- 10 -
of "unrelated trade or business", we have recognized that the
reasoning of that case remains sound. See Julius M. Israel Lodge
of B'nai B'rith No. 2113 v. Commissioner, T.C. Memo. 1995-439
n.6, affd. 98 F.3d 190 (5th Cir. 1996). Therefore, the fact that
petitioner did not compete with for-profit entities with respect
to pickle card sales is not controlling.
Section 1.513-1(d)(2), Income Tax Regs., provides in part
that a trade or business is "related" to an exempt purpose "only
where the conduct of the business activities has causal
relationship to the achievement of exempt purposes (other than
through the production of income); and it is 'substantially
related,' * * * only if the causal relationship is a substantial
one." To be considered "substantially related" to exempt
purposes, the regulations require that income generated by the
trade or business must "contribute importantly" to the
achievement of the exempt purpose. Id. This determination
depends "upon the facts and circumstances involved." Id.
In this case, pickle card sales did not contribute in the
manner contemplated by section 513 and the regulations
thereunder. Petitioner argues that since all proceeds from the
sales were used to further petitioner's exempt activities, the
income from pickle card sales is not UBTI. Petitioner's
argument ignores the plain language of section 513(a) and the
regulations thereunder, which, it bears repeating, provide that
mere production of income to fund an exempt organization's
activities is insufficient to establish a substantial causal
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011