## Facts

- Guide International Corporation was a nonprofit membership organization formed to develop and share information about data-processing products and systems.
- The IRS previously recognized Guide as exempt from federal income tax as a “business league” under I.R.C. § 501(c)(6).
- Guide’s membership was limited to organizations using IBM mainframe equipment; IBM was a key participant and dominated the mainframe market.
- Guide’s primary activities included producing conferences focused on data-processing systems using IBM hardware and software.
- After an IRS revenue ruling raised questions about exemption for groups serving users of a dominant company’s products, Guide filed returns for multiple years, paid taxes, and sought refunds.
- The IRS did not grant refunds, and Guide sued to recover the taxes paid.

## Issues

1. Whether Guide qualified as an exempt “business league” under I.R.C. § 501(c)(6) despite its IBM-centered membership and activities.
2. What standard of appellate review applies to the § 501(c)(6) “business league” determination.
3. Whether summary judgment was proper on the exemption/refund claim given the record on Guide’s structure and activities.

## Decision

- The Seventh Circuit affirmed summary judgment for the United States.
- The court held that the business-league classification under § 501(c)(6) is a mixed question of law and fact reviewed de novo.
- On the undisputed facts, Guide did not qualify as a § 501(c)(6) business league because it primarily advanced IBM’s private interests, and any broader benefit was incidental.
- Because there was no genuine dispute of material fact, the exemption question could be resolved as a matter of law on summary judgment.

## Legal Principles

- A § 501(c)(6) business league must be an association with a common business interest devoted to improving business conditions in a line of business, rather than providing particular services to individual persons or conferring primarily private benefit.
- An organization centered on a single manufacturer’s products, especially where the manufacturer is dominant, is unlikely to qualify as a business league when its activities primarily advance that manufacturer’s interests.
- Summary judgment is appropriate when the material facts are undisputed and the legal classification under § 501(c)(6) can be determined as a matter of law.

## Conclusion

The Seventh Circuit held that Guide’s IBM-focused membership and programming primarily served private interests rather than improving business conditions for a line of business, so Guide was not a tax-exempt business league under § 501(c)(6) and was not entitled to refunds for the tax years at issue.


Guide Int’l Corp. v. United States, 948 F.2d 360 (7th Cir. 1991)