April 20, 1993
Department of the Treasury
Internal Revenue Service
Washington, D.C. 20224
Mr. M. Bradley Flynn
Office of the General Counsel
United States Department of Agriculture
Room 2014-South Building
Washington, D.C. 20250-1400
Dear Mr. Flynn:
This is in reply to your letter dated March 11, 1993, requesting a ruling that the United Soybean Board (Board) is exempt from federal income taxation.
The Board is established pursuant to specific statutory authorization vested in the Secretary of Agriculture. Soybean producers nominate members to the Board. The Secretary may reject any nomination submitted and require the submission of new nominations. The Board’s budget must be approved by the Secretary and the Board must maintain records for the Secretary’s inspection. No funds of the Board may be invested without the approval of the Secretary. The Secretary has the discretion to terminate the orders establishing the Board.
Revenue Ruling 87-2, 1987-1 Cumulative Bulletin 18, holds that a trust fund created by a state supreme court to hold amounts advanced to lawyers in the state by their clients is an integral part of the state and not subject to income tax. In arriving at this holding, the ruling reasons that the state court’s creation of the fund and its ability to select and remove the funds governing body, to control the fund’s investments and expenditures, to monitor the fund’s daily operation, and to abolish the fund indicate that the fund is not an independent entity, but rather is an integral part of the state.
The Board is similar to the trust fund in Rev. Rule. 87-2 and therefore is an integral part of the Department of Agriculture. Accordingly, the Board is not subject to federal income taxation.
If you require further information or have any questions concerning this matter, please call Ms. Carol Schultze at (202) 622-3960.
Assistant Chief Counsel
(Financial Institutions & Products)
By: William E. Blanchard
Senior Technician Reviewer, Branch 3