Alaska Public Service Employees Local 71 v. Commissioner
United States Tax Court
T.C. Memo. 1991-650 (1991)
- Written by Daniel Clark, JD
Facts
The Alaska Public Service Employees Local 71 (union) (plaintiff) was a tax-exempt labor union under §§ 501(a) and 501(c)(5) of the Internal Revenue Code (code). The union had a general fund into which it deposited dues and other sources of revenue, such as investment income. The union also had a separate fund called the Political League, which funded political activity. Union members and employees could opt to have some of their dues designated for contribution to the Political League. In 1984, the union’s board authorized a transfer of $25,000 of undesignated money from the general fund to the Political League. The union earned over $50,000 in investment income in 1984. In 1987, the Internal Revenue Service (IRS) (defendant) informed the union that the IRS planned to tax the transfer. In response, the union attempted to rescind the transfer by having the Political League transfer back $25,000 to the general fund. The IRS continued with its plan to treat the initial transfer as taxable and assessed a deficiency against the union. The union petitioned the United States Tax Court, challenging the deficiency.
Rule of Law
Issue
Holding and Reasoning ()
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