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3 Fla. Tax Rev. 367 (1996-1998)
Unfair Business Competition and the Tax on Income Destined for Charity: Forty-Six Years Later

handle is hein.journals/ftaxr3 and id is 395 raw text is: FLORIDA TAX REVIEW
VOLUME 3                    1996                   NUMBER 7
Unfair Business Competition and the Tax on Income
Destined for Charity: Forty-Six Years Later
Donald L Sharpe*
I.    INTRODUCTION  ................................    369
II.   JUSTIFYING TAX EXEMPTION FOR THE CHARITABLE AcTIITiEs
OF NON-PROFIT ORGANIZATIONS .................... 374
m.    THE PROBLEM OF UNFAIR COMPETITION AND ITS RESOLUTION:
TAX THE INCOME DESTINED FOR CHARITY OR DISTRIBUTE
THE TAX WITH THE INCOME? ....................... 380
A.    Bath Houses, Noodles and Piston Rings in the
Service of  Charity  .........................  380
B.    The Revenue Act of 1950 .................... 383
C.    Unfair Competition: The Rationale for the Tax
on Unrelated Business Income ................ 385
1.    Unfair Competition for Market Share ...... 385
2.    Capital Market Competition at the Investor
Level  ............................  389
3.    Loss of Federal Tax Revenue ........... 392
4.    The Sale-Leaseback Problem ............ 396
D.    The Tax Reform Act of 1969 .................. 398
E.    Variations on the Theme of Section 512(b)(15) ..... 402
F.    Is the Elective Credit Sound Tax Policy? ......... 405
IV.   THE COURTS SEARCH FOR STATUTORY MEANING:
FORTY-SIX YEARS WANDERING IN THE DESERT ........ 412
A.    Trade or Business: In Pursuit of a Definition .... 412
1.    The 1958 Regulations  ................. 414
2.    The 1967 Regulations  ................. 415
* Associate Professor, Fordham University School of Law. B.A. 1956, Oberlin
College; M.A. 1960, Harvard University; J.D. 1962, Boston College; LL.M. 1966, New York
University. Special thanks go to Joseph Perillo and Linda Sugin for helpful comments relating
to this article. I also would like to thank my research assistants Dave Rifkin and Charles Wilk.
I am grateful to Mary Whelan and Claudette Parker for helping with the manuscript.

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