Section 511(a) imposes a tax on the unrelated business taxable income of "section 501(c)(7) organizations." ⁴1985 U.S. Tax Ct. LEXIS 88">*97 "Unrelated business taxable income" is essentially gross income, excluding membership dues and fees, less allowable deductions directly connected with the production of gross income. Sec. 84 T.C. 756">*760 512(a)(3)(A) and (B). ⁵ As noted, respondent determined that petitioner's realized gain of $ 148,640 on the land sale constituted "unrelated business taxable income," and determined petitioner's tax liability for the taxable year ended September 30, 1974, as $ 44,592. Petitioner maintains that no recognizable gain arose from the sale of the land and the subsequent purchase of other property. ⁶

1985 U.S. Tax Ct. LEXIS 88">*98 Petitioner contends that section 512(a)(3)(D) permits nonrecognition so long as the "price of the organization's equity in the old property does not exceed the cost of the organization's equity in the new property." According to petitioner, if all profits are reinvested in property that is also used for exempt purposes, no gain is to be recognized. ⁷ Petitioner asserts that under section 512(a)(3)(D), the "organization's sales price" of the land is $ 260,959. The $ 260,959 result is arrived at by subtracting from the $ 850,000 proceeds of the sale, selling expenses ($ 5,541), amounts spent to discharge the indebtedness on the unsecured loan ($ 265,000), and the refund of the membership assessment ($ 318,500). Since the cost of purchasing other property was $ 305,511, an amount higher than the 84 T.C. 756">*761 amount petitioner contends is the "organization's sales price," petitioner concludes that it had no recognizable gain.

1985 U.S. Tax Ct. LEXIS 88">*99 Respondent, in contrast, asserts that petitioner "organization's sales price" under section 512(a)(3)(D) is $ 844,459, the $ 850,000 sale proceeds, less $ 5,541 in selling expenses. According to respondent, the organization's sales price ($ 844,459) exceeds the cost of the new property ($ 305,511) by more than the gain realized ($ 148,640) so that petitioner must recognize the full amount of its realized gain. We agree with respondent and hold that petitioner must recognize the $ 148,640 gain.

The starting point for interpreting a statute is the language of the statute, itself. E.g., Rosewell v. LaSalle National Bank, 450 U.S. 503">450 U.S. 503, 450 U.S. 503">512 (1981); Consumer Product Safety Commission v. GTE Sylvania, 447 U.S. 102">447 U.S. 102, 447 U.S. 102">108 (1980). Absent a clearly expressed legislative intention to the contrary, the language of a statute ordinarily must be regarded as conclusive. E.g., United States v. Turkette, 452 U.S. 576">452 U.S. 576, 452 U.S. 576">580 (1981); 447 U.S. 102">Consumer Product Safety Commission v. GTE Sylvania, supra at 108.

According to the express language of section 512(a)(3)(D), "rules similar to the 1985 U.S. Tax Ct. LEXIS 88">*100 rules provided by subsections (b), (c), (e), and (j) of section 1034 shall apply." Citing no authority, petitioner asserts that section 512(a)(3)(D) should be read without resort to section 1034 until temporary or final regulations are adopted under section 512(a)(3)(D) because "similar rules" will not be established until that time. ⁸ We disagree. We cannot ignore section 1034 in interpreting section 512(a)(3)(D). To do so would be to disregard the mandate of the statute. Courts, not executive agencies, are the final authorities on questions of statutory construction. E.g., Volkswagenwerk Aktiengesellschaft v. Federal Maritime Commission, 390 U.S. 261">390 U.S. 261, 390 U.S. 261">272 (1968). The absence of temporary or final regulations under one section of the Code should not preclude us from interpreting the provision by resort to another Code section to which it refers.

1985 U.S. Tax Ct. LEXIS 88">*101

84 T.C. 756">*762 Section 1034 provides for nonrecognition of gain on the sale of a principal residence.⁹Section 1034 does not contain a definition of "organization's sales price" but does contain a definition of "adjusted sales price" as the amount realized on the sale, less expenses for work performed to assist in its sale. Sec. 1034(b)(1). The "amount realized" is the consideration received, less selling expenses. Sec. 1.1034-1(b)(4), Income Tax Regs.; Allstate Savings & Loan Association v. Commissioner, 68 T.C. 310">68 T.C. 310, 68 T.C. 310">318 (1977), affd. 600 F.2d 760">600 F.2d 760 (9th Cir. 1979), cert. denied 445 U.S. 962">445 U.S. 962 (1980). To apply section 1034(b) to the facts before us, we subtract petitioner's selling expenses of $ 5,541 from the $ 850,000 consideration it received to arrive at its "amount realized," $ 844,459. By analogy to the definition of "adjusted sales price" in section 1034(b), "organization's sales price" is the amount realized, reduced by the aggregate of the expenses for work performed on the old property to assist in its sale. No work was performed on petitioner's old property to assist in its sale, so petitioner's1985 U.S. Tax Ct. LEXIS 88">*102 sales price and its amount realized are the same, $ 844,459, a sum of $ 538,948 in excess of petitioner's cost of purchasing the other property. Petitioner's gain on the sale is its amount realized ($ 844,459), less its adjusted basis in the land ($ 695,819), or $ 148,640. Sec. 1001(a); sec. 1.1034-1(b)(5), Income Tax Regs. Because petitioner's sales price of the 55-acre tract, less its cost of purchasing the other property, exceeds its gain, the nonrecognition provisions of section 512(a)(3)(D) are not available to petitioner and it must recognize the full amount of its gain on the land sale, $ 148,640. See Shaw v. Commissioner, 69 T.C. 1034">69 T.C. 1034, 69 T.C. 1034">1036 (1978); Boesel v. Commissioner, 65 T.C. 378">65 T.C. 378, 65 T.C. 378">385 (1975) (in both cases, computation of gain recognized under section 1034).

