IHC Health Plans, Inc. - Page 3




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                                     Background                                       
               By way of a brief introduction, petitioner and its                     
          affiliates, IHC Care, Inc. (Care) and IHC Group, Inc. (Group),              
          operated health maintenance organizations and were part of a                
          number of companies composing the so-called Intermountain Health            
          System.  Petitioner offered health plans to individuals,                    
          employees of large and small employers, and Medicaid recipients.            
          At the same time that respondent revoked petitioner’s tax-exempt            
          status, respondent denied Care’s and Group’s applications for               
          exemption from Federal income taxation pursuant to section                  
          501(a).1  For completeness, we have provided a detailed                     
          description of the various entities composing the Intermountain             
          Health System.                                                              
          I.  The Intermountain Health System                                         
          A.  Intermountain Health Care, Inc.                                         
               Between 1882 and 1970, the Church of Jesus Christ of Latter-           
          Day Saints (LDS Church) constructed or purchased 15 hospitals in            
          Utah, Idaho, and Wyoming.  Prior to 1970, LDS Church hospitals              
          functioned autonomously with little coordination or centralized             
          management.                                                                 




          1   Respondent’s determinations to deny IHC Care, Inc.’s and IHC            
          Group, Inc.’s applications for tax-exempt status are the subjects           
          of the Court’s opinions in IHC Care, Inc. v. Commissioner, T.C.             
          Memo. 2001-248, and IHC Group, Inc. v. Commissioner, T.C. Memo.             
          2001-247.                                                                   




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