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that simply having unrelated business income causes it to become
a Section 502(a) organization”.
3. Is Petitioner’s Rental Activity a “Trade or Business”
Under Section 502?
Petitioner contends that its “triple net leases” are
“investment vehicles, not businesses”. Petitioner contends that
under well-established criteria for determining a trade or
business, as applied in Commissioner v. Groetzinger, 480 U.S. 23
(1987), and its progeny, these leases do not represent a regular
and continuous activity so as to constitute a trade or business.
Petitioner contends that there is no indication that Congress
intended “trade or business” to mean anything different for
purposes of section 502(a). Therefore, petitioner concludes,
section 502(a) fails to ensnare petitioner’s rental activity in
the “trade or business” classification. Accordingly, petitioner
suggests, we need not concern ourselves with the effect, if any,
of the section 502(b)(1) escape hatch. As petitioner puts it:
“The recipe for rabbit soup is to ‘first catch a rabbit’.”
7(...continued)
not raised, and accordingly we do not consider, any issue as to
whether or how these declining ratios should affect a
determination as to whether petitioner fits the description of an
organization that carries on a business as its “primary purpose”
within the meaning of sec. 502(a).
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