Exempt organizations - Uncle Fed's Tax*Board

Exempt organizations
Accumulation of income
208.1 Obsolete rulings. As a result of the repeal
by the Tax Reform Act of 1969 of section 504
relating to improper accumulations of income,
certain revenue rulings have been declared obsolete.
§301.7805-1. (Sec. 7805, ’86 Code.)
Rev. Rul. 77–278, 1977–2 C.B. 485.
208.2 Title-bolding corporation; indebtedness
reduced. An exempt title-holding corporation
may retain part of its income each year to
apply to indebtedness on property to which it
holds title; the transaction will be treated as if the
income had been turned over to its exempt parent
and the latter had used such income to make a capital
contribution to the title-holding corporation
which, in turn, applied such contribution to the
indebtedness. Income so retained will be treated as
part of the parent’s accumulated income. Superseded
in part and obsoleted in part by Rev. Rul.
77-429. §§1.501(c)(2)-1, 1.504-1. (Secs. 501,
504; ’86 Code.)
Rev. Rul. 67-104, 1967-1 C.B. 120.
208.3 Title-bolding corporation; indebtedness
reduced. An exempt title-holding corporation
may retain part of its income each year to
apply tO indebtedness on property to which it
holds title; the transaction will be treated as if the
income had been turned over to the exempt parent
and the latter had used such income to make a capital
contribution to the title-holding corporation
which, in turn, applied such contribution to the
indebtedness. Rev. Rul. 67–104 superseded in part
and obsoleted in part. §1.501(c)(2)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 77-429, 1977-2 C.B. 189.
Charitable contributions
(See: Charitable contributions)
General
210.1 Change in accounting period. A simplified
method is provided under which certain organizations
exempt under section 501(a) may
change their annual accounting periods. Rev.
Procs. 769 and 79–2 modified and, as modified,
superseded. §1.442–1. (Sec. 601.204, S.P.R.; Sec.
442, ’86 Code.)
Rev. Proc. 85-58, 1985-2 C.B. 740.
210.2 Change in accounting period; group
basis; Form 1128. The procedure and conditions
are set forth whereby certain exempt central organizations
may obtain expeditious approval of a
group change in accounting period for its subordinate
organizations. Modified by Rev. Proc.
79-3. §1.442-1. (Sec. 601.204, S.P.R.; Sec. 442,
’86 Code.)
Rev. Proc. 76-10, 1976-1 C.B. 548.
210.3 Change in accounting period; group
basis; Form 1128. An exempt central organization
seeking expeditious approval for a group
change of annual accounting period in accordance
with Rev. Proc. 76–10 should file Form 1128 with
the Service Center where it files its annual Form
990. Rev. Proc. 76-10 modified. §1.442-1. (Sec.
601.204, S.P.R.; Sec. 442, ’86 Code.)
Rev. Proc. 79-3, 1979-1 C.B. 483.
210.4 Charitable trusts; filing requirements.
Filing requirements for charitable and split-interest
trusts are provided. Rev. Proc. 73–29 superseded.
(Sec. 601.602, S.P.R.)
Rev. Proc. 83-32, 1983-1 C.B. 723.
210.5 Church-affiliated organizations;
information returns. Certain church-affiliated
organizations that are internally supported are
relieved from filing annual information returns.
Rev. Rul. 83-23 supplemented and Notice 84-2
superseded. §1.6033–2. (Sec. 601.602, S.P.R.;
Sec. 6033, ’86 Code.)
Rev. Proc. 86-23, 1986-1 C.B. 564.
210.6 Credit unions; State chartered. A form
of statement furnished to applicant credit unions
by the Credit Union National Association is
acceptable as meeting the requirements relating to
the evidence to be filed by State chartered credit
unions claiming exemption from tax. (Sec. 501,
’86 Code.)
Rev. Proc. 56-2, 1956-1 C.B. 1017.
210.7 Cumulative List of Organizations. The
extent to which contributors may rely on the listing
of organizations in Publication No. 78, Cumulative
List of Organizations, for purposes of
deducting contributions under section 170 and for
making grants under section 4945, is provided.
Rev. Proc. 72-39 superseded. §§170A-1,
1.501(c)(3)-1, 53.4945-5. (Sec. 601.105, S.P.R.;
Secs. 170, 501, 4945, 7428, ’86 Code.)
Rev. Proc. 82-39, 1982-2 C.B. 759.
210.8 Disclosure; public inspection; availability
of material. Guidance is provided to taxexempt
organizations regarding recently enacted
legislation on: (1) Disclosure of nondeductibility
of contributions; (2) Public inspection of annual
returns and applications for tax-exempt status; and
(3) Disclosure of the availability of material free
or at a nominal charge from the federal government.
Notice 88–120, 1988–2 C.B. 454.
210.9 Dissolution; state statutes providing for
the distribution of assets. A list identifying
which states have statutes providing for the distribution
of assets upon dissolution of nonprofit
trusts, corporations, and unincorporated associations
that satisfy the provisions of section
1.501(c)(3)-1(b)(4) is provided. §1.501(c)(3)-1.
(Sec. 601.201, S.P.R.; Sec. 501, ’86 Code.)
Rev. Proc. 82-2, 1982-1 C.B. 367.
210.10 Educational institution. The amendment
made to section 151(e)(4)(A) by the Tax
Reform Act of 1976 does not affect the definition
of “educational institution,” “educational establishments,”
or “other educational institutions” as
used in the income tax conventions with the
United Kingdom, Japan, Germany, and Switzerland.
Rev. Rul. 58-433 distinguished and Rev.
Ruls. 70-196 and 72-106 amplified. §§1.151-3,
1.170A-9. (Secs. 151, 170; ’86 Code.)
Rev. Rul. 81-79, 1981-1 C.B. 605.
210.11 Effective period of ruling or determination
letter. Rulings and determination letters
granting exemption from tax to an organization,
contributions to which are deductible, are effective
only so long as there are no material changes
in the character of the organization, its purposes,
or its methods of operation. Failure to notify the
District Director of any such changes may result
in retroactive revocation of the exempt status.
§§1.501(a)-1, 1.6033-1. (Secs. 501, 6033; ’86
Code.)
Rev. Rul. 58–617, 1958–2 C.B. 260.
210.12 Homeowners association; recovery
from condominium builder; adjustment to
owner’s basis. A homeowners association was
awarded a judgment against the builder of a condominium
development for defects in construction
of the common elements of the development.
The award represents a recovery of capital that
reduces the individual unit owners’ bases in their
respective property interests in the development.
However, their bases will be increased to the
extent of any capital assessments for necessary
capital repairs or replacements or to the extent the
association retains the award for similar purposes.
§§1.528-1, 1.1016-2. (Secs. 528, 1016; ’86
Code.)
Rev. Rul. 81-152, 1981-1 C.B. 433.
210.13 Homeowners association; revocation
of election. A homeowners association may not
revoke elections made under section 528 in previous
tax years in order to obtain the benefit of a
net operating loss incurred in a subsequent year.
§1.528-8 (Sec. 528, ’86 Code.)
Rev. Rul. 82-203, 1982–2 C.B. 109.
210.14 Homeowners association; revocation
of election. Permission is granted to a homeowners
association to revoke an election made under
section 528 because of inadequate tax advice provided
by its professional tax advisor. §1.528–8.
(Sec. 528, ’86 Code.)
Rev. Rul. 83-74, 1983-1 C.B. 112.
210.15 Hurricane Andrew and Iniki; relief.
This notice provides relief from certain provisions
of the Code for organizations giving emergency
assistance to victims of Hurricanes Andrew and
Iniki. The relief is available until December 31,
1992, or later if an extension by the Service is
determined to be necessary or appropriate.
Notice 92-45, 1992-2 C.B. 375.
210.16 Information returns; church-affiliated
college. A church-affiliated college exempt
from tax under section 501(c)(3) that trains ministers
and lay workers to serve religious functions in
the church is an integrated auxiliary of a church
within the meaning of reg. 1.6033–2(g)(5)(i) and
is not required to file an annual return on Form
990. §1.6033-2. (Sec. 6033, ’86 Code.)
Rev. Rul. 77-381, 1977–2 C.B. 462.
210.17 Information returns; community
chest contributions. A charitable organization
supported primarily by contributions from a community
chest is not required to file Form 990-A for
years beginning after January 1, 1970, but must
file annual information returns for years beginning
after December 31, 1969, unless excepted
from filing. Rev. Rul. 67–271 superseded.
§§1.6033-1, 1.6033-2. (Sec. 6033, ’86 Code.)
Rev. Rul. 71-554, 1971-2 C.B. 405.

210.18 Information returns; failure to file.
Failure or inability to file the required information
return or to comply with the provisions of section
6033 and the regulations thereunder may result in
the termination of the exempt status of an organization
previously held exempt, on the grounds
that the organization has not established that it is
observing the conditions required for continuation
of an exempt status. §§1.501(a)–1, 1.6033–1.
(Secs. 501, 6033; ’86 Code.)
Rev. Rul. 59-95, 1959-1 C.B. 627.
210.19 Information returns; Federal credit
unions; group return. A group information
return, Form 990, may be filed by the Bureau of
Federal Credit Unions covering all of the exempt
Federal credit unions under its supervision. Rev.
Rul. 55-133 superseded. §1.6033-1. (Sec. 6033,
’86 Code.)
Rev. Rul. 60-169, 1960-1 C.B. 621.
210.20 Information returns; hospital;
patients under government care programs.
Payments received by an exempt hospital from the
Federal, State, or local governments for care of
patients under government programs do not constitute
“funds contributed by the U.S. or any State”
for purposes of the requirement for the filing of
annual information returns. I.T. 3710 superseded.
§§1.501(c)(3)-1, 1.6033-1. (Secs. 501, 6033; ’86
Code.)
Rev. Rul. 67-397, 1967-2 C.B. 408.
210.21 Information returns; incomplete
return filed. An exempt organization that, without
reasonable cause, files an incomplete information
return on Form 990 by omitting material
information has failed to file a return for purposes
of the penalty imposed by section 6652(d)(1) and
the period of limitations on assessment and collection
of tax. §§1.6033-2, 301.6501(c)-1,
301.6652-2. (Secs. 6033, 6501, 6652; ’86 Code.)
Rev. Rul. 77–162, 1977-1 C.B. 400.
210.22 Information returns; insurance premiums
as gross receipts. In determining whether
the gross receipts of a local lodge of a tax-exempt
fraternal beneficiary society are not more
than $5,000 and whether it is excepted, as provided
in section 6033(a)(2)(A)(ii), from the requirements
for filing information returns, insurance
premiums collected from its members, maintained
separately without use or benefit, and remitted to
its parent organization which issued the insurance
contracts are not gross receipts of the local lodge.
§§1.501(c)(8)-1, 1.6033-2. (Secs. 501, 6033; ’86
Code.)
Rev. Rul. 73-364, 1973-2 C.B. 393.
210.23 Information returns; organizations
not required to file. A current list is provided of
those categories of exempt organization that are
not required to file an annual information return on
Form 990. Rev. Proc. 80-44 modified and superseded.
§1.6033–2. (Sec. 601.602, S.P.R.; Sec.
6033, ’86 Code.)
Rev. Proc. 83-23, 1983-1 C.B. 687.
210.24 Information returns; State credit
unions; group return. A group information
return, Form 990, may be filed by a State agency
for all exempt state-chartered credit unions under
its control and supervision in lieu of separate
returns by each credit union. §1.6033–1. (Sec.
6033, ’86 Code.)
Rev. Rul. 60-364, 1960-2 C.B. 382.
210.25 Information returns; student government
association. A student government association
that is an integral part of and controlled by a
university is not required to file an annual
information return for years beginning before January
1, 1970, but must file returns for years beginning
after 1969, unless excepted from filing. Rev.
Rul. 56-133 superseded. §§1.6033-1, 1.6033-2.
(Sec. 6033, ’86 Code.)
Rev. Rul. 71–553, 1971–2 C.B. 404.
210.26 Information returns; substitute
forms. The forms that may be filed as substitutes
for the detailed income statement and balance
sheet portions (currently Part II) of Form 990 are
set forth. Rev. Proc. 61–3 superseded. §1.6033–2.
(Sec. 601.602, S.P.R.; Sec. 6033, ’86 Code.)
Rev. Proc. 794, 1979-1 C.B. 485.
210.27 Inspection of exemption applications.
Under specified conditions, public inspection may
be permitted of certain applications for exemption
filed by organizations described in sections 501(c)
and 501(d) and held to be exempt under section
501(a). The procedures to be followed with
respect to such public disclosure are set forth.
§§1.501(a)-1, 301.6104-1. (Sec. 601.702, S.P.R.;
Secs. 501, 6104, ’86 Code.)
Rev. Proc. 58-20, 1958-2 C.B. 1134.
210.28 Interest equalization tax. An organization
exempt under section 501 is subject to the
interest equalization tax on its acquisitions by purchase
or gift of stock of a foreign issuer or debt
obligations of a foreign obligor. §1.501(a)–1.
(Secs. 501, 4911; ’86 Code.)
Rev. Rul. 67-81, 1967-1 C.B. 309.
210.29 Legislative activities; dues and other
payments. Dues and other payments made to an
“action” organization exempt under section
501(c)(4) are subject to the provisions of reg.
1.162–20(c)(3) where a substantial part of such
organization’s activities consists of attempting to
influence legislation by urging the public to contact
members of a legislative body. §§1.162-20.
(Sec. 162, ’86 Code.)
Rev. Rul. 67-163, 1967-1 C.B. 43.
210.30 Political organization; “exempt function
income”. A political organization sold reproductions
of an original work of art, which was not
of a political nature, over a period of several
months to raise operating funds. The sales were
not undertaken to encourage support (other than
financial) for the organization or for any individual
seeking political office. The proceeds
were not “exempt function income.” (Sec. 527,
’86 Code.)
Rev. Rul. 80-103, 1980-1 C.B. 120.
210.31 Political organization; nonexempt
function income; state income taxes. State
income taxes paid by apolitical organization on its
nonexempt function income are deductible in
computing its taxable income. §§1.164-1,
1.527-4. (Secs. 164, 527; ’86 Code.)
Rev. Rul. 85-115, 1985-2 C.B. 172.
210.32 Political organization; surplus campaign
funds; convention expenses. Amounts
expended to enable an elected legislator to attend
a political party’s national convention as a delegate,
which are paid from surplus funds from an
earlier campaign maintained in a separate bank
account qualifying as a political organization, are
not includible” in the legislator’s gross income.
(Sec. 527, ’86 Code.)
Rev. Rul. 79-12, 1979-1 C.B. 208.
210.33 Political organization; surplus campaign
funds; voter research. Amounts expended
for voter research, public opinion polls, and voter
canvasses on behalf of an elected legislator who
becomes a candidate for another political office,
which are paid from surplus funds from an earlier
campaign maintained in a separate bank account
qualifying as a political organization, are not
includible in the leeislator’s gross income. (Sec.
527, ’86 Code.)
Rev. Rul. 79-13. 1979-1 C.B. 208.
Exempt organizations
210.34 Private school racially nondiscriminatory
policies; recordkeeping requirements.
Guidelines and recordkeeping requirements are
set forth for determining whether private schools,
applying for or presently recognized as having
exemption from tax, have racially nondiscriminatory
policies as to students. Rev. Proc. 72–54
superseded. §1.501(c)(3)–1. (Sec. 601.201,
S.P.R.; Sec. 501, ’86 Code.)
Rev. Proc. 75-50, 1975-2 C.B. 587.
210.35 Religious and apostolic organizations;
membership determined. In determining the pro
rata shares of a religious and apostolic association’s
or corporation’s taxable income to be
included in the gross income of its members, the
membership is determined by applicable state law,
the rules of the organization, and the consent of
individuals with respect to their status as members.
Parents may consent to their children’s membership
to the extent allowed under applicable
state law. §1.501(d)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-295, 1977-2 C.B. 196.
210.36 Reorganization; application for
exemption. Four examples of reorganization of
qualified exempt organizations are set forth in
which a new legal entity has been created which
requires the filing of new applications to establish
that the new entity qualifies for exemption.
§1.501(a)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-390, 1967–2 C.B. 179.
210.37 Reporting cash received. Guidance is
provided to section 501(a) exempt organizations
on meeting the requirements of section 60501 of
the Code.
Notice 90-61, 1990-2 C.B. 347.
210.38 Returns; information; later held taxable;
limitation period. An organization claiming
exemption under section 501(a) will not meet
the return requirements when, prior to the time it
establishes its tax-exempt status, it files an
information return, Form 990 or 990-A, in lieu of
an income tax return. However, where section
6501(g)(2) applies, such an information return
when filed will be considered as starting the running
of the period of limitations on assessment
should the organization be held to be taxable. Rev.
Rul. 54-393 distinguished. §§1.501(a)-1,
1.6033-1, 301.6501(g)-1. (Secs. 501, 6033, 6501;
’86 Code.)
Rev. Rul. 60-144, 1960-1 C.B. 636.
210.39 Revocation of exemption; assessment;
limitation period. In the event the exempt status
of an educational organization excepted from filing
annual information returns is revoked, the
periods of limitation provided by section 6501(a)
will not bar assessment of any income tax for the
years the organization has not, in fact, filed
returns. 5301, 6501(a)–1. (Sec. 6501, ’86 Code.)
Rev. Rul. 71-55, 1971–1 C.B. 403.
210.40 Revocation of exemption; retroactive.
The Commissioner was not estopped from revoking
a ruling holding that an automobile club was
exempt from income tax where such ruling was
based on a mistake of law, nor was the retroactive
revocation an abuse of discretion. The statute of
limitations on assessment of the consequent deficiencies
began to run from the date returns were
actually filed, not from the date they were due to
be filed. §§39.41-1, 39.54-1, 39.101(9)-1,
39.275-1. (Secs. 41, 54, 101, 275, 3791(b), ’39
Code; Secs. 501, 6018, 6501, 7805, ’86 Code.)
Automobile Club of Michigan, 353 U.S. 180,
Ct. D. 1807, 1957–1 C.B. 513.
210.41 Revocation of exemption; unrelated
business income tax. An organization whose
exemption from tax under section 501(a) is
revoked prospectively under the authority of section
7805(b) is subject to the unrelated business
income tax for the period covered by section

Exempt organizations
7805(b) relief. §§1.511–2, 301.7805-1. (Secs.
511, 7805; ’86 Code.)
Rev. Rul. 78–289, 1978–2 C.B. 180.
210.42 Revocation of ruling letter; declaratory
judgment; injunctive relief. An action for
declaratory judgment and injunctive relief, to
enjoin the Service to reinstate a letter ruling that a
nonprofit educational organization qualifies for
tax-exempt status and that contributions to the
organization will constitute charitable deductions,
is barred by the prohibition in section 7421 against
suits restraining the assessment or collection of
any tax. (Sec. 7421, ’86 Code.)
“Americans United” Inc., 416 U.S. 752, Ct. D.
1963, 1974-2 C.B. 401.
210.43 Revocation of ruling letter; suit to
restrain assessment or collection. A court may
not, prior to the assessment and collection of any
tax, enjoin the Revenue Service from revoking a
ruling letter declaring that an organization qualifies
for tax-exempt status and from withdrawing
advance assurance to donors that contributions to
the organizations will constitute charitable deductions.
(Sec. 7421, ’86 Code.)
Bob Jones University, 416 U.S. 725, Ct. D.
1962, 1974-1 C.B. 354.
210.44 Royalties; interest in patent; donated
by owner. The fair market value of an interest in
a patent donated to a tax-exempt organization by
the owner of the patent is deductible as a charitable
contribution in the taxable year such property is
transferred. Any royalties paid to the tax-exempt
organization as a result of the transfer constitutes
income to the organization. (Sec. 170, ’86 Code.)
Rev. Rul. 58-260, 1958–1 C.B. 126.
210.45 Rulings; conformed copy of document.
The standards for acceptance of a “conformed
copy” of a document required to be submitted
by organizations applying for exemption
under section 501 are set forth. §1.501(a)–1. (Sec.
601.201, S.P.R.; Sec. 501, ’86 Code.)
Rev. Proc. 68–14, 1968–1 C.B. 768.
210.46 Rulings; effective date of exempt status.
Rulings granting exemption are generally
effective as of the date of incorporation or organization,
unless the incorporation simply changed
the legal form of an existing “exempt type” organization,
in which case there is incorporated in the
ruling a statement with respect to the period covered.
§39.101–1. (Sec. 101, ’39 Code; Sec. 501,
’86 Code.)
Rev. Rul 54–134, 1954-1 C.B. 88.
210.47 Rulings; procedures; appeal and protest
of adverse determinations. Procedures are
provided for applying for recognition of exemption
under section 501 and 521 and for revoking or
modifying exemption rulings and determination
letters. Rev. Proc. 80–25 superseded and Rev.
Proc. 76-34 modified. 1.170A-1, 1.501(a)-1,
1.509(a)-1, 1.521-1, 53.4942(b)-1, 1.9100-1.
(Sec. 601.201, S.P.R.; Secs. 170, 501, 509, 521,
4942, 7428, ’86 Code.)
Rev. Proc. 84-46, 1984-1 C.B. 541.
210.48 Rulings; procedures; group exemption
letters. Procedures are set forth under which
recognition of exemption may be obtained on a
group basis for subordinate organizations affiliated
with and under the general supervision or
control of a central organization. Rev. Proc. 77–38
superseded. §1.501(a)–1. (Sec. 601.201, S.P.R.;
Sec. 501, ’86 Code.)
Rev. Proc. 80-27, 1980-1 C.B. 677.
210.49 Rulings; public interest law firms.
Guidelines for the issuance of advance rulings of
exemption to public interest law firms and testing
the charitable character of such organizations
already holding favorable rulings. Amplified to
provide procedures under which such organizations
may accept attorneys’ fees for their services.
§1.501(c)(3)-1. (Sec. 601.201, S.P.R.; Sec. 501,
’86 Code.)
Rev. Proc. 71–39, 1971–2 C.B. 575; Rev. Proc.
75-13, 1975-1 C.B. 662.
210.50 Rulings; publicly supported organization.
The requirement of reg. 1.170A-9(e)(5)(i)
that an organization must have been in existence
for at least one taxable year consisting of at least
eight months in order to obtain a ruling or determination
letter that it is not a private foundation by
virtue of being described in sections 509(a)(1) and
170(b)(1)(A)(vi) does not apply to section
170(b)(1)(A)(iv) organizations. §§1.170A-9,
1.509(a)-2. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 77-407, 1977-2 C.B. 77.
210.51 Rulings; publicly supported organization;
advance ruling. A newly created organization
that can reasonably be expected to meet the
requirements of section 170(b)(1)(A)(vi) for its
first three years of existence may receive a ruling
or determination letter that it will be treated as a
publicly-supported organization even though its
first taxable year consists of less than eight
months. §1.170A-9. (Sec. 170, ’86 Code.)
Rev. Rul. 75-211, 1975-1 C.B. 86.
210.52 Rulings; publicly supported organization;
advance ruling. An organization described
in section 501(c)(3) having a first taxable year
consisting of exactly eight months and that meets
the requirements of section lo is
entitled to a ruling or determination letter that it
is not a private foundation. §1.170A-9. (Sec. 170,
’86 Code.)
Rev. Rul. 76-27, 1976-1 C.B. 64.
210.53 Rulings; publicly supported organization;
advance ruling period. The advance ruling
period will be three years for a newly created publicly
supported organization described in section
170(b)(1)(A)(vi) having a first taxable year consisting
of more than seven but less than eight
months. §1.170A-9. (Sec. 170, ’86 Code.)
Rev. Rul. 74-487, 1974-2 C.B. 82.
210.54 Rulings; publicly supported organization;
extended advance ruling. A newly created
organization, exempt from tax under section
501(c)(3), that wishes to obtain an extended
advance ruling for purposes of determining
whether it will qualify as a publicly supported
organization must submit a request for the
extended advance ruling at the same time as its
request for an initial advance ruling. §§1.170A-9,
1.509(a)-3. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 77-115, 1977-1 C.B. 154.
210.55 Rulings; religious and apostolic organizations.
Information to be included in exemption
applications filed by religious and apostolic
organizations is set forth. Rev. Proc. 68–24 superseded.
§1.501(a)–1. (Sec. 601.201, S.P.R.; Sec.
501, ’86 Code)
Rev. Proc. 72-5, 1972-1 C.B. 709.
210.56 Rulings; technical advice to District
Directors and Appeals Office. Procedures are
provided for furnishing technical advice to key
District Directors or Appeals Offices on employee
plan and exempt organization matters. Modified
by Rev. Proc. 83-41. (Sec. 601.201, S.P.R.)
Rev. Proc. 80-26, 1980-1 C.B. 671.
210.57 Rulings; timely notification of
application for exemption. An organization that
has no gross receipts in its first two taxable years,
but receives more than $15,000 in contributions
from the general public in its third taxable year,
meets the notice requirement of section 508(a) if
it files for exemption under section 501(c)(3)
within 90 days after the close of its third taxable
year. It will be recognized as exempt as of the date
of its organization. Rev. Rul. 80-113 modified.
§§1.501(c)(3)-1, 1.508-1. (Secs. 501, 508; ’86
Code.)
Rev. Rul. 85-173, 1985-2 C.B. 164.
210.58 Rulings; untimely notification;
advance ruling period. An organization having
no financial support filed the notice required by
section 508(a) more than 15 months after the end
of the month it was organized. The organization
may obtain an advance ruling treating it as an organization
described in sections 170(b)(1)(A)(vi)
and 509(a)(1) for the period beginning on the date
the notice was filed, which is the date the organization
is recognized as exempt under section
501(c)(3). §§1.170A-9, 1.508-1, 1.509(a)-2.
(Secs. 170, 508, 509; ’86 Code.)
Rev. Rul. 80-113, 1980-1 C.B. 58.
210.59 Rulings and determination letters;
issuance procedures. Procedures are provided for
issuing rulings and determination, opinion, notification,
and information letters and for entering
into closing agreements on specific issues in em
ployee plans and exempt organization matters.
Rev. Proc. 80–24 superseded; Rev. Procs. 76-47
and 80-39 modified. Modified by Rev. Proc.
83-41. (Sec. 601.201, S.P.R.)
Rev. Proc. 83–36, 1983-1 C.B. 763.
210.60 Rulings or determination letters;
court determined exemption. The procedures
are provided under which an organization that has
been determined by a court to qualify as an exempt
organization may obtain a ruling or determination
letter recognizing such qualification for the tax
years subsequent to that involved in the litigation.
Rev. Proc. 80-25 amplified. §§1.501(a)–1,
1.508–1, 1.521–1. (Sec. 601.201, S.P.R.; Secs.
501, 508, 521, ’86 Code.)
Rev. Proc. 80-28, 1980-1 C.B. 680.
210.61 Separate charitable fund. Exempt
organizations, other than those exempt under section
101(6) of the ’39 Code, may establish a separate
fund exclusively for religious, charitable,
scientific, literary, or educational purposes, apart
from other funds, so that contributions to the fund
will be deductible. §§39.23(0)-1, 39.23(q)–1,
39.101(6)-1. (Secs. 23(o), 23(q), 101, ’39 Code;
Secs. 170, 501, ’86 Code.)
Rev. Rul. 54-243, 1954–1 C.B. 92.
210.62 Status; application for recognition.
An organization applying for recognition of
exemption under section 501(c)(3), whose existence
as a corporation under the applicable State
law begins on the date of the filing of its articles of
incorporation in the appropriate State office, is
considered “organized” on that filing date for purposes
of applying the notice provisions of section
508(a). §1.508-1. (Sec. 508, ’86 Code.)
Rev. Rul. 75–290, 1975-2 C.B. 215.
210.63 Status; application for recognition. A
religious organization that applies for recognition
of its status more than 15 months from the end of
the month in which it is organized will not be
treated as a section 501(c)(3) organization for the
period before its application was filed and services
performed by its employees during that period are
not excepted from employment for FICA and
FUTA purposes. §1.508-1. (Secs. 508, 3121,
3306; ’86 Code.)
Rev. Ru1. 76-262, 1976-2 C.B. 310.
210.64 Status; application for recognition.
An organization that filed an application for recognition
of exemption under section 501(c)(3) in
May 1976, following its incorporation in November
1975 to succeed an unincorporated association
that had operated for three years without filing an
application, will be recognized as exempt from the
date of mcorporation. An advance ruling concerning
the organization’s private foundation status

