CRSO - Page 11

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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’.”                  

          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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Last modified: November 10, 2007