United States v. American Bar Endowment

477 U.S. 105 (1986)

Case BriefRelatedOptions
From our private database of 39,700+ case briefs...

United States v. American Bar Endowment

United States Supreme Court

477 U.S. 105 (1986)

Facts

The American Bar Endowment (ABE) (plaintiff) was a tax-exempt organization that advanced the administration of justice and legal research. All members of ABE were automatically members of ABE. ABE fundraised for its charitable services by offering group insurance policies to the members and retaining the members’ pro rata shares of dividends. Members received a benefit by deducting their pro rata shares minus ABE’s administrative costs as charitable contributions on their tax returns. The group policies were negotiated by ABE for an overall policy discount, but the premiums paid by members were of similar costs regardless of whether they had obtained a policy from ABE or elsewhere. In 1980, the Internal Revenue Service (IRS) (defendant) issued a deficiency notice, informing ABE that its group insurance plan was an unrelated trade or business to its charitable purpose and thus that the profits made from the plan were subject to taxation. Under the Internal Revenue Code’s unrelated-business tax, income of a tax-exempt organization that profited from an unrelated trade or business regularly carried on was subject to a corporate tax rate. ABE paid the taxes and sought a refund in the United States Court of Claims. The claims court found for ABE, ruling that ABE was not engaging in a trade or business and that the insurance-sale profits were contributions by members rather than business income. The claims court also stated that ABE’s group insurance plan did not violate the unrelated-business tax’s purpose of eliminating unfair competition for goods and services between exempt and nonexempt organizations. Simultaneously, a group of ABE members sought refunds for untaken past charitable-contribution deductions, i.e., the assignments of their dividends to ABE. The claims court found that those members had not proven that their purchases of the policy and assignments of dividends had been made for a charitable purpose. The two matters were consolidated and appealed.

Rule of Law

Issue

Holding and Reasoning (Marshall, J.)

Dissent (Stevens, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 645,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 645,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 39,700 briefs, keyed to 988 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 645,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 39,700 briefs - keyed to 988 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership