Trade Association Internet Activity

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Trade Association's Internet Activities Excepted from Unrelated Business Tax

Revenue Ruling 2004-112, 2004-51 I.R.B., holds that under specified circumstances, Internet activities conducted by section 501(c)(6) exempt trade associations fall within the specific exception for qualified convention and trade show activity under Code section 513(d)(3)(B). To qualify for this exception, income-producing activities must meet the following requirements:

They must be conducted by a qualifying organization (including a section 501(c)(6) organization) that conducts as one of its substantial exempt purposes a show that stimulates interest in and demand for products of an industry (or industry segment) or that educates those attending about new developments or products and services related to the organization's exempt activities. The activity must be a qualifying convention or trade show activity, i.e., any activity of a kind traditionally conducted at conventions, annual meetings, or trade shows.

The activity must be conducted in conjunction with a convention or trade show. In one situation addressed in the ruling, the trade association operated one website on the premises of its trade show, and a second site during the time period when it was conducting the show. Income from both sites was within the exception. In a second situation, a trade association operated a website available to the public for a two-week period not overlapping or coinciding with any trade show. Income received from those wishing to have information listed on the website was not within the exception.

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