Section 4401(a)(1) of the Code imposes on any wager authorized under the law of the state in which accepted an excise tax equal to 0.25 percent of the amount of such wager. The taxpayer stated that the relatively high percentage for dues in the first year can be attributable to a lifetime membership drive during that year. For the succeeding four years, membership dues were fairly constant and comprised considerably less than 1%, on average, of total income for those years. Membership dues collected by the taxpayer in the first year of the periods under audit comprised 13% of the total income for the year. Other expenditures of the pull-tab proceeds were directed to the funding of activities related to the exempt purposes of the organization and to operating and administrative expenses of the organization. (The weekly bingo game receipts averaged about 21% of total income.) Over 40% of the proceeds from the pull-tab operation were donated to charity. During the periods in question, pull-tab receipts averaged about 31% of total income. The taxpayer's receipts from the weekly pull-tab operation comprise a substantial portion of the taxpayer's income. Under state regulations, once the sale of a pull-tab game has commenced, it must continue until all of the pull-tabs in that game are sold.

The cost to play is $.25 to $1.00 and prizes range from $.50 to $200.00. The player purchases a pull-tab and opens it to immediately determine if he is a prize winner. The pull-tabs are single-folded or branded tickets or cards the faces of which are hidden from view. Uncompensated volunteer members run both the bingo and pull-tab operations in a building rented by the taxpayer for such purposes. It conducts weekly, state-regulated bingo games open to the general public during which pull-tabs are sold to the persons in attendance. The taxpayer is an organization described in section 501(c)(19) of the Code that is exempt from income tax under section 501(a). Is the taxpayer liable for the wagering taxes imposed by sections 44 of the Internal Revenue Code with respect to sales of pull-tabs?

Are pull tabs donations or gambling