Court Opinion

ID: 9464967
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:31:40.458297+00
Date Added: 2024-06-11T17:38:54.319473
License: Public Domain

LAY, Circuit Judge,
concurring.
I concur.
The legislative history reveals the primary purpose for the adoption of the unrelated business income tax was to eliminate a source of unfair competition by exempt organizations. Nonetheless the critical question under the statute is not the question of unfair competition, but whether the activity constitutes an unrelated “trade or business.” If it does, then the Treasury regulations state that this finding constitutes “sufficient likelihood of unfair competition to be within the policy of the tax.” 26 C.F.R. § 1.513-l(b) (1976).
No one here challenges the regulations as being unreasonable or invalid.1 Thus, I agree that the only question is whether the trade or business carried on by the tax exempt organization is unrelated to its principal function. Because conducting bingo games is a trade or business unrelated to the Taxpayer’s principal function as a nonprofit veterans organization, it follows the Taxpayer should be subject to the tax.

. A regulation which is inconsistent with a governing statute is an invalid exercise of the power delegated by Congress. See United States v. Cartwright, 411 U.S. 546, 557, 93 S.Ct. 1713, 36 L.Ed.2d 528 (1973). However, a regulation which gives effect to the intent of Congress expressed in the legislative history is proper. See Commissioner v. Bilder, 369 U.S. 499, 501-02, 82 S.Ct. 881, 8 L.Ed.2d 65 (1962). We have also recognized that if a Treasury regulation “is a reasonable interpretation of [the Internal Revenue Code] and as such does not distort the intent of Congress, then it must be sustained . .” World Serv. Life Ins. Co. v. United States, 471 F.2d 247, 250 (8th Cir. 1973).