Phi Delta Theta Fraternity v. Commissioner
United States Tax Court
P, a not-for-profit corporation, is the national office of a college men's fraternity. P is exempt from Federal income tax pursuant to sec. 501(c)(7), I.R.C. 1954. The income from an endowment fund owned and maintained by P is used to finance the quarterly publication of the fraternity magazine.
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P, a not-for-profit corporation, is the national office of a college men's fraternity. P is exempt from Federal income tax pursuant to sec. 501(c)(7), I.R.C. 1954. The income from an endowment fund owned and maintained by P is used to finance the quarterly publication of the fraternity magazine. Held, P's magazine was not published for one of the exempt purposes specified in sec. 170(c)(4), I.R.C. 1954. Held, further, the net investment income of P's endowment fund is taxable to P as unrelated business income.
1Opinion of the Court
GERBER, Judge:
By statutory notice dated March 3, 1986, respondent determined a deficiency in petitioner’s Federal income tax for the taxable year ended June 30, 1979, in the amount of $37,068. The issue presented for our consideration is whether the net investment income from petitioner’s Frank J.R. Mitchell Scroll Endowment Fund is subject to income tax as unrelated business income of an exempt organization.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Petitioner, the national…
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