Credit Managers Ass'n v. Commissioner

This is a petition for review of a decision of the Tax Court sustaining the assessment of deficiencies in income tax for the taxable years ending April 30, 1940, and April 30, 1941. We are asked to hold that the Tax Court was wrong in deciding that petitioner is not a business league within the meaning of § 101(7) of the Internal Revenue Code, 26 U.S.C.A.Int. Rev.Code, § 101(7). This section exempts from taxation the income of “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.” The controlling regulation (§ 19.101(7) of Treasury Regulations 103) is quoted in our opinion in Apartment Operations Ass’n v. Commissioner of Internal Revenue, 9 Cir., 136 F.2d 435, 436 , and need not again be set out.

Petitioner is a corporation without shareholders. Its members, who are mostly jobbers, manufacturers, banks, and insurance companies, paid annual dues of $36. The Tax Court found that petitioner’s principal activity during the taxable period was the operation of its Credit Interchange Bureau. The subscriber to this service paid a…