PLR 201702002 Service Determines No UBTI on Hospital Lease
Dear * * *:
This letter responds to a letter dated February 17, 2016, and subsequent
correspondence, requesting rulings that (i) the lease agreement described
below is in furtherance of Association's charitable purpose under
§ 501(c)(3) of the Internal Revenue Code1
; and (ii) the lessee's use of the leased property is substantially
related to the exercise or performance by Association of its charitable
purpose for purposes of determining whether income under the lease is
derived from debt-financed property under § 514(b)(1).
Association is recognized by the Internal Revenue Service as an organization
described in §§ 170(b)(1)(A)(iii) and 501(c)(3), and is classified
as a public charity under § 509(a)(1). Association was organized
under State law as a nonprofit membership and charitable corporation and
was formed to "establish and maintain a general hospital" at
Village ("Community Hospital"), and "to receive, collect,
and hold, either by gift, bequest, devise, or otherwise, funds and property
either real or personal, and to use and disburse the same in furtherance
of the objects of the said corporation." Association's board
of directors is composed of X individuals whose background and experience
reflect a wide diversity of professions and interests within the community.
Community Hospital has an open medical staff, and its emergency department
treats all persons, regardless of one's ability to pay. Association
owns the Community Hospital building and various other buildings in Village
(the "Premises"). Community Hospital is collateral for tax-exempt
bonds used to fund its expansion and modernization.
Association has operated Community Hospital continuously for more than
Z years. For much of that time, Community Hospital's revenues exceeded
its expenses. In recent decades, however, changes in the healthcare industry,
including changes in the standard of payment for hospital services, have
caused Community Hospital to sustain steady, and occasionally severe, losses.
Some years ago, State undertook an independent review of State's health
care capacity and resources. To that end, it commissioned a study (the
"Study"), which examined the supply of general hospital and
nursing home facilities in State, and recommended changes that would result
in a more coherent, streamlined health care system. Referring to Community
Hospital and certain other independent community hospitals in the same
geographic region, the Study recommended that access to emergency and
acute inpatient care be maintained at each location due to the unique
geography and population distribution of the region and the distance between
the region's hospitals. The Study recognized, however, that competition
for patients in what it characterized as a "thinly populated"
area would cause the continued decline of those hospitals. Consequently,
it recommended that the hospitals develop an affiliation with University
Hospital in order to strengthen the hospitals and to create a healthcare
system that better serves the needs of the region.
University Hospital is an academic medical center and the region's
only tertiary care center and Level 1 trauma center. University Hospital
is a division of State University.
State University was created by statute as a corporation within the department
of the State that is concerned with public education.2
After careful study and analysis of current and projected future conditions
in its service area and in the field of health care in general, Association
concluded that its public purpose could best be achieved by integrating
its Community Hospital operations into University Hospital under an Integration
and Affiliation Agreement (the "IAA") with State University
(acting through University Hospital) and by entering into other related
and ancillary transactions and arrangements, including a lease agreement
Under the terms of the Lease, Association will lease the Premises and
all property, plant, and fixed equipment located on the Premises to State
University (acting through University Hospital) for a term of Y years
(which term is automatically extended for an additional year on each anniversary
of the lease commencement date), unless terminated sooner due to one of
several enumerated events, including termination by the landlord following
a major tenant breach, not timely cured. A major tenant breach includes
tenant's failure to observe or perform any material covenant, condition,
or agreement on its part to be observed or performed under certain sections
of the IAA. Among the covenants and agreements that State University is
required to observe or perform to avoid a major tenant breach are the
- Maintain Community Hospital at service and quality levels commensurate
with a first-class community hospital of similar type in State;
Maintain at Community Hospital the following list of core medical and surgical
services, at levels of access and sophistication customary for a first-class
community hospital of similar type in State:
- Emergency services;
- Maternity ward and ob/gyn services;
- Pediatric services;
- General medicine and surgery beds;
- Operating room suites;
- Dialysis services;
- All services that are offered by at least 75% of community hospitals in
the State that have at least 100 licensed beds and have similar medical
needs in their primary service area; and
- Appropriate supportive services (e.g., anesthesiology, radiology, and pathology);
- Maintain at Community Hospital accreditation by the Joint Commission without
significant deficiencies, as well as the current "Centers of Excellence"
designations bestowed on Community Hospital by nationally recognized accreditation bodies;
Ensure that Community Hospital is operated in a manner consistent with
the mission, vision, values, and tax-exempt status of State University4; in particular, the provision of an emergency room meeting State Department
of Health requirements may not be discontinued or unreasonably limited; and
Ensure that State University maintains its exemption from U.S. federal
The rent to be paid under the Lease is limited to Association's payment
obligations under the tax-exempt bonds and certain other liabilities,
utilities, taxes, insurance, and administrative expenses.
