## Facts

- Suffolk County Patrolmen’s Benevolent Association, Inc. (PBA) was a New York nonprofit membership corporation of Suffolk County police officers, exempt under I.R.C. § 501(c)(5).
- The PBA’s purposes included promoting fraternal spirit among members, advancing the welfare and efficiency of the Suffolk County Police Department, and serving as the police officers’ collective bargaining agent.
- In each of 1974, 1975, and 1976, the PBA conducted a fundraising event consisting of sponsoring a professional vaudeville show staged over one weekend each year.
- The PBA contracted with a producer who supplied the cast, venue, equipment, and promotion; the PBA supplied support personnel such as ushers and ticket takers.
- The PBA distributed program guides at the shows that contained paid advertising from local businesses and other informational material.
- The PBA received a percentage of ticket-sale revenue and program-advertising revenue; aside from dues, these were its only significant fundraising activities in the years at issue.
- The Commissioner determined deficiencies for 1974–1976 on the theory that the show and advertising income was unrelated business taxable income (UBTI) from an unrelated trade or business regularly carried on.

## Issues

1. Whether the PBA’s annual weekend shows and related program advertising were an unrelated trade or business “regularly carried on” under I.R.C. §§ 511–513 and Treas. Reg. § 1.513-1(c), making the receipts taxable as UBTI.

## Decision

- The Tax Court held for the PBA.
- The court found the annual shows and accompanying program guides were intermittent fundraising activities and therefore not “regularly carried on.”
- Because the “regularly carried on” element was not met, the receipts were not taxable as UBTI, and the asserted deficiencies for 1974–1976 were not sustained.

## Legal Principles

- UBTI generally requires income from an unrelated trade or business that is “regularly carried on.” I.R.C. §§ 511–513.
- “Regularly carried on” depends on frequency, continuity, and manner of conduct, measured against comparable commercial activities. Treas. Reg. § 1.513-1(c)(1).
- Periodic, short-duration fundraising events may be treated as intermittent and ordinarily are not “regularly carried on,” even if they involve ticket sales and advertising. Treas. Reg. § 1.513-1(c)(2).
- When an activity fails the “regularly carried on” requirement, the court need not decide whether the activity is substantially related to exempt purposes for UBTI purposes.

## Conclusion

The Tax Court concluded that a once-a-year weekend entertainment fundraiser with event-tied program advertising lacked the frequency and continuity of comparable commercial operations, so it was not “regularly carried on” and did not generate UBTI.


Suffolk Cnty. Patrolmen's Benevolent Ass'n, Inc. v. Comm'r, 77 T.C. 1314 (1981)