Estates, Gifts, And Trusts (EGT)

Tax-Exempt Organizations — Trade Associations (Section 501(c)(6)) (Portfolio 454)

  • This portfolio examines in depth the requirements that trade and professional associations must meet to secure and maintain tax-exempt status as trade associations and also discusses the application of the unrelated business income tax to such organizations.

Description

Tax Management Portfolio, Tax-Exempt Organizations — Trade Associations (Section 501(c)(6)), No. 454, examines in depth the requirements that trade and professional associations must meet to secure and maintain tax-exempt status as trade associations and also discusses the application of the unrelated business income tax to such organizations.

The Portfolio analyzes first the general requirements for association exemption imposed by §501(c)(6) and the accompanying regulations, describing both the IRS’s and the courts’ interpretations of those requirements.

The Portfolio then examines the unrelated business income tax, which is linked to the exemption question because the tax is levied on those association activities that, although unrelated to the purposes for which exempt status was granted, are not so significant as to cause loss or denial of exemption.

Complementing these discussions is the examination of the effect of specific activities on the exempt status of associations undertaking those activities. In particular, the Portfolio analyzes IRS’s and the courts’ attitudes toward advertising and promotion activities, trade shows, legislative and political activities, publication activities, certification and standard-setting activities, research, and insurance activities.

Finally, the Portfolio discusses the use of for-profit and nonprofit subsidiary entities, reporting requirements, and relinquishment of exempt status.

This Portfolio may be cited as Riley, 454 T.M., Tax-Exempt Organizations — Trade Associations (Section 501(c)(6)).

Table of Contents

I. Introduction
II. Eligibility for Exemption
III. Sections 501(c)(6) and 501(c)(3) Compared
IV. Unrelated Business Income Tax
V. Subsidiary Entities
VI. Political Activities
VII. Legislative Activities
VIII. Reporting Requirements
IX. Deductibility of Dues and Other Payments to Associations
X. Relinquishing Exempt Status
XI. Conclusion

Richard F. Riley, Jr., Esq. Bloomberg Tax & Accounting
Richard F. Riley, Jr.
Partner
Foley & Lardner, LLP
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