Under the IAA, the parties agree to plan for, and construct, a new facility
("New Community Hospital") that will be owned by Association
but operated by State University and located on State University-owned
land in Village that is leased to Association for a nominal rent. The
terms of the Lease provide that, prior to the construction of the New
Community Hospital, the parties agree to negotiate and execute a lease
that will govern State University's occupancy and use of the New Community
Hospital premises, the provisions of which will be substantially similar
to the provisions of the Lease.
As an integral part of State, State University is governed by a board
of trustees, the majority of the members of which are appointed by State's
governor. The remaining members of the board of trustees are State University
leaders who serve ex-officio. While the persons who control State University
are not the same as the persons who control Association, the IAA provides
for a joint advisory committee made up of Association and State University
designees, the majority of whom are appointed by Association (the "Joint
Advisory Committee"). The Joint Advisory Committee will meet at least
quarterly to advise University Hospital on matters of operational and
strategic importance involving Community Hospital. It will serve a consultative
role (and will be subject and subordinate to State University's ultimate
responsibility and decision-making authority), but will discuss and may
advise University Hospital on any matter that its participants deem important
relating to Community Hospital, including the recruitment, selection,
or termination of the senior executive having operational responsibility
for Community Hospital, decisions to reduce, close, or transfer any core
service, proposed annual capital and operating budgets of Community Hospital,
and the development of long-term strategic plans for Community Hospital.
Association has requested the following rulings:
1) The Lease will be in furtherance of Association's exempt purpose
under § 501(c)(3); and
2) The use of the Premises by University Hospital under the Lease is substantially
related to the exercise or performance of Association's exempt purpose
or function for purposes of the exception to the term "debt-financed
property" under § 514(b)(1)(A), such that any gross income realized
from the Lease will not be unrelated debt-financed income as defined in
Section 501(a) provides generally that an organization described in §
501(c) is exempt from federal income taxes.
Section 501(c)(3) describes entities that are organized and operated exclusively
for charitable, educational, scientific, and certain other purposes.
Section 1.501(c)(3)-1(c) of the Income Tax Regulations (the "regulations")
provides that an organization will be regarded as "operated exclusively"
for one or more exempt purposes only if it engages primarily in activities
which accomplish one or more of such exempt purposes specified in §
501(c)(3). An organization will not be so regarded if more than an insubstantial
part of its activities is not in furtherance of an exempt purpose.
Section 1.501(c)(3)-1(d)(2) of the regulations provides that an organization
is not organized or operated exclusively for one or more exempt purposes
unless it serves a public rather than a private interest.
Rev. Rul. 69-545, 1969-2 C.B. 117, states that the promotion of health
is a charitable purpose, and that a nonprofit organization whose purpose
and activity are providing hospital care is promoting health and may,
therefore, qualify as organized and operated in furtherance of charitable
purposes if it meets the other requirements of § 501(c)(3). The ruling
explains that the promotion of health is one of the purposes in the general
law of charity that is deemed beneficial to the community as a whole even
though the class of beneficiaries eligible to receive a direct benefit
from its activities does not include all members of the community, such
as indigent members of the community, provided that the class is not so
small that its relief is not of benefit to the community. For example,
a hospital that operates an emergency room open to all persons and that
provides hospital care for all those persons in the community able to
pay the cost of such care either directly or through third party reimbursement
is promoting the health of a class of persons that is broad enough to
benefit the community. Additional indications that a hospital is operated
for the benefit of the public include the facts that control of the hospital
rests with a board of trustees composed of independent civic leaders,
that the hospital maintains an open medical staff, with privileges available
to all qualified physicians, and that members of its active medical staff
have the privilege of leasing available space in its medical building.
