Tax Management Portfolio No. 450-2nd, Tax-Exempt Organizations — Organizational and Operational Requirements, describes the organizational and operational requirements of organizations exempt from federal income taxation under the Internal Revenue Code of 1986, as amended (the Code). Tax-Exempt Organizations are required to meet both the Organizational Test and the Operational Test in order to qualify for tax-exempt status.
This Portfolio analyzes the organizational requirements of organizations exempt under §501(a)
farmers’ cooperatives, §527
political organizations, §528
homeowners’ associations, and §529
qualified tuition plans. Governmental entities and instrumentalities also are discussed. Charitable trusts and pooled income funds are briefly mentioned. This Portfolio focuses on the various types of public charities and their activities, and distinguishes public charities from private foundations.
In addition to discussing the general operational requirements of §501(c)(3)
organizations, this Portfolio analyzes the operational requirements of hospitals, health care providers, legal assistance and litigation organizations, public works organizations, educational organizations, scientific organizations and other types of charitable organizations. This Portfolio also discusses the legislative and political activities in which tax-exempt organizations are allowed to engage, as well as the restrictions on engaging in a trade or business by these tax-exempt organizations.
The reporting and record-keeping requirements of exempt organizations are discussed in 452
T.M., Tax-Exempt Organizations — Reporting, Disclosure, and Other Procedural Aspects.
Other issues relating to tax-exempt organizations discussed herein are covered in greater detail in other Portfolios, to which reference is made where appropriate.
This Portfolio may be cited as Beckwith and Culbertson, 450-2nd T.M., Tax-Exempt Organizations — Organizational and Operational Requirements.
Table of Contents
I. General Considerations — Introduction
II. Advantages to Tax Exemption
III. Disadvantages to Tax Exemption
IV. Section 501(c) Tax-Exempt Organizations
V. Other Tax-Exempt Organizations
VI. Governmental Entities and Instrumentalities
VII. Section 501(c)(3) Organizations
VIII. Distinction Between Public Charities and Private Foundations
IX. Section 508 Notice Requirements
X. Private Inurement, Private Benefit, and Intermediate Sanctions
XI. Legislative and Political Activities
XII. Engaging in a Trade or Business
XIII. Excise Tax on Accommodation Parties in Tax Shelter Transactions