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A colloquy between Congressmen Daniel Rostenkowski (D-Ill.),
Chairman of the Ways and Means Committee, and John Duncan (R-
Tenn.), Ranking Republican Member of the Ways and Means
Committee, occurred in the House of Representatives on the day
that the conference report which included section 513(h) was
passed. Congressman Rostenkowski’s comments were as follows:
I also have discussed with Congressman Duncan the issue
of whether the provision of the bill which excludes
certain income from unrelated trade or business income
creates any inference under present law. We have
reached a common understanding regarding the following
specific issue:
The question relates to section 1601 of the bill which
excludes from unrelated trade or business income
revenues from the use of a tax-exempt organization's
mailing list by another such organization. Section
1601 of the bill, which specifically exempts certain
such revenues from the tax on unrelated business income
in the future, carries no inference whatever that
mailing list revenues beyond its scope or prior to its
effective date should be considered taxable to an
exempt organization.
132 Cong. Rec. 26208 (Sept. 25, 1986).
We conclude that section 513(h) does not apply here. See
Sierra Club, Inc. v. Commissioner, T.C. Memo. 1993-199.
7. Whether Royalty Treatment Is Consistent With the Role
of the Tax on Unrelated Business Income
The unrelated business income tax (UBIT) was enacted to
prevent tax-exempt organizations from unfairly using their tax-
exempt status to compete with commercial businesses. United
States v. American College of Physicians, 475 U.S. 834, 837-838
(1986). Respondent contends that petitioner's participation in
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