Non-profit exemptions rest on the government&#x27;s policy of forgoing tax revenues on <i>specific</i> favored activities. Non-profit entities have to take great care to avoid engaging in activities besides those favored ones. So the non-profit hospital likely couldn&#x27;t fold the advertising activities into itself without jeopardizing their tax-exempt status.<p>The problem is not the acquisition of the for-profit entity by the non-profit entity. The problem is when those entities don&#x27;t interact at arm&#x27;s-length.