Rev. Rul. 58-204

A municipal police departmet, too small to finance an independent retiremet, pension, or disability fund, such as is maintained by policemen's and firemen's organizations of large cities, purchases health and accident insurance for the benefit of its members. Funds with which to purchase this insurance are derived, in part, from charges for admission to dances sponsored by members of the police department. All of the proceeds from the admissions are applied to the purchase of the insurance described. Held, where the proceeds from admissions to a dance, or other similar affair, are used exclusively to provide the same benefits for members of a police or fire department as those that would inure to then from an independent retirement, pension, or disability fund, the admissions qualify for the exemption provided with respect to policemen's and firemen's disability funds by section 4233(a)(1)(B) of the Internal Revenue Code of 1954. In the instant case, since the benefits derived by the members of the police department from the health and accident insurance are the same as those that they would receive from an independent disability fund, charges for admission to the dances are exempt from the tax. See Revenue Ruling 58-203, page 431, which holds that the exemption provided by section 4233(a)(1)(B) of the Code applies only in respect of admissions all the proceeds of which inure to the benefit of a separate fund maintained by the association exclusively for the requisite statutory purposes, and fixes the requisites for such separate fund.