- 15 -
for real property and associated personal property rentals that
previously had applied for purposes of determining UBTI. Tax
Reform Act of 1969 (TRA), Pub. L. 91-172, sec. 121(b)(1), 83
Stat. 537. In place of the former exclusion, Congress provided
the more limited exclusion now found in section 512(b)(3). S.
Rept. 91-552, at 68-69 (1969), 1969-3 C.B. 423, 468. In
addition, pursuant to new section 512(b)(4), rents that would be
treated as unrelated debt-financed income pursuant to section
514(a)(1) were included as UBTI. TRA sec. 121(b)(2); see also
Kern County Elec. Pension Fund v. Commissioner, 96 T.C. 845
(1991), affd. without published opinion 988 F.2d 120 (9th Cir.
1993).
In the same section of this legislation, Congress amended
section 502 to eliminate the former exclusion for rental
activity, replacing it with the more limited exclusion of section
502(b)(1), cross-referencing new section 512(b)(3). TRA sec.
121(b)(7), 83 Stat. 542. Congress also added other special rules
in section 502(b)(2) and (3), similarly intended to conform the
treatment of exempt organizations’ business activities for
purposes of the UBTI rules and the feeder organization rules
under section 502. Id.; see S. Rept. 91-552, supra at 70, 1969-3
C.B. at 469. Describing this amendment to section 502, the
Senate Finance Committee stated: “this amendment merely makes
these rules [i.e., the UBTI rules and the feeder organization
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: November 10, 2007