Opinion ID: 439089
Heading Depth: 1
Heading Rank: 2

Heading: R.C. Sec. 501(c)(6) provides income tax exemption for:

Text: Business leagues, chambers of commerce, real estate boards, boards of trade, or professional football leagues ..., not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. 8 The First Circuit recently reversed the tax court's decision in MIB, though on different grounds. The court held that MIB's activities were directed primarily toward performance of services for individual members, thus excepting it from business league status under Treas. Reg. Sec. 1.501(c)(6)-1. The court declined, however, to address the Commissioner's argument that MIB was engaged in a kind of business ordinarily carried on for profit in violation of the 501(c)(6) regulations 9 NCAIA relies on King County Insurance Association v. Commissioner, 37 B.T.A. 288 (1938), acq., 1938-1 C.B. 17, and Independent Insurance Agents of Northern Nevada, Inc. v. United States, 44 A.F.T.R.2d (P-H) 5880 (D.Nev.1979), as authority supporting its argument that the State Insurance Program is not a business ordinarily engaged in for profit. Independent is easily distinguished in several important respects, but as to King County, we think the best course is simply to acknowledge its irreconcilability with our view of current law 10 Nothing we have said to this point is altered by the fact that the NCAIA devotes all of its income to financing tax-exempt activities. This court has repudiated the destination-of-income doctrine. E.g., United States v. Community Services, Inc., 189 F.2d 421 (4th Cir.1951), cert. denied, 342 U.S. 932, 72 S.Ct. 375, 96 L.Ed. 694 (1952). Nevertheless, we are not persuaded by the government's argument that NCAIA's claimed exemption is barred by I.R.C. Sec. 502, i.e., that NCAIA is the equivalent of a non-exempt feeder organization, since not all of [NCAIA's] profits are payable to one or more organizations exempt from taxation under I.R.C. Sec. 501