- 17 -
purpose described in that section and (2) set aside to provide
for the payment of reasonable costs of administration directly
connected with a purpose described in section 512(a)(3)(B)(ii) as
set aside for a purpose described in that section.16
To support its position that reasonable costs of administra-
tion directly connected with a purpose described in section
512(a)(3)(B)(i) or (ii) qualify as one of the four independent
sources or components of exempt function income under section
512(a)(3)(B), the Trustee relies not only on the language of
section 512(a)(3)(B), but also on the following statement in Phi
Delta Theta Fraternity v. Commissioner, 887 F.2d 1302, 1307 (6th
Cir. 1989), affg. 90 T.C. 1033 (1988): “Section 512(a)(3)(B),
however, does allow reasonable costs actually spent in adminis-
tering a tax-exempt activity to be included in ‘exempt function
income.’” We find the Trustee’s reliance on that statement to be
misplaced. The United States Court of Appeals for the Sixth
16We need not resort to the legislative history of sec.
512(a)(3)(B) to determine the meaning of the phrase in question
that appears at the end of the second sentence of that section.
That is because the terms of that statutory provision are unam-
biguous, and there are no exceptional circumstances warranting
our turning to that legislative history for guidance. See
Burlington N. R.R. Co. v. Oklahoma Tax Commn., 481 U.S. 454, 461
(1987); Fernandez v. Commissioner, 114 T.C. 324, 329-330 (2000).
Nonetheless, it is noteworthy that, consistent with its plain
language, the legislative history of sec. 512(a)(3)(B) provides
that income will be treated as set aside for benefits specified
in that section where it is set aside and used not only for the
payment of those benefits but also for the payment of reasonable
costs of administration of providing those benefits. See S.
Rept. 91-552 (1969), at 72, 1969-3 C.B. 470.
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