A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. Trade associations and professional associations are business leagues. To be exempt, a business league’s activities must be devoted to improving business conditions of one or more lines of business as distinguished from performing particular services for individual persons. No part of a business league’s net earnings may inure to the benefit of any private shareholder or individual and it may not be organized for profit to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only enough income to be self-sustaining). The term line of business generally refers either to an entire industry or to all components of an industry within a geographic area. It does not include a group composed of businesses that market a particular brand within an industry.

Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues (and other organizations) which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

A nonprofit corporation is a taxable entity and subject each year to an $800 minimum California franchise tax
unless the corporation has applied for tax-exempt status and the Franchise Tax Board determines the
corporation qualifies for tax-exempt status. Therefore, until such a determination is made, the corporation must
file a return and pay the associated tax every year until the corporation is formally dissolved.