IHC Care, Inc. - Page 23




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          exempt status, such as an HMO, must demonstrate that it provides            
          a community benefit.                                                        
          Community Benefit Test                                                      
               In Sound Health Association v. Commissioner, supra, we first           
          considered whether an HMO may qualify as an organization                    
          described in section 501(c)(3).  The Commissioner determined that           
          Sound Health Association did not qualify for tax-exempt status              
          pursuant to section 501(c)(3) on the ground that the organization           
          served the private interests of its members as opposed to the               
          interests of the community.                                                 
               In Sound Health Association v. Commissioner, supra at 182-             
          183, we utilized the same factors deemed significant by the                 
          Commissioner in granting tax-exempt status to one of two                    
          hospitals under review in Rev. Rul. 69-545, 1969-2 C.B. 117, and            
          referred to the factors cited favorably in that ruling as the               
          community benefit test.  In Sound Health Association, we                    
          concluded that the subject organization shared several                      
          characteristics with the hospital deemed exempt in Rev. Rul. 69-            
          545, supra.  In particular, like the hospital in the revenue                
          ruling, Sound Health Association operated a medical clinic and              
          employed physicians and nurses to provide medical services, and             
          opened its emergency room to all persons requiring emergency care           
          whether they were members or not and regardless of whether they             
          were financially able to pay.  Sound Health Association also                






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