Exempt organizations
may be requested on the basis of support received
since incorporation. §§1.508–1, 1.509(a)–3.
(Secs. 508, 509; ’86 Code.)
Rev. Rul. 77-469, 1977-2 C.B. 196.
210.65 Status; application for recognition.
An organization that is organized and operated
exclusively for charitable purposes and is not a
private foundation applied for recognition of its
exempt status six years after it was incorporated.
During its first three taxable years the organization’s
aggregate gross receipts were less than
$15,000. During the fourth year its aggregate
gross receipts for that year and the preceding two
taxable years were greater than $15,000. The organization
is not exempt under section 501(c)(3)
from the beginning of its fourth year until the date
it filed the required notice. Consideration will be
given in applying the Commissioner’s discretionary
authority under reg. 1.9100-1 to extend the
time for satisfying the notice requirement.
§§1.508-1, 1.9100-1. (Sec. 508, ’86 Code.)
Rev. Rul. 80-259, 1980-2 C.B. 192.
210.66 Status; application for recognition.
An organization that is organized and operated
exclusively for charitable purposes and is not a
private foundation filed Form 1023 more than 90
days after the end of its second taxable year. The
organization’s gross receipts for the first taxable
year were less than $7,500 but its aggregate gross
receipts for the first and second taxable years
exceeded $12,000. The organization did not satisfy
the test under regs. 1.508–1(a)(3)(ii)(b) and is
not exempt under section 501(c)(3) from the date
it was incorporated until the date it filed the
required notice. Consideration will be given to
applying the Commissioner’s discretionary
authority under regs. 1.9100-1 to extend the time
for satisfying the notice requirement. §§1.508-1,
1.9100-1. (Sec. 508, ’86 Code.)
Rev. Rul. 81-177, 1981-2 C.B. 132.
210.67 Status; application for recognition;
change in enabling instrument; 15-month notification
period. Examples illustrate the effective
date for recognition of exemption under section
501(c)(3) when an organization makes a non-substantive
amendment to its enabling instrument.
The examples involve the computation of the
15-month notification period under reg.
1.508–1(a)(2)(i). Rev. Proc. 84-46 amplified.
§§1.501(c)(3)-1, 1.508-1(a), 1.9100-1. (Sec.
601.201, S.P.R.; Secs. 501, 508, ’86 Code.)
Rev. Proc. 84-47, 1984-1 C.B. 545.
210.68 Status; application for recognition;
date of filing The date of notice for purposes of
section 508(a) is the date of the U.S. postmark
stamped on the cover in which an exemption
application is mailed or, if no postmark appears on
the cover, the date the application is stamped as
received by the Service. §§1.508–1, 301.7502-1.
(Secs. 508, 7502; ’86 Code.)
Rev. Rul. 77-114, 1977-1 C.B. 152.
210.69 Status; application for recognition;
FICA exemption. Forms SS-15 and SS-15a, filed
in 1961 by a nonprofit charitable organization to
waive its exemption from social security taxes
pursuant to section 3121(k) were valid when filed
even though the organization did not file an
application for recognition of its section 501(c)(3)
status until 1976. §1.501(a)–1. (Sec. 501, 3121;
’86 Code.)
Rev. Rul. 77-315, 1977-2 C.B. 355.
210.70 Status; application for recognition;
requirements. Application instructions and
requirements are provided for exemption from
federal income tax under section 501(c)(25) of the
Code.
Notice 87-18, 1987-1 C.B. 455.
210.71 Status; application for recognition;
untimely notice. An organization that otherwise
qualifies for exemption under both sections
501(c)(3) and 501(c)(4) filed the notice required
by section 508(a) more than 15 months after the
end of the month in which it was organized. The
organization may apply for and obtain exemption
under section 501(c)(4) from the date of its inception
to the date the exemption under section
501(c)(3) becomes effective. §§1.501(c)(3)-1,
1.501(c)(4)-1, 1.508-1. (Secs. 501, 508; ’86
Code.)
Rev. Rul. 80-108, 1980-1 C.B. 119.
210.72 Subsidiary of exempt parent. A separately
incorporated subsidiary of an exempt organization
may not consider itself exempt merely
because of its relationship to the exempt parent.
Further, the inclusion of the financial information
of the subsidiary on the information return of the
parent does not satisfy the reporting requirements
of the subsidiary. §§1.501(a)–1, 1.6033–1. (Secs.
501, 6033; ’86 Code.)
Rev. Rul. 67-174, 1967-1 C.B. 119.
210.73 Title holding corporations or trusts;
application instructions and requirements.
Notice 87–18 is modified and supplemented to
allow certain corporations to include organizational
provisions in by-laws instead of articles of
incorporation, and to provide additional requirements
with respect to holdings and activities of
section 501(c)(25) organizations.
Notice 88-121, 1988-2 C.B. 457.
210.74 Transition rules; lobbying expenses.
With respect to dues assessed or received by certain
tax-exempt organizations before 1994, that
are allocable to nondeductible lobbying and political
expenditures paid or incurred after 1993, the
organizations may provide their members with
required notices. In lieu of paying a tax on those
expenditures, an organization may adjust notices
provided for the following taxable year.
Notice 93-55, 1993-2 C.B. 339.
Instrumentalities of United States
212.1 National farm loan associations. The
Revenue Act of 1951 does not affect the exempt
status of national farm loan associations. (Sec.
101, ’39 Code; Sec. 501, ’86 Code.)
Rev. Rul. 133, 1953-2 C.B. 155.
212.2 Nonappropriated welfare fund; Armed
Forces. A nonappropriated welfare fund, established
and operated under Armed Forces Regulations,
is considered an activity of the U.S. Government
and is exempt from tax; it is not required to
file an application for exemption or to file income
tax returns. §1.501(a)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-249, 1967-2 C.B. 179.
212.3 Railroad partially owned by R.F.C. A
reorganized railroad company which has issued all
its first mortgage bonds and the majority of its
shares of common stock to the Reconstruction
Finance Corporation in satisfaction of a debt, and
has also issued and set aside shares of its common
stock for subscription through warrants issued to
private creditors, is not exempt from tax.
§§39.22(a)-1, 39.101(14)-1. (Secs. 22(a), 101,
’39 Code; Secs. 61, 501, ’86 Code.)
Rev. Rul. 56-93, 1956-1 C.B. 601.
Private foundations
214.1 Adjusted net income; pre-1970 principal
and interest received. Repayments of principal
received by a private foundation in taxable
years beginning after 1969 on loans made in prior
years to individuals for charitable purposes are not
includable in its gross income to determine its
adjusted net income for purposes of section
4942(f). However, payments of interest on such
loans are includible. §53.4942(a)-2. (Sec. 4942,
’86 Code.)
Rev. Rul. 75-443, 1975-2 C.B. 449.
214.2 Animal clinic. An exempt organization
that maintains a free clinic for animals does not
qualify as a hospital or an organization that provides
medical or hospital care within the meaning
of section 170(b)(1)(A)(iii) and is a private
foundation. §§1.170A-9, 1.509(a)-2. (Secs. 170,
509; ’86 Code.)
Rev. Rul. 74-572, 1974-2 C.B. 82.
214.3 Appeal of certain taxes. Procedures set
forth the appeal process regarding certain taxes
imposed on exempt organizations and farmers
cooperatives and on certain individuals subject to
the excise taxes imposed under Chapter 42 of
Code relating to private foundations.
§§1.501(a)-1, 1.507-1, 1.511-1, 1.521-1,
1.641(a)-1, 1.1383-1, 53. 4941(a)-1,
53.4941(b)-1, 53.4944-1, 53.4944-2, 53.4945-1,
53.4947-1. (Sec. 601.105, S.P.R.; Secs. 501, 507,
511, 521, 527, 641, 1383, 4941, 4944, 4945, 4947,
’86 Code.)
Rev. Proc. 77-31, 1977–2 C.B. 540.
214.4 Association of churches; different
denominations. An exempt organization whose
membership is comprised of churches of different
denominations qualifies as an association of
churches within the meaning of section
170(b)(1)(A)(i) for purposes of classification as an
organization that is not a “private foundation”.
§§1.170A-9, 1.509(a)-3. (Secs. 170, 509; ’86
Code.)
Rev. Rul. 74-224, 1974–1 C.B. 61.
214.5 Blood bank; hospitals collecting fees.
Hospitals that receive blood from a nonprofit
blood bank under an agreement making each hospital
responsible for collecting payment for the
blood and remitting the payments to the blood
bank, and requiring the hospital to pay for the
blood if it fails to collect from the patient, are acting
as agents for the blood bank. These amounts
the hospital collects are treated as received by the
blood bank directly from patients in determining
if it satisfies the one-third support test under section
509(a)(2)(A)(ii) as an organization not a private
foundation. §1.509(a)–3. (Sec. 509, ’86
Code.)
Rev. Rul. 75–387, 1975–2 C.B. 216.
214.6 Charitable trusts; filing requirements.
Filing requirements for charitable and split-interest
trusts are provided. Rev. Proc. 73–29 superseded.
(Sec. 601.602, S.P.R.)
Rev. Proc. 83-32, 1983–1 C.B. 723.
214.7 Charitable trusts; nonexempt; investment
income; unrelated income. Unrelated business
income taxable under section 641(a) is not
includable in the gross investment income of a section
4947(a)(1) nonexempt charitable trust in
determining the tax on its investment income.
§53.4940-1. (Sec. 4940, ’86 Code.)
Rev. Rul. 74-497, 1974-2 C.B. 383.
214.8 Charitable trusts; nonexempt; substantial
contributor. An organization that is a
nonexempt charitable trust described in section
4947(a)(1) that has made contributions to a private
foundation in excess of the limitation in section
507(d)(2) is not a “substantial contributor” within
the meaning of that section for purposes of the tax
on self-dealing under section 4941. The exception
provided in reg. 1.507–6(a)(2) for section
501(c)(3) organizations also applies to nonexempt
charitable trusts described in section 4947(a)(1).
§1.507-6. (Sec. 507, ’86 Code.)
Rev. Rul. 73-455, 1973-2 C.B. 187.
214.9 Controlled by community trust; contribution
limitation. A trust is operated, supervised,
and controlled by the distribution committee
of a community trust. Each individual donor to
the trust has the right to designate charitable recipients
of the income and corpus of the trust attributable
to the donor’s contribution. The trust is
described in section 170(b)(1)(D) (iii), and the 50

Exempt organizations
percent charitable deduction limitation is applicable
for transfers to the trust. §1.170A-9. (Sec. 170,
’86 Code.)
Rev. Rul. 80-305, 1980-2 C.B. 71.
214.10 Cumulative List of Organizations.
The extent to which contributors may rely on the
listing of organizations in Publication No. 78,
Cumulative List of Organizations, for purposes of
deducting contributions under section 170 and for
making grants under section 4945, is provided.
Rev. Proc. 72-39 superseded. §§1.170A-1,
1.501(c)(3)-1, 53.4945-5. (Sec. 601.105, S.P.R.;
Secs. 170, 501, 4945, 7428; ’86 Code.)
Rev. Proc. 82-39, 1982-2 C.B. 759.
214.11 Depository for annual reports. The
proposal to designate The Foundation Center as a
depository for certain private foundation annual
reports will not be implemented,
Notice 80-2, 1980-1 C.B. 576.
214.12 Disqualified person; control of corporation.
A private foundation, owning 35 percent
of the voting stock of a corporation and having a
foundation manager personally owning the
remaining 65 percent but not holding a position of
authority in the corporation by virtue of being
foundation manager, does not control the corporation
for purposes of the self-dealing provisions of
the Code. §53.4941(d)–1. (Sec. 4941, ’86 Code.)
Rev. Rul. 76-158, 1976-1 C.B. 354.
214.13 Disqualified persons; employee stock
ownership trust. An employee stock ownership
trust holds 30 percent of the stock in a corporation
on behalf of the corporation’s participating
employees, who direct the manner in which the
trust votes the shares. The trust will not be considered
a disqualified person with respect to a private
foundation merely because the corporation is a
substantial contributor to the foundation.
§53.4946-1. (Sec. 4946, ’86 Code.)
Rev. Rul. 81-76, 1981-1 C.B. 516.
214.14 Disqualified person; member of state
legislature. An elected member of a state legislature
who receives a salary of less than $15,000 per
year and an expense allowance of a fixed amount
for the use of which no accounting need be made
to the state, which together amount to more than
$15,000 per year, is a disqualified person by virtue
of being a government official described in section
4946(c)(5). §53.4946-1. (Sec. 4946, ’86 Code.)
Rev. Rul. 77-473, 1977–2 C.B. 421.
214.15 Disqualified persons; employees of
trustee. Employees of a bank designated as the
trustee of a private foundation, who have been
delegated fiduciary responsibility for the day-today
administration and distribution of the trust
funds, are foundation managers within the meaning
of section 4946(b)(1) and are disqualified persons
as defined in section 4946(a)(1)(B) even
though they are ultimately responsible to the bank
directors and officers for their actions with respect
to the trust. §53.4946-1. (Sec. 4946, ’86 Code.)
Rev. Rul. 74-287, 19754-1 C.B. 327.
214.16 Educational; correspondence school.
An exempt organization, not publicly supported,
whose primary activity is providing specialized
instruction by correspondence and that also offers
a five- to ten-day seminar program of personal
instruction for students who have completed the
correspondence course is not an organization
described in section 170(b)(1)(A)(ii) and is a private
foundation. §§1.170A-9, 1.509(a)–2. (Secs.
170, 509; ’86 Code.)
Rev. Rul. 75-492, 1975–2 C.B. 80.
214.17 Educational; elementary school. An
organization providing an elementary education
for children may meet the requirements for an
educational organization and, therefore, is not a
private foundation even though it has no formal
course program or formal classroom instruction.
§1.170-1. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 72-130, 1972-2 C.B. 105.
214.18 Educational; martial arts instruction.
An organization exempt from tax under section
501(c)(3), whose primary activity consists of providing
courses of study in one of the martial arts
consisting of regularly scheduled participatory
exercises and theoretical discussions taught by a
faculty of qualified instructors to a regularly
enrolled student body, is an educational organization
within the meaning of section
170(b)(1)(A)(ii) and, therefore, is not a private
foundation. §§1.170A-9, 1.509(a)-2. (Secs. 170,
509; ’86 Code.)
Rev. Rul. 78-309, 1978-2 C.B. 123.
214.19 Educational; student intern program.
An organization exempt under section 501(c)(3),
that conducts an internship program placing college
and university students with cooperating government
agencies for a semester, is not an educational
organization described in section
170(b)(1)(A)(ii) and is a private foundation unless
otherwise described in section 509(a).
§§1.170A-9, 1.509(a)-1. (Secs. 170, 509; ’86
Code.)
Rev. Rul. 76-417, 1976-2 C.B. 58.
214.20 Educational; survival school. An organization
exempt from tax under section 501(c)(3)
that has full-time instructors who regularly conduct
a 26-day survival course, mostly out-ofdoors,
to teach young people how to survive in a
natural environment, is an educational organization
within the meaning of section
170(b)(1)(A)(ii) and, therefore, is not a private
foundation by reason of section 509(a)(1).
§§1.170A-9, 1.509(a)-2. (Secs. 170, 509; ’86
Code.)
Rev. Rul. 73-434, 1973-2 C.B. 71.
214.21 Educational; tutoring service. An
organization exempt under section 501(c)(3) that
operates a tutoring service for students on a oneto-one
basis in their homes, maintains a small center
to test students to determine their need for individual
tutoring, and employs tutors on a part-time
basis is not an educational organization of the type
described in section 170(b)(1)(A)(ii).
§§1.170A-9, 1.509(a)-2. (Secs. 170, 509; ’86
Code.)
Rev. Rul. 76-384, 1976-2 C.B. 57.
214.22 Excess business holdings. Section
4943(c)(4)(D) may limit a private foundation’s
permitted holdings in a business enterprise to 25
percent of the value of all outstanding shares of all
classes of stock during the second phase of the
present holdings rules described in section
4943(c)(4). §53.4943-4. (Sec. 4943, ’86 Code.)
Rev. Rul. 81-22, 1981-1 C.B. 510.
214.23 Excess business holdings; acquired by
will. Interest in a business enterprise was
bequeathed to a private foundation under the
residuary clause of a will executed before May 26,
1969. After May 26, 1969, a second will expressly
revoked the first will and increased the amounts of
the specific bequests without changing the residuary
clause. The interest in the business enterprise
acquired by the foundation on the death of the testator
comes within the special transitional rules
under section 4943(c)(4) and (c)(5). §53.4943–5.
(Sec. 4943, ’86 Code.)
Rev. Rul. 81-119, 1981-1 C.B. 512.
214.24 Excess business holdings; permitted
holdings; effective control. For purposes of computing
the 35 percent permitted holdings rule of
section 4943(c)(2)(B), effective control in one or
more persons who are not disqualified persons
may be demonstrated by proving that some unrelated
party or cohesive group of third parties, in
fact, exercises control over the business enterprise.
It is not enough to show that the private
foundation and disqualified persons cannot exercise
such control. §53.4943–3. (Sec. 4943, ’86
Code.)
Rev. Rul. 81–111, 1981–1 C.B. 509.
214.25 Excess business holdings; redemption
of stock. The redemption of stock from a private
foundation to the extent necessary for the foundation
to avoid the excess business holdings tax
under section 4943 is a sale or exchange not equivalent
to a dividend and the proceeds will be taxed
neither as investment income nor as undistributed
income. §§1.302–2, 53.4940–1, 53.4942(a)–2.
(Secs. 302, 4940, 4942; ’86 Code.)
Rev. Rul. 75-336, 1975-2 C.B. 110.
214.26 Foreign; bond interest coupons; withholding.
A foreign tax-exempt organization may
claim exemption from withholding at the source
with respect to bond interest coupons presented
for payment in the U.S. by including a notation on
the ownership certificate, Form 1001, of its taxexempt
status and that the obligation is not debt-financed
property. The organization will be subject
to withholding on such income under section
1443(b) for any taxable year it is a private foundation.
Rev. Rul. 70–570 superseded. §§1.1443–1,
1.1461–1. (Secs. 1443, 1461; ’86 Code.)
Rev. Rul. 72-244, 1972-1 C.B. 282.
214.27 Governing instruments. Sample provisions
of governing instruments of private foundations
provide a guide for determining whether
the provisions meet the requirements under section
508(e). (Sec. 508, ’86 Code.)
Rev. Rul. 70-270, 1970-1 C.B. 135.
214.28 Governing instruments; charitable
trusts. Situations are given showing governing
instrument provisions of split-income trusts
described in section 4947(a)(2) and (b)(3) that
meet the requirements of section 508(e).
§1.508-3. (Secs. 508, 4947; ’86 Code.)
Rev. Rul. 74-368, 1974-2 C.B. 390.
214.29 Governing instruments; State laws
enacted. States that have adopted legislation satisfying
the requirements of section 508(e), relating
to private foundation governing instruments, are
listed. Rev. Rul. 73-286 superseded. §1.508-3.
(Sec. 508, ’86 Code.)
Rev. Rul. 75–38, 1975-1 C.B. 161.
214.30 Grants to foreign grantees. A simplified
procedure is provided that a grantor foundation
may follow in making its “reasonable judgment”
and “good faith determination” of the status
under United States tax law of a foreign grantee,
and thereby determining whether the grant will be
a “qualifying distribution,” for the purpose of section
4942 or a “taxable expenditure” for the purpose
of section 4945. §§53.4942(a)-3, 53.4945-5,
53.4945-6. (Sec. 601.105, S.P.R.; Secs. 4942,
4945, ’86 Code.)
Rev. Proc. 92-94, 1992–2 C.B. 507.
214.31 Health care organizations; medicare
and medicaid payments; exempt functions.
Medicare and medicaid payments constitute gross
receipts derived from the exercise of performance
of a health care organization’s exempt activities
for purposes of the support test of sections
170(b)(1)(A)(vi) and 509(a)(2). §§1.170A-1,
1.509(a)-3. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 83-153, 1983–2 C.B. 48.
214.32 Home health care. An exempt organization
primarily providing health services to
sick persons in their own homes under the direction
of their private physicians and providing only
incidental patient treatment at the organization’s
office, which is not equipped to serve as an outpatient
facility on a continuing basis, does not qual-

ify as a hospital as defined in section
170(b)(1)(A)(iii). §1.170A-9. (Sec. 170, ’86
Code.)
Rev. Rul. 76-452, 1976–2 C.B. 60.
214.33 Hospital; classifi1ation. A hospital
described in section 170(b)(1)(A)(iii) is not prevented
by reg. 1.170A-9(e)(1) from qualifying as
a publicly supported organization under section
170(b)(1)(A)(vi) if it desires that additional classification.
§1.170A-9. (Sec. 170, ’86 Code.)
Rev. Rul. 70-416, 1976-2 C.B. 57.
214.34 Income; deferred incentive compensation
plan. A private foundation receiving
annual payments, as beneficiary of a decedent’s
deferred incentive compensation income plan,
includes each payment as gross income to the
extent that it exceeds the amount attributable to the
value of the right to receive the payment on the
decedent’s date of the death. §53.4942(a)-2. (Sec.
4942, ’86 Code.)
Rev. Rul. 75-442, 1975–2 C.B. 448.
214.35 Investment and adjusted net income;
amortizable bond premium deduction. An
exempt private foundation that amortizes bond
premium pursuant to section 171 may deduct the
amortized amount in computing its net investment
income and its adjusted net income. §§53.4940–1,
53.4942(a)-2. (Secs. 4940, 4942; ’86 Code.)
Rev. Rul. 76-248, 1976-1 C.B. 353.
214.36 Investment income; audit fees. Audit
fees paid by an exempt private foundation must be
apportioned between its investment and exempt
activities and only that portion of the fees attributable
to the investment activities is deductible in
computing the foundation’s net investment
income. §53.4940-1. (Sec. 4940, ’86 Code.)
Rev. Rul. 75-410, 1975–2 C.B. 446.
214.37 Investment income; basis of depletable
property. An exempt private foundation that,
prior to 1970, was not subject to tax and claimed
no depletion deduction on its royalty interest in oil
and gas properties recorded depletion on its books
using the percentage method. The foundation need
only decrease its original basis in the properties by
the amount of the cost depletion allowable, and not
the percentage depletion show on its books, for
purposes of determining the net investment
income under section 4940. §53.4940-1. (Sec.
4940, ’54 code.)
Rev. Rul. 79–200, 1979–1 C.B. 364.
214.38 Investment income; basis; residuary
interest in pre-1969 estate. Appreciated stock
distributed to a private foundation in 1971, in satisfaction
of a specific bequest and a percentage of
the residuary estate of an individual who died in
1967, will reconsidered held by the foundation on
December 31, 1969, and the basis of the stock for
purposes of computing capital gain includable in
net investment income will be the fair market
value of the stock as of December 31, 1969.
§53.4940-1. (Sec. 4940, ’86 Code.)
Rev. Rul. 76-424, 1976-2 C.B. 367.
214.39 Investment income; Belgian foundation.
A Belgian private foundation, whose only
business activities in the U.S. are investments
from which it derives interest income, is not
exempt from the excise tax on gross investment
income. §§1.881–2, 1.894-1. (Secs. 881, 894,
4940, 4948; ’86 Code.)
Rev. Rul. 76-330, 1976-2 C.B. 488.
214.40 Investment income; Canadian
foundation. A Canadian private foundation,
exempt from the Canadian income tax and exempt
from U.S. income tax under section 501(c)(3), is
also exempt from the tax imposed on gross investment
income by section 4948(a) by virtue of
Article X of the U.S.-Canada Income Tax Convention.
§53.4948–1. (Sec. 4948, ’86 Code.)
Rev. Rul. 74-183, 1974-1 C.B. 328.
214.41 Investment income; capital gain computation;
sale of listed stock. For purposes of
computing a private foundation’s tax on net
investment income, the net capital gain on the sale
of a listed common stock purchased before
December 31, 1969 is the difference between the
selling price and the greater of (1) the foundation’s
basis in the stock, or (2) the mean average of the
highest and lowest quotations on December 31,
1969 plus or minus subsequent adjustment to the
date of sale. §53.4940-1. (Sec. 4940, ’86 Code.)
Rev. Rul. 74-403, 1974-2 C.B. 381.
214.42 Investment income; capital gain dividends
from a regulated investment company.
Capital gain dividends received by a private
foundation from a regulated investment company
described in section 851 are includible in the
foundation’s net investment income in the year
received for purposes of determining the excise
taxes imposed by section 4940(a), but are
excluded from the foundation’s adjusted net
income for purposes of section 4942(f).
§§53.4940-1, 53.4942(a)-2. (Secs. 4940, 4942;
’86 Code.)
Rev. Rul. 73-320, 1973-2 C.B. 385.
214.43 Investment income; capital gain from
sale of donated stock. Capital gain realized by an
exempt private foundation from the sale of stock
donated to it during its taxable years 1970 through
1972 and immediately disposed of upon receipt
will not be taken into account for purposes of the
tax on net investment income. §53.4940-1. (Sec.
4940, ’86 Code.)
Rev. Rul. 74-404, 1974-2 C.B. 382.
214.44 Investment income; interest paid for
funds reloaned interest free. An exempt private
foundation that obtained a loan from a commercial
lending institution, made an interest-free temporary
construction loan to an exempt university,
made no attempt to collect the loan, and forgave a
portion of it, may not deduct or otherwise take into
account the interest it paid for its loan in computing
its net investment income. §53.4940-1. (Sec.
4940, ’86 Code.)
Rev. Rul. 74-579, 1974-2 C.B. 383.
214.45 Investment income; U.S. savings
bonds; unreported interest. A private foundation
derived interest income upon redemption of
Series E U.S. savings bonds that were received
from the estate of the purchaser. The interest is
includible in the computation of gross investment
income if neither the individual nor the estate
elected to report as income the periodic increases
in bond value. §53.4940-1. (Sec. 4940, ’86 Code.)
Rev. Rul. 80-118, 1980-1 C.B. 254.
214.46 Jeopardizing investment; life insurance
policy. A whole-life insurance policy that
was subject to a loan to the donor-insured was
donated to a private foundation. The face value of
the policy, less any outstanding loan principal or
interest, was payable to the donee upon the
donor’s death. The combined interest and premimum
payments made by the donee over the life
expectancy of the donor would exceed the amount
it would receive under the policy and were, therefore,
jeopardizing investments. §53.4944–1. (Sec.
4944, ’86 Code.)
Rev. Rul. 80-133, 1980-1 C.B. 258.
214.47 Minimum investment return; computation;
portion of office building commercially
used. A private foundation owns a building,
a portion of which is used directly in carrying out
its exempt purposes, with the remainder leased to
commercial tenants. The percentage of exempt
use of the building, for purposes of determining
the foundation’s minimum investment return
Exempt organizations
under section 4942(e), should be determined by
dividing the fair rental value of that portion of the
building used for exempt purposes by the fair
rental value of the entire building. §53.4942(a)–2.
(Sec. 4942, ’86 Code.)
Rev. Rul. 82-137, 1982-2 C.B. 303.
214.48 Minimum investment return; island
preserved for educational purposes. The value
of an island, owned by a private foundation dedicated
to preserve the natural ecosystems and historical
and archaeological remains on the island that
has no residential use and to which present access
is limited to invited public and private researchers,
may be excluded from the foundation’s minimum
investment return. §53.4942(a)–2. (Sec. 4942, ’86
Code.)
Rev. Rul. 75-207, 1975-1 C.B. 361.
214.49 Minimum investment return; paintings
for public exhibitions. A collection of paintings,
owned by a private foundation formed to further
the arts, that are loaned under an active loan
program for exhibition in museums, universities,
and similar institutions, are being used directly in
carrying out the foundation’s exempt purposes,
and the value of the paintings is excludable in
computing the foundation’s minimum investment
return. §53.4942(a)–2. (Sec. 4942, ’86 Code.)
Rev. Rul. 74-498, 1974-2 C.B. 387.
214.50 Minimum investment return; per centage.
The applicable percentage to be used by private
foundations in determining minimum investment
return for a taxable year beginning in 1972
has been changed, in the case of private foundations
organized after May 26, 1969, from 6.0 percent
to 5.5 percent, and for foundations organized
before May 27, 1969, from 4.5 percent to 4.125
percent. The applicable percentages for determining
the minimum investment return for a taxable
year beginning in 1973 are changed to 5.25 and
4.375 respectively; the applicable percentages for
a taxable year beginning in 1974 are changed to
6.0 and 5.5 respectively. §53.4942(a)–2. - (Sec.
4942, ’86 Code.)
Rev. Rul. 72–625, 1972–2 C.B. 604; Rev. Rul.
73-235, 1973–1 C.B. 519; Rev. Rul. 74-238,
1974-1 C.B. 326.
214.51 Minimum investment return; percentage.
The percentage to be used by private
foundations, organized before May 27, 1969, in
determining minimum investment return for a taxable
year beginning in 1975, has been changed to
six percent, the same percentage as for those organized
after May 26, 1969. The applicable percentage
for determining the minimum investment
return for a taxable year beginning in 1976 is
changed to 6.75 percent. §53.4942(a)–2. (Sec.
4942, ’86 Code.)
Rev. Rul. 75–270, 1975–2 C.B. 449; Rev. Rul.
76-193, 1976-1 C.B. 357.
214.52 Minimum investment return; reasonable
cash balances. In determining its minimum
investment return, a private foundation whose
average cash balances during the taxable year represented
one percent of the fair market value of its
assets may exclude an amount equal to one and
one-half percent of its assets’ fair market value as
reasonable cash balances used or held for use
directly in carrying out its exempt purpose.
§53.4942(a)-2. (Sec. 4942, ’86 Code.)
Rev. Rul. 75-392, 1975-2 C.B. 447.
214.53 Minimum investment return; unrelated
trade or business. In determining its minimum
investment return, a private foundation need
not take into account assets used in a trade or business
for which substantially all the work is performed
without compensation. §53.4942(a)-2.
(Sec. 4942, ’86 Code.)
Rev. Rul. 76-85, 1970-1 C.B. 357.
214.54 Operating foundation; qualifying distributions.
An otherwise qualifying trust whose