Rev. Rul. 73-313, 1973-2 C.B. 174, addresses the issue of whether the
activity of providing a medical building and facilities at reasonable
rent (but less than what would be necessary to provide a normal return
on the investment in the building and other facilities) to attract a medical
doctor to a community furthers the charitable purposes of an organization
that was formed to promote the health of the community through the development
and improvement of medical facilities and services. The community represented
by the organization is in an isolated rural area where there were no medical
practitioners. To induce a doctor to locate to the community, the organization
erected a building for use as a doctor's office with funds raised
by contributions. Using the availability of the building at a reasonable
rental basis as an inducement, the organization entered into an arrangement
with a doctor to locate in the community, with the understanding that
the doctor would make his services available to the entire community.
In holding that the organization's activity is charitable within the
meaning of § 501(c)(3), the ruling states that providing a physical
facility in the manner described bears a clear relationship to lessening
the health hazards that result from the absence of a local practitioner,
and that the terms of the arrangement, which were negotiated at arm's
length and in good faith, bear a reasonable relationship to the promotion
and protection of the health of the community. Any personal benefit derived
by the doctor from the use of the building to conduct his private practice
does not lessen the public benefit flowing from the organization's
activities or constitute the type of private interest prohibited by the
Rev. Rul. 80-309, 1980-2 C.B. 183, addresses the issue of whether a nonprofit
organization that was created to construct, maintain, and operate or lease
a public hospital is operated exclusively for charitable purposes. The
organization's articles of incorporation state that the organization's
purpose is to provide a public hospital and related facilities for city
V and its surrounding communities. The articles also provide that all
of the organization's assets will be transferred, without consideration,
to city V when all indebtedness has been paid. City V has agreed to accept
title at such time. After construction of the hospital and related facilities,
the organization's only activity has been to lease them to an association
exempt under § 501(c)(3). The lessee operates the hospital and facilities
and pays as consideration an amount sufficient only to retire the organization's
indebtedness incurred to finance them and meet the organization's
administrative expenses. Trustees of the lessee association make up the
lessor organization's entire board of directors. Citing Restatement
(Second), Trusts, secs. 368, 372, and IV Scott on Trusts (3d ed. 1967)
secs. 368, 372, for the proposition that the promotion of health is considered
a charitable purpose under the general law of charity, the ruling concludes
that the organization, by building a public hospital and related facilities
and leasing them to an exempt charitable association, which operates the
facilities for an amount sufficient only to retire indebtedness and meet
necessary operating expenses, is furthering the charitable purpose of
promoting the health of the community.
In B.S.W. Group, Inc., v. Comm'r, 70 T.C. 352 (1978), an organization
formed for the purpose of providing consulting services to tax-exempt
and not-for-profit organizations in the area of rural-related policy and
program development, sought a declaratory judgment from the Tax Court
after the IRS determined that the organization did not qualify as an organization
described in § 501(c)(3). Holding that the Commissioner had not erred
in its determination, the Tax Court said that it is the purpose towards
which an organization's activities are directed, and not the nature
of the activities themselves, that is ultimately dispositive of the organization's
right to be classified as a § 501(c)(3) organization. With respect
to this petitioner, the court said that the critical enquiry is whether
petitioner's primary purpose for engaging in its sole activity, providing
consulting services, is an exempt purpose, or whether its primary purpose
is the nonexempt one of operating a commercial business producing net
profits. Finding that petitioner's sole activity constituted a consulting
business of the sort which is ordinarily carried on by commercial ventures
organized for profit, and observing that competition with commercial firms
is strong evidence of the predominance of a nonexempt commercial purpose,
the Tax Court concluded that petitioner's conduct of a business with
an apparently commercial character weighed heavily against exemption.
Furthermore, after noting that it did not appear that petitioner ever
planned to charge a fee less than cost, the court said the fact that petitioner's
fees may be lower than those charged by other firms is not enough to prove
that petitioner's purposes are primarily exempt.
Section 511(a) imposes a tax on the unrelated business taxable income
of organizations described in § 501(c)(3).
Section 512(a)(1) defines the term "unrelated business taxable income"
as the gross income derived by any organization from any unrelated trade
or business regularly carried on by it, less the allowable deductions
which are directly connected with the carrying on of such trade or business,
both computed with the modifications provided in § 512(b).
Section 512(b)(3)(A) excludes from the term "unrelated business taxable
income" all rents from real property, and all rents from personal
property leased with such real property if the rents attributable to such
personal property are an incidental amount of the total rents received
and accrued under the lease, determined at the time the personal property
is placed in service.
