- 6 -
income for 1991 and 1992, respectively.6 In its Forms 990-T for
1991 and 1992, the Trust claimed as deductions directly connected
with its unrelated business income (1) “Compensation of officers,
directors, and trustees” in the amounts of $1,456,954 and
$1,618,779, respectively, and (2) “Other deductions” in the
amounts of $156,084 and $287,450, respectively. Of the foregoing
total deductions claimed in the Trust’s Forms 990-T for 1991 and
1992, $1,580,455 and $1,853,529, respectively, constitute reason-
able costs of administration directly connected with providing
for the payment of health care benefits for which the Trust set
aside income within the meaning of section 512(a)(3)(B).7
The instructions to Forms 990-T stated in pertinent part:
Sections 501(c)(7), (9), (17), and (20) organiza-
tions will not be taxed on income set aside for:
1. Religious, charitable, scientific, literary, or
educational purposes, or for the prevention of cruelty
to children or animals;
2. The payment of life, sick, accident, or other
benefits by a section 501(c)(9), (17), or (20) organi-
zation. The amount allowed as a set-aside may not
exceed a limit determined using section 419A. See
sections 419A and 512(a)(3)(E) for details;
3. Reasonable administration costs directly con-
nected with 1 and 2 above.
6The Trust reported in Forms 990 additional investment
income of $232,202 and $405,095 for 1991 and 1992, respectively,
which the Trust did not treat as unrelated business income in
those forms or in Forms 990-T for those years.
7See supra note 4.
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