Exempt organizations
sole activity is the operation of a cultural center
makes distributions qualifying it as an operating
foundation under section 4942(j)(3)(A) when it
turns over substantially all of its adjusted net
income each year to a separate corporation that,
acting only in a fiduciary capacity on behalf of the
trust, disburses such amount in a timely manner in
the operation of the cultural center.
§53.4942(b)-1. (Sec. 4942, ’86 Code.)
Rev. Rul. 78-315, 1978–2 C.B. 271.
214.55 Preincorporation period. In determining
whether an incorporated organization meets
the time requirement provided by regs.
1.170A-9(e)(4)(vi) and 1.509(a)–3(c)(1)(iv) to
entitle it to be issued a ruling on the question
whether it is publicly supported, the period of time
a predecessor unincorporated association operated
will be taken into consideration where
incorporation has been the only significant change
in the organization. §§1.170A-9, 1.509(a)–3.
(Secs. 170, 509; ’86 Code.)
Rev. Rul. 73-422, 1973-2 C.B. 70.
214.56 Professional standards review. An
organization was established to perform the services
of a professional standards review organization
(PSRO) pursuant to section 249F of the Social
Security Amendments of 1972, and was designated
as a PSRO for a particular area by the
Department of Health and Human Services
(HHS). It derives all of its support from contracts
with HHS which provide for payment for all reasonable
and necessary expenses incurred by it in
the performance of its functions. The organization
qualifies for exemption under section 501(c)(3) of
the Code and is not a private foundation under section
509(a) because it is described in section
170(b)(1)(A)(vi). Rev. Rul. 74-553 distinguished.
§§1.170A-9, 1.501(c)(3)-1, 1.509(a)-2. (Secs.
170, 501, 509; ’86 Code.)
Rev. Rul. 81-276, 1981–2 C.B. 128.
214.57 Program related investments; low-interest
loans to the blind. Low interest rate loans
by a private foundation, established to aid the
blind in securing employment, that are made to
blind persons who desire to establish themselves
in business but who are unable to obtain funds
through commercial sources constitute program
related investments and are also qualifying distributions.
§§53.4942(a)–3, 53.4944–3. (Secs.
4942, 4944; ’86 Code.)
Rev. Rul. 78-90, 1978-1 C.B. 380.
214.58 Promoting science or art of ceramics.
A foundation was established under the decedent’s
will providing primarily for the continuance of the
pyrometric cone manufacturing business and secondarily
for the advancement of the ceramic arts
and industries. Under the will, approximately 80
percent of the business gross in come would be
required to meet manufacturing costs and other
expenses and the remaining 20 percent would be
spent in research in the field of ceramics through
fellowships granted to selected graduate students.
Held, the foundation was not a feeder organization;
it carried on exempt activities through its fellowship
and grant programs and was not obligated
to distribute funds or equipment to or through specific
institutions. (Sec. 502, ’86 Code.)
Edward Orton, Jr. Ceramic Foundation, 56 T.C.
147, Acq., 1972-1 C.B. 3.
214.59 Publicly supported; business league
contribution limitation. Contributions made by
a section 501(c)(6) business league to a section
501(c)(3) organization seeking to be classified as
other than a private foundation under section
509(a)(1) because it is publicly supported under
section 170(b)(1)(A)(vi) are subject to the two
percent limitation imposed by reg.
1.170A-9(e)(6). §§1.170A-9, 1.509(a)–2. (Secs.
170, 509; ’86 Code.)
Rev. Rul. 77-255, 1977-2 C.B. 74.
214.60 Publicly supported; substantial and
material changes in support. Guidelines set
forth the circumstances under which grantors or
contributors will not be considered responsible for
“substantial and material” changes in sources of
financial support. §§1.170A-9, 1.509(a)–3. (Sec.
601.105 S.P.R.; Secs. 170, 509, ’86 Code.)
Rev. Proc. 81-6, 1981-1 C.B. 615.
214.61 Publicly supported; unusual grants.
Guidelines set forth the circumstances under
which grants or contributions will be considered
“unusual grants” without benefit of an advance
ruling. §§1.170A-9, 1.509(a)–3. (Sec. 601.105,
S.P.R.; Secs. 170, 509, ’86 Code.)
Rev. Proc. 81-7, 1981-1 C.B. 615.
214.62 Publicly supported organization;
limitation of support received from churches.
The two percent limitation prescribed by reg.
1.170A-9(e)(6)(i) does not apply to the support
received by an exempt organization described in
section 170(c)(2) from individual churches
described in section 170(b)(1)(A)(i) that are publicly
supported and entitled to section
170(b)(1)(A)(vi) status. §1.170A-9. (Sec. 170, ’86
Code.)
Rev. Rul. 78-95, 1978-1 C.B. 71.
214.63 Publicly supported organization;
unusual contribution. A large inter vivos gift of
undeveloped land from a disinterested donor to a
normally publicly supported organization exempt
under section 501(c)(3), conditioned on the land’s
being used in perpetuity to further the exempt
organization’s purposes of preserving natural
resources, constitutes an unusual grant and will
not adversely affect the status of the organization
as a publicly supported organization under section
170(b)(1)(A)(vi). §§1.170A-9, 1.509(a)-3. (Secs.
170, 509; ’86 Code.)
Rev. Rul. 76-440, 1976-2 C.B. 58.
214.64 Qualifying distributions; carryover of
transferor. A private foundation that had a carryover
of excess qualifying distributions as
described in section 4942(i) transferred all its
assets to another private foundation that was controlled
by the same persons who controlled the
first foundation. The transferee foundation may
reduce its distributable amount under section
4942(d) by such carryover. §§1.507-3,
53.4942(a)-3. (Secs. 507, 4942; ’86 Code.)
Rev. Rul. 78-387, 1978-2 C.B. 270.
214.65 Qualifying distributions; contribution
to exempt cemetery company. An unrestricted
contribution made by a private foundation
to an exempt cemetery company that is not
described in section 170(c)(2)(B) is not a qualifying
distribution within the meaning of section
4942(g) and is a taxable expenditure within the
meaning of section 4945(d)(5). §§1.170A-1,
53.4942(a)-3, 53.4945-1. (Secs. 170, 4942, 4945;
’86 Code.)
Rev. Rul. 80-97, 1980-1 C.B. 257.
214.66 Qualifying distributions; contribution
to other private foundation. An amount
contributed by a private foundation to another private
foundation that, in the taxable year following
the taxable year in which it received the contribution,
established an approved set-aside in the
amount of the contribution and made a valid election
to treat the entire amount of the set-aside as a
distribution out of corpus may be treated by the
donor foundation as a qualifying distribution.
§53.4942(a)-3. (Sec. 4942, ’86 Code.)
Rev. Rul. 78-45, 1978–1 C.B. 378.
214.67 Qualifying distributions; depreciation.
For its fiscal year after 1970, a private
foundation may not treat as a qualifying distribution
under section 4942(g)(1)(B) an amount equal
to straight line depreciation on a building it
constructed for purposes described in section
170(c)(2)(B). §53.4942(a)-3. (Sec. 4942, ’86
Code.)
Rev. Rul. 74-560, 1974–2 C.B. 389.
214.68 Qualifying distributions; legal fees.
Legal fees not excessive in amount, paid by an
exempt charitable trust in a suit to determine the
proper beneficiary of a portion of its net income
are qualifying distributions. §53.4942(a)–3. (Sec.
4942, ’86 Code.)
Rev. Rul. 75-495, 1975-2 C.B. 449.
214.69 Qualifying distributions; property
converted from nonexempt to exempt use; conversion
date. The correct conversion date of real
property converted by a private operating foundation
from nonexempt to exempt uses, for purposes
of treating the conversion as a qualifying distribution,
is the date the foundation adopts and immediately
proceeds to implement a plan for the exempt
use of the property, even though the actual conversion
is not completed until the following year.
§53.4942(a)-3. (Sec. 4942, ’86 Code.)
Rev. Rul. 78-102, 1978-1 C.B. 379.
214.70 Qualifying distributions; retention of
control. A private foundation agreed to help fund
a museum to be built by a public charity but, in
order to retain control of the funds and receive
income therefrom during the 3 year period before
construction was to begin, deferred payment on
the commitment. The amount set aside may not be
treated as a qualifying distribution under section
4942(g). §53.4942(a)-3. (Sec. 4942, ’86 Code.)
Rev. Rul. 79-319, 1979-2 C.B. 388.
214.71 Qualifying distributions; second distribution
of same asset. If a private foundation
that has made a qualifying distribution equal to the
purchase price of an asset donates the asset to a
publicly supported charity, it will be allowed a
second qualifying distribution to the extent that
the fair market value of the asset on the date of
contribution exceeds the amount of the first qualifying
distribution. §53.4942(a)-3. (Sec. 4942, ’86
Code.)
Rev. Rul. 79–375, 1979–2 C.B. 389.
214.72 Qualifying distributions; separate filing
of election. An election under section
4942(h)(2), with respect to treatment of a qualifying
distribution, that is not filed with the return
required to be filed under section 6033 should be
filed with the District Director of the appropriate
key district. §53.4942(a)-3. (Sec. 601.201, S.P.R.;
Sec. 4942, ’86 Code.)
Rev. Proc. 74-41, 1974–2 C.B. 495.
214.73 Qualifying distributions; set-aside;
capable of current funding. A private foundation,
whose primary activity is the making of
renewable scholarships and fixed sum research
grants that normally run for three years, for which
payments have been made annually from current
income, may not treat set-aside amounts representing
the maximum for each grantee from which
the annual payments will be made as qualifying
distributions under section
§53.4942(a)-3. (Sec. 4942, ’86 Code.)
Rev. Rul. 75-511, 1975-2 C.B. 450.
4942(g)(2).
214.74 Qualifying distributions; set-aside;
“specific project”. The accumulation of setaside
funds to endow a specific building project of
an unrelated public charity is a “specific project”
within the meaning of reg. 53.4942(a)–3(b)(2).
§53.4942(a)-3. (Sec. 4942, ’86 Code.)
Rev. Rul. 77-7, 1977-1 C.B. 354.
214.75 Qualifying distributions; set-aside;
undistributed income; wildlife sanctuary
enlarged. An operating private foundation’s conversion
of a portion of its newly acquired land into
an extension of its existing wildlife sanctuary and
the remainder into a public park under a four-year
construction contract under which payments are
mainly during the last two years constitutes a

“specific project” and the foundation’s set-aside
of all its excess earnings for four years, for which
it files a timely justifying application with the Service,
will be treated as a qualifying distribution
under section 4942(g)(2), in applying the income
test prescribed by section 4942(j)(3)(A) for each
taxable year in which such earnings are set aside
and remain unexpended. §53.4942(a)–3. (Sec.
4942, ’86 Code.)
Rev. Rul. 74-450, 1974-2 C.B. 388.
214.76 Qualifying distributions; set-aside
amount. A private foundation may set aside, by
means of a bookkeeping entry, the amount by
which its minimum investment return for its
immediately preceding taxable year exceeds its
adjusted net income for that year. §53.4942(a)–3.
(Sec. 4942, ’86 Code.)
Rev. Rul. 78-148, 1978-1 C.B. 380.
214.77 Reliance on status of grantees. Guidelines
under which grant-making private foundations
will not be considered to be responsible for
substantial and material changes in the sources of
financial support of recipient organizations that
are described in sections 170(b)(1)(A)(vi) or
509(a)(2) of the Code. Rev. Proc. 81-6 amplified.
§§1.170A-9, 1.509(a)-3. (Sec. 601.105, S.P.R.;
Secs. 170, 509, ’86 Code.)
Rev. Proc. 89-23, 1989-1 C.B. 844.
214.78 Repayment of loan from corpus. A private
foundation that made an interest-free loan
from corpus to a public charity in a year in which
its distribution requirements had been met and that
continued to meet the distribution requirements
during the five-year adjustment period without
use of the excess of qualifying distributions
created by the loan is not required to include in its
gross income repayments on the loan and may
return the payments to corpus. §53.4942(a)–2.
(Sec. 4942, ’86 Code.)
Rev. Rul. 77-252, 1977-2 C.B. 390.
214.79 Returns; extension of time; status
pending. Conditions are updated and restated
under which certain private foundations will be
deemed to have reasonable cause for failure to
comply with requirements for filing of returns and
payment of taxes. The temporary relief from penalties
previously provided for organizations
awaiting determinations under section 509(a) or
170(b)(1)(A) is also extended. Rev. Proc. 72-31
superseded. §§1.501(c)(3)-1, 1.508-1,
1.509(a)-1, 1.6033-2, 1.6056-1, 301.6104-4,
301.6151-1, 301.6652-2. (Sec. 601.201, S.P.R.;
Secs. 501, 508, 509, 6011, 6033, 6056, 6104,
6151, 6651, 6652, ’86 Code.)
Rev. Proc. 79-8, 1979-1 C.B. 487.
214.80 Returns; extension of time for filing;
status pending. Certain organizations exempt
under section 501(c)(3) awaiting a determination
of their private foundation status under section
509 are granted an extension of time to file Part III
of Forms 990 and 990-AR until thirty days after
notification of status is received or six months
from the due date for filing these returns, whichever
occurs first. §1.6081–1. (Sec. 6081, ’86
Code.)
Rev. Rul. 71-236, 1971-1 C.B. 398.
214.81 Rulings; jeopardizing investments.
The Service cannot issue a ruling that use of a proposed
investment procedure by a private foundation
will preclude imposition of tax under the provisions
of section 4944. §53.4944–1. (Sec. 4944,
’86 Code.)
Rev. Rul. 74-316, 1974-2 C.B. 389.
214.82 Rulings; publicly supported organizations.
An organization described in section
501(c)(3) having a first taxable year consisting of
exactly eight months and that meets the requirements
of section 170(b)(1)(A)(vi) is entitled to a
ruling or determination letter that it is not a private
foundation. §1.170A-9. (Sec. 170, ’86 Code.)
Rev. Rul. 76-27, 1976-1 C.B. 64.
214.83 Rulings; publicly supported organizations.
The requirement of reg. 1.170A-9(e)(5)(i)
that an organization must have been in existence
for at least one taxable year consisting of at least
eight months in order to obtain a ruling or determination
letter that it is not a private foundation by
virtue of being described in sections 509(a)(1) and
170(b)(1)(A)(vi) does not apply to section
170(b)(1)(A)(iv) organizations. §§1.170A-9,
1.509(a)-2. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 77-407, 1977-2 C.B. 77.
214.84 Rulings; publicly supported organizations;
extended advance ruling. A newly created
organization, exempt from tax under section
501(c)(3), that wishes to obtain an extended
advance ruling for purposes of determining
whether it will qualify as a publicly supported
organization must submit a request for the
extended advance ruling at the same time as its
request for an initial advance ruling. §§1.170A-9,
1.509(a)-3. (Secs. 170, 509; ’86 Code.)
Rev. Rul. 77-115, 1977-1 C.B. 154.
214.85 Rulings and determination letters;
grant-making procedures. Procedures are provided
for issuing rulings and determination, opinion,
notification, and information letters and for
entering into closing agreements on specific
issues in employee plans and exempt organization
matters. Rev. Proc. 80-24 superseded; Rev. Procs.
76-47 and 80–39 modified. Modified by Rev.
Proc. 83-41. (Sec. 601.201, S.P.R.)
Rev. Proc. 83-36, 1983-1 C.B. 763.
214.86 Rulings and determination letters;
procedures. Updated procedures are provided for
issuing rulings and determination letters on private
foundation status under section 509(a) and
operating foundation status under section
4942(j)(3) for organizations exempt from income
tax under section 501(c)(3). Rev. Procs. 73–7
superseded and 72–50 superseded in part. Supplemented
by Rev. Proc. 77–21. Modified by Rev.
Proc. 80-25. §§1.509(a)-1. (Sec. 601.201, S.P.R.;
Secs. 509, 4942, 4947, ’86 Code.)
Rev. Proc. 72–50, 1972–2 C.B. 830; Rev. Proc.
76-34, 1976-2 C.B. 656.
214.87 Rulings and determination letters;
procedures; appeals and protests. Procedures
are provided for applying for recognition of
exemption under section 501 and 521 and for
revoking or modifying exemption rulings and
determination letters. Rev. Proc. 80–25 superseded
and Rev. Proc. 76-34 modified.
§§1.170A-1, 1.501(a)-1, 1.509(a)-1, 1.521-1,
53.4942(b)-1, 1.9100-1. (Sec. 601.201, S.P.R.;
Secs. 170, 501, 509, 521, 4942, 7428, ’86 Code.)
Rev. Proc. 84-46, 1984-1 C.B. 541.
214.88 Self-dealing; church membership
dues of disqualified person. Payment by a private
foundation of a disqualified person’ s church membership
dues in order to maintain that per son’s
church membership is an act of self-dealing.
§53.4941(d)-2. (Sec. 4941, ’86 Code.)
Rev. Rul. 77-160, 1977-1 C.B. 351.
214.89 Self-dealing; contribution to public
charity. A contribution by a private foundation to
a public charity made on the condition that the
public charity change its name to that of a substantial
contributor to the foundation and agree not to
change the name again for 100 years does not
constitute an act of self-dealing. §53.4941(d)–2.
(Sec. 4941, ’86 Code.)
Rev. Rul. 73 -407, 1973-2 C.B. 383.
214.90 Self-dealing; different tax years. Adisqualified
person with a tax year differing from that
of the private foundation from which he borrows
Exempt organizations
money computes the initial tax on self-dealing
based upon his own tax year. §53.4941(a)-1. (Sec.
4941, ’86 Code.)
Rev. Rul. 75-391, 1975-2 C.B. 446.
214.91 Self-dealing; disqualified persons;
bond purchase. The purchase of a portion of a
bond issue on behalf of an exempt hospital by a
disqualified person with respect to a private
foundation that guaranteed the bonds except for
those sold to the disqualified person is not an act
of self-dealing. §53.4941(d)–1. (Sec. 4941, ’86
Code.)
Rev. Rul. 77-6, 1977-1 C.B. 350.
214.92 Self-dealing; disqualified persons
serving as trustees of grant recipient. A grant
authorized by an exempt private foundation to an
exempt hospital for modernization, replacement,
and expansion does not constitute an act of selfdealing
even though two individuals serve as trustees
of both organizations. Clarified by Rev. Rul.
82-136. §53.4941(d)-1. (Sec. 4941, ’56 Code.)
Rev. Rul. 75-42, 1975-1 C.B. 359.
214.93 Self-dealing; disqualified persons
serving as trustees of grant recipient. A grant by
a private foundation to a second private foundation
does not constitute an act of self-dealing
within the meaning of section 4941 even though a
banking institution serves as sole trustee of both
foundations. Rev. Rul. 75-42 clarified.
§53.4941(d)-1. (Sec. 4941, ’86 Code.)
Rev. Rul. 82-136, 1982-2 C.B. 300.
214.94 Self-dealing; educational program;
incidental benefit to disqualified person. A private
foundation made a grant to an exempt university
to establish an educational program providing
instruction in manufacturing engineering.
A corporation that is a disqualified person with
respect to the private foundation intends to hire
graduates of the new program and encourage its
employees to enroll in the program, but will not
receive preferential treatment in recruiting graduates
or enrolling its employees. The grant is not an
act of self-dealing. §53.4941(d)–1. (Sec. 4941, ’86
Code.)
Rev. Rul. 80-310, 1980-2 C.B. 319.
214.95 Self-dealing; excess business holdings.
In the proposed sale to a disqualified person of a
private foundation’s 15-percent interest in a corporation,
in which the foundation and all disqualified
persons with respect to the foundation have
combined holdings of 45 percent of the voting
stock as of May 26, 1969, the disqualified person
would be subject to the tax on self-dealing
imposed by section 4941 ; in a similar situation in
which the total combined holdings of the foundation
and disqualified persons are 55 percent, the
foundation has excess business holdings under
section 4943(c)(4), and section 101(1)(2)(B) of
the Tax Reform Act of 1969 would apply to except
the proposed sale from the provisions of section
4941. §53.4941(d)-4. (Sec. 4941, ’86 Code.)
Rev. Rul. 75-25, 1975-1 C.B. 359.
214.96 Self-dealing; exchange of securities;
former disqualified person. An act of self-dealing
will not result from the exchange of securities
between a private foundation and a corporation
that was previously a disqualified person by reason
of the ownership of more than 35 percent of its
total combined voting power by the former
foundation manager, who resigned 5 years prior to
the exchange, and who did not participate in planning
the exchange offer during the period of disqualification.
§§53.4941(d)-2, 53.4946-1. (Secs.
4941, 4946; ’86 Code.)
Rev. Rul. 76-448, 1976-2 C.B. 368.
214.97 Self-dealing; foundation and trust
with same trustee. A transaction in which a private
foundation purchased property from a testamentary
trust that is not a disqualified person with
respect to the foundation, both of which had the

