in United States Tax Court.

Rule of Law

Issue

Holding and Reasoning (Clapp, J.)

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