- 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.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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