Exempt organizations
same banking institution as trustee, is not an act of
self-dealing. §53.4941(d)–2. (Sec. 4941, ’86
Code.)
Rev. Ru1. 78-77, 1978-1 C.B. 378.
214.98 Self-dealing; “foundation manager’s”
sale of property to trust. The trustee of a
trust that is a private foundation who, while rep
resenting both himself and the trust, willfully and
without reasonable cause sells property he owns to
the trust knowing that the sale of an act of selfdealing
under section 4941(d)(1)(A) is liable for
both the tax imposed on an act of self-dealing and
the tax imposed on the participation of foundation
managers. §53.4941(a)–1. (Sec. 4941, ’86 Code.)
Rev. Rul. 78-76, 1978-1 C.B. 377.
214.99 Self-dealing; gift of insurance policy
by disqualified person; loan outstanding. A disqualified
person donated a life insurance policy to
a private foundation. The policy was subject to an
outstanding loan made to the donor within the
10-year period ending on the date of the donation
that was not insignificant in relation to the value of
the policy. The donation was an act of self-dealing.
§53.4941(d)–2. (Sec. 4941, ’86 Code.)
Rev. Rul. 80-132, 1980-1 C.B. 255.
214.100 Self-dealing; gift of property by disqualified
person; subject to lien. A disqualified
person’s transfer to a private foundation of real
property that is subject to a lien placed on the property
by the disqualified person within the 10-year
period ending on the transfer date is an act of selfdealing,
even though the lien was created merely
as part of a multiphase financing plan begun more
than ten years earlier. §53.4941(d)–1. (Sec. 4941,
’86 Code.)
Rev. Rul. 78–395, 1978–2 C.B. 270.
214.101 Self-dealing; government official’s
use of facility. The use of a private foundation
library’s meeting room, which is functionally
related to the foundation’s exempt purpose and is
made available at no charge to members of the
community-at-large, by a government official (a
disqualified person) does not constitute an act of
self-dealing. §53.4941(d)–3. (Sec. 4941, ’86
Code.)
Rev. Rul. 76-10, 1976-1 C.B. 355.
214.102 Self-dealing; insurance to indemnify
disqualified person. The payment of premiums
by a private foundation for insurance indemnifying
a disqualified person against liability for
claims in connection with his assistance in preparing
a registration statement and prospectus for the
foundation’s public offering of stock issued by a
corporation of which he was a principal officer are
treated as part of his compensation for such services
and do not constitute acts of self-dealing if
the compensation is not excessive.
§53.4941(d)–2. (Sec. 4941, ’86 Code.)
Rev. Rul. 74-405, 1974-2 C.B. 384.
214.103 Self-dealing; legal fees of disqualified
person. Payment by a private foundation of
legal fees awarded by a court to the counsel for its
director-manager, a disqualified person, who had
filed suit against the remaining directors to require
them to carry on the foundation’s charitable program,
does not constitute an act of self-dealing.
§53.4941(d)-2. (Sec. 4941, ’86 Code.)
Rev. Rul. 73–613, 1973–2 C.B. 385.
214.104 Self-dealing; loan program providing
financing to publicly supported organizations;
incidental benefit to disqualified person.
A loan program of a private foundation that provides
financing to publicly supported organizations
for construction projects in disadvantaged
areas does not result in acts of self-dealing within
the meaning of section 4941 merely because certain
individuals involved in the construction projects
have ordinary banking and business relationships
with a bank that is a disqualified person.
§53.4941(d)-1. (Sec. 4941, ’86 Code.)
Rev. Rul. 85-162, 1985-2 C.B. 275.
214.105 Self-dealing; loss of interest. A transaction
of a private foundation in which it deposited
funds in a savings account maintained with a disqualified
banking institution on the tenth day of a
calendar quarter and withdrew the funds before
the end of the next quarter thereby subjecting itself
to a loss of interest for the entire period of deposit
constitutes an act of self-dealing. §53.4941(d)–2.
(Sec. 4941, ’86 Code.)
Rev. Rul. 73-595, 1973-2 C.B. 384.
214.106 Self-dealing; loss of interest. The purchase
by a private foundation from a banking institution,
a disqualified person with respect to the
foundation, of certificates of deposit with a maturity
date one year from the date of issue and providing
for a reduced rate of interest if they are not
held to the maturity date is an act of self-dealing
under section 4941(d)(1)(B). §53.4941(d)–2.
(Sec. 4941, ’86 Code.)
Rev. Rul. 77-288, 1977-2 C.B. 388.
214.107 Self-dealing; paintings placed in disqualified
person’s residence. The placing of
paintings owned by a private foundation in the residence
of a substantial contributor, a disqualified
person, constitutes an act of self-dealing.
§53.4941(d)-2. (Sec. 4941, ’86 Code.)
Rev. Rul. 74-600, 1974-2 C.B. 385.
214.108 Self-dealing; pension to disqualified
person. A pension for past personal services paid
by a private foundation to one of its directors, a
disqualified person whose total compensation
including the pension is not excessive, does not
constitute an act of self-dealing. §53.4941(d)–3.
(Sec. 4941, ’86 Code.)
Rev. Rul. 74-591, 1974-2 C.B. 385.
214.109 Self-dealing; purchase of mortgage
from disqualified person. The purchase by a private
foundation of a mortgage from a bank, a disqualified
person that in the normal course of its
business acquires and sells mortgages, is not
within the exception for general banking services
and is an act of self-dealing under section
4941(d)(1)(A). §53.4941(d)-2. (Sec. 4941, ’86
Code.)
Rev. Rul. 77--259, 1977-2 C.B. 387.
214.110 Self-dealing; rental of charter aircraft.
The rental of a charter aircraft by a disqualified
person, the charter aircraft company, to a private
foundation constitutes an act of self-dealing
under section 4941(d)(1)(C). §53.4941(d)–2.
(Sec. 4941, ’86 Code.)
Rev. Rul. 73-363, 1973-2 C.B. 383.
214.111 Self-dealing; rental of office space to
disqualified persons. An exempt private foundation
conducts agricultural economics research and
experimentation in part of an office building it
owns and rents the remaining spaces to disqualified
persons who are engaged in agricultural business
activities. The foundation does not utilize
these businesses in its research. The rental of the
office space is not functionally related to the
foundation’s exempt purpose and constitutes an
act of self-dealing. §§53.4941(d)-2,
53.4942(a)-2. (Secs. 4941, 4942; ’86 Code.)
Rev. Rul. 79-374, 1979-2 C.B. 387.
214.112 Self-dealing; repayment of loan to
disqualified person. A private foundation’ s transfer
of stock in repayment of an interest-free loan,
made by a disqualified person and used exchsively
for exempt purposes, is tantamount to a sale
or exchange of property between the private
foundation and the disqualified person and is an
act of self-dealing. §53.4941(d)–1. (Sec. 4941, ’86
Code.)
Rev. Rul. 77-379, 1977-2 C.B. 387.
214.113 Self-dealing; sale at public auction to
disqualified person. The sale of a private foundation’s
art objects to a disqualified person at a public
auction conducted by an auction gallery to
which the items were consigned for sale constitutes
an act of self-dealing. §53.4941(d)–2. (Sec.
4941, ’86 Code.)
Rev. Rul. 76-18, 1976-1 C.B. 355.
214.114 Self-dealing; service fee for overdrawn
checking account. The payment by a private
foundation to a bank, a disqualified person, of
a service fee for an overdrawn checking account
in an amount equal to the actual cost of processing
the overdraft does not result in an act of self-dealing.
§53.4941(d)–2. (Sec. 4941, ’86 Code.)
Rev. Rul. 73-546, 1973-2 C.B. 384.
214.115 Self-dealing; student loan guarantees.
The guarantee of loans made to disqualified
persons under a student loan guarantee program
established by a private foundation for the children
of its employees constitutes an act of selfdealing
within the meaning of section
4941(d)(1)(E). §53.4941(d)-2. (Sec. 4941, ’86
Code.)
Rev. Rul. 77–331, 1977-2 C.B. 388.
214.116 Self-dealing; taxable expenditure;
indemnification of foundation manager. The
indemnification of a foundation manager by a private
foundation for attorney’s fees and costs
incurred in a state mismanagement proceeding is
treated as part of his compensation and does not
constitute an act of self-dealing or a taxable expenditure
if the compensation is not excessive. The
indemnification of a settlement amount would
constitute an act of self-dealing and a taxable
expenditure. The payment of premiums by a private
foundation for insurance indemnifying a disqualified
person against all liabilities, including
settlement amounts, in connection with state mismanagement
proceedings, are treated as part of his
compensation and do not constitute acts of selfdealing
or taxable expenditures if the compensation
is not excessive. §§53.4941(d)–2, 53.4945A.
(Secs. 4941, 4945; ’86 Code.)
Rev. Rul. 82-223, 1982-2 C.B. 301.
214.117 Self-dealing; transfer of real property
by disqualified person. A disqualified person’s
attempt to correct an act of self-dealing by
transferring to a private foundation real estate, the
fair market value of which equals the amount of a
loan made by the foundation to the disqualified
person,
§53.4941(d)-1. (Sec. 4941, ’86 Code.)
Rev. Rul. 81-40, 1981-1 C.B. 508.
is a second act of self-dealing.
214.118 Self-dealing; trustee’s travel from
Puerto Rico to U.S. The payment or reimbursement
by a private foundation of expenses incurred
by a trustee, a government official of the Commonwealth
of Puerto Rico, for round trip travel
from Puerto Rico to the U.S. to attend the foundation’s
trustee meetings does not constitute an
exception to self-dealing. §§53.4941(d)-3,
53.4946-1. (Secs. 4941, 4946, 7701; ’86 Code.)
Rev. Rul. 76-159, 1976-1 C.B. 356.
214.119 Self-dealing; U.S. Congressmen
reimbursed for foreign travel. Reimbursement
by a private foundation for travel, meals, and lodging
expenses incurred by U.S. Congressmen it
chooses to participate in a conference it cosponsors
in a foreign country does not come within the
exception to self-dealing. §53.4941(d)–3. (Sec.
4941, ’86 Code.)
Rev. Rul. 74-601, 1974–2 C.B. 385.
214.120 Self-dealing; U.S. government official
per diem allowance. A per diem allowance
for travel inside the U.S. paid to a government official
by a private foundation in connection with its
educational and charitable purposes is excepted
from the tax on self-dealing under section
4941(d)(2)(G)(vii) only if the allowance does not

exceed 125 percent of the maximum authorized
rate of $35 provided by section 5702(a) of title 5,
U.S.C., notwithstanding the provision in section
5702(c) allowing higher rates in designated geographical
areas. §53.4941(d)-3. (Sec. 4941, ’86
Code.)
Rev. Rul. 77-251, 1977-2 C.B. 389.
214.121 Self-dealing; use of private road by
disqualified person. The use of a private foundation
museum’s private road for access to the adjacent
headquarters and manufacturing plant of a
corporation (a disqualified person) during the
same hours the road is used by the general public
as a thoroughfare connecting two public streets is
not an act of self-dealing. §§53.4941(d)–3. (Sec.
4941, ’86 Code.)
Rev. Rul. 76-459, 1976-2 C.B. 369.
214.122 Status; community trusts; reliance
period extended. The reliance period contained
in reg. 1.508–1(b)(4)(i) that permits grantors, contributors,
and distributors to rely on the claimed
public charity status of community trusts is
extended. §§1.170A-1, 1.508–1. (Sec. 601.201,
S.P.R.; Secs. 170, 508, ’86 Code.)
Rev. Proc. 77-20, 1977-1 C.B. 585.
214.123 Status; nonexempt charitable trusts.
A nonexempt charitable trust described in section
4947(a)(1) that is a private foundation must terminate
its private foundation status pursuant to section
507 before it can be excluded from such status
under section 509(a)(3). §1.509(a)-4. (Sec. 509,
’86 Code.)
Rev. Rul. 76-92, 1976-1 C.B. 160.
214.124 Status; section 508(b) presumption;
untimely notification. An organization formed
before October 9, 1969 is not precluded from classification
as other than a private foundation
merely because it failed to notify the Service by
the March 22, 1973 deadline given in the regulations
that it is not a private foundation as required
by section 508(b); its status as other than a private
foundation may be established by submitting a
request for a determination letter to the local District
Director. §§1.508–1, 1.509(a)–1. (Secs. 508,
509; ’86 Code.)
Rev. Rul. 73-504, 1973-2 C.B. 190.
214.125 Status; support received prior to
change in operations. Support received by an
organization prior to changes made in its operations
to enable it to qualify under section 501(c)(3)
is not taken into account in determining its foundation
status. §§1.170A-9, 1.509(a)–3. (Secs. 170,
509; ’86 Code.)
Rev. Rul. 77-116, 1977-1 C.B. 155.
214.126 Status; support received prior to
incorporation. An organization that filed an
application for recognition of exemption under
section 501(c)(3) in May 1976, following its
incorporation in November 1975 to succeed an
unincorporated association that had operated for
three years without filing an application, will be
recognized as exempt from the date of incorporation.
An advance ruling concerning the organization’s
private foundation may be requested on the
basis of support received since incorporation.
§§1.508-1, 1.509(a)-3. (Secs. 508, 509; ’86
Code.)
Rev. Rul. 77-469, 1977-2 C.B. 196.
214.127 Status; untimely notification. A corporation
that states it is a private foundation when
it files an application for recognition of exemption
subsequent to the 15 month deadline provided by
regulation is treated as an organization described
in section 501(c)(3) and as a private foundation
only from the date it files its application.
§§1.508-1, 1.509(a)-1. (Secs. 508, 509; ’86
Code.)
Rev. Rul. 77-207, 1977-1 C.B. 152.
214.128 Status; untimely notification. A corporation
that states it is a publicly supported charity
when it files its application for recognition of
exemption subsequent to the 15 month deadline
provided by regulation cannot be treated as an
organization described in section 501(c)(3) before
the date it files its application; financial support
received prior to that date may not be used for purposes
of determining whether the organization is
publicly supported. §§1.508–1, 1.509(a)–1. (Secs.
508, 509; ’86 Code.)
Rev. Rul. 77-208, 1977-1 C.B. 153.
214.129 Status after distribution of assets. A
private foundation may terminate its private
foundation status under section 507(b)(1)(A) by
distributing its total net assets to a public charity,
in existence 20 months, formed from the consolidation
of two public charities each of which would
have been in existence for 60 months at the time
of distribution had they not been consolidated.
§1.507-2. (Sec. 507, ’86 Code.)
Rev. Rul. 75-289, 1975-2 C.B. 215.
214.130 Status after termination. A corporation
that remains in existence after terminating its
private foundation status under section
507(b)(1)(A) must, unless specifically excepted
by section 508(c), file an Application for Recognition
of Exemption if it wishes to be treated as an
organization described in section 501(c)(3).
§§1.507-2, 1.508-1, 1.509(c)-1. (Secs. 507, 508,
509; ’86 Code.)
Rev. Rul. 74-490, 1974-2 C.B. 171.
214.131 Status termination; advance ruling;
supporting organization. A private foundation
that has commenced a 60-month termination
period has received an advance ruling that it can
reasonably be expected to satisfy the requirements
of section 507(b)(1)(B)(i) by operating as a public
charity during the period. A private foundation
that supports only such organization and otherwise
qualifies under reg. 1.509(a)-4 may be given
an advance ruling that it can reasonably be
expected to operate as a section 509(a)(3) organization
and satisfy the requirements of section
507(b)(1)(B)(i) during its own 60-month termination
period. §§1.507–2, 1.509(a)–4. (Secs. 507,
509; ’86 Code.)
Rev. Rul. 78-386, 1978-2 C.B. 179.
214.132 Status termination; change in
accounting period. A private foundation that
gave notice that it was terminating its private
foundation status by operating as a public charity
for a 60-month period beginning with the first day
of its next taxable year and that is was changing its
annual accounting period from a calendar to a fiscal
year pursuant to reg. 1.442–1(c)(2) may begin
the 60-month period on the earlier fiscal year date.
§§1.442-1, 1.507-2. (Secs. 442, 507; ’86 Code.)
Rev. Rul. 77-113, 1977-1 C.B. 152.
214.133 Support by foreign government. An
exempt organization organized in a foreign country
and receiving a substantial portion of its support
from a foreign government is not a private
foundation. §1.509(a)-2. (Sec. 509, ’86 Code.)
Rev. Rul. 75-435, 1975-2 C.B. 215.
214.134 Support of foreign organization. An
organization that is organized and operated in support
of a foreign, rather than a domestic, organization
meeting the requirements of section 509(a)(1)
and (a)(2) and that otherwise meets the requirements
of section 509(a)(3) qualifies as an organization
described in that section. §1.509(a)-4.
(Sec. 509, ’86 Code.)
Rev. Rul. 74-229, 1974-1 C.B. 142.
Exempt organizations
214.135 Support requirement; organization
for the benefit of a state university. The substantial
support tests of section 170(b)(1)(A)(vi) also
apply to allow an organization organized and operated
exclusively for the benefit of a state university,
otherwise described in section
170(b)(1)(A)(iv), to meet the substantial support
test of section 170(b)(1)(A)(iv), provided the
sources of support of the organization do not
include support from sources permitted by section
170(b)(1)(A)(vi), but not permitted by section
170(b)(1)(A)(iv). 1.170A-9, 1.509(a)–2. (Secs.
170, 509; ’86 Code.)
Rev. Rul. 82–132, 1982–2 C.B. 107.
214.136 Supporting organization. A newly
created nonprofit organization is to pay its future
income until a specific amount has been paid to
specified organizations described in section
509(a)(1) or (a)(2) that appoint a majority of its
governing body. The organization will dissove after
the specific amount has been paid and will distribute
its assets to such specified organizations that a
contributor named in its articles of organization
selects. The organization is a private foundation
and not a supporting organization. §1.509(a)-4.
(Sec. 509, ’86 Code.)
Rev. Rul. 79-197, 1979-1 C.B. 204.
214.137 Supporting organization; charitable
trust granting scholarships. An exempt charitable
trust whose sole purpose is to grant scholarships
to students graduating from the public high
schools in a city and that is trusteed by the city
council with its funds managed by the city treasurer
is a supporting organization and is not a private
foundation. §1.509(a)-4. (Sec. 509, ’86
Code.)
Rev. Rul. 75–436, 1975-2 C.B. 217.
214.138 Supporting organization; charitable
trust granting scholarships. An exempt charitable
trust whose sole purpose is to grant scholarships
to students graduating from both public and
private high schools in a city and whose trustees
are officers of, or are elected by the membership
of, a local civic league exempt under section
501(c)(4) is a supporting organization and thus not
a private foundation. §1.509(a)-4. (Sec. 509, ’86
Code.)
Rev. Rul. 76-401, 1976-2 C.B. 175.
214.139 Supporting organization; charitable
trust granting scholarships for county students.
An exempt charitable trust established
solely to provide college scholarships to county
high school graduates that is trusteed by an independent
bank trustee is a private foundation and
not a supporting organization. §1.509(a)–4. (Sec.
509, ’86 Code.)
Rev. Rul. 75-437, 1975-2 C.B. 218.
214.140 Supporting organization; community
trust. A community trust described in reg.
1.170A-9(e)(11) that was created by a community
chest to hold permanently endowed charitable
funds and to distribute income to support local
charitable organizations that are public charities is
a supporting organization and is not a private
foundation, even if the publicly supported charities
are not specified by name. §1.509(a)-4. (Sec.
509, ’86 Code.)
Rev. Rul. 81-43, 1981-1 C.B. 350.
214.141 Supporting organization; control of
board by disqualified person. An organization
that is exempt under section 501(c)(3) makes distributions
to a university. The organization is controlled
by a four member board of directors, one of
whom is a substantial contributor to the organization
and a disqualified person. Two other directors
are employees of a corporation, also a disqualified
person, in which more than 35 percent of the voting
power is owned by the substantial contributor.
The remaining director is chosen by the university.
None of the directors has a veto power. The organization
is not a supporting organization within
the meaning of section 509(a)(3). §1.509(a)-4.
(Sec. 509, ’86 Code.)
Rev. Rul. 80-207, 1980-2 C.B. 193.

Exempt organizations
214.142 Supporting organization; integral
part test. Reports of the type described in the
example in reg. 1.509(a)-4(i)(3)(iii)(d), submitted
by the trustee to each of the beneficiaries of a charitable
trust, will not alone satisfy the attentiveness
requirement of the integral part test. §1.509(a)-4.
(Sec. 509, ’86 Code.)
Rev. Rul. 76-32, 1976-1 C.B. 160.
214.143 Supporting organization; integral
part test. An exempt trust whose trust instrument
designates a bank as sole trustee and provides that
75 percent of the trust income be distributed annually
to a specified church with the remaining 25
percent to accumulate until the original corpus
doubles, at which time the entire annual income is
to be distributed to the church, does not satisfy the
“substantially all” requirement of the integral part
test set forth in reg. 1.509(a)-4(i)(3)(iii)(a) and is
not a supporting organization. §1.509(a)-4. (Sec.
509, ’86 Code.)
Rev. Rul. 76-208, 1976-1 C.B. 161.
214.144 Supporting organization; organizational
test. The trust’s articles of organization, the
decedent’s will, require that the net income of the
trust be used “for the purpose of paying for the
education at Yale College of such graduates of
Duxbury, Massachusetts, High School, or bona
fide residents of Duxbury.” The organizational
test of section 509(a)(3) is met. §1.509(a)–4. (Sec.
509, ’86 Code.)
Warren M. Goodspeed Scholarship Fund, 70
T.C. 515, Nonacq., 1981-1 C.B. 2.
214.145 Taxable expenditure; awards including
travel or study. Grants made by a private
foundation primarily in recognition of past
achievement, with the funds being unrestricted, or
earmarked for subsequent travel or study and
meeting the requirements of section 4945(g), are
not taxable expenditures. §53.4945-4. (Sec. 4945,
’86 Code.)
Rev. Rul. 77-380, 1977-2 C.B. 419.
214.146 Taxable expenditure; compensation
to research assistants by an individual grantee.
The payment of compensation to research assistants
by an individual grantee of a private foundation,
where the grantee controls the selection of
these persons independently of the grantor private
foundation and where the private foundation’s
grant-making procedures satisfy the requirements
of section 4945(g), does not constitute a grant
within the meaning of section 4945(d)(3).
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 81–293, 1981–2 C.B. 218.
214.147 Taxable expenditure; craft competition.
An unconditional and unrestricted grant by
a private foundation to the winner of a competition
conducted among students attending schools specializing
in teaching a special craft is not a taxable
expenditure. Rev. Rul. 75–393 modified.
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 76-460, 1976-2 C.B. 371.
214.148 Taxable expenditure; educational
grants; request for approval. A private foundation
submitted a request for approval of its grantmaking
procedures to the Service, did not receive
a reply within 45 days, and considered the procedures
to be approved under reg. 53.4945-4(d)(3).
Later, the foundation was notified by the Service
that its grant-making program did not conform to
the requirements of section 4945(g). After receipt
of the disapproval notification, the remaining
installments of fixed-sum grants awarded during
the period the foundation’s procedures were
deemed approved are not taxable expenditures;
however, the renewals of any grants awarded during
such period are taxable expenditures.
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 81-46, 1981-1 C.B. 514.
214.149 Taxable expenditure; educational
loans. Long-term, low-interest educational loans
made by a private foundation under a program that
specifically limits the use of the funds to furtherance
of the recipient’s education at an educational
institution described in section 170(b)(1)(A)(ii)
are individual grants. §53.4945-4. (Sec. 4945, ’86
Code.)
Rev. Rul. 77-434, 1977-2 C.B. 420.
214.150 Taxable expenditure; educational
loans; employer-related. Guidelines are provided
for determining whether educational loans
made by private foundations under employer-related
loan programs are taxable expenditures.
Modified by Rev. Proc. 83-36. §§53.4945-4,
301.7805-1. (Sec. 601.602, S.P.R.; Secs. 4945,
7805, ’86 Code.)
Rev. Proc. 80-39, 1980-2 C.B. 772.
214.151 Taxable expenditure; employer-related
educational grant and loan programs.
Procedures are provided for determining whether
children of employees are eligible recipients of
employer-related educational grants or loans of a
private foundation for purposes of the 10 percent
tests of Rev. Procs. 76-47 and 80-39. Rev. Procs.
76-47 and 80-39 clarified. §§1.117-1,
53.4945-4. (Sec. 601.602, S.P.R.; Secs. 117, 4945,
’86 Code.)
Rev. Proc. 85-51, 1985-2 C.B. 717.
214.152 Taxable expenditure; employer-related
educational loans; scholarship and fellowship
grants. Publicizing a private foundation’s
employer-related grant or loan program in
the employer’s newsletter, distributed to all
employees of the company, will not violate the
requirements of Rev. Procs. 76-47 or 80-39 if the
foundation is clearly identified as the grantor of
the awards. Rev. Procs. 76-47 and 80-39 clarified.
§§1.117-1, 53.4945-4. (Sec. 601.602, S.P.R.;
Secs. 117, 4945, ’86 Code.)
Rev. Proc. 81-65, 1981-2 C.B. 690.
214.153 Taxable expenditure; grant to
another organization omitted from return. A
private foundation that failed to list on its original
annual information return a grant to an organization
not described in either section 509(a)(1), (2),
or (3), but corrected the omission on an amended
return filed after the due date, has failed to exercise
the expenditure responsibility requirements of
section 4945(h)(3) with respect to the grant, and
the grant is a taxable expenditure. §53.4945–5.
(Sec. 4945, ’86 Code.)
Rev. Rul. 77-213, 1977–1 C.B. 357.
214.154 Taxable expenditure; grant to instrumentality
of political subdivision. A grant for
exclusively charitable purposes made by a private
foundation to a wholly owned instrumentality of
a political subdivision of a state is not a taxable
expenditure under section 4945(d)(4) even if the
foundation does not exercise expenditure responsibility
over the grant. §53.4945–5. (Sec. 4945,
’86 Code.)
Rev. Rul. 81-125, 1981-1 C.B. 515.
214.155 Taxable expenditure; literary
awards. An award by a private foundation to the
person who has written the best work of literary
criticism during the preceding year, whether it is
an article, essay, treatise, or book, is not a taxable
expenditure. §53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 75-393, 1975-2 C.B. 451.
214.156 Taxable expenditure; loan to disqualified
person. A loan by a private foundation to
a disqualified person that constitutes an act of selfdealing
but otherwise is a permissible expenditure,
is not a taxable expenditure. §53.4945-6.
(Sec. 4945, ’86 Code.)
Rev. Rul. 77-161, 1977-1 C.B. 358.
214.157 Taxable expenditure; payments to
consultants. Payments to consultants by a private
foundation for personal services performed in the
development of model curricula and design of
educational materials to aid the foundation in its
program activity of assisting educators to employ
improved educational methods are not grants
within the meaning of section 4945(d)(3).
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 74-125, 1974–1 C.B. 327.
214.158 Taxable expenditure; payments to
students. Grants made on an objective and nondiscriminatory
basis by a private foundation to
worthy college students who acknowledge that
they plan to teach in a particular State after graduation
satisfy the requirements of section 4945(g)
and are not taxable expenditures under section
4945(d)(3); however, they are grants to achieve
specific objectives as described in section
4945(g)(3) rather than grants constituting scholarships
as described in section 4945(g)(1).
§53.4945-4. (Secs. 117, 4945; ’86 Code.)
Rev. Rul. 77-44, 1977-1 C.B. 353.
214.159 Taxable expenditure; scholarship
grants. A private foundation that made grants to
individuals after 45 days from the date it submitted
an exemption application in accordance with procedures
fully disclosed in its application did not
make taxable expenditures under section 4945,
even though the foundation did not specifically
request advance approval of its procedures.
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 86-77, 1986-1 C.B. 334.
214.160 Taxable expenditure; scholarship
grants. Grants awarded by a private foundation
under an employer-related program are scholarships
under section 117(a), even though the grants
will be awarded without regard to the percentage
guidelines of section 4.08 of Rev. Proc. 76-47.
Therefore, grants awarded under the program will
be described in section 4945(g)(1) and will not be
taxable expenditures under section 4945(d)(3).
§1.117-1, 53.4945-4. (Secs. 117, 4945; ’86
Code.)
Rev. Rul. 86-90, 1986-2 C.B. 184.
214.161 Taxable expenditure; scholarships;
deceased or retired employees. For purposes of
sections 117(a) and 4945(g)(1), a private foundation’s
scholarship program for children of
deceased or retired employees of a particular company
is an “employer-related grant program” to
which the guidelines of Rev. Proc. 76-47 apply.
§§1.117-1, 53.4945-4, (Secs. 117, 4945; ’86
Code.)
Rev. Rul. 79-365, 1979-2 C.B. 389.
214.162 Taxable expenditure; scholarships
and fellowships. Guidelines are provided to
determine whether a grant made by a private
foundation under an employer-related grant program
to an employee to which the program relates
is a taxable expenditure or a scholarship or fellowship
grant. Amplified by Rev. Proc. 77–32. Clarified
by Rev. Proc. 81–65. Modified by Rev. Proc.
83-36. §§1.117-1, 53.4945-4. (Sec. 601.602,
S.P.R.; Secs. 117, 4945, ’86 Code.)
Rev. Proc. 76-47, 1976–2 C.B. 670.
214.163 Taxable expenditure; scholarships
and fellowships. Rules are provided under which
private foundations may continue to rely on ruling
letters issued prior to December 27, 1976, approving
their employer-related scholarship programs.
Rev. Proc. 76-47 amplified. §§53.4945-4,
301.7805-1. (Sec. 601.201, S.P.R.; Secs. 4945,
7805, ’86 Code.)
Rev. Proc. 77-32, 1977–2 C.B. 541.
214.164 Taxable expenditure; scholarships
and fellowships; employer-related. A private
foundation that was created and funded by a forprofit
company grants scholarships, based on
objective standards, for the education of children

