Sturdy Memorial Foundation, Inc. v. Board of Assessors of North Attleborough,
804 N.E.2d 368 (Mass.App.Ct. 2004)

A state tax board denied a charitable foundation's application for a property tax abatement on property leased to an organization which operated an outpatient medical practice on the property. The medical practice was established by a hospital, and the hospital was controlled by the foundation, and all of the entities were tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code. The state tax board based its decision on its findings that the incentive plan for the medical practice's physicians constituted a diversion of charitable income, and that the practice was organized for a commercial purpose instead of a charitable purpose.

The appeals court upheld the decision of the tax board, and held, among other things, that the evidence supported the finding that the incentive plan amounted to diversion of charitable income or profits to a limited class of persons, in contravention of the state tax exemption statute, and that the tax could properly infer that the medical practice did not serve a large enough segment of the population to confer a benefit upon the community.