Section 512(b)(4) provides that, notwithstanding paragraph (3), above,
in the case of debt-financed property (as defined in § 514) there
generally shall be included, as an item of gross income derived from an
unrelated trade or business, the amount ascertained under § 514(a)(1),
and there shall be allowed, as a deduction, the amount ascertained under
Section 513(a) defines the term "unrelated trade or business"
as any trade or business the conduct of which is not substantially related
(aside from the need of such organization for income or funds or the use
it makes of the profits derived) to the exercise or performance by such
organization of its charitable, educational, or other purpose or function
constituting the basis for its exemption under § 501.
Section 1.513-1(d)(1) of the regulations provides that gross income derives
from "unrelated trade or business" within the meaning of §
513(a) if the conduct of the trade or business which produces the income
is not substantially related (other than through the production of funds)
to the purposes for which exemption is granted. The presence of this requirement
necessitates an examination of the relationship between the business activities
which generate the particular income in question -- the activities, that
is, of producing or distributing the goods or performing the services
involved -- and the accomplishment of the organization's exempt purposes.
Section 1.513-1(d)(2) of the regulations provides that trade or business
is "related" to exempt purposes, in the relevant sense, only
where the conduct of the business activities has causal relationship to
the achievement of exempt purposes (other than through the production
of income); and it is "substantially related," for purposes
of § 513, only if the causal relationship is a substantial one. Thus,
for the conduct of trade or business from which a particular amount of
gross income is derived to be substantially related to purposes for which
exemption is granted, the production or distribution of the goods or the
performance of the services from which the gross income is derived must
contribute importantly to the accomplishment of those purposes. Whether
activities productive of gross income contribute importantly to the accomplishment
of any purpose for which an organization is granted exemption depends
in each case upon the facts and circumstances involved.
In computing under § 512 the unrelated business taxable income for
any taxable year, § 514(a) generally includes as an item of gross
income derived from an unrelated trade or business certain amounts with
respect to debt-financed property.
Section 514(b)(1) defines the term "debt-financed property"
as any property which is held to produce income and with respect to which
there is an acquisition indebtedness (as defined in subsection (c)) at
any time during the taxable year, except that such term does not include --
(A)(i) any property substantially all the use of which is substantially
related (aside from the need of the organization for income or funds)
to the exercise or performance by such organization of its charitable,
educational, or other purpose or function constituting the basis for its
exemption under § 501 . . . or (ii) any property to which clause
(i) does not apply, to the extent that its use is so substantially related.
Section 1.514(b)-1(a) of the regulations defines the term "debt-financed
property" as any property which is held to produce income (e.g.,
rental real estate) and with respect to which there is any acquisition
indebtedness at any time during the taxable year.
Section 1.514(b)-1(b)(1)(i) of the regulations provides that to the extent
that the use of any property is substantially related (aside from the
need of the organization for income or funds or the use it makes of the
profits derived) to the exercise or performance by an organization of
its charitable, educational, or other purpose or function constituting
its basis for exemption under § 501, such property shall not be treated
as "debt-financed property."
Section 1.514(b)-1(b)(1)(ii) of the regulations provides that if substantially
all of any property is used in a manner described in § 1.514(b)-1(b)(1)(i),
such property shall not be treated as "debt-financed property."
In general, the preceding sentence shall apply if 85 percent or more of
the use of such property is devoted to the organization's exempt purpose.
The extent to which property is used for a particular purpose shall be
determined on the basis of all the facts and circumstances.
Section 514(c)(1) defines the term "acquisition indebtedness"
with respect to any debt-financed property to include the unpaid amount
of the indebtedness incurred by the organization in acquiring or improving
Whether leasing the Premises to State University furthers Association's
The leasing of real property is a trade or business commonly carried on
for profit by commercial ventures. In B.S.W. Group, Inc. v. Comm'r,
the Tax Court held that the conduct of a trade or business of a commercial
character generally does not further charitable purposes, even if the
trade or business provides goods or services at cost and solely to §
501(c)(3) organizations. Nevertheless, the court said that it is the purpose
towards which the activities are directed, and not the nature of the activities
themselves, that determines whether the activities further exempt purposes.
Revenue Ruling 80-309 provides an example of an instance in which a unique
set of facts supported a conclusion that, in rare circumstances, the activity
of leasing a hospital facility to an association that is exempt under
§ 501(c)(3) is directed to the furtherance of charitable purposes.