of a particular community, regardless of whether
the parents are employed by the company. The
scholarship program is not an “employer-related”
grant program subject to the guidelines of Rev.
Proc. 76-47.§§1.117-1, 53.4945-4. (Secs. 117,
4945; ’86 Code.)
Rev. Rul. 79-131, 1979-1 C.B. 368.
214.165 Taxable expenditure; scholarships
based on supplementary funding. Scholarship
grants made to individuals by a private foundation
on the basis of academic standing, financial need,
personal history, the cost of the programs of study
to be pursued, and the likelihood that the recipients
will be able to finance the balance of the cost of
their education, are not taxable expenditures.
§53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 76-340, 1976-2 C.B. 370.
214.166 Taxable expenditure; scholarships to
children of employees. A private foundation pays
grants to an organization that is not a private
foundation to provide scholarships only to children
of a particular employer. The grants are
grants to individuals under section 4945(d)(3) for
which advance approval under section 4945(g)(1)
is required, and are employer-related grants to
which the guidelines of Rev. Proc. 76-47 apply.
§§53.4945-4, 301.7805-1. (Secs. 4945, 7805; ’86
Code.)
Rev. Rul. 81-217, 1981-2 C.B. 217.
214.167 Taxable expenditure; scholarships to
relatives of trust’s grantor. A private foundation
trust that awards scholarships on a preferential
basis to family members and relatives of the trust’s
grantor does not award such scholarships on an
objective and nondiscriminatory basis as required
by section 4945(g). §§1.501(c)(3)-1, 53.4945-4.
(Secs. 501, 4945; ’86 Code.)
Rev. Rul. 85–175, 1985–2 C.B. 276.
214.168 Taxable expenditure; science award.
An award by a private foundation to a high school
senior whose exhibit receives top honors in a local
science fair and is conditioned on the student’s
agreeing to use the award for educational activities
may be a taxable expenditure. Rev. Rul. 75–393
distinguished. §53.4945-4. (Sec. 4945, ’86 Code.)
Rev. Rul. 76-461, 1976-2 C.B. 371.
214.169 Taxable expenditure; tools for vocational
school students. Grants by a private
foundation to vocational high schools to be used
to purchase the basic tools of a trade for students
selected by representatives of the foundation are
grants to individuals for study and will be taxable
expenditures unless the requirements of section
4945(g) are met. §53.4945-4. (Sec. 4945, ’86
Code.)
Rev. Rul. 77-212, 1977-1 C.B. 356.
214.170 Trade school. A nonprofit organization
created as a result of collective bargaining
agreements to train individuals desiring to acquire
skills in an industry is exempt under section
501(e)(3); it is also an educational organizationdescribed
in section 170(b)(1)(A) and, therefore,
is not a private foundation under section 509(a).
§§1.170-1, 1.501(c)(3)-1. (Secs. 170, 501, 509;
’86 Code.)
Rev. Rul. 72-101, 1972-1 C.B. 144.
214.171 Undistributed income; distribution
in short taxable year. A private foundation that
made a valid election to change its accounting
period, which resulted in a short taxable year, and
that had undistributed income at the endof its prior
taxable year must distribute the income before the
close of the short taxable year to avoid the taxes
imposed by section 4942. §53.4942(a)–1. (Sec.
4942, ’86 Code.)
Rev. Rul. 74-315, 1974-2 C.B. 449.
214.172 Undistributed income; required
accumulation. Amounts accumulated by a private
foundation created in 1968 to award scholarships
to qualified individuals from a specific high
school, such accumulations being required by the
trust instrument, do not reduce the amount
required to be distributed, even though a probate
court of competent jurisdiction denied the trustee’s
request to be excused from compliance with
the provision of the trust requiring the accumulation.
§53.4942(a)–2. (Sec. 4942, ’86 Code.)
Rev. Rul. 77-74, 1977–1 C.B. 352.
Prohibited transactions
216.1 Charitable trust; benefit to children of
employees of creator corporation. An exempt
charitable trust will not be considered to be engaging
in prohibited transactions by distributing funds
to a charitable and/or educational public organization,
even though some students at the local school
who may benefit from the distributions by the trust
are children of employees of the creator corporation.
§§29.162–3, 29.3813–1. (Secs. 162(a), 3813,
’39 Code; Secs. 503, 641, ’86 Code.)
Rev. Rul. 96, 1953-1 C.B. 264.
216.2 Employees’ trust; adequate security;
prior payment by grantor. A loan made by an
exempt employees’ pension trust to the employercreator
is a prohibited transaction under section
503(c) where the loan security is the excess of a
prior unconditional payment to the trust over the
deductible limits under section 404. §1.503(c)-1.
(Sec. 503, ’86 Code.)
Rev. Rul. 67–266, 1967–2 C.B. 206.
216.3 Employees’ trust; deposits in employer-grantor
bank; checking. Deposits of funds of
an exempt employees’ trust in a checking account
with the employer-grantor bank will not constitute
a prohibited transaction; nor will the deposit of
funds in such checking account, during a
described interim period, violate the provisions of
section 401(a) or section 503(c)(6). §§1.401–1,
1.503(c)-1. (Secs. 401, 503; ’86 Code.)
Rev. Rul. 59–29, 1959–1 C.B. 123.
216.4 Employees’ trust; loan without adequate
security. A loan by an exempt employees’
pension trust to its grantor, initially secured by the
grantor-corporation’s general assets and 18
months later also secured by the principal shareholder’s
unconditional guarantee for payment,
was without adequate security and constituted a
prohibited transaction. (Section 503(c)(1) redesignated
as section 503(b)(1) by the Tax Reform
Act of 1969.) §§1.401-1, 1.503(c)-1. (Secs. 401,
503; ’86 Code.)
Rev. Rul. 70-131, 1970-1 C.B. 135.
216.5 Employees’ trust; loans to employercreator.
The trustees’ failure to promptly demand
payment of the interest due on an adequately
secured loan from a trust forming part of a plan
described in section 4975(g)(3) to the trust’s
employer-creator is a prohibited transaction within
the meaning of section 503(b). Rev. Rul. 73-609
superseded. §1.503(b)–1. (Secs. 503, 4975; ’86
Code.)
Rev. Rul. 81-145, 1981-1 C.B. 350.
216.6 Employees’ trust; loans to employergrantor.
A qualified employees’ trust made a loan
to the employer-grantor and received in return a
demand note bearing a reasonable rate of interest
together with a chattel mortgage on personal property
then or in the future owned by the grantor. The
property was not identified and the mortgage was
not recorded as soon as practicable. The loan was
not adequately secured and constitutes a prohibited
transaction. Rev. Rul. 66-324 superseded.
§1.503(b)-1. (Sec. 503, ’86 Code.)
Rev. Rul. 80-269, 1980-2 C.B. 191.
216.7 Employees’ trust; loans to labor union.
A loan to a labor union from a trust forming part
of a union-negotiated employees’ pension plan
Exempt organizations
administered by a board composed equally of
employer and union representatives is not a prohibited
transaction. The loan must be for the exchsive
benefit of the employees if the pension trust
is to retain its qualified status. §§1.401–1,
1.503(c)-1. (Secs. 401, 503; ’86 Code.)
Rev. Rul. 71-462, 1971–2 C.B. 238.
216.8 Employees’ trust; savings account
passbook as security for loan. A loan to an
employer-grantor by an exempt employees’ trust
is not a prohibited transaction where the loan is
secured by a savings account passbook placed in
escrow. §1.503(c)–1. (Sec. 503, ’86 Code.)
Rev. Rul. 70-82, 1970-1 C.B. 134.
216.9 Employees’ trust; secured demand
note transferred to employer. Where a qualified
employees’ trust transfers its demand note secured
by securities and cash to its employer-creator for
an agreed percentage of the note’s principal while
the note remains outstanding, the transaction
constitutes a loan of income or corpus find is a prohibited
transaction unless adequate security and
interest is included. §1.503(c)–1. (Sec. 503, ’86
Code.)
Rev. Rul. 72–494, 1972-2 C.B. 249.
216.10 Employees’ trust; unsecured debentures.
The exempt trust forming a part of an
employees’ qualified pension plan of a subsidiary
shall not be considered as engaging in a prohibited
transaction merely because trust funds are
invested in debentures of the parent which,
although not secured by the pledge of any collateral,
are subject to the usual provisions with
respect to default of either principal or interest
ordinarily set forth in an indenture under which
corporate debentures are issued. §1.503(c)–1.
(Sec. 503, ’86 Code.)
Rev. Rul. 58-526, 1958-2 C.B. 269.
216.11 Employees’ trust; unsecured loan;
same shareholder of creator corporation. An
exempt employees’ trust does not engage in a prohibited
transaction under section 503(b) by making
an unsecured loan to a corporation with the
same controlling shareholder as the creator corporation.
§§1.401–1, 1.503(c)–1. (Secs. 401, 503;
’86 Code.)
Rev. Rul. 72-532, 1972-2 C.B. 250.
216.12 Establishment of exempt status. An
organization created for charitable purposes that
has engaged in a prohibited transaction will not be
precluded from establishing exemption under section
501(c)(3). §§1.501(c)(3)-1, 1.503(c)-1.
(Secs. 501, 503; ’86 Code.)
Rev. Rul. 69-233, 1969-1 C.B. 156.
216.13 Legislative activity; testimony. An
exempt organization is not engaged in prohibited
legislative activity if, at the request of a legislative
committee, a representative testifies as an expert
witness on pending legislation affecting the organization.
§1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-449, 1970-2 C.B. 111.
216.14 Loans to employer-grantor unrecorded
deed of trust. A loan made by an exempt
employees’ trust of a governmental plan to its
employer-grantor evidenced by a note bearing a
reasonable rate of interest, but secured only by an
unrecorded deed of trust on real property owned
by the grantor, was not adequately secured and
constituted a prohibited transaction under section
503(b)(1). Rev. Rul. 73–586 superseded.
§1.503(b)-1. (Sec. 503 ’86 Code.)
Rev. Rul. 85-114, 1985-2 C.B. 163.
216.15 Noneducational activities. An organization
exempt under section 501(c)(3) which
accomplishes its exempt educational purposes by
holding conferences, discussions, and seminars to
which prominent men and women from all fields
of endeavor are invited to attend and participate
therein, is not an educational organization of the

Exempt organizations
type described in section 503(h)(2) since the organization
does not maintain a regular faculty and
curriculum and does not have a regularly enrolled
body of pupils or students in attendance. Accordingl,
the extra ten percent deduction for certain
contributions provided by section
170(b)(1)(A)(ii) and the various excise tax exemptions
allowed to nonprofit educational organizations
do not apply to the instant organization. Nor
is the organization exempt from filing an annual
information return. §§1.501(c)(3)–1, 1.503( a)–1.
(Secs. 501, 503; ’86 Code.)
Rev. Rul. 64-128, 1964-1 (Part 1) C.B. 191.
216.16 Reestablishment of status; loan without
adequate security. An organization which
has been denied exemption by reason of having
engaged in a prohibited transaction may not reestablish
exemption until the loan which was the
prohibited transaction has been repaid or adequately
secured. §1.503(d)-1. (Sec. 503, ’86
Code.)
Rev. Rul. 67-9, 1967-1 C.B. 143.
216.17 Unsecured demand note. The failure of
an organization to promptly demand payment or
obtain adequate security for an unsecured demand
note of a substantial contributor constitutes a prohibited
transaction. §1.503-1. (Sec. 503, ’86
Code.)
Rev. Rul. 68-474, 1968-2 C.B. 240.
216.18 Unsecured loan to corporation controlled
by son of trust’s creator. A corporation
controlled by the son of the creator of an exempt
charitable trust is a debarred party. Therefore, by
making an unsecured loan to such corporation, the
trust is lending its assets to a party within the scope
of section 501(c) and the loan constitutes a prohibited
transaction. §1.503(c)–1. (Sec. 503, ’86
Code.)
Rev. Rul. 69–221, 1969–1 C.B. 156.
216.19 Unsecured loan to partnership. Where
an exempt charitable organization makes a loan to
a partnership, one of the general partners of which
is a substantial contributor to the organization, the
requirements of “adequate security” are not satisfied
solely by reason of the joint and several liability
of the partners, on the obligation. Accordingly,
the making of such a loan to a partnership constitutes
a prohibited transaction. §1.503(c)–1. (Sec.
503, ’86 Code.)
Rev. Rul. 65–202, 1965–2 C.B. 172.
Qualification
218.1 Accreditation of animal care facilities.
A nonprofit organization may qualify for exemption
where it is organized and operated to promote
humane treatment of laboratory animals by carrying
on a program for the accreditation of animal
care facilities that supply, keep, and care for animals
used by medical and scientific researchers.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66–359, 1966-2 C.B. 219.
218.2 Adoption agency; placement of foreign
orphans. A nonprofit organization that arranges
the placement of orphan children from foreign
countries in the homes of adoptive parents in the
United States is operated exclusively for charitable
purposes. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 80–200, 1980–2 C.B. 173.
218.3 Agricultural; dog club. A club that promotes
and protects a particular breed of dog not
raised or used by members as farm animals is not
exempt as an agricultural organization but may
qualify for exemption as a social club.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73–520, 1973–2 C.B. 180.
218.4 Agricultural; fairs. A nonprofit organization
formed and operated exclusively to
instruct the public on agricultural matters by conducting
annual public fairs and exhibitions of livestock,
poultry, and farm products may be exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-216, 1967-2 C.B. 180.
218.5 Agricultural; farmers’ wives promoting
farming. A nonprofit organization of farmers’
wives formed to enhance and improve the agricultural
way of life in a particular State qualifies for
exemption. §1.501(c)(5)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-118, 1974-1 C.B. 134.
218.6 Agricultural; fish farming. A non profit
organization whose membership is restricted to
persons engaged in raising fish as a cash crop on
farms, that was formed to encourage better and
more economical methods of fish farming and
promote the interests of its members, may qualify
as an exempt agricultural organization.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-488, 1974-2 C.B. 166.
218.7 Agricultural; fur-bearing animal
breeders’ association. An association of forbearing
animal breeders and ranchers, formed to
promote better and more economical methods of
raising the animals and to educate its members and
protect their interests, is exempt as an agricultural
organization. §1.501(c)(5)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 56-245, 1956-1 C.B. 204.
218.8 Agricultural; labor force to farmers. A
nonprofit organization of farmers formed to furnish
farm laborers for individual farmers does not
qualify for exemption. §1.501(c)(5)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 72–391, 1972–2 C.B. 249.
218.9 Agricultural; livestock marketing
facility. A nonprofit organization that owns and
operates a livestock facility and leases it to local
members of a nonexempt national association of
farmers for use in implementing the association’s
collective bargaining program with processors
does not quality for exemption as an agricultural
organization. §1.501(c)(5)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 77-153, 1977-1 C.B. 147.
218.10 Agricultural; management, grazing,
and sale of cattle. A nonprofit organization
formed to manage, graze, and sell its members’
cattle is providing a direct business service to its
members and does not qualify for exemption.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-195, 1974-1 C.B. 135.
218.11 Agricultural; marketing agent. A nonprofit
agricultural corporation whose principal
activity is marketing livestock as agent for its
members does not qualify for exemption,
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-105, 1966-1 C.B. 145.
218.12 Agricultural; milk production
records. A nonprofit organization of agricultural
producers formed to process individual farmer’s
milk production and test records for use in improving
milk production does not qualify for exemption.
Clarified and distinguished by Rev. Rul.
74-518. §1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-372, 1970-2 C.B. 118.
218.13 Agricultural; milk production testing.
A nonprofit organization of dairy farmers, a member
of the National Cooperative Dairy Herd
Improvement Program sponsored by the U.S.
Department of Agriculture, that derives its income
from testing fees and membership assessments
and that weighs and tests milk of members’ cows
and makes statistical information based on the
tests available to members, nonmembers, and
governmental agencies for use in improving milk
production is exempt as an agricultural organization.
Rev. Rul. 70–372 clarified and distinguished.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-518, 1974-2 C.B. 166.
218.14 Agricultural; negotiating crop prices.
A nonprofit organization of growers and producers
of a particular agricultural commodity formed
principally to negotiate with processors for the
price to be paid to members for their crops qualifies
for exemption. §1.501(c)(5)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-399, 1976-2 C.B. 152.
218.15 Agricultural; pest control. A local
association of farmers, formed to promote more
effective agricultural pest control, that employs
pest management scouts who periodically inspect
members’ fields, identify and count agricultural
pests, and compile data on agricultural pest
infestation qualifies for exemption.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul 81–59, 1981–1 C.B. 334.
218.16 Agricultural; refund of dues. The
refund of excess dues to members of an exempt
agricultural organization in the same proportion as
the dues are paid does not disqualify the organization
from exemption. §1.501(c)(5)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 81-60, 1981-1 C.B. 335.
218.17 Agricultural; soil testing laboratory.
A corporation, organized by an organization of
farm bureaus and governed by farm bureau
boards, that conducts soil tests for farmers and others
(members and nonmembers of the farm
bureau) on a cost basis, is exempt as an agricultural
organization. §39.101(1)–1. (Sec. 101, ’39
Code; Sec. 501, ’86 Code.)
Rev. Rul. 54-282, 1954-2 C.B. 126.
218.18 Agricultural; Welsh pony breeders’
association. An association organized to guard
the purity of the breed of Welsh ponies is entitled
to exemption as an agricultural organization.
§1.501(c)(5)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 55-230, 1955-1 C.B. 71.
218.19 Aiding needy in developing countries.
A nonprofit organization formed and operated to
assist needy families in “developing” countries
may be exempt from tax. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 68–117, 1968–1 C.B. 251.
218.20 Airport serving rural areas. A nonprofit
organization formed to operate an airport
that is located on land owned by a municipality
that supervises its overall operation, is used by the
general public and key local businesses essential
to the economy of a four-county rural area having
no other airport facilities, uses volunteers to provide
administrative and maintenance services for
the organization, and uses income derived from
government grants, hangar rentals, and the sale of
gasoline and oil for permanent improvements,
maintenance, and daily operations qualifies for
exemption under section 501(C)(4).
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-429, 1978-2 C.B. 178.
218.21 Antiwar protest organization. A nonprofit
organization formed to promote world
peace and disarmament by nonviolent direct
action and whose primary activity is the sponsoring
of antiwar protest demonstrations in which
demonstrators are urged to commit violations of
local ordinances and breaches of public order does
not qualify for exemption under section 501(c)(3)
or (4). §§1.501(c)(3)–1, 1.501(c)(4)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 75-384, 1975–2 C.B. 204.
218.22 Apprentice training program. An
organization created by representatives of both
labor and management to select individuals for apprentice
training, arrange their classroom and on-

Exemtp organizations
the-job training, and provide books and supplies
used in the training is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-72, 1967-1 C.B. 125.
218.23 Art exhibit sponsorship. A nonprofit
organization created to foster and develop the arts
by sponsoring a public art exhibit at which the
works of unknown but promising artists are
selected by a panel of qualified judges for viewing
and are gratuitously displayed is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-178, 1966-1 C.B. 138.
218.24 Art gallery. A cooperative art gallery
formed and operated by a group of artists for the
purpose of exhibiting and selling their works does
not-qualify for exemption. Clarified by Rev. Rul.
76-152. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-395, 1971-2 C.B. 228.
218.25 Art gallery. A nonprofit organization
formed by art patrons to promote community
understanding of modern art trends by selecting
for exhibit, exhibiting, and selling art works of
local artists, retaining a commission on sales less
than customary commercial charges and not sufficient
to cover the cost of operating the gallery,
does not qualify for exemption. Rev. Rul. 71-395
clarified. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-152, 1976-1 C.B. 151.
218.26 Association to enroll athletes in college.
A nonprofit organization which raises funds
to be used in travel and other activities to interview
and persuade prospective students with outstanding
athletic ability to attend a particular university,
and which is not an integral part of such institution,
does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 56-13, 1956-1 C.B. 198.
218.27 Awarding of scholarships. The awarding
of scholarships by a foundation solely to undergraduate
members of a designated fraternity will
not preclude it from exemption as an educa-tional
organization. §1.501(c)(3)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 56-403, 1956-2 C.B. 307.
218.28 Awards for outstanding achievement.
A corporation organized to examine and evaluate
the achievements and contributions of citizens of
a particular State toward the progress and betterment
of human endeavor and to make awards to
such citizens is exempt from tax as a charitable
organization which benefits the community.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-146, 1966-1 C.B. 136.
218.29 Bar association; local. A city bar
association, exempt under section 501(c)(6), that
primarily directs its activities to the promotion and
protection of the practice of law may not be reclassified
as an educational or charitable organization
exempt under section 501(c)(3). G.C.M. 4805
superseded. §§1.501(c)(3)-1, 1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 71-505, 1971-2 C.B. 232.
218.30 Benefits inuring to donor; brand symbol.
Acceptance of funds and adjacent realty by an
exempt organization for establishing a public park
will not affect its exempt status even though the
corporate donor retained the right to continue
using the picture of a certain scenic view in the
park as its brand symbol. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 66-358, 1966-2 C.B. 218.
218.31 Benefits inuring to donor; corporate
name. A nonprofit organization formed to create
and operate a replica of an early American village
is engaging in educational activities similar to
those of a museum and qualifies for exemption
even though the corporation, which donated the
land and a substantial percentage of the organization’s
support, benefits by having the village
named after it and by having its name associated
with the village through both the corporation’s and
the organization’s advertising. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 77-367, 1977-2 C.B. 193.
218.32 Benefits inuring to founder. An organization,
formed to operate the activities previously
conducted by its principal founder, which
plans to reimburse the founder for expenditures
made by him in prior years in the conduct of these
activities, is not entitled to exemption, since a portion
of the net earnings of the organization will
inure to the benefit of the founder. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 55–610, 1955-2 C.B. 262.
218.33 Blood bank. A blood bank organized
and operated to provide a community with permanent
facilities for the collection and storage of
human blood and blood products and to provide
for the public distribution thereof may be exempt
from tax; however, the selling of blood and blood
products to commercial laboratories is unrelated
trade or business. Modified by Rev. Rul. 78–145.
§§1.501(c)(3)-1, 1.511-2, 1.513-1. (Secs. 501,
511, 513; ’86 Code.)
Rev. Rul. 66-323, 1966-2 C.B. 216.
218.34 Boat safety standards. A nonprofit
organization formed to formulate and recommend
practices and safety standards for those who
design, manufacture, and operate small boats may
be exempt from tax. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 68-164, 1968–1 C.B. 252.
218.35 Broadcasting rights; professional
tournaments. The status of an organization
exempt under section 501(c)(6) created to promote
interest in, elevate the standards of, and conduct
tournaments in, a certain professional sport
will not be adversely affected merely because its
primary support is derived from the sale of television
broadcasting rights to the tournaments it conducts.
Rev. Rul. 58-502 clarified. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 80-294, 1980–2 C.B. 187.
218.36 Broadcasting station; free air time to
political candidates. An organization exempt
under section 501(c)(3) of the Code, operating a
broadcasting station presenting religious, educational,
and public interest programs, is not participating
in political campaigns on behalf of public
candidates in violation of the provisions of that
section by providing reasonable air time equally
available to all legally qualified candidates for
election to public office in compliance with section
312(a)(7) of the Federal Communications Act
of 1934, as amended, and endorsing no candidate
or viewpoint. §1.501(c)(3)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 74-574, 1974-2 C.B. 160.
218.37 Bus transportation for community’s
isolated areas. An organization formed as a
Model Cities demonstration project under the
Demonstration Cities and Metropolitan Development
Act of 1966 to provide bus transportation to
isolated areas of a community not served by the
existing city bus system is providing bus service
under the authority of the Federal and local governments
and qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–68, 1978–1 C.B. 149.
218.38 Bus transportation for private school
children. A nonprofit organization, formed by
parents of pupils attending a private school, that
provides school bus transportation for its members’
children serves a private rather than a public
interest and does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-175, 1969–1 C.B. 149.
218.39 Bus transportation for senior citizens
and handicapped. A nonprofit organization that
provides, upon request, low cost bus transportation
to senior citizens and handicapped persons in
a community where public transportation is
unavailable or inadequate qualifies for exemption
as operated exclusively for charitable purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-246, 1977-2 C.B. 190.
218.40 Business leagues; advancement of
given profession. An organization formed to provide
specific services to members of a given profession
and to those preparing to enter the profession
on matters relating to their practices does not
qualify for exemption. §1.501(c)(6)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 67–176, 1967–1 C.B. 140.
218.41 Business leagues; advertising agencies.
A nonprofit organization composed of advertising
agencies, which verifies the advertising
claims of publications selling advertising space
and makes reports available to members of the
advertising industry generally, qualifies for
exemption. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–387, 1969-2 C.B. 124.
218.42 Business leagues; advertising members’
publications. An organization operated primarily
for the purpose of promoting, selling, and
handling the national advertising in its members’
publications is engaged in the performance of particular
services for individual members and is not
entitled to exemption. (Sec. 501, ’86 Code.)
Rev. Rul. 56-84, 1956-1 C.B. 201.
218.43 Business leagues; advertising products
of members. A local organization whose
principal activity consists of furnishing information
to and advertising the products of its members
engaged in the building construction business is
performing particular services for them and is not
exempt as a business league. Clarified by Rev.
Rul. 65–164 and Rev. Rul. 72-211.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 56-65, 1956-1 C.B. 199
218.44 Business leagues; appointing travel
agents. A nonprofit organization, formed by carriers
engaged in regular transoceanic passenger service,
whose primary activity consists of appointing
travel agents to book passenger travel on its
members’ ships is performing particular services
for its members and does not qualify for exemption.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-228, 1974-1 C.B. 136.
218.45 Business leagues; attracting national
conventions. A nonprofit organization, formed by
a city’s civic leaders, public officials, businessmen,
and representatives of the community-atlarge
to encourage conventions of national organizations
in the city by making arrangements for
facilities, services, and administrative support
necessary to run a convention. qualifies for
exemption. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-207, 1976-1 C.B. 158.
218.46 Business leagues; bid registry. The
operation of a bid registry which is open to all individuals
or firms in a particular trade or industry
and which has been established and operated as a
means of encouraging fair bidding practices
within the industry is an appropriate activity for an
association which otherwise meets the requirements
for exemption. §1.501(c)(6)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 66-223, 1966-2 C.B. 224.
218.47 Business leagues; board of trade. A
nonprofit organization formed to regulate the sale
of a specified agricultural commodity to assure

Exempt organizations
equal treatment of producers, warehousemen and
buyers is entitled to exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 55–715, 1955–2 C.B. 263.
218.48 Business leagues; building and
construction industry; plan room and news
bulletin. An organization formed to promote the
interest of its members and persons or firms
related to the building and construction industry
by providing a plan room and news bulletins available
for the entire industry qualifies for exemption.
Rev. Rul. 56-65 clarified. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 72-211, 1972-1 C.B. 150.
218.49 Business leagues; business and professional
women. A nonprofit organization formed
as a membership organization of business and professional
women that promotes the acceptance of
women in business and the professions qualifies
for exemption. §1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-400, 1976-2 C.B. 153.
218.50 Business leagues; commercial banks;
credit card plan. A nonprofit organization of
commercial banks formed to create, operate, and
promote a credit card plan for its member banks
does not qualify for exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 70-591, 1970-2 C.B. 118.
218.51 Business leagues; computer users. An
organization whose members represent diversified
businesses that own, rent, or lease computers
produced by a single computer manufacturer does
not qualify for exemption from federal income tax
as a business league under section 501(c)(6). Rev.
Rul. 74-147 distinguished. §1.501(c)(6)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 83–164, 1983–2 C.B. 95.
218.52 Business leagues; conducting parking
stamp plan. An organization whose primary
activity is the operation of a parking stamp plan
whereby the patrons of the organization’s members
are afforded automobile parking privileges
while shopping at members’ stores does not qualify
for exemption. §1.501(c)(6)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 64-108, 1964–1 (Part 1) C.B. 189.
218.53 Business leagues; consultant services
and cooperative purchasing. Where the principal
activities of a nonprofit organization, formed
to promote the interests of a particular retail trade,
are the management consultant services of its field
representatives who advise members on their individual
business problems and the sale of supplies
and equipment to members at low prices, the organization
does not qualify for exemption, even
though such activities are conducted on a cooperative
basis and produce only sufficient income to be
self-sustaining. §1.501(c)(6)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 66-338, 1966-2 C.B. 226.
218.54 Business leagues; credit information
service. A nonprofit organization that operates a
credit information service as its primary activity is
not exempt. G.C.M. 159 superseded.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–265, 1968–1 C.B. 265.
218.55 Business leagues; credit union assistance.
A nonprofit organization formed to maintain
the good will and reputation of credit unions
in a particular state by making interest free loans
to assist credit unions in financial difficulty, with
no restrictions placed upon the use of funds, does
not qualify for exemption. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 76-38, 1976-1 C.B. 157.
218.56 Business leagues; dealers association.
An association of licensed dealers in a certain type
of patented product does not qualify as a business
league where the association owns the controlling
interest in the corporation holding the basic patent
and is engaged mainly in furthering the business
interests of its member-dealers. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 58-294, 1958-1 C.B. 244.
218.57 Business leagues; distributors of agricultural
products. A nonprofit organization
whose members are packers, processors, and distributors
of agricultural products may be exempt
under section 501(c)(6) rather than 501(c)(5).
§§1.501(c)(5)-1, 1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 67–252, 1967-2 C.B. 195.
218.58 Business leagues; exchange of business
information. An organization which
restricts its membership to individuals, firms,
associations, and corporations, each representing
a different trade, business, occupation, or profession,
and which is organized for the purpose of
exchanging information on business prospects, its
members having no common business interest
other than a desire to increase their individual
sales, is not exempt as a business league. G.C.M.
21000 revoked. §1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 59-391, 1959-2 C.B. 151.
218.59 Business leagues; financial aid and
welfare services to members. A business league
which extends financial aid and welfare services
to its members is not exempt since part of its net
earnings is inuring to the benefit of private individuals.
§1.501(c)(6)–1. (Sec. 501, ’36 Code.)
Rev. Rul. 67-251, 1967-2 C.B. 196.
218.60 Business leagues; fishing industry
promotion. A nonprofit organization whose
members are involved in the commercial fishing
industry in a state that publishes a monthly newspaper
of commercial fishing technical information
and news and that derives its income primarily
from membership dues and sale of advertising
does not qualify as an agricultural organization but
may qualify as a business league.
§§1.501(c)(5)-1, 1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-287, 1975-2 C.B. 211.
218.61 Business leagues; forms for reporting
data used by members. The exempt status of a
business league is not affected where it distributes
forms designed primarily for use by the members
in reporting data to the league, but are also used by
members as business records. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 68-657, 1968-2 C.B. 218.
218.62 Business leagues; industrial park
development. The exempt status of a chamber of
commerce is not adversely affected by the development
of an industrial park in order to attract new
industry to the community. Amplified by Rev. Rul.
81-138. §1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-81, 1970-1 C.B. 131.
218.63 Business leagues; industry-wide
advertising campaign. An organization formed
to promote the business of a particular industry
that carries out its purposes primarily by conducting
a general advertising campaign to encourage
the use of products and services of the industry as
a whole is exempt from tax notwithstanding that
such advertising to a minor extent constitutes the
performance of particular services for its members.
§§39.101(7)-1, 1.501(c)(6)-1. (Sec. 101(7),
’39 Code; Sec. 501, ’86 Code.)
Rev. Rul. 55-444, 1955-2 C.B. 258.
218.64 Business leagues; insurance board.
The handling of an insurance program for a
municipal board of education and the receipt of
brokerage commissions which are required to be
deposited in a special fund for public purposes
does not affect the exempt status of an insurance
board. Further, such activity is not considered an
unrelated trade or business and brokerage commissions
allocated to the special fund were not
unrelated business income. (Sec. 511, ’86 Code.)
Rev. Rul. 56-152, 1956-1 C.B. 56.
218.65 Business leagues; insurance claimants
guaranty organization. An organization created
under State statute to pay claims against insolvent
fire and casualty insurance companies qualifies
for exemption as a business league where membership
in the organization is required of all insurance
companies writing fire and casualty insurance
in the State and its income is derived from
membership assessments and claims against the
assets of the insolvent companies. §1.501(c)(6)-6.
(Sec. 501, ’86 Code.)
Rev. Rul. 73-452, 1973-2 C.B. 183.
218.66 Business leagues; insurance companies;
high-risk policies. A nonprofit association
composed of licensed insurance companies that
makes insurance available to persons who are in
high-risk categories and cannot otherwise obtain
coverage qualifies for exemption. Distinguished
by Rev. Rul. 81-174. §1.501(c)(6)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 71-155, 1971-1 C.B. 152.
218.67 Business leagues; insurance companies;
medical malpractice insurance. A nonprofit
association of insurance companies that
provides medical malpractice insurance to health
care providers is not exempt as a business league.
Rev. Rul. 71-155 distinguished. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 81-174, 1981-1 C.B. 335.
218.68 Business leagues; insurance companies;
no-fault protection. A nonprofit organization
composed of insurance companies operating
within a state and created under the state’s no-fault
insurance statute to provide personal injury
protection benefits for residents of the state who
sustain injury in situations where the injuring
party is unknown or has very limited or no liability
coverage qualifies for exemption. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 76-410, 1976-2 C.B. 155.
218.69 Business leagues; insurance companies;
reinsurance of high-risk customers. A
nonprofit association of insurance companies that
accepts for reinsurance high-risk customers who
would ordinarily be turned down by member companies
is not exempt as a business league. Rev.
Rul. 71-155 distinguished. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 81-175, 1981-1 C.B. 337.
218.70 Business leagues; investigating fraudulent
insurance claims. An organization which is
created for the purpose of investigating and prosecuting
criminal, fraudulent, and unethical conduct
on the part of lawyers, doctors, and laymen in the
matter of casualty claims against insurance companies,
qualifies for exemption. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 66-260, 1966-2 C.B. 225.
218.71 Business leagues; laboratory profits.
A board of trade that, as its principal activity, provides
grain analysis laboratory services to members
and nonmembers at the same charge and that
is supported almost entirely from the substantial
profits of the laboratory, which is of a kind customarily
carried on for profit, is not exempt from tax.
I.T. 2801 superseded. §1.501(c)(6)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 78-70, 1978-1 C.B. 159.
218.72 Business leagues; legislative activities.
A corporation organized and operated primarily

