Hi-Plains Hospital v. United States

CLARK, Chief Judge:

Hi-Plains Hospital (Hi-Plains) appeals from the district court’s decision holding that pharmaceutical sales to nonhospital patients generated taxable business income unrelated to the tax-exempt operations of Hi-Plains. We reverse in part and remand in part.

I

Hi-Plains was established in 1945 to provide' hospital and other related services to its members. Hi-Plains is located in Hale Center, Texas, a small town of about 2,250 people. Prior to 1937, Hale Center had been served by a resident doctor. From 1937, when the doctor died, until 1945, when Hi-Plains was established,…