United States v. American Bar Endowment

The charitable work of the American Bar Endowment is funded, in large part, through a procedure in which the Endowment provides insurance policies for participating American Bar Association members, and the members assign the dividends to the ABE. The primary question presented is whether that assignment of dividends is taxable as an unrelated “trade or business.”

“The problem at which the tax on unrelated business income is directed ... is primarily that of unfair competition.”1 The unrelated business tax was adopted in 1950, *120and substantially revised in 1969. It is useful to recall the kind…