Exempt organizations
for the purpose of promoting a common business
interest and bettering the business conditions of
one or more lines of business is exempt as a business
league even though its principal activity is the
advocacy of legislation which is germane to such
common business interest. Rev. Rul. 54-442
modified. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 61-177, 1961-2 C.B. 117.
218.73 Business leagues; legislative activities;
incidental. A corporation organized and operated
primarily for the purposes of promoting a common
business interest and bettering the conditions of
independent business, whose activities include the
furtherance of a legislative program, is exempt as
a business league. Modified by Rev. Rul. 61–177
to the extent that it suggests that engaging in other
than incidental legislative activities will necessarily
disqualify an organization. §39.101(7)–1.
(Sec. 101, ’39 Code; Sec. 501, ’86 Code.)
Rev. Rul. 54-442, 1954-2 C.B. 131.
218.74 Business leagues; luncheon and bar
facilities furnished members. An organization of
business and professional persons of a community,
providing luncheon and bar facilities for its
members but having no specific program directed
to the improvement of business conditions, does
not qualify for exemption. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 70-244, 1970-1 C.B. 132.
218.75 Business leagues; luncheon meetings
to discuss industry problems. An organization
composed of businessmen may qualify for exemption
where its activities are limited to holding luncheon
meetings devoted to a discussion, review,
and consideration of the various problems in a particular
industry directed to the improvement of
business conditions as a whole. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 67-295, 1967-2 C.B. 197.
218.76 Business leagues; manufacturers’
organization; research for members. A nonprofit
manufacturers’ organization that conducts
research and makes the results available only to its
members rather than to the industry as a whole
does not qualify for exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 69-106, 1969-1 C.B. 153.
218.77 Business leagues; manufacturers’
organization; testing and certification; product
standard. A nonprofit organization formed by
manufacturers of a particular product to conduct a
program of testing and certification of the product
to establish acceptable standards within the industry,
as a whole, qualifies for exemption.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-187, 1970-1 C.B. 131.
218.78 Business leagues; motor carriers
association. A motor carriers’ association formed
to make recommendations with respect to the
establishment, revision, and change of rates, tariffs,
rules, regulations, and practices for its members
who are regulated by the Interstate Commerce
Commission and to publish the prevailing
rates may be exempt from tax. §1.501(c)(6)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 67-393, 1967-2 C.B. 200.
218.79 Business leagues; neighborhood community
association. A nonprofit organization that
is operated to promote the common business interests
of its members, a majority of whose businesses
are located in one particular shopping center,
has a voluntary membership open to all
businesses in a neighborhood community, and is
not concerned with landlord-tenant matters relating
to the shopping center qualifies for exemption.
Rev. Rul. 73-411 distinguished. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 78-225, 1978-1 C.B. 159.
218.80 Business leagues; nonprofit consumer
cooperatives. An association of nonprofit consumer
cooperatives which promotes the cooperative
method of doing business may qualify for
exemption. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-264, 1967-2 C.B. 196.
218.81 Business leagues; packaging
manufacturers. An organization of packaging
manufacturers which includes in its industry
advertising references to brand name products
merchandised in its packaging material may be
exempt from tax. §1.501(c)(6)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-344, 1967-2 C.B. 199.
218.82 Business leagues; promoting members’
interests. A trade organization that confines
its membership to dealers franchised by a particular
corporation and its activities to promoting the
business interests of its members does not satisfy
the “line of business” test of reg. 1.501(c)(6)–1
and is not a business league. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
National Muffler Dealers Assn., Inc., 440 U.S.,
Ct. D. 1997, 1979-1 C.B. 198.
218.83 Business leagues; promoting sale of
automobile for dealer-members. An organization
composed of dealers in a certain make of automobile
in a designated area, organized and operated
for the primary purpose of financing general
advertising campaigns to promote, with funds
contributed by dealer-members, the sale of that
make of automobile, is performing particular services
for its members instead of the automotive
industry as a whole and is not entitled to exemption.
I.T. 4053 superseded. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 67-77, 1967–1 C.B. 138.
218.84 Business leagues; promoting single
brand or product. The Revenue Service will not
follow the Pepsi-Cola Bottlers’ Assn. decision
which held that an association, whose members
bottle and sell a single franchised soft-drink product
and whose purpose is to promote that product,
was exempt as a business league. It is the position
of the Service that organizations promoting a
single brand or product within a line of business do
not qualify for exemption. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 68-182, 1968-1 C.B. 263.
218.85 Business leagues; public health and
welfare; professional membership. A nonprofit
organization whose membership consists of individuals
engaged in various professions organized
to promote a common business interest and to
improve professional services and techniques of
the members in the field of public health and welfare,
qualifies for exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 70-641, 1970-2 C.B. 119.
218.86 Business leagues; publishing directory
of members; granting franchises. A nonprofit
organization of individuals in the business
of furnishing finance adjusting services, which
assigns exclusive franchise areas to its members
and publishes and distributes to their potential customers
a directory containing members’ names
and addresses, is performing particular services
for its members and does not qualify for exemption.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-409, 1976-2 C.B. 154.
218.87 Business leagues; publishing tourist
guidebook. An organization formed to promote
the tourist industry in its area and whose principal
activity is the publication of a year book consisting
largely of paid advertisements for its members is
not entitled to exemption. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 65-14, 1965-1 C.B. 236.
218.88 Business leagues; rewards to deter
crime against members. An organization created
to improve the business conditions of financial
institutions by offering rewards for information
leading to the arrest and conviction of individuals
committing crimes against its member institutions
qualifies for exemption. §1.501(c)(6)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 69–634, 1969-2 C.B. 124.
218.89 Business leagues; scientific research
association. A nonprofit association composed of
members of a particular industry to develop new
and improved uses for existing products of the
industry does not qualify for exemption under section
501(c)(3), but may qualify for exemption
under section 501(c)(6). §§1.501(c)(3)-1,
1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-632, 1969–2 C.B. 120.
218.90 Business leagues; shopping center
merchants’ association. An association of merchants
whose businesses constitute a shopping
center does not qualify for exemption where the
association expends its funds and engages exclusively
in advertising the names of member merchants
and their merchandise in various newspapers
and on television and radio to attract
customers to the shopping center. Clarified by
Rev. Rul. 73-411. §1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 64-315, 1964–2 C.B. 147.
218.91 Business leagues; shopping center
merchants’ association. A shopping center merchants’
association whose membership is
restricted to and required of the tenants of a oneowner
shopping center and their common lessor,
and whose activities are directed to promoting the
general business interests of its members, does not
qualify as a business league or chamber of commerce
under section 501(c)(6). This Revenue Ruling
will not be applied to taxable years beginning
before January 1, 1974, with respect to organizations
that have been relying upon ruling or determination
letters issued under section 501(c)(6).
Distinguished by Rev. Rul. 78–225. Rev. Rul.
64-315 clarified. §§1.501(c)(6)-1, 301.7805-1.
(Secs. 501, 7805; ’86 Code.)
Rev. Rul. 73-411, 1973–2 C.B. 180.
218.92 Business leagues; small loan companies.
An organization of small loan companies,
formed in response to regulations issued by a state
department of banking to promote control of consumer
lending, maintains a file of all open loans
made by its members and furnishes this information
to them in order to prevent a borrower from
obtaining small loans in excess of a specified sum
at any one time, may qualify for exemption.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67–394, 1967–2 C.B. 201.
218.93 Business leagues; specialized reference
library. An organization whose only activity
is providing a reference library of “electric logs”,
maps, and information services used solely by its
members in their exploration businesses is not
exempt from tax. §1.501(c)(6)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-182, 1967–1 C.B. 141.
218.94 Business leagues; students in a profession.
An organization whose membership is composed
of students studying for a degree in a particular
profession and that was formed to promote the
students’ interests as future members of that profession
may qualify for exemption.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77–112, 1977-1 C.B. 149.
218.95 Business leagues; subsidizing lawsuit;
prevention of air pollution. Subsidizing the prosecution
of a lawsuit for an injunction to prevent
air pollution of a region did not cause an organization
of growers and processors of agricultural

Exempt organizations
products to lose its exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 67-175, 1967-1 C.B. 139.
218.96 Business leagues; telephone-answering
service for doctors. A nonprofit organization
that has as its principal activity the operation of a
telephone-answering service for member doctors
does not qualify for exemption. §1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 71-175, 1971–1 C.B. 153.
218.97 Business leagues; tow truck dispatching
service. A nonprofit organization whose principal
activity is providing a telephone answering
service to distribute calls for towing service on a
rotational basis to its members who are tow truck
owners and operators does not qualify for exemption.
Distinguished by Rev. Rul. 80-287.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-308, 1974-2 C.B. 168.
218.98 Business leagues; trade show. An organization
which operates a trade show as its sole or
principal activity, primarily for the purpose of displaying
its members’ merchandise for sale to
wholesale and retail buyers, is not exempt as a
business league. Distinguished by Rev. Rul.
67-219. §1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 58-224, 1958-1 C.B. 242.
218.99 Business leagues; trade show; rebate
of floor deposit. Cash rebates made by an exempt
business association to member and nonmemberexhibitors
who participate in the association’s
annual industry trade show, that represent a portion
of an advance floor deposit paid by each
exhibitor to insure the show against financial loss,
are made to all exhibitors on the same basis, and
may not exceed the amount of the deposit, do not
adversely affect the association’s exempt status.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-206, 1977-1 C.B. 149.
218.100 Business leagues; trademark products
promotion. A nonprofit trade association of
manufacturers whose principal activity is the
promotion of its members’ products under the
association’s registered trademark does not qualify
for exemption. §1.501(c)(6)–1. (Sec. 501. ’86
Code.)
Rev. Rul. 70-80, 1970-1 C.B. 130.
218.101 Business leagues; trading stamp
plan. An organization which operates a trading
stamp plan whereby the patrons of the organization’s
members are given trading stamps which are
redeemable for merchandise at local stores is not
entitled to exemption. §1.501(c)(6)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 65-244, 1965-2 C.B. 167.
218.102 Business leagues; traffic bureau for
shipping products. A nonprofit organization
whose primary activity is the operation of a traffic
bureau for members and nonmembers as a service
in the shipment of their goods and products is not
exempt from tax. S.M. 2368 superseded.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-264, 1968-1 C.B. 264.
218.103 Business leagues; trust created by
labor union and business league. A nonprofit
trust created by an agreement between a labor
union and a business league is considered “an
association of persons having some common business
interest” and is exempt from tax.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-31, 1970-1 C.B. 130.
218.104 Business leagues; trust created by
several business leagues. A trust, which was
created pursuant to collective bargaining agreements
between a labor union and several business
leagues for the purposes of monitoring and coordinating
business league activities of its member
business leagues and collecting, administering,
and disbursing funds to the member business
leagues for business league purposes, is exempt as
a business league. §1.501(c)(6)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 82-138, 1982-2 C.B. 106.
218.105 Business leagues; union negotiations.
A corporation whose membership is made up of
individuals, partnerships, firms and corporations
engaged in a particular industry was organized for
the purpose, among others, of assisting in the making
of trade agreements respecting employment of
labor by its members generally; conducting collective
bargaining with employees and labor
groups for its members; promoting settlement of
labor disputes and preventing strikes and lockouts.
Its activities consist solely of negotiation of collective
bargaining contracts, interpretation of such
contracts, and adjustment of labor disputes. Such
organization qualifies for exemption as a business
league. Rev. Rul. 56-65 clarified. §1.501(c)(6)-1,
(Sec. 501, ’86 Code.)
Rev. Rul. 65–164, 1965-1 C.B. 238.
218.106 Business leagues; users of digital
computers. A nonprofit organization, whose
members represent diversified businesses that
own, rent, or lease digital computers produced by
various manufacturers, organized to improve the
efficiency of its members’ use of computers, qualifies
for exemption. Distinguished by Rev. Rul.
83-164. §1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-147, 1974-1 C.B. 136.
218.107 Business leagues; veterinarians’
association operating rabies clinic. The operation
of an annual rabies clinic by an association of
veterinarians will not preclude exemption where
the members donate their services and supplies
and reduced fees are charged to the public.
§1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-222, 1966-2 C.B. 223.
218.108 Business leagues; wives promoting
husbands’ profession. Wives of members of an
exempt business league who form an organization
to help advance their husbands’ profession have a
common business interest in such profession.
Accordingly, such organization may qualify for
exemption. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-343, 1967-2 C.B. 198.
218.109 Business leagues; workmen’s compensation
insurance for members. A nonprofit
organization formed to promote the business welfare
and interests of persons engaged in the contracting
trade and related industries and whose
principal activity is to provide its members with
group workmen’s compensation insurance is not
exempt. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-81, 1974-1 C.B. 135.
218.110 Business leagues; writers’ association.
An organization which publishes the works
of its members in anthologies and which arranges
for programs on radio and television based on such
works is not exempt. §1.501(c)(6)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 57-453, 1957-2 C.B. 310.
218.111 Campaigning for school board candidates.
A nonprofit organization created to
improve a public educational system is not exempt
from tax where it campaigns on behalf of candidates
for election to the school board.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-71, 1967-1 C.B. 125.
218.112 Canadian or Honduran organization.
Procedures for use in establishing the tax-exempt
status of charitable organizations created or
organized under the laws of Canada or Honduras,
and determining the deductibility of contributions
made to such organizations pursuant to tax conventions
entered into between those countries and
the U.S. §§1.170-1, 1.501(a)–1. (Sec. 601.201,
S.P.R.; Secs. 170, 501, ’86 Code.)
Rev. Proc. 59-31, 1959–2 C.B. 949.
218.113 Career planning and occupational
adjustment. A nonprofit organization that helps
people in planning their careers and in achieving
occupational adjustment by distributing educational
publications at a nominal charge and providing
free vocational counseling qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-71, 1968-1 C.B. 249.
218.114 Cemetery company; contract with
land company. A nonprofit cemetery corporation
paid, as its price for land purchased from a company
which acquired the land and constructed the
cemetery buildings, a percentage from sales of
internment sites. It also derived income from
operation and management of a mortuary and
other related and extraneous services and sales.
All net earnings were expended in the improvement
of the corporate property as required by its
charter and by-laws. Held, no part of the net earnings
inured to an individual and the profit activities
did not deprive the corporation of its tax
exempt status. (Sec. 101(5), ’39 Code; Sec. 501,
’86 Code.)
Forest Lawn Memorial Park Assn., Inc., 45
B.T.A. 1091, Nonacq., 1960–2 C.B. 8.
218.115 Cemetery company; crematorium.
Revenue Ruling 69–637, which held that a cemetery
company’s exempt status is adversely
affected by operating a crematorium, is withdrawn.
§1.501(c)(13)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-300, 1971-2 C.B. 238.
218.116 Cemetery company; maintenance of
established cemetery. A nonprofit organization,
not associated with a cemetery company, formed
by citizens of a community to maintain a cemetery
whose lots were purchased by individuals from a
landowner qualifies for exemption.
§1.501(c)(13)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-143, 1978-1 C.B. 161.
218.117 Cemetery company; maintenance of
private family cemetery. An organization which
owns, operates, and maintains a cemetery for the
exclusive burial of lineal descendants of a particular
family and those who intermarry with those
descendants, and which is supported by funds
from the descendants, is not exempt under either
section 501(c)(3) or section 501(c)(13).
§§1.501(c)(3)-1, 1.501(c)(13)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 65-6, 1965-1 C.B. 229.
218.118 Cemetery company; operation of
mortuary. A cemetery company will be subject to
the loss of its exempt status if it operates a mortuary.
§1.501(c)(13)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-109, 1964-1 (Part 1) C.B. 190.
218.119 Cemetery company; perpetual care
fund. An organization, including a trust, created
by formal action, the funds of which are irrevocably
dedicated to the perpetual care of a nonprofit
cemetery, as a whole, none of the earnings of
which inures to the benefit of any private shareholder
or individual, may qualify. (Sec. 501, ’86
Code.)
Rev. Rul. 58-190, 1958-1 C.B. 15.
218.120 Cemetery company; perpetual care
fund. A perpetual care fund, the income of which
is turned over to a profit-making cemetery company
for use in connection with the maintenance
of the cemetery properties and the burial lots, is
not entitled to exemption. §1.501(c)(13)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 64-217, 1964-2 C.B. 153.
218.121 Cemetery company; pets. An organization
that owns, operates and maintains a cem-

Exempt organizations
etery for pets does not qualify for exemption.
§1.501(c)(13)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-454, 1973–2 C.B. 185.
218.122 Cemetery company; private family
cemetery. A non-profit family cemetery company
owned and operated for the exclusive burial of
members of a particular family and their descendants,
is an organization described in section
501(c)(13) and, therefore, exempt from tax under
section 501(a). (Sec. 501, ’86 Code.)
John D. Rockefeller Family Cemetery Corp., 63
T.C. 355, Acq., 1977-2 C.B. 2.
218.123 Cemetery company; property purchased.
A nonprofit cemetery company that
acquires land from a for-profit cemetery company,
under an agreement providing payment to the former
owners on the basis of a percentage of the
sales price of each cemetery lot sold, is not exempt
from tax as a cemetery. Rev. Rul. 61-137 amplified.
§1.501(c)(13)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-70, 1977-1 C.B. 150.
218.124 Cemetery company; property purchased
for an indeterminable price. A cemetery
company that purchases land for an indeterminable
total price to be paid for on the basis of a percentage
of gross proceeds realized from the sale of
individual lots does not qualify for exemption.
Amplified by Rev. Rul. 77–70. §1.501(c)(13)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 61-137, 1961-2 C.B. 118.
218.125 Cemetery company; sale of monuments.
The exempt status of a cemetery company
is not adversely affected where it sells monuments,
markers, vaults, and flowers solely for use
in the cemetery and uses the sales proceeds for
maintenance of the cemetery. §1.501(c)(13)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 72–17, 1972–1 C.B. 151.
218.126 Children’s day care center. A nonprofit
organization formed to provide a day care
center for young children of needy working parents
may be exempt from tax, even though a nominal
fee is charged, if the organization is not selfsupporting
and must depend on public
contributions. O.D. 340 superseded.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–166, 1968–1 C.B. 255.
218.127 Children’s day care center. An educational
day care center operated in conjunction with
an industrial company that enrolls children on a
basis of family financial need and the child’s need
for the care and development program of the center
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 70-533, 1970-2 C.B. 112.
218.128 Church controlled supplier of school
materials. A nonprofit organization controlled by
a church to print and sell religious and educational
material to the church’s parochial school system is
not a feeder organization when it sells the material
at a profit which is returned annually to the parochial
school system. Thus, it may be exempt from
tax. §§1.501(c)(3)–1, 1.502–1. (Secs. 501, 502;
’86 Code.)
Rev. Rul. 68-26, 1968–1 C.B. 272.
218.129 Church mortgage loans. An organization
formed and controlled by an exempt conference
of churches that borrows funds from individuals
and makes mortgage loans at less than the
commercial rate of interest to affiliated churches
to finance the construction of church buildings
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75-282, 1975–2 C.B. 201.
218.130 Church news publication. A nonprofit
organization that publishes a newspaper primarily
devoted to news, articles, and editorials
relating to church and religious matters of interdenominational
interest may qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-306, 1968-1 C.B. 257.
218.131 Church operated for benefit of
founder. A “church” that was formed by a professional
nurse (who is also the “church’s” minister,
director, and principal officer) and that is used primarily
as a vehicle for handling the nurse’s personal
financial transactions is not exempt.
§1.501(c)3-1. (Sec. 501, ’86 Code.)
Rev. Ru1. 81–94, 1981-1 C.B. 330.
218.132 Church operated schools with discriminatory
policies. Organizations, including
churches, that conduct schools with a policy of
refusing to accept children from certain racial and
ethnic groups will not be recognized as tax-exempt
charities. §§1.170A-1, 1.501(c)(3)–1. (Secs.
170, 501; ’86 Code.)
Rev. Rul. 75–231; 1975-1 C.B. 158.
218.133 City beautification projects. A nonprofit
organization formed to promote and assist in
city beautification projects and to educate the public
in the advantage of street tree planting may be
exempt from tax. Distinguished by Rev. Rul.
75-289. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-14, 1968-1 C.B. 243.
218.134 Civic; aiding in redevelopment
areas. A nonprofit corporation organized to aid
and promote the purposes of the Area Redevelopment
Act by providing funds through loans to purchase
or develop land and facilities to alleviate
unemployment in areas classified as “redevelopment
areas” qualifies for exemption. Contributions
to the organization may be deducted as business
expenses if such contributions bear a direct
relationship to a donor’s business and are made
with a reasonable expectation of a financial return
commensurate with the amount of the contribution.
§§1.162-1, 1.501(c)(4)-1. (Secs. 162, 501;
’86 Code.)
Rev. Rul. 64-187, 1964-1 (Part 1) C.B. 187.
218.135 Civic; amateur baseball league. A
nonprofit organization formed to maintain an
amateur baseball association made up of baseball
teams with amateur players of college age qualifies
for exemption. §1.501(c)(4)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 69-384, 1969-2 C.B. 122.
218.136 Civic; amateur sports. A nonprofit
organization formed to promote and regulate a
sport for amateurs is exempt under section
501(c)(4) but is not exempt under section
501(c)(3). Distinguished by Rev. Rul. 80-215.
§§1.501(c)(3)-1, 1.501(c)(4)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 70-4 1970-1 C.B. 126.
218.137 Civic; antiabortion. A nonprofit organization
formed to educate the public on the subject
of abortions, promote the rights of the unborn,
and support legislative and Constitutional changes
to restrict women’s access to abortions qualifies
for exemption. §1.501(c)(4)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76–81, 1976-1 C.B. 156.
218.138 Civic; block association; beautification
of public areas. A nonprofit organization
with membership limited to the residents and business
operators within a city block and formed to
preserve and beautify the public areas in the block,
thereby benefiting the community as a whole as
well as enhancing the value of its members’ property
rights, will not qualify for exemption under
section 501(c)(3), but may qualify under section
501(c)(4). Rev. Rul. 68–14 distinguished. Distinguished
by Rev. Rul. 78-85. §§1.501(c)(3)-1,
1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 75-286, 1975-2 C.B. 210.
218.139 Civic; bus transportation during
rush hours for suburban community. A nonprofit
organization formed by residents of the suburban
community to provide bus transportation
between the community and the major employment
centers in the metropolitan area during rush
hours when the regular bus service is inadequate
qualifies for exemption. §1.501(c)(4)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 78–69, 1978-1 C.B. 156.
218.140 Civic; educating public on controversial
subject. An organization formed to educate
the public on a controversial subject that
attempts to influence legislation that is germane to
its program may qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-656, 1968-2 C.B. 216.
218.141 Civic; employees’ association;
employer approved activities. A nonprofit local
association of employees sponsoring social and
recreational activities is not precluded from
exemption merely because the activities must be
approved by the employer of its members.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-202, 1970–1 C.B. 130.
218.142 Civic; festival depicting regional customs
and traditions. A nonprofit organization
that conducts an annual festival centered around
regional customs and traditions may qualify for
exemption. §1.501(c)(4)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–224, 1968–1 C.B. 262.
218.143 Civic; grocery cooperative. An organization
formed to purchase groceries for its membership
at the lowest possible prices on a cooperative
basis is not exempt as a social welfare
organization. §1.501(c)(4)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 73-349, 1973-2 C.B. 179.
218.144 Civic; gun club. A nonprofit organization
formed to provide supervised facilities in a
community for the development of good pistol,
rifle, and shotgun marksmanship and for instruction
in the safe handling and proper care of firearms,
is exempt from tax. §1.501(c)(4)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 66-273, 1966-2 C.B. 222.
218.145 Civic; homeowners associations.
Answers are provided to specific questions about
the effect of certain activities on the exempt status
under section 501(c)(4) of otherwise qualifying
homeowners’ associations. Rev. Rul. 74-99 clarified.
§§1.501(c)(4)-1, 1.501(c)(7)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 80-63, 1980-1 C.B. 116.
218.146 Civic; homeowners association; condominium.
An organization formed by the unit
owners of a condominium housing project to provide
for the management, maintenance, and care
of the common areas of the project, as defined by
State statute, with membership assessments paid
by the unit owners does not qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-17, 1974-1 C.B. 130.
218.147 Civic; homeowners association; preserving
appearance and maintaining common
areas. A nonprofit organization formed to preserve
the architecture and appearance of a housing
development, and to own and maintain common
green areas, streets, and sidewalks for useof all the
development residents qualifies for exemption;
however, contributions to the organization are not
deductible. Rev. Rul. 69–280 distinguished; modified
by Rev. Rul. 74-99. §§1.170-2,
1.501(c)(4)-1. (Secs. 170, 501; ’86 Code.)
Rev. Rul. 72–102, 1972–1 C.B. 149.
218.148 Civic; homeowners association; preserving
appearance and maintaining common
areas. To qualify for exemption a homeowners