That revenue ruling held that a nonprofit organization was operating exclusively
for charitable purposes when it leased a hospital facility to a §
501(c)(3) association under the following facts: (i) the lessee association
paid as consideration an amount sufficient only to retire the indebtedness
incurred to finance the hospital facility and meet necessary operating
expenses; (ii) lessor and lessee were under common control; and (iii)
title to the facility would be transferred to the municipality once all
indebtedness had been paid.
Association was organized for the purpose of maintaining a general hospital
in Village so as to ensure the highest quality of healthcare services
for its community. Acting on the recommendation of the State-commissioned
Study that it develop an affiliation with University Hospital to strengthen
Community Hospital and to create a healthcare system that better serves
the needs of the region, Association proposes to lease the Premises to
State University, which is an integral part of State that is organized
and operated for educational purposes. The lease of the Premises to State
University (acting through University Hospital) will not cause Community
Hospital to be operated other than in a manner that will continue to benefit
the public and serve the public interest. In entering into the Lease,
State University covenants to maintain the core services already rendered
by Community Hospital, including emergency room services open to the entire
community. In addition, State University covenants to maintain Community
Hospital as a first-class community hospital, to maintain Community Hospital's
accreditation by the Joint Commission and its current "Centers of
Excellence" designations, to operate Community Hospital in a manner
consistent with State University's mission, vision, values, and tax-exempt
status, and to maintain State University's exemption from U.S. federal
If State University breaches its covenants, Association can terminate
the Lease. The rent under the Lease will be in an amount sufficient only
to satisfy Association's obligations under instruments pertaining
to tax-exempt bonds, the proceeds of which were used to expand and modernize
Community Hospital, and to pay other liabilities and expenses incurred,
or to be incurred, by Association on behalf of Community Hospital and
New Community Hospital. Once the obligations under the bonds are satisfied,
the rental amount will decrease accordingly. Finally, although the persons
who control State University are not the same persons who control Association,
Association controls the Joint Advisory Committee that will advise University
Hospital on the operation of, and strategic planning for, Community Hospital.
Consequently, as in Revenue Ruling 80-309, in which an unusual set of
facts resulted in a conclusion that the lease of a hospital facility to
a § 501(c)(3) organization was in furtherance of charitable purposes,
the particular facts of this case -- specifically, the Study's recommendation
that Community Hospital affiliate with University Hospital in order to
gain access to tertiary care services and the other benefits inherent
in a relationship with an academic medical center, Association's determination
that affiliation with State University would be the best way to maintain
and enhance health care and hospital services for the residents of the
community, State University's status as an integral part of State
organized and operated for educational purposes, State University's
commitments under the IAA, and Association's control of the Joint
Advisory Committee -- lead to a conclusion that the lease of the Premises
to State University, acting through University Hospital, furthers Association's
charitable purpose of promoting health by maintaining a general hospital
at Village. Thus, under the particular facts of this case, the proposed
lease structure will be used to accomplish the same purposes previously
carried out directly by Association.
Revenue Ruling 73-313 provides another example of an instance in which
a unique fact -- the absence of medical providers in an isolated rural
community -- resulted in the conclusion that the activity of leasing property
-- in this case, the lease of a medical office under terms that would
induce a private physician to set up a practice in the community and make
his services available to the entire community -- is directed to the furtherance
of a charitable purpose, namely the purpose of promoting the health of
the residents of the community by lessening the health hazards resulting
from the absence of a local medical practitioner.
Similarly, the Study noted that Community Hospital serves a thinly populated
area in which access to emergency and acute inpatient care must be maintained.
The IAA and accompanying Lease will enable Community Hospital to share
resources with University Hospital, a tertiary academic medical center,
which will give members of the community access to a broader and more
efficient network of emergency services, healthcare providers, medical
specialists, specialty medical care, and clinical trials. The affiliation
will also guarantee the long-term financial stability of Community Hospital.
Therefore, by leasing the Premises to State University, Association will
be furthering a charitable purpose, namely the purpose of promoting the
health of the residents of an isolated, thinly populated area by lessening
the health hazards that would result should, in the absence of the affiliation,
Community Hospital be forced to discontinue core services or to close entirely.
