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    Internal Revenue Service
 Revenue Ruling

Rev. Rul. 67-251

1967-2 C.B. 196

Sec. 501

IRS Headnote

A business league which extends financial aid and welfare services to its
members does not qualify for exemption under section 501(c)(6) of the
Internal Revenue Code of 1954 since part of its net earnings is inuring to
the benefit of private individuals. Full Text

Rev. Rul. 67-251 

Advice has been requested whether a business league which extends financial
aid and welfare services to its members qualifies for exemption from
Federal income tax under section 501(c)(6) of the Internal Revenue Code of
1954. 

The league is an association of persons employed in a particular industry.
Its activities are directed to the improvement of business conditions in
the line of business represented by its members. In addition, the league
provides financial aid and welfare services to any member whose employment
is involuntarily terminated. 

Income is derived from dues and assessments, interest on investments, and
the sale of a trade publication. Funds are expended for operating expenses,
member benefits, and charitable contributions. Amounts expended for
members' benefits amounted to a small percentage of total expenditures. 

Section 501(c)(6) of the Code provides exemption from Federal income tax
for business leagues, chambers of commerce, real estate boards, and 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. Thus, in
order for an organization to be exempt under the provisions of the statute,
no financial benefit can inure to a shareholder or private individual. 

The net earnings of the league are inuring to the benefit of private
individuals through furnishing financial aid and welfare services to its
members. Therefore, the league is not exempt from Federal income tax under
section 501(c)(6) of the Code, even  though its financial aid to members is
minor in relation to its other activities which are directed to improvement
of business conditions in a line of business.