Exempt organizations
association must serve a “community” which
bears a reasonable recognizable relationship to an
area ordinarily identified as governmental. It must
not conduct activities directed to the exterior
maintenance of private residences, and the common
areas or facilities it owns and maintains must
be for the use and enjoyment of the general public.
Rev. Rul. 72–102 modified. Clarified by Rev. Rul.
80-63. §1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-99, 1974-1 C.B. 131.
218.149 Civic; homeowners associations;
exterior maintenance. A nonprofit organization
formed to provide maintenance of exterior walls
and roofs of homes of members who own houses
in a housing development is not exempt as a social
welfare organization. Distinguished by Rev. Rul.
72-102. §1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–280, 1969–1 C.B. 152.
218.150 Civic; junior chamber of commerce.
A junior chamber of commerce operated exclusively
for the purpose of rendering civic services
for the promotion of the welfare of the community
and its citizens is exempt from tax.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-195, 1965-2 C.B. 164.
218.151 Civic; loans to businesses to alleviate
unemployment. A nonprofit organization created
to make loans to businesses as an inducement to
locate in an economically depressed area in order
to alleviate unemployment may be exempt from
tax. §1.501(c)(4)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-294, 1967-2 C.B. 193.
218.152 Civic; low-cost housing; advisory
activities. An organization that purchases acreage
in a stated locality, makes arrangements for water
and sewer facilities, and enters into arrangements
for the erection and sale of dwellings to individuals
in the low to moderate income groups, is
entitled to exemption as a social welfare organization.
§1.501(c)(4)–1 . (Sec. 501, ’86 Code.)
Rev. Rul. 55-439, 1955–2 C.B. 257.
218.153 Civic; management of low and moderate
income housing projects. A nonprofit organization
formed to manage low and moderate
income housing projects for a fee is not operated
primarily for the promotion of social welfare and,
therefore, does not qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-535, 1970-2 C.B. 117.
218.154 Civic; memorial association. A
memorial association organized to study and
develop methods of achieving simplicity and dignity
in funeral and memorial services, educate and
inform its members as well as the public as to the
results of such study, and maintain a registry for
the wishes of its members in regard to arrangements
following death, qualifies for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-313, 1964-2 C.B. 146.
218.155 Civic; organized sports; booster
club. A nonprofit corporation organized by local
citizens to initiate programs designed to stimulate
the interest of youth throughout the community in
organized sports may be exempt from tax.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-118, 1968-1 C.B. 261.
218.156 Civic; profits from business activities
distributed to members. A community welfare
corporation that purchases and sells unimproved
land and engages in other business activities, the
profits from which are distributed to members,
does not qualify for exemption. §1.501(c)(4)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 69-385, 1969-2 C.B. 123.
218.157 Civic; public safety and community
services. A nonprofit organization that contracts
with a private firm to provide the community with
security patrols assisted by guard dogs, works to
improve public services, housing, and residential
parking, and that publishes a newspaper distributed
free of charge to all community residents and
sponsors a community basketball league, holiday
programs, and meetings of community residents is
operated exclusively for the promotion of social
welfare and qualifies for exemption under section
501(c)(4). §1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 75-386, 1975-2 C.B. 211.
218.158 Civic; public utility stockholders’
organization. An organization of individuals and
institutions, having beneficial interests in shares
of any public utility located in the state, that was
formed to promote the interests of the public utility
industry and its stockholders by preparing and
filing statements relating to public utility matters
pending before state and federal agencies and legislative
bodies and by publishing a newsletter
about matters affecting the stockholders does not
qualify for exemption. §1.501(c)(4)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 80-107, 1980-1 C.B. 117.
218.159 Civic; representation on tax matters.
A nonprofit organization formed to promote the
common good and welfare of the general public by
representing the interests of the public at legislative
and administrative hearings on tax matters
qualifies for exemption as a social welfare organization.
Contributions to the organization are not
deductible. §§1.170-1, 1.501(c)(4)-1. (Secs. 170,
501; ’86 Code.)
Rev. Rul. 71-530, 1971–2 C.B. 237.
218.160 Civic; semiprofessional baseball
club. A nonprofit corporation which operated a
semiprofessional baseball club as its principal
activity is not entitled to exemption,
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 55-516, 1955-2 C.B. 260.
218.161 Civic; social welfare; art exhibit
sponsorship. A nonprofit organization whose
purpose is to develop and encourage interest in
painting, sculpture, and other art forms by conducting,
in a noncommercial manner, a community
art show, qualifies for exemption as an organization
operated exclusively for the promotion of
social welfare. §1.501(c)(4)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 78-131, 1978-1 C.B. 156.
218.162 Civic; social welfare; consumer
protection. A nonprofit organization that processes
consumer complaints concerning products
and services provided by business establishments,
meets with the parties involved to encourage resolution
of the problem, recommends a fair solution
and, if the proposed solution is not accepted,
informs the parties about appropriate judicial or
administrative bodies that may be used to resolve
the disputes qualifies for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-50, 1978-1 C.B. 155.
218.163 Civic; social welfare; debt counseling
services. A nonprofit organization formed to
advise, counsel, and assist individuals in solving
their financial difficulties by budgeting their
income and expenses and effecting an orderly program
for the payment of their obligations, is
entitled to exemption. §1.501(c)(4)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 65-299, 1965-2 C.B. 165.
218.164 Civic; social welfare; firefighters’
association. A nonprofit firefighters’ association
that provides firefighters with retirement benefits,
which are funded by government sources and
which are the exclusive retirement benefits provided
to these firefighters, qualifies for exemption
as a social welfare organization described in section
501(c)(4) of the Code. Rev. Rul. 81–58 distinguished.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 87-126, 1987–2 C.B. 150.
218.165 Civic; social welfare; golf tournament
sponsorship. A nonprofit organization,
whose membership is limited to local residents,
and whose sole activity is sponsoring an annual
professional golf tournament for which it leases a
golf course and charges admission, is not operated
primarily for the promotion of social welfare and
does not qualify for exemption. §1.501(c)(4)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 74-298, 1974–1 C.B. 133.
218.166 Civic; social welfare; lottery operation.
A nonprofit organization, created exclusively
for the promotion of social welfare, which
conducts weekly drawings among members of the
general public as its principal activity and uses the
profits therefrom primarily for the payment of its
general expenses does not qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 61-158, 1961-2 C.B. 115.
218.167 Civic; social welfare; P.T.A.-organized
corporation. A nonprofit corporation having
no capital stock, no assets and no income
established for the sole purpose of cooperating
with the parent-teacher association of a local
school district in its activities, by reviewing the
proposals of and designating the insurance company
allowed to solicit accident insurance from
the students, teachers, and other employees of the
school district qualifies for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 61-153, 1961-2 C.B. 114.
218.168 Civic; social welfare; personal service
cooperative. A community cooperative organization
formed to facilitate the exchange of personal
services among members is operating
primarily for the private benefit of its members
and is not exempt from tax as a social welfare organization.
§1.501(c)(4)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-132, 1978-1 C.B. 157.
218.169 Civic; social welfare; police officer
association. A nonprofit police officer association
whose primary activity is providing lumpsum
retirement payments to its members or death
benefits to their beneficiaries will not qualify as a
social welfare organization for taxable years
beginning after August 23, 1981. Rev. Rul.
75-199 amplified. §§1.501(c)(4)-1, 301.7805-1.
(Secs. 501, 7805; ’86 Code.)
Rev. Rul. 81-58, 1981-1 C.B. 331.
218.170 Civic; social welfare; political campaign
activities. An organization primarily
engaged in the promotion of social welfare may
participate in lawful political campaign activities
involving the nomination or election of public
officials without adversely affecting its exempt
status. However, the amounts expended for such
activities may be treated as political organization
taxable income. §1.501(c)(4)–1. (Secs. 501, 527;
’86 Code.)
Rev. Rul. 81–95, 1981-1 C.B. 332.
218.171 Civic; social welfare; public offstreet
parking. The Service will not follow the
Morrterey, Public Parking Corp. decision that an
organization formed by merchants to establish and
operate a public off-street parking facility that provides
free or reduced-rate parking for the merchants’
customers through a validation stamp system
qualifies for exemption as either a charitable
corporation or a social welfare organization. Distinguished
by Rev. Rul. 81–116. §§1.501(c)(3)–1,
1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–86, 1978-1 C.B. 151.
218.172 Civic; social welfare; public offstreet
parking; free. An organization that provides
and maintains free off-street parking to any-

Exempt organizations
one visiting a city’s downt own business district
qualifies for exemption under section 501(c)(4).
Rev. Rul. 78-86 distinguished. §1.504(c)(4)-1.
(Sec. 504, ’86 Code.)
Rev. Rul. 81-116, 1981-1 C.B. 333.
218.173 Civic; social welfare; rating candidates
for public office. An organization whose
primary activity is rating candidates for public
office on a nonpartisan basis does not qualify for
exemption. §1.501(c)(4)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-368, 1967-2 C.B. 194.
218.174 Civic; social welfare; roller skating
rink. A nonprofit corporation formed to operate a
roller skating rink as a recreational facility for the
benefit and use of all of the residents of a particular
county in a county-owned building which it occupies
rent free in cooperation with the county government
may qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67–109, 1967–1 C.B. 136.
218.175 Civic; social welfare; sick benefit
association. An association of members of the
same faith, operating a loan fund for members,
providing for payments of sickness, accident and
death benefits and making donations to charity but
not operating under the lodge system is not exempt
under section 501(c)(8), but is exempt under section
501(c)(4). Modified by Rev. Rul. 75-199.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 55-495, 1955-2 C.B. 259.
218.176 Civic; social welfare; sick benefit
association. A nonprofit organization that
restricts its membership to individuals of good
moral character and health belonging to a particular
ethnic group residing in a stated geographical
area and provides sick benefits to members and
death benefits to their beneficiaries is not exempt
for tax years beginning after June 2, 1975. Rev.
Rul. 55-495 modified. Amplified by Rev. Rul.
81-58. §§1.501(c)(4)-1, 301.7805-1. (Secs. 501,
7805; ’86 Code.)
Rev. Rul. 75-199, 1975-1 C.B. 160.
218.177 Civic; social welfare; spillage control.
A nonprofit organization whose purpose is to
prevent liquid spills, primarily oil spills, within a
city port area and to develop a program for the containment
and cleanup of liquid spills that do occur
is entitled to exemption as a social welfare organization
under section 501(c)(4) provided that its
services are equally available to members and
nonmembers and both members and nonmembers
are charged on the same basis for the cleanup services
rendered. §1.501(c)(4)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 79-316, 1979-2 C.B. 228.
218.178 Civic; social welfare; system to
improve community water supply. A nonprofit
organization formed for the purpose of establishing
and maintaining a system for storage and distribution
of water in order to increase underground
water levels of a community qualifies for exemption.
§1.501(c)(4)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-148, 1966-1 C.B. 143.
218.179 Civic; stadium for school district. A
corporation organized to build a stadium and lease
it to a school district is not entitled to exemption
under section 501(c)(3) but is exempt under section
501(c)(4). §1.501(c)(4)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 57-493, 1957-2 C.B. 314.
218.180 Civic; television antenna service. An
organization formed for the purpose of furnishing
television antenna service to its members in their
homes, for a membership fee and monthly maintenance
charge, is not exempt as a club organized
exclusively for pleasure, recreation, and other
nonprofitable purposes. Distinguished by Rev.
Rul. 62-167. §1.501(c)(4)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 55-716, 1955–2 C.B. 263.
218.181 Civic; television reception service.
An organization whose sole activity is to provide
television reception on a cooperative basis to its
members who pay for such services is not entitled
to exemption as a civic league operating exclusively
for the promotion of social welfare. Distinguished
by Rev. Rul. 62–167. §39.101(8)–1. (Sec.
101, ’39 Code; Sec. 501, ’86 Code.)
Rev. Rul. 54-394, 1954-2 C.B. 131.
218.182 Civic; television reception service. A
nonprofit organization formed for the purpose of
providing television reception for the community
as a whole by the process of retransmitting television
signals in an area not adaptable to ordinary
reception is entitled to exemption as an organization
operated exclusively for the promotion of
social welfare. Rev. Rul. 54–394 and Rev. Rul.
55-716 distinguished. §1.501(c)(4)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 62-167, 1962-2 C.B. 142.
218.183 Civic; war veterans; operating bingo
games. A war veterans’ post which is primarily
engaged in social welfare activities may qualify
for exemption notwithstanding the fact that it
receives a substantial portion of its funds from
bingo games open to the general public.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-45, 1968–1 C.B. 259.
218.184 Civic; war veterans; operating resort
concession. A war veterans’ organization qualifies
for exemption if its primary activity is the
promotion of social welfare even though it operates
a resort concession and spends part of its
income to liquidate indebtedness on buildings
used for veterans’ programs and for other social
welfare purposes. Rev. Rul. 58–517 revoked.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-455, 1968-2 C.B. 215.
218.185 Civic; war veterans; renting and
operating public facilities. A war veterans’ organization
does not qualify for exemption where it is
primarily engaged in renting a commercial building
and operating a public banquet and meeting
hall having a bar and dining facilities.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-46, 1968-1 C.B. 260.
218.186 Civil rights research. A nonprofit
organization formed and operated to lessen racial
and religious prejudice in housing and public
accommodations by disseminating the results of
its investigations and research may be exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-438, 1968-2 C.B. 209.
218.187 Clearinghouse and course coordinator;
classes in community. A nonprofit organization
acting as a clearinghouse and course coordinator
by bringing together instructors and
interested students in a community for purposes of
instruction on subjects useful to individuals and
beneficial to the community is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-413, 1971-2 C.B. 228.
218.188 Clinic to aid drug victims. A nonprofit
organization operating a clinic to aid victims of
hallucinatory drugs and providing information
concerning such drugs qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-590, 1970-2 C.B. 116.
218.189 Coffee house. A nonprofit organization
formed by local churches to operate a supervised
facility, known as a “coffee house”, in
which persons of college age are brought together
with church leaders, educators, and leading businessmen
of the community for discussions and
coun selling on religion, current events, social and
vocational problems, may be exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–72, 1968–1 C.B. 250.
218.190 Collection and collation of historical
campaign speeches. An organization formed to
collect and collate campaign speeches, recorded
interviews, comments, and other materials of a
candidate for an historically important elective
office for donation to a university or public library
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 70-321, 1970–1 C.B. 129.
218.191 College; book and supply store. An
organization that operates a college book and supply
store serving exclusively members of the faculty
and student body of the college and refunds its
excess earnings to members in proportion to their
purchases qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-538, 1969–2 C.B. 116.
218.192 College; employment furnished students.
An organization wholly owned by a tax-exempt
college is not eligible for exemption if it
manufactures and sells wood products primarily to
empoy students of the college to enable them to
continue their education: §§1.501(c)(3)–1,
1.502-1. (Secs. 501, 502; ’86 Code.)
Rev. Rul. 69–177, 1969-1 C.B. 150.
218.193 Color guard. An organization formed
by citizens of a community to promote civic pride
in the community, the state, and the country by
providing a color guard and conducting flag-raising
and other ceremonies at patriotic and community
functions is promoting patriotism, a recognized
charitable objective, and qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–84, 1978–1 C.B. 150.
218.194 Combined functions; social club,
civic league, and fraternal beneficiary society.
A nonprofit organization, not operated under the
lodge system, which maintains a social club for
members and also provides sick and death benefits
for members and their beneficiaries, does not
qualify for exemption either as a social club, a
civic league, or a fraternal beneficiary society.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 63-190, 1963-2 C.B. 212.
218.195 Commercial printing corporation;
church controlled. A church-controlled commercial
printing corporation whose business earnings
are periodically paid to the church, but which has
no other significant charitable activity, is a feeder
organization and does not qualify for exemption.
§§1.501(c)(3)-1, 1.502-1. (Secs. 501, 502; ’86
Code.)
Rev. Rul. 73-164, 1973-1 C.B. 223.
218.196 Communal religious organization;
supported by wages of members. A communal
religious organization that was formed to promote
the tenets and practices of a particular church, does
not conduct any business activities, and is supported
by the wages earned by some of its members
from outside employment does not qualify for
exemption. §1.501(d)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-100, 1978-1 C.B. 162.
218.197 Community improvement organization.
An association whose activities are devoted
primarily to preserving the traditions, architecture,
and scenic appearance of a community by
means of individual and group action before the
local legislature and administrative agencies with
respect to zoning, traffic, and parking regulations
is exempt under section 501(c)(4). It is not exempt
under section 501(c)(3). Modified by Rev. Rul.
76-147. §1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67–6, 1967–1 C.B. 135.
218.198 Community improvement organization.
An organization formed to improve condi-

Exempt organizations
tions in an area of a city where the income level is
higher and housing better than in other areas of the
city and whose activities include providing general
information on methods of counteracting
housing deterioration and ways of improving
homes may qualify for exemption. Rev. Rul. 67-6
modified. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-147, 1976-1 C.B. 151.
218.199 Community land-use plan. A nonprofit
organization formed to develop and distribute
a community land-use plan may be exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-391, 1967-2 C.B. 190.
218.200 Community recreational; facilities
restricted. A nonprofit corporation which was
organized to provide community recreational facilities
without charge to the residents of a township,
but which restricts their use to less than the entire
community on the basis of race is not organized
and operated exclusively for charitable purposes.
Contributions to the organization are not deductible
and it is not exempt from tax. §§1.170–1,
1.501(c)(3)-1. (Secs. 170, 501; ’86 Code.)
Rev. Rul. 67-325, 1967-2 C.B. 113.
218.201 Community trusts; governing
instruments. Examples are given of provisions in
the governing instruments of community trusts
that meet the requirements of reg.
1.170A-9(e)(11)(v)(B). §1.170A-9. (Sec. 170, ’86
Code.)
Rev. Rul. 77-333, 1977–2 C.B. 75.
218.202 Community trusts; required resolutions.
Examples are given of resolutions adopted
by community trusts with respect to the administration
of such trusts or funds that satisfy the
requirements of reg. 1.170A-9(e)(11)(v)(E) and
(F). §1.170A-9. (Sec. 170, ’86 Code.)
Rev. Rul. 77-334, 1977-2 C.B. 77.
218.203 Community welfare. A nonprofit
organization that, under described circumstances,
investigates causes of community tension, discrimination,
physical deterioration, and juvenile
delinquency, disseminates its findings, and
attempts to educate the public as to means of correcting
such conditions-may be exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-15, 1968-1 C.B. 244.
218.204 Community welfare. A nonprofit
organization assisting local governments of a metropolitan
area by conducting research to develop
solutions for common regional problems, but not
advocating any legislative action to implement its
findings, qualifies for exemption. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 70-79, 1970-1 C.B. 127.
218.205 Community welfare. A nonprofit
organization formed to provide food and drink to
firemen, policemen, and other emergency personnel
at the scene of fires, riots and other disasters
qualifies for exemption. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 71-99, 1971-1 C.B. 151.
218.206 Community welfare; apprehension
of criminals. An organization assisting the police
department in the apprehension and conviction of
criminals by making funds available for use in
offering rewards qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-246, 1974-1 C.B. 130.
218.207 Community welfare; business activity
in economically deteriorated area. An organization
formed to increase business patronage in
a deteriorated area by providing information on
the area’s shopping opportunities, local transportation,
and accommodations is not operated
exclusively for charitable purposes and does not
qualify for exemption. Similarly, an organization
whose purpose is to revive retail sales in an area of
economic decline by constructing a shopping center
does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-111, 1977-1 C.B. 144.
218.208 Community welfare; financial assistance
to economically depressed areas. A nonprofit
organization formed to relieve poverty,
eliminate prejudice, reduce neighborhood tensions,
and combat community deterioration
through a program of financial assistance in the
form of low-cost or long-term loans to, or the purchase
of equity interests in, various business enterprises
in economically depressed areas is exempt.
Amplified by Rev. Rul. 81-284. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 74-587, 1974-2 C.B. 162.
218.209 Community welfare; financial assistance
to economically depressed areas. A nonprofit
small business investment company
licensed under section 301(d) of the Small Business
Investment Act of 1958, which was formed to
relieve poverty, eliminate prejudice and discrimination,
reduce neighborhood tensions, and combat
community deterioration, and that provides lowcost
or long-term loans to businesses not able to
obtain funds from conventional commercial
sources, with preference given to businesses that
provide training and employment opportunities
for the unemployed or under-employed residents
of economically depressed areas, may qualify for
exemption. Rev. Rul. 74-587 amplified.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 81-284, 1981-2 C.B. 130.
218.210 Community welfare; industrial
parks. A nonprofit organization that purchases
blighted land in an economically depressed community,
converts the land into an industrial park,
and encourages industrial enterprises to locate
new facilities in the park in order to provide
employment opportunities for low income residents
of the area, is operated exclusively for charitable
purposes and qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-419, 1976-2 C.B. 146.
218.211 Community welfare; law enforcement
agency funding. An organization that provides
funds to a county’s law enforcement agencies
to police illegal narcotic traffic lessens the
burdens of government and, therefore, qualifies
for exemption under section 501(c)(3).
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 85-1, 1985-1 C.B. 177.
218.212 Community welfare; legal assistance
to guardians ad litem in juvenile court. An organization
that provides legal assistance to guardians
ad litem who represent abused and neglected
children before a juvenile court that requires their
appointment lessens the burdens of government
and, therefore, qualifies for exemption under section
501(c)(3). §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 85-2, 1985-1 C.B. 178.
218.213 Community welfare; medical services.
An organization formed and supported by
residents of an isolated rural community to provide
a medical building and facilities at a reasonable
rent to attract a doctor who would provide
medical services to the entire community is
exempt. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-313, 1973-2 C.B. 174.
218.214 Community welfare; solid waste
pollution. An organization formed to educate the
public regarding environmental deterioration due
to solid waste pollution and operated with contributions
and proceeds from sale of collected
solid waste such as old newspapers, glass containers,
and metal cans for recycling qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 72-560, 1972-2 C.B. 248.
218.215 Community welfare; traffic safety. A
nonprofit organization formed to initiate and
develop plans and programs to reduce vehicle
deaths and injuries by providing free expert opinions
to local government officials regarding hazardous
traffic conditions in the community and
conducting programs designed to inform the public
about traffic safety qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-418, 1976-2 C.B. 145.
218.216 Company providing employment to
labor union members. A company, even though
formed to provide employment to members of a
certain labor union to which the company pays all
of the profits from its business operations, does not
qualify for exemption. O.D. 523 superseded.
§§1.501(c)(5)-1, 1.502-1. (Secs. 501, 502; ’86
Code.)
Rev. Rul. 69-386, 1969-2 C.B. 123.
218.217 Construction and sale of houses. The
construction and sale of houses by an exempt charitable
foundation over a period of 18 months for
the sole purpose of raising funds for the support of
a church constitute an unrelated trade or business,
notwithstanding the foundation does not contemplate
engaging further in such activity. Where
such activity is the primary activity of the foundation,
it is not entitled to exemption. §§39.421-2,
39.422–3. (Secs. 421, 422, ’39 Code; Secs. 511,
512, ’86 Code.)
Rev. Rul. 55-449, 1955-2 C.B. 599.
218.218 Control retained by creator or
grantor. An organization, which otherwise meets
the requirements for exemption, will not be precluded
from establishing an exempt status merely
because the creator of the organization (if a trust)
is either the sole or controlling trustee or merely
because the organization is controlled by one individual.
§1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-219, 1966–2 C.B. 208.
218.219 Cooking and needlework of needy
women. A nonprofit organization created to market
the cooking and needlework of women who
are not otherwise able to support themselves and
their families may be exempt from tax, even
though a small commission is charged, if the organization
is not self-supporting and must depend on
public contributions. O.D. 509 and S.M. 5516
superseded. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-167, 1968-1 C.B. 255.
218.220 Cooperative; farmers; allocation of
nonpatronage income. An exempt farmer’s
cooperative carried on purchasing activities
through feed and fertilizer departments and storage
and selling activities through the grain department,
substantially all of whose customers patronized
the other two departments. Nonpatronage
income from the storage and handling of grain was
allocated only to patrons of the grain department.
Held, the method of allocation was acceptable
under section 522 (replaced in effect by 1382) and
the amounts so allocated were deductible. (Sec.
1382, ’86 Code.)
Juniata Farmers Cooperative Assn., 43 T.C.
836, Acq., 1966-1 C.B. 2.
218.221 Cooperative; farmers; patronage
dividends. Payments made by the Commodity
Credit Corporation to a farmers’ cooperative
association for certain expenses of the cooperative’s
farmer-producers under a “reseal” program
of the U.S. Department of Agriculture are patronage
source income that may give rise to patronage
dividends under section 1382(b)(1). §§1.61-5,
1.1382-3, 1.1388-1. (Secs. 61, 1382, 1388, ’86
Code.)
Rev. Rul. 89-97, 1989-2 C.B. 217.
218.222 Cooperative telephone companies.
This notice sets forth the Service’ s ruling positions

