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years of the date of the sale. Upon review of the matter, the
Commissioner determined that the taxpayer was liable for
unrelated business income tax in respect of the gain realized on
the sale of its land because the land in question was not used
directly in the performance of the taxpayer's exempt function as
required for nonrecognition treatment under section 512(a)(3)(D).
In proceedings before this Court, the parties presented
conflicting testimony and other evidence regarding both the
taxpayer's intentions with respect to the use of the land in
question and whether activities in furtherance of the taxpayer's
exempt function were actually conducted on the property. In
rendering our decision, we first rejected the parties' evidence
respecting the taxpayer's intentions with respect to the use of
the land on the ground that the applicability of section
512(a)(3)(D) does not turn on a taxpayer's intent. Further,
based upon our review of the remaining testimony and evidence, we
found that the land in question was not used directly in the
performance of the taxpayer's exempt function. Consequently, we
sustained the Commissioner's determination that the taxpayer was
liable for unrelated business income tax. Atlanta Athletic Club
v. Commissioner, T.C. Memo. 1991-83.
The taxpayer appealed our decision to the U.S. Court of
Appeals for the Eleventh Circuit. As a preliminary matter, the
Court of Appeals agreed with this Court's initial determination
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