1985 U.S. Tax Ct. LEXIS 88">*103 Petitioner vigorously asserts that section 512(a)(3)(D) must be interpreted consistent with the legislative objective in enacting the provision, as set forth by the Senate Finance Committee in S. Rept. 91-552 (1969), 1969-3 C.B. 423, which 84 T.C. 756">*763 accompanied the enacting legislation, H.R. 13270, the Tax Reform Act of 1969, 83 Stat. 487, Pub. L. 91-172. Petitioner contends that Congress did not intend that gain be recognized on the facts before us.

The Senate Finance Committee provided the following reasons for changing former law, under which certain income of social clubs was exempt from taxation:

Since the tax exemption for social clubs and other groups is designed to allow individuals to join together to provide recreational or social facilities or other benefits on a mutual basis, without tax consequences, the tax exemption operates properly only when the sources of income of the organization are limited to receipts from the membership. Under such circumstances, the individual is in substantially the same position as if he had spent his income on pleasure or recreation (or other benefits) without the intervening separate organization. However, 1985 U.S. Tax Ct. LEXIS 88">*104 where the organization receives income from sources outside the membership, such as income from investments * * *, upon which no tax is paid, the membership receives a benefit not contemplated by the exemption in that untaxed dollars can be used by the organization to provide pleasure or recreation (or other benefits) to its membership. For example, if a social club were to receive $ 10,000 of untaxed income from investment in securities, it could use that $ 10,000 to reduce the cost or increase the services it provides to its members. In such a case, the exemption is no longer simply allowing individuals to join together for recreation or pleasure without tax consequences. Rather, it is bestowing a substantial additional advantage to the members of the club by allowing tax-free dollars to be used for their personal recreational or pleasure purposes. The extension of the exemption to such investment income is, therefore, a distortion of its purpose. [S. Rept. 91-552, supra, 1969-3 C.B. at 469-470.]

The committee explained the exception to its tax on unrelated business taxable income codified in section 512(a)(3)(D), as follows:

In addition, the1985 U.S. Tax Ct. LEXIS 88">*105 committee's bill provides that the tax on investment income is not to apply to the gain on the sale of assets used by the organizations in the performance of their exempt functions to the extent the proceeds are reinvested in assets used for such purposes within a period beginning 1 year before the date of sale and ending three years after that date. This provision is to be implemented by rules similar to those provided where a taxpayer sells or exchanges his residence (sec. 1034). The committee believes that it is appropriate not to apply the tax on investment income in this case because the organization is merely reinvesting the funds formerly used for the benefit of its members in other types of assets to be used for the same purpose. They are not being withdrawn for gain by the members of the organization. For example, where a social club sells its clubhouse and uses 84 T.C. 756">*764 the entire proceeds to build or purchase a larger clubhouse, the gain on the sale will not be taxed if the proceeds are reinvested in the new clubhouse within three years. [S. Rept. 91-552, supra, 1969-3 C.B. at 470-471.]

Nothing in the committee report pertinent to section 512(a)(3)(D) supports petitioner's1985 U.S. Tax Ct. LEXIS 88">*106 argument that it is entitled to nonrecognition of gain to the extent that its "equity" (or "profit") was reinvested in other qualifying property; to the contrary, the cited excerpt refers to reinvestment of the proceeds from the sale of property. If Congress intended, as petitioner maintains, that the realized gain on the sale by a section 501(c)(7) organization of property used directly in the performance of its exempt function not be recognized where the equity in the sold property or the profits on the sale are reinvested, it could have said so. See, e.g., Malat v. Riddell, 383 U.S. 569">383 U.S. 569, 383 U.S. 569">571 (1966). By discharging the indebtedness on its loan and by currently refunding the assessment, which its membership previously had agreed was refundable only upon death or resignation from the club, petitioner did not "merely reinvest" its funds from the land sale in other types of assets. In the language of the committee report, funds were "withdrawn for gain by the members of the organization," who benefited through decrease in petitioner's debt and return of the assessment. Petitioner's gain therefore constitutes unrelated business taxable income.

1985 U.S. Tax Ct. LEXIS 88">*107 Decision will be entered for the respondent.