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exempt function of an organization" as set forth in section
512(a)(3)(D) connotes an exempt organization's use of assets or
property that is both actual and direct in relation to the
performance of its exempt function. Given petitioner's
concession that no part of the 4.8-acre tract on which the 11
homesites are situated was ever physically used by petitioner for
recreational activities, it follows that the gain realized on the
sale of the 11 homesites does not qualify for nonrecognition
under section 512(a)(3)(D), but rather is subject to the
unrelated business income tax.
Petitioner argues that Atlanta Athletic Club v.
Commissioner, supra, is factually distinguishable from the
instant case. Specifically, petitioner asserts that unlike the
instant case, there is no indication that the taxpayer in Atlanta
Athletic Club v. Commissioner, supra, attempted to obtain a
development plan for the property in question or that the
property was subject to any sort of use restriction as is the
case here. Simply stated, we are not persuaded that the Tax
Court or the Court of Appeals would have altered its
interpretation of section 512(a)(3)(D) in the face of such
evidence.
We likewise are not convinced that the legislative history
underlying section 512(a)(3)(D) supports petitioner's position.
Petitioner relies on S. Rept. 91-552 (1969), 1969-3 C.B. 423, for
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