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promote cooperative activity among the farmers. Petitioner
believed that the use of cooperatives was beneficial to farmers,
as evidenced by its historical involvement in the cooperative
movement in Ohio. We think that petitioner is in a unique
position to perform the activities under the service contract
given its distinctive relationship with Ohio farmers, and we find
the activities to be unique to petitioner’s tax-exempt function.
In evaluating the relationship between the activities and
the purposes of an agricultural organization, the capacity in
which benefits are received by the organization’s members is as
important as the unique character of the organization’s
activities. For a substantial relationship to exist, the
benefits flowing from the organization’s activities must inure to
the members as a group, rather than as individuals. Professional
Ins. Agents of Mich. v. Commissioner, supra at 1103-1104;
Louisiana Credit Union League v. United States, supra at 535-536.
Several factors are relevant in determining whether an activity
operates primarily to benefit individual members: (1) Whether
fees charged are directly proportionate to benefits received; (2)
whether participation is limited to members and, thus, is of no
benefit to nonmembers in the industry; and (3) whether the
service provided is one commonly provided by for-profit entities.
Illinois Association of Professional Ins. Agents v. Commissioner,
801 F.2d 987, 993 (7th Cir. 1986), affg. T.C. Memo. 1985-105;
Carolinas Farm & Power Equip. Dealers v. United States, 699 F.2d
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