Internal Revenue Service
Rev. Rul. 68-182
1968-1 C.B. 263
Rev. Rul. 68-182 /1/
The Internal Revenue Service will not in similar cases follow the decision
entered November 10, 1966, by the United States Court of Appeals, Seventh
Circuit, in Pepsi-Cola Bottlers' Association, Inc. v. United States , 369
F.2d 250 (1966).
In that case the Court held that the Association, whose members are engaged
in the bottling and sale of a single franchised soft-drink product, and
whose purposes and activities were directed to the more efficient
production and sale of that product, qualified for exemption from Federal
income tax as a business league under section 501(c)(6) of the Internal
Revenue Code of 1954.
Section 501(c)(6) of the Code exempts from Federal income tax business
leagues, chambers of commerce, real estate boards, or boards of trade, not
organized for profit and no part of the net earnings of which inures to the
benefit of any private shareholder or individual.
Section 1.501(c)(6)-1 of the Income Tax Regulations describes a business
league as an association of persons having some common business interest,
the purpose of which is to promote such common interest and not to engage
in a regular business of a kind ordinarily carried on for profit. It is an
organization of the same general class as a chamber of commerce or board of
trade. Thus, its activities should be directed to the improvement of
business conditions of one or more lines of business as distinguished from
the performance of particular services for individual persons.
It is the position of the Service that organizations promoting a single
brand or product within a line of business do not qualify for exemption
from Federal income tax under section 501(c)(6) of the Code. See Produce
Exchange Clearing Association, Inc. v. Helvering , 71 F.2d 142 (1934), Ct.
D. 898, C.B. XIII-2, 209 (1934).
/1/ Based on Technical Information Release 952, dated December 26, 1967.