Gundersen Medical Foundation, Ltd. v. United States
United States District Court for the Western District of Wisconsin
536 F. Supp. 556 (1982)
- Written by Daniel Clark, JD
Facts
The Gundersen Medical Foundation, Ltd. (foundation) (plaintiff) was a tax-exempt educational organization that provided training to medical students. The Gundersen Clinic, Ltd. (clinic) was a non-tax-exempt organization that operated a large, for-profit medical clinic. The clinic and the foundation had a symbiotic relationship. Foundation students observed and participated in the clinic’s medical practice as part of their training, and the clinic’s large size and variety of practices were valuable to the foundation. The foundation took out debt to expand a building on land it owned that was adjacent to the clinic. The foundation leased the building to the clinic. The clinic used the building for medical procedures, some of which foundation students participated in and some of which they did not. The foundation did not include the rent payments from the clinic in the foundation’s taxable income. The Internal Revenue Service (IRS) determined that a portion of the rental payments was taxable as unrelated business taxable income (UBTI). The foundation challenged the IRS’s position in district court.
Rule of Law
Issue
Holding and Reasoning (Doyle, J.)
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