N.Y.U.'s Macaroni

When alumni and friends of New York University bought a macaroni factory in 1947 and dedicated the profits to N.Y.U., they were following a path already partly blazed by others. In a search for bigger & better returns on endowment money, some U.S. colleges and universities have been buying into all sorts of enterprises, from real estate to department stores, thus giving income from the properties their own exemption from corporation income taxes. If New York University's new macaroni factory could thus become tax exempt, its macaroni would go to market with a tidy advantage over most of the rest of the industry, make a properly tidy return to N.Y.U.

Last week in Washington the United States Tax Court gave N.Y.U.'s macaroni a fresh bend. It ruled that the C. F. Mueller Co. (as reorganized for N.Y.U.'s benefit) was not exempt from paying federal corporation income taxes, owed Uncle Sam $136,438.62 for a four-month period in 1947. Said the court: such an exemption could have "a vicious effect upon nonexempt competitors." Said the Mueller Co.: it would appeal to a higher court.

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