Laborers' International Union of North America - Page 7

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          deductions, produced from (1) any trade or business (2) regularly           
          carried on by the organization (3) which is not substantially               
          related (aside from generating revenue) to the organization's               
          tax-exempt purposes.  Secs. 512(a)(1) and 513(a); United States             
          v. Am. Bar Endowment, 477 U.S. 105, 109-110 (1986); United States           
          v. Am. Coll. of Physicians, 475 U.S. 834, 838-839 (1986).  This             
          tax is designed to restrain unfair competition by otherwise tax-            
          exempt organizations engaged in profit-making activities without            
          unnecessarily discouraging benevolent enterprise.  United States            
          v. Am. Coll. of Physicians, supra at 837-838.  Where an activity            
          does not possess the characteristics of a trade or business                 
          within the meaning of section 162, such as when an organization             
          sends out low-cost articles incidental to the solicitation of               
          charitable contributions, the unrelated business income tax does            
          not apply since the organization is not in competition with                 
          taxable organizations.  Sec. 1.513-1(b), Income Tax Regs.                   
               On the record before us, we can find no activity performed             
          by petitioner that competes with taxable organizations.  One                
          section 501(c)(5) organization, such as petitioner, levying a               
          “per capita tax” on another section 501(c)(5) organization so               
          that the first organization may perform its exempt functions                
          simply is not conducting a trade or business as that term is                
          defined for the purposes of section 162.  Petitioner does not               
          provide insurance or services in competition with taxable                   

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