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that a taxpayer's intention with respect to the use of property
is not relevant in determining the applicability of section
512(a)(3)(D). In this regard, the Court of Appeals reasoned as
follows:
The statute speaks in terms of use rather than
intent. Therefore, the Tax Court correctly observed
that the Club's various plans for the land were
irrelevant. Atlantic Athletic Club, 61 T.C.M. (CCH) at
2019. The analysis must concentrate on the ways in
which the Westside Property was or was not "used
directly." This process entails factual findings as to
the activities that occurred on tracts A and B of the
Westside Property, and legal conclusions as to whether
those activities constituted sufficient recreational
uses by the Club. [Atlanta Athletic Club v.
Commissioner, 980 F.2d at 1412.]
The Court of Appeals nevertheless reversed our decision after
concluding that the testimony and evidence demonstrated that the
taxpayer had in fact directly used the property in question in
the performance of its exempt function. In particular, the Court
of Appeals focused on evidence that it concluded tended to show
that the taxpayer conducted various activities on the property in
question, including kite flying contests, foot races, and
picnics. Id. at 1412-1413.
The plain language of section 512(a)(3)(D) limits
nonrecognition treatment to gains realized on the sale of
property used directly in the performance of the organization's
exempt function. Consistent with Atlanta Athletic Club v.
Commissioner, supra, we conclude that the plain and ordinary
meaning of the phrase "used directly in the performance of the
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