St. Luke’s Hospital of Kansas City v. United States
United States District Court for the Western District of Missouri
494 F. Supp. 85 (1980)
- Written by Jenny Perry, JD
Facts
The Internal Revenue Service (IRS) (defendant) determined that income derived by St. Luke’s Hospital of Kansas City (the hospital) (plaintiff) from its outside pathology testing program constituted unrelated business taxable income (UBTI). The hospital was an exempt organization and a teaching hospital. The outside testing program involved services that were offered to the hospital’s medical staff, which consisted of physicians who had admitting privileges at the hospital but were not employed by the hospital. The services were limited to the hospital’s medical staff and were not offered to all the physicians in the community. Upon a physician’s request, the hospital would arrange to pick up a test or slide at a physician’s office and deliver it to the hospital’s pathology department. Benefits of this process for the physicians included convenience and the assurance of accurate testing. The hospital paid taxes the IRS claimed were owed and sued for a refund.
Rule of Law
Issue
Holding and Reasoning (Wright, J.)
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