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each must be present for income to be UBTI. Here, we shall focus
our attention on the third element; namely, whether the leasing
of museum spaces was substantially related to the Museum's exempt
purpose.
An activity is substantially related to an organization's
exempt purposes where the performance of the activity has a
substantial causal relationship to the achievement of the exempt
purposes. Sec. 1.513-1(d)(2), Income Tax Regs. The activity
must contribute importantly to the accomplishment of those pur-
poses. Id. This determination is based upon all of the facts
and circumstances surrounding the activity. Id.
In evaluating the substantial relationship, we focus our
inquiry on the manner in which the Museum conducts its activi-
ties. United States v. American College of Physicians, 475 U.S.
834, 848-849 (1986). Specifically, we will determine whether the
manner in which the Museum leased the building spaces to the
public manifests an intent to further its exempt purposes or
whether that manner indicates an intent to merely raise revenue.
National League of Postmasters of the United States v. Commis-
sioner, T.C. Memo. 1995-205, affd. 86 F.3d 59 (4th Cir. 1996).
We begin by noting that the amount of revenue involved for each
year is not significant. More importantly, the revenues earned
by the Museum from this activity barely exceeded the related
expenses, and in some years the Museum actually suffered losses.
This fact lends credence to the Museum's argument that the
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