IHC Care, Inc. - Page 29




                                       - 29 -                                         
          if its activities are carried out under the supervision or                  
          control of the tax-exempt affiliate and the HMO’s activities                
          would not constitute an unrelated trade or business if conducted            
          by the tax-exempt affiliate.  Id. at 402, 404-405.  We looked to            
          section 513(a) which defined an unrelated trade or business in              
          pertinent part as:                                                          
               "any trade or business the conduct of which is not                     
               substantially related (aside from the need of such                     
               organization for income or funds or the use it makes of                
               the profits derived) to the exercise or performance by                 
               such organization of * * * [the] purpose or function                   
               constituting the basis for its exemption". * * *  [Id.                 
               at 405.]                                                               
                                                                                     
               Because Geisinger HMO enrollees received medical services              
          from hospitals outside of the Geisinger system, and because the             
          administrative record lacked evidence as to whether such services           
          were substantial, we were unable to conclude that Geisinger HMO’s           
          activities were substantially related to the activities of its              
          tax-exempt affiliates.  Id. at 405-406.                                     
               In Geisinger IV, the Court of Appeals affirmed our holding             
          in Geisinger III, albeit on slightly different grounds.                     
          Geisinger Health Plan v. Commissioner, 30 F.3d at 501.  The Court           
          of Appeals held that an organization may qualify for tax-exempt             
          status as an integral part of its tax-exempt parent if: (1) the             
          organization is not carrying on a trade or business which would             
          be an unrelated trade or business if regularly carried on by its            
          tax-exempt parent; and (2) the organization’s relationship with             






Page:  Previous  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  Next

Last modified: May 25, 2011