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Trustee that that amount of investment income for each year at
issue is not subject to that limitation. That position rests
upon the contentions of the Trustee that the plain language of
section 512(a)(3)(B) identifies four independent sources or
components of exempt function income and that one of those
sources or components of exempt function income is reasonable
costs of administration directly connected with a purpose de-
scribed in section 512(a)(3)(B)(i) or (ii). The Trustee posits
that the four sources of exempt function income identified by
section 512(a)(3)(B) are:
(1) amounts paid by members of the association as
consideration for goods, facilities, or services;
(2) amounts set aside for a charitable purpose;
(3) amounts set aside for the payment of life, sick,
accident, or other benefits; and
(4) reasonable costs of administration directly con-
nected with components 2 and 3.
According to the Trustee, “It is apparent from the plain language
of the statute [section 512(a)(3)(B)] that reasonable costs of
administration are an independent basis of Exempt Function
Income.”
Proceeding from its premises that reasonable costs of
administration directly connected with a purpose described in
section 512(a)(3)(B)(i) or (ii) are one of the four independent
sources or components of exempt function income under section
512(a)(3)(B), the Trustee argues that the limitation in section
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