American Journal of Law & Medicine

Taxation: health care joint venture not tax-exempt.

Taxation: Health Care Joint Venture Not Tax-Exempt--Redlands Surgical Serv. v. Comm'r(1)--In a per curiam opinion, the Ninth Circuit affirmed a United States Tax Court holding that Redlands Surgical Services ("RSS"), a hospital-subsidiary partner in a health care joint venture, is not tax-exempt.(2) RSS is a California nonprofit corporation and is a wholly owned subsidiary of Redlands Health Systems ("RHS"), a California nonprofit corporation that has been recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code.(3)

In 1990 RHS formed a general partnership with Redlands-SCA Surgical Centers, Inc., a for-profit corporation. The partnership owns and operates a surgical center in Redlands, California. …

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