a homeowners association exempt from tax under sec. 501(c)(4), I.R.C., operated two parking lots and a beach club eight miles from the area in which its members lived. The parking lots and the primary beach club facilities were accessible only to the association's members and their guests. The association did not report its net income from the parking lot and beach club activities as unrelated business taxable income on its tax returns for 2003 and 2004. R issued a notice of deficiency determining that the net income was subject to the unrelated business income tax because the operation of the parking lots and the beach club is not substantially related to the promotion of community welfare (the purpose constituting the basis of the Association's exemption under sec. 501, I.R.C., see secs. 1.501(c)(4)-1(a)(2), 1.513-1(a), (d)(1), Income Tax Regs.) and because the revenue received from operating the parking lots is not rent from real property under sec. 512(b), I.R.C.

Held: The operation of the parking lots and the beach club is not substantially related to the promotion of community welfare because the facilities are not open to the general public.