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charged commercial pharmacies for the same type of products. The
manufacturers countered that sales to the hospitals were exempt
from the Robinson-Patman Act under the Nonprofit Institutions
Act, ch. 283, 52 Stat. 446 (1938) (current version at 15 U.S.C.
sec. 13(c) (1994)), which exempts from the application of the
Robinson-Patman Act "purchases of their supplies for their own
use by * * * hospitals and charitable institutions not operated
for profit." Accordingly, the issue in the Abbott Labs. case was
whether the pharmaceutical products were sold to the hospitals
for resale or for the hospitals' "own use". The Supreme Court
specifically recognized that the purchase of drugs for the
treatment of a hospital's patients is a purchase for that
hospital's "own use" because such use is part of and promotes the
hospital's basic function of caring for patients. Abbott Labs.
v. Portland Retail Druggists Association, supra at 10, 14; see
also St. Luke's Hosp. v. Commissioner, 35 T.C. at 238 (taxpayer
hospital is "not a merchandising business and * * * [taxpayer]
has no merchandise inventories which would require the use of an
accrual method in keeping its books or reporting its income. Its
income is derived from providing hospital and professional care
to the sick.").
We conclude from the foregoing that, for purposes of section
448(d)(5), income earned through the performance of services
includes income relating to accounts receivable attributable to
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