In Revenue Ruling 73-313, furthermore, the leasing of property to a medical
provider for reasonable rent under terms that were negotiated at arm's
length and in good faith did not cause an arrangement that otherwise served
a public interest to be construed as serving an impermissible private
interest. Similarly, the leasing of the Premises to State University will
not cause the affiliation between Association and State University --
which, as discussed above, otherwise serves a public interest -- to serve
impermissible private interests. As previously noted, the lessee, State
University, is an integral part of State with the mission of providing
educational services to the people of State. As such, it owes a singular
duty to, and is charged with unique responsibilities toward, the residents
of State. Therefore, the lease of the Premises to State University, as
provided under the IAA and the Lease, will not redound to private interests,
but will continue to accrue to the benefit of the people of State and
the residents of Village and the surrounding region.
Whether the use of the Premises by University Hospital under the Lease
is substantially related to the exercise or performance by Association
of its exempt purpose.
The Premises are the subject of tax-exempt bond financing, the proceeds
of which were used to expand and modernize those Premises. Therefore,
Community Hospital would be considered debt-financed property under §
514(a), and a percentage of any payments derived under the Lease that
would otherwise be excluded as rents under § 512(b)(3)(A) would be
includible in Association's unrelated debt-financed income unless
University Hospital's use of the Premises under the Lease is substantially
related to the exercise or performance by Association of its charitable purpose.
Association's charitable purpose is to establish and maintain a general
hospital at Village. Under the terms of the IAA and the accompanying Lease,
State University (acting through University Hospital) is required to use
the Premises to maintain Community Hospital and to continue providing
healthcare services to the public served by Association. Consequently,
the use of the Premises by State University (acting through University
Hospital) is substantially related to the exercise or performance by Association
of its charitable purpose, and the Premises are not considered debt-financed
property within the meaning of § 514(b)(1) for purposes of determining
whether any part of the income derived under the Lease is excludible from
Association's unrelated business taxable income under § 512(b)(3).
Based solely on the facts and representations submitted by Association,
we rule as follows:
1) The leasing of the Premises to State University as provided in the
Lease will further Association's charitable purpose under § 501(c)(3); and
2) The use of the Premises by State University (acting through University
Hospital) will be substantially related to the exercise or performance
by Association of its charitable purpose. Therefore, the Premises will
not be considered debt-financed property within the meaning of §
514(b)(1) for purposes of determining whether any part of the income derived
under the Lease will be excludible from Association's unrelated business
taxable income under § 512(b)(3).
The rulings contained in this letter are based upon information and representations
submitted by or on behalf of Association (accompanied by a penalty of
perjury statement executed by an individual with authority to bind Association)
and upon the understanding that there will be no material changes in the
facts. This office has not verified any of the material submitted in support
of the request for rulings, and such material is subject to verification
on examination. The Associate office will revoke or modify a letter ruling
and apply the revocation retroactively if there has been a misstatement
or omission of controlling facts; the facts at the time of the transaction
are materially different from the controlling facts on which the ruling
was based; or, in the case of a transaction involving a continuing action
or series of actions, the controlling facts change during the course of
the transaction. See Rev. Proc. 2016-1, § 11.05.
No ruling is granted as to whether Association qualifies as an organization
described in § 501(c) and/or § 509(a)(1), (2), or (3), and,
except as expressly provided above, no opinion is expressed or implied
concerning the federal income tax consequences of any other aspects of
any transaction or item of income described in this letter ruling. In
addition, no ruling is granted regarding whether Association satisfies
or is required to satisfy the requirements of § 501(r). This ruling
applies only to the Lease and does not extend to any future lease with
respect to New Community Hospital.
This letter ruling is directed only to the taxpayer who requested it.
Section 6110(k)(3) provides that it may not be used or cited as precedent.
In accordance with the Power of Attorney on file with this office, a copy
of this letter is being sent to your authorized representatives.
David L. Marshall
Assistant Branch Chief
Exempt Organizations Branch 1
(TEGE Associate Chief Counsel)
1 The Internal Revenue Code of 1986, as amended, to which all subsequent
"section" references are made unless otherwise indicated.
2 While State University is not recognized as an organization described
in § 501(c)(3), you represent that it is an integral part of State,
such that its income is generally not subject to federal income tax.
3 The signatories to the IAA and the Lease are State University and Association.
However, University Hospital, which is a division of State University,
will operate Community Hospital though the Premises will still be owned
4 See fn. 2.
5 See fn. 2.
6 See fn. 2.