with regard to certain income of cooperative telephone
companies exempt under section
501(c)(12).
Notice 92-33, 1992-2 C.B. 363.
218.223 Cooperatives; electric; sale of excess
fuel. An electric cooperative’s sale of excess fuel
at cost in the year of purchase is not income for
purposes of determining compliance with the 85
percent member-income requirement.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-86, 1980-1 C.B. 118.
218.224 Cooperatives; electrical supplies or
housing. A nonprofit cooperative organization
that sells electrical equipment to its members and
performs incidental installation and repair service
in connection with the sales and a cooperative
housing organization operated for the personal
benefit of its tenant-owner members, are not “like
organizations” under section 501(c)(12), therefore,
neither qualify for exemption.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-201, 1965-2 C.B. 170.
218.225 Cooperatives; farmers; alcohol produced
for making gasohol. A cooperative
association that, in connection with its marketing
function, processes its members’ agricultural
products into alcohol for making gasohol qualifies
as an exempt farmers’ cooperative. §§1.521–1,
1.1381-1. (Secs. 521, 1381; ’86 Code.)
Rev. Rul. 81-96, 1981-1 C.B. 359.
218.226 Cooperatives; farmers; allocation of
nonpatronage income. The allocation of income
of a farmers’ cooperative from the handling and
storage of grain of the Commodity Credit Corp.
during the fiscal year ended May 31, 1954, which
is distributed on a patronage basis to persons who
have done business with the association during
any or all of the fiscal years 1949–1954, will not
affect its exempt status. Amounts so allocated
may be deducted by the association for the year
ended May 31, 1954, provided the patronage distribution
is timely made. §39.101(12)–1. (Sec.
101, ’39 Code; Sec. 501, ’86 Code.)
Rev. Rul. 55-591, 1955-2 C.B. 553.
218.227 Cooperatives; farmers; allocation of
nonpatronage income and losses. A farmers’
cooperative association may, without jeopardizing
its exempt status, allocate nonpatronage
income and losses to the department to which the
income and losses relate, provided that the allocation
is not discriminatory among patrons similarly
situated. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-128, 1967-1 C.B. 147.
218.228 Cooperatives; farmers; broad business
powers. A farmers cooperative association
may be exempt even though its articles of incorporation
include broad business powers. I.T. 1914
superseded. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 68-496, 1968-2 C.B. 251.
218.229 Cooperatives; farmers; by-products
sold nonproducers. A farmers’ cooperative
engaged in the production and distribution of
petroleum products may disregard sales on the
open market of by-products not usable by its
patrons and the value of petroleum products
exchanged with other refineries, in order to utilize
its output and save unnecessary transportation
costs, in determining whether its purchases for
persons who are neither members nor producers
exceed 15 percent of the value of all purchases.
(Rev. Rul. 54-12). Distinguished by Rev. Rul.
67–346 dealing with exchanges for an unlike
product. Modified to provide that the sale of byproducts
to nonproducers may not, after August 4,
1969, be disregarded in computing the 15 percent
limitation. (Rev. Rul. 69-417). §§39.101(12)-1,
1.521-1, 301.7805-1. (Sec. 101. ’39 Code; Secs.
521,7805, ’86 Code.)
Rev. Rul. 54-12, 1954-1 C.B. 93; Rev. Rul.
69-417, 1969-2 C.B. 132.
218.230 Cooperatives; farmers; care and
harvesting of patrons’ crops. A farmers’ cooperative
association whose only activities consist of
caring for and maintaining its patrons’ orchards
and harvesting their crops, does not qualify for
exemption as an association described in section
521. (Sec. 521, ’86 Code.)
Rev. Rul. 66-108, 1966-1 C.B. 154.
218.231 Cooperatives; farmers; Commodity
Credit Corporation income. Grain stored in a
nonexempt cooperative was pledged as security
for loans to a farmer-producer under the price support
program. The Commodity Credit Corporation
paid storage charges which under section 522
(replaced in effect by 1382) constitute income
allocable to members as patronage dividends
excludable from the cooperative’s income before
the default but constitute income not derived from
patronage after the default. §1.61–5. (Secs. 61,
1382; ’86 Code.)
Rev. Rul. 59-107, 1959-1 C.B. 20.
218.232 Cooperatives; farmers; distribution
requirements. A farmers’ cooperative may, without
jeopardizing its exempt status, make cash payments
in full where the patronage dividends or
nonpatronage distribution is $10 or less, and may
pay $10 or 20 percent of the total dividend, whichever
is greater, on all dividends in excess of $10.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 66-152, 1966-1 C.B. 155.
218.233 Cooperatives; farmers; distributions
beyond fixed dividends. A farmers’ cooperative
association does not qualify for exemption where
its stockholders are permitted to participate in the
profits of the association beyond the fixed dividends
upon dissolution or redemption of their
stock. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 69-431, 1969-2 C.B. 133.
218.234 Cooperatives; farmers; emergency
purchases from nonproducers. The exempt status
of a farmers’ cooperative marketing association
will not be adversely affected by emergency
purchases of farm products from nonproducers to
fulfill outstanding orders based on normal crop
expectations. However, such purchases must be
caused by unforeseen circumstances to qualify as
emergency purchases. §1.521–1. (Sec. 521, ’86
Code.)
Rev. Rul. 69-222, 1969-1 C.B. 161.
218.235 Cooperatives; farmers; equitable
allocation. An exempt farmers’ cooperative that
operates a grain elevator branch, a soybean processing
branch, and establishes a feed yard branch
financed by selling preferred debentures to its
members, that allocates the feed yard earnings be
tween the debenture holders and the other
branches according to the feed source and allocates
the grain and soybean branchs’ earnings
according to the branchs’ individual patronage,
thus resulting in debenture and nondebenture
holders receiving different dividends for identical
marketing, is using a method of operation that
does not affect its exempt status. §§1.521-1,
1.1388-1. (Secs. 521, 1388; ’86 Code.)
Rev. Rul. 74-567, 1974-2 C.B. 174.
218.236 Cooperatives; farmers; exchange of
products with nonmember producers. A product
processed by an exempt farmers purchasing
cooperative and exchanged for an unlike product
processed by a nonmember nonproducer will be
considered to have been purchased by the cooperative
for the nonmember nonproducer in determining
whether the value of purchases made for
persons who are neither members nor producers
exceeds 15 percent of the value of all purchases.
Exempt organizations
The nonmember nonproducer will be considered
a patron of the cooperative, and the amount of the
product delivered to the other patrons of the cooperative
by the nonmember nonproducer will be
considered a sale to them by the cooperative. Rev.
Rul. 54-12 distinguished. §1.521-1. (Sec. 521,
’86 Code.)
Rev. Rul. 67-346, 1967-2 C.B. 216.
218.237 Cooperatives; farmers; federated;
“look through” principle. The effect on the
exempt status of federated farmers’ cooperatives
in applying the “look through” principle is illustrated
in the following situations: (1) A supply
cooperative purchases supplies from commercial
sources and sells them at a profit to nonmembers;
(2) A supply cooperative purchases supplies for a
nonexempt member; and (3) a nonexempt member
handles fungible products and markets
through both the farmers’ cooperative and commercial
sources. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 72–50, 1972–1 C.B. 163; Rev. Rul.
72-51,1972-1 C.B. 164; Rev. Rul. 72-52, 1972-1
C.B. 165.
218.238 Cooperatives; farmers; federated;
“look through” principle. Four situations illustrate
the principle of “looking through” to ultimate
patrons of member associations in determining
whether a federated farmer’s cooperative
meets the requirements for exemption. Situation
two through four involving federated cooperatives
dealing with nonexempt cooperatives will not be
applied to taxable years beginning before July 1,
1970, with respect to federated cooperative
associations that have been relying on rulings or
determination letters of exemption issued under
section 521 of the Code. Rev. Rul. 69-651 is modified
by Rev. Rul. 71-493 to postpone to July 1,
1971, the effective date of situations two through
four, and suspended by Rev. Rul. 73–138, pending
reconsideration of Rev. Proc. 72–17. Rev. Rul.
73–138 is revoked by Rev. Rul. 73–568. The provisions
of Rev. Rul. 69–651 as set forth in situations
two through four will not be applied to taxable
years beginning before December 17, 1973.
§§1.521-1, 301.7805-1. (Secs. 521, 7805; ’86
Code.)
Rev. Rul. 69-651, 1969–2 C.B. 135; Rev. Rul.
71-493, 1971-2 C.B. 240; Rev. Rul. 73-138,
1973-1 C.B. 293; Rev. Rul. 73-568, 1973-2 C.B.
194.
218.239 Cooperatives; farmers; federated;
“lookthrough” principle. Methods are provided
that may be used by a federated farmers’ cooperative
whose taxable year differs from some of its
member cooperatives, in establishing and maintaining
its exemption under section 521 for the
purpose of the “look through” principle. Supplemented
to provide an additional method. (Sec.
601.105, S.P.R.)
Rev. Proc. 72–17, 1972–1 C.B. 739; Rev. Proc.
73-38, 1973-2 C.B. 501.
218.240 Cooperatives; farmers; federated;
“look through” principle; information and
returns for exemption. Information from a member
that a federated farmers’ cooperative may rely
on in establishing and maintaining exemption and
information that should be submitted by the cooperative
with its application for exemption and
annual return; effective for years beginning after
June 30, 1971. §1.521-1. (Sec. 601.201, S.P.R.;
Sec. 521, ’86 Code.)
Rev. Proc. 72-16, 1972-1 C.B. 738.
218.241 Cooperatives; farmers; fruit cannery
and cotton textile mill. A farmers’ cooperative
operating a cannery and facilities for drying
fruit and a farmers’ cooperative operating a textile
mill, both of which market the processed or unprocessed
products of their member growers and distribute
the proceeds to them on the basis of the
quantity of product furnished, less a charge to
cover the cost of processing, qualify as exempt

Exempt organizations
farmers’ cooperatives. §§1.521–1, 1.1381–1.
(Secs. 521, 1381; ’86 Code.)
Rev. Rul. 77-384, 1977-2 C.B. 198.
218.242 Cooperatives; farmers; grazing land
provided. A cooperative association which
acquires the beneficial use of land and apportions
it among its members for grazing their livestock
may be exempt from tax. §1.521–1. (Sec. 521, ’86
Code.)
Rev. Rul. 67-429, 1967-2 C.B. 218.
218.243 Cooperatives; farmers; hedging
transactions for patrons. An exempt farmers’
cooperative may in certain circumstances establish
a commodity trading division to serve as a
commodity broker to facilitate hedging transactions
for its marketing patrons without affecting its
exemption. §1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 76-298, 1976-2 C.B. 179.
218.244 Cooperatives; farmers; ingredient
purchases from nonproducers. The purchase of
cream from nonproducers by a dairy farmers’
cooperative marketing association, that markets
ice cream produced from the excess cream resulting
from the processing of its members’ raw milk,
is not an ingredient purchase but is a product and
will adversely affect the association’s exempt status.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 75-4, 1975-1 C.B. 165.
218.245 Cooperatives; farmers; integrated
business unit; marketing and storage. The marketing
activity of a nonexempt farmers’ cooperative
may be combined with its storage activity so
that the two aspects of the business are treated as
a unit. However, where a cooperative distributes
profits only to member patrons, the exclusion
under section 522 (replaced in effect by 1382) will
be limited to that portion of the dividend attributable
to member business. (Sec. 1382, ’86 Code.)
Rev. Rul. 63-58, 1963-1 C.B. 109.
218.246 Cooperatives; farmers; leasing facilities.
A farmers’ cooperative association is not
exempt where it leases its marketing facilities and
relinquishes its authority to negotiate the price
paid to its members for their products. §1.521-1.
(Sec. 521, ’86 Code.)
Rev. Rul. 71-100, 1971–1 C.B. 159.
218.247 Cooperatives; farmers; life insurance
purchased for members. A farmers’ cooperative
marketing association which purchases
life insurance policies on the lives of its members
does not qualify for exemption, since it would not
be turning back to its members and other producers
the proceeds of the sales of their products less
the necessary marketing expenses. §§39.23(a)-1,
39.24(a)-3, 39.101(12)-1. (Secs. 23(a), 24(a),
101, ’39 Code; Secs. 162, 264, 521, ’86 Code.)
Rev. Rul. 55-558, 1955-2 C.B. 270.
218.248 Cooperatives; farmers; market facilities
furnished. A cooperative association
formed to furnish its members facilities to
assemble, grade, display, advertise, and sell their
own fruits, vegetables, and other farm products
may be exempt as a marketing association even
though it does not actually sell or distribute a product.
I.T. 2720 superseded. §1.521–1. (Sec. 521,
’86 Code.)
Rev. Rul. 67-430, 1967–2 C.B. 220.
218.249 Cooperatives; farmers; marketing
and purchasing association; vote by proxy. The
exempt status of a farmers’ cooperative will not be
jeopardized if it permits proxy voting by shareholders.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 75–97, 1975–1 C.B. 167.
218.250 Cooperatives; farmers; marketing
nonmembers’ products. An exempt cooperative
marketing association will not lose its exempt status
if it markets for members products of nonmembers
where the member provides evidence that the
proceeds from the sale of the nonmembers’ products,
less marketing expenses, have been turned
over to the nonmembers, and the value of the nonmembers’
products marketed does not exceed that
of the members. §39.101(12)–1. (Sec. 101, ’39
Code; Sec. 521, ’86 Code.)
Rev. Rul. 55-496, 1955-2 C.B. 268.
218.251 Cooperatives; farmers; marketing
or purchasing for or with U.S. An exempt farmers’
cooperative will not jeopardize its status if it
does business of a marketing or purchasing nature
for or with the U.S. or an agency thereof so long
as it otherwise continues to engage in marketing or
purchasing activities for its patrons. §1.521-1.
(Sec. 521, ’86 Code.)
Rev. Rul. 65-5, 1965–1 C.B. 244.
218.252 Cooperatives; farmers; marketing
products purchased by members. Where a
cooperative association which markets products
purchased by members which exceed in value
those grown or otherwise produced by members
for whose accounts such products are marketed, it
violates the limitation placed on business done
with nonmembers. Furthermore, by marketing
products of nonmembers as those of its members,
the association does not meet the statutory requirement
that proceeds of the sale of products, less
necessary operating expenses, be returned to producerson
the basis of the quantity or value of products
furnished by them. I.T. 3853 superseded.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-152, 1967-1 C.B. 147.
218.253 Cooperatives; farmers; marketing
range grasses. A nonprofit agricultural cooperative
formed to produce and market range grasses,
on land owned or leased by its members, by grazing
its own herd of breeder cattle and by grazing
the cattle of others during the peak growing season
qualifies for exemption as a farmers’, fruit growers’,
or like association. §1.521–1. (Sec. 521, ’86
Code.)
Rev. Rul. 75-5, 1975-1 C.B. 166.
218.254 Cooperatives; farmers; membership
fee withheld from patronage dividends. A farmers’
cooperative will continue to qualify for
exemption where an amount up to the annual
membership fee is withheld from nonmembers’
patronage dividends to meet the cost operations of
the cooperative. G.C.M. 11068 superseded.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 69–52, 1969-1 C.B. 161.
218.255 Cooperatives; farmers; milk quality
bonus program. A milk quality bonus program,
adopted by a dairy farmers’ cooperative association
marketing milk only for its members, that is
financed under contracts with milk handlers who
in addition to the base price pay a premium that is
shared by all the member-producers on the basis of
points awarded according to each member’s milk
quality is a permissible method of allocating
income and does not adversely affect the association’s
exempt status. §1.521–1. (Sec. 521. ’86
Code.)
Rev. Rul. 75-110, 1975-1 C.B. 167.
218.256 Cooperatives; farmers; name of
cooperative. Farmers’ cooperative marketing and
purchasing associations, whose bylaws set forth a
definite pre-existing obligation of the association
to make distribution to patrons of a portion of the
net profits as patronage dividends, may exclude
such dividends from income regardless of whether
the corporate name contains the word “cooperative.’’
§39.101(12)-4. (Sec. 101, ’39 Code; Sec.
521, ’86 Code.)
Rev. Rul. 55-26, 1955–1 C.B. 338.
218.257 Cooperatives; farmers; non-exempt
supply association for nonmembers. A non-exempt
supply association formed by the officers
and directors of an exempt farmers’ cooperative
is, under the circumstances, considered a subsidiary
of the cooperative, and the cooperative will
lose its exempt status if the association’s purchases
for nonmember-nonproducers exceed fifteen
percent of the combined purchases of both
organizations. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 73-148, 1973-1 C.B. 294.
218.258 Cooperatives; farmers; noncash
allocation; deceased member’s estate. A written
notice of allocation made by an exempt farmers’
cooperative to the estate of a deceased member,
who during his lifetime had filed a consent pursuant
to section 1388 of the Code, for business
conducted with the cooperative prior to his death
is deductible by the cooperative as a patronage
dividend. The estate is required to include the noncash
allocation in gross income. For any additional
cooperative written notices of allocation
with respect to the decedent, the estate would be
required to follow the normal membership procedure.
§§1.521-1, 1.1385-1, 1.1388-1. (Secs. 521,
1385, 1388; ’86 Code.)
Rev. Rul. 73-93, 1973-1 C.B. 292.
218.259 Cooperatives; farmers; nonfarm use
of supplies purchased for members. For purposes
of the 15 percent test provided in section
521(b)(4), supplies purchased by a member of a
farmers’ cooperative for use in his nonfarming
business will be treated as purchases made for persons
who are neither members nor producers.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-223, 1967–2 C.B. 214.
218.260 Cooperatives; farmers; nonmember
dividends deposited in suspense reserve. A livestock
marketing cooperative prohibited under the
Packers and Stockyards Act of 1921 from distributing
patronage dividends to nonmembers does
not qualify for exemption by depositing those dividends
in a patronage refund suspense reserve.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 73–59, 1973-1 C.B. 292.
218.261 Cooperatives; farmers; nonpatrons’
products marketed; dividends. An exempt
farmers’ cooperative making emergency purchases
and purchases of sideline products for fixed
prices from a nonmember nonproducer is not
required to pay patronage dividends to the nonmember
to maintain its exempt status. §1.521–1.
(Sec. 521, ’86 Code.)
Rev. Rul. 76-388, 1976-2 C.B. 180.
218.262 Cooperatives; farmers; nonproducer
patrons requested to return capital stock.
A farmers’ cooperative purchasing association
issues shares of voting common stock to patrons
without regard to the status of such patrons as producers
or nonproducers, requesting that patrons
who are not producers of agricultural products
return their shares for redemption. As a result of
this practice and the failure of many nonproducers
to comply with the association’s request, numerous
nonproducers have become shareholders so
that the association is not complying with the
requirements that ownership of capital stock be
restricted to actual producers as far as possible.
Accordingly, the association is not exempt,
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-204, 1967-1 C.B. 149.
218.263 Cooperatives; farmers; nontaxable
stock dividend. The issuance by a farmers cooperative
association of a nontaxable dividend to its
shareholders does not increase the “value of the
consideration for which the stock was issued” for
the purpose of the dividend limitation. Therefore,
the maximum annual dividend rate of the cooperative
may not exceed the specified percentage of
the consideration paid for the original stock.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 68-169, 1968-1 C.B. 286.

218.264 Cooperatives; farmers; patronage
dividends retained. The retention by farmers’
cooperatives of each patronage dividend less than
one dollar and similar retentions of the cents payable
in excess of whole dollar amounts do not
constitute inequitable treatment of all patrons to an
extent which would jeopardize the exempt status
of the cooperative. The mailing of checks or stock
representing patronage dividends by a farmers’
cooperative is payment, and deduction is allowed
even though the postal authorities are unable to
make delivery and the cooperative holds the
instrument subject to the claim of the rightful
wner. §39.101(12)–1. (Sec. 101, ’39 Code; Sec.
501, ’86 Code.)
Rev. Rul. 55-141, 1955-1 C.B. 337.
218.265 Cooperatives; farmers; patron’s status
as producer. Farm owners operating their
farms through tenants are producers, and where
the number of those operating their own farms and
those operating through tenants constitutes substantially
all of the membership of a cooperative
association operating a creamery, such association
is entitled to exemption. (Sec. 231(11), Revenue
Act of 1924; Sec. 231(12), Revenue Act of 1926;
Sec. 521, ’86 Code.)
Farmers Co-operative Creamery, 21 B.T.A. 265,
Acq., 1957-2 C.B. 4.
218.266 Cooperatives; farmers; patron’s statusas
producer. In general, a person who markets
his products or purchases supplies through a cooperative
organization may be considered a producer
for purposes of section 521 if he bears the risks of
production, cultivates, operates, or manages a
farm for gain or profit as owner or tenant. Circumstances
under which a person may be considered
a producer are set forth. Amplified by Rev. Rul.
72-589. §1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-422, 1967-2 C.B. 217.
218.267 Cooperatives; farmers; patron’s status
as producer; stockholder of corporation. A
stockholder does not qualify as a producer exempt
from tax solely because the corporation engaged
in farming so qualifies; however, he may qualify
if independent of his stock ownership he meets the
requirements of a producer. Rev. Rul. 67-422
amplified. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 72-589, 1972-2 C.B. 282.
218.268 Cooperatives; farmers; processing
semen for artificial breeding. A cooperative
association that owns sire cattle for the purpose of
producing and processing semen for use in the
artificial breeding of its members’ livestock may
qualify for exemption. §1.521-1. (Sec. 521, ’86
Code.)
Rev. Rul. 68-76, 1968-1 C.B. 285.
218.269 Cooperatives; farmers; purchasing
subsidiary. A corporation formed to purchase
farm equipment for members of an exempt farmers’
cooperative that holds all issued capital stock
of the corporation satisfies the requirement that
substantially all of its stock must be owned by producers.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 75-388, 1975-2 C.B. 227.
218.270 Cooperatives; farmers; records and
allocation requirements. A farmers’ cooperative
marketing and purchasing association does not
maintain records of the amount of business done
with its marketing patrons separate from those
pertaining to the amounts of business done with
the purchasing patrons. The association apportions
its expenses between the marketing and purchasing
departments solely on the basis of gross
sales of each department, and it allocates patronage
dividends only to patrons of its purchasing
department. This association is not exempt from
tax. §1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 67-253, 1967-2 C.B. 214.
218.271 Cooperatives; farmers; share agreement.
Where feed dealers contract with growers
who agree to properly feed and care for poultry
which is turned over to the dealers for marketing
through a farmers’ cooperative association, both
the feed dealer and the grower qualify as producers
with respect to the interest of each in the poultry
marketed. Under such circumstances, the
exempt status of a farmers’ cooperative association
will not be adversely affected. §1.521–1.
(Sec. 521, ’86 Code.)
Rev. Rul. 58-483, 1958-2 C.B. 277.
218.272 Cooperatives; farmers; stock ownership;
“substantially all” test. The “substantially
all” test is satisfied if at least 85 percent of the total
shares of capital stock of a farmers’ cooperative
(other than non-voting preferred stock for which
the owners’ participation in profits is limited to no
more than the fixed dividends) is held by producers.
§1.521–1. (Sec. 521, ’86 Code.)
Rev. Rul. 73-248, 1973-1 C.B. 295.
218.273 Cooperatives; farmers; subsidiary
corporations; nonmember patrons. Farmers’
cooperative associations will lose their exempt
status where subsidiary corporations established
to handle nonmember-nonproducer business, fails
to pay patronage dividends to nonmembers
patrons, or violates the 15 percent limitation on
purchases. §1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 69-575, 1969-2 C.B. 134.
218.274 Cooperatives; farmers; subsidiary
DISC. A tax exempt farmers’ cooperative
association may own a DISC for purposes of marketing
its members’ produce abroad without
affecting its exempt status; ownership of the DISC
by the cooperative, as the sole shareholder, will
not prevent qualification as a DISC. §1.521–1.
(Secs. 521, 992; ’86 Code.)
Rev. Rul. 73-247, 1973-1 C.B. 294.
218.275 Cooperatives; farmers; supplemental
distributions. A supplemental distribution of
earnings by an exempt farmers’ cooperative to its
patrons as the result of a 1973 audit disallowing
depreciation deductions claimed on the 1970 and
1971 returns of the cooperative, whose bylaws
obligate it to pay its patrons all net margins over
and above operating expenses, will not qualify as
a patronage dividend deduction in any year. The
cooperative must pay tax on the amount of
depreciation disallowed for each year and the tax
payment should be reflected on its books as a
deduction from net earnings of the respective
year’ spool. The remaining amount may be distributed
as a nonqualifying patronage dividend.
§§1.521-1, 1.1382-1, 1.1382-2, 1.1388-1. (Secs.
521, 1382, 1388; ’86 Code.)
Rev. Rul. 74-327, 1974-2 C.B. 173.
218.276 Cooperatives; farmers; time
extended for filing returns. For taxable years
beginning in 1952 and 1953, the time for filing
exempt cooperative association income tax
returns and the payment of tax due thereon has
been extended until the fifteenth day of the ninth
month following the close of such taxable year.
§§29.53-2, 39.53-2, 29.56-2, 39.562,
29.101(12)-1, 39.101(12)-1. (Secs. 53, 56, 101,
’39 Code; Secs. 521, 6081, 6151, ’86 Code.)
Rev. Rul. 27, 1953-1 C.B. 85; Rev. Rul. 102,
1953-1 C.B. 86; Rev. Rul. 54-81, 1954-1 C.B. 78.
218.277 Cooperatives; farmers; unrelated
expenditures. An exempt cotton farmers’ cooperative
association’s expenditures incurred under
a corporate development plan to acquire control of
a wool processing company are neither cotton
marketing expenses nor connected with incidental
investment activities properly deducted from a
reserve account, and the association will no longer
qualify for exemption. §1.521-1. (Sec. 521, ’86
Code.)
Rev. Rul. 76-233, 1976-1 C.B. 173.
Exempt organizations
218.278 Cooperatives; farmers; voting status
of shareholder-producers. The requirements for
qualification as voting members of a farmers’
cooperative are discussed as they apply to shareholder-producers
who fallow their land every
other year, have a farm with production in the market
areas of two different cooperatives, have two
farms located in different areas served by different
cooperatives, or have their own storage facilities
and shop among competing marketing facilities
for the best price for their crops. §1.521-1. (Sec.
521, ’86 Code.)
Rev. Rul. 77-440, 1977–2 C.B. 199.
218.279 Cooperatives; farmers; voting stock
held in trust by membership committee. A
farmers’ cooperative will not be denied exemption
merely because a substantial part of its voting
stock is held by its membership committee as
trustees for the members. (Sec. 521, ’86 Code.)
Rev. Rul. 56-21, 1956-1 C.B. 208.
218.280 Cooperatives; federated; marketing
forest products. A federated cooperative marketing
newsprint, and its member cooperatives growing
pulpwood, are. not engaged in the business of
farming and do not qualify for the exemption from
federal income tax as farmers’ cooperatives.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 84-81, 1984-1 C.B. 135.
218.281 Cooperatives; hospital; laundry service
for members. Answers to questions relating
to the exempt status of (1) hospitals that form a
cooperative laundry service organization which
services member hospitals and (2) a hospital that
establishes its own laundry service facility and
sells laundry service to other hospitals.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 69-633, 1969-2 C.B. 121.
218.282 Cooperatives; “like organization”;
accounting method. An exempt section
501(c)(12) organization on the accrual method of
accounting must use that method in determining
compliance with the 85 percent requirement
imposed by that section. §1.501(c)(12)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 68-18, 1968-1 C.B. 271.
218.283 Cooperatives; “like organization”;
fish marketing association. An association organized
and operated on a cooperative basis for the
purpose of marketing “farm-raised fish” is considered
an organization composed of producers of
farm products. Accordingly, the organization is
entitled to exemption as a farmers’, fruit growers’,
or like association. Rev. Rul. 55-611 distinguished.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 64-246, 1964-2 C.B. 154.
218.284 Cooperatives; “like organization”;
fishermen’s purchasing association. An association
which purchases supplies and equipment for
its members who are fishermen or oyster growers
is not a farmers’, fruit growers’ or like association
and is not exempt from tax. Distinguished by Rev.
Rul. 64-246. (Sec. 521, ’86 Code.)
Rev. Rul. 55-611, 1955-2 C.B. 270.
218.285 Cooperatives; “like organization”;
government agency as member. A government
agency admitted to membership in an electric
cooperative is a member for purposes of the 85
percent limitation. §1.501(c)(12)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 68–75, 1968-1 C.B. 271.
218.286 Cooperatives; “like organization”;
installment sales. An exempt cooperative sold its
office building under a valid installment sales
transaction from which it realized a long-term gain
of 100x dollars. In determining whether the organization
meets the 85 percent of income from
members requirement, the amount of the gain that
the organization is required to include in gross

Exempt organizations
income for the annual accounting period involved,
is the income portion of the installment payment
actually received during that period. §§1.453–1,
1.501(c)(12)-1. (Secs. 453, 501; ’86 Code.)
Rev. Rul. 65-99, 1965-1 C.B. 242.
218.287 Cooperatives; “like organization”;
light and water cooperative. An organization
which furnishes light and water to its members on
a cooperative basis may be exempt as a like organization
provided 85 percent or more of its income
consists of amounts collected from members for
the sole purpose of meeting losses and expenses.
I.T. 1671 superseded. §1.501(c)(12)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 67–265, 1967–2 C.B. 205.
218.288 Cooperatives; “like organization”;
lumber marketing association. An incorporated
organization that markets lumber for the independent
lumber producing companies controlling
such organization, whose members share in its
surplus or deficit on the basis of their stock interests,
does not qualify for exemption as a “farmers,
fruit growers, or like association, and operated on
a cooperative basis.” I.T. 1312 superseded.
§1.521-1. (Sec. 521, ’86 Code.)
Rev. Rul. 73-570, 1973-2 C.B. 194.
218.289 Cooperatives; “like organization”;
mutual water company. A mutual water company
whose articles of incorporation provide that
in the event of integration with a local government
water system the assets of the company are to be
distributed to its members who will transfer them
to the local government without charge is not precluded
from qualifying for exemption.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-453, 1973–2 C.B. 185.
218.290 Cooperatives; “like organization”;
preventing erosion of river banks. A mutual
company, whose members are the owners of river
front property, formed to contract with the Federal
Government to prevent erosion of river banks may
qualify for exemption as a “like organization”.
I.T. 3286 superseded. §1.501(c)(12)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 68-564, 1968-2 C.B. 221.
218.291 Cooperatives; “like organization”;
rental income. An electric generation and transmission
cooperative entered into a lease-operating
agreement with a commercial electrical power
company whereby the latter leases, operates, and
maintains the cooperative’s electric generator unit
and provides electric energy to the cooperative’s
members all of which are nonprofit membership
distribution cooperatives. The commercial company
pays the cooperative for the use of the unit
and the cooperative, in turn, pays the commercial
company for electric energy furnished to co-op’s
members. The amounts which are received by the
cooperative from the commercial company under
the circumstances constitute income which must
be considered in determining whether the cooperative
meets the 85 percent of member income
requirement. §1.501(c)(12)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 65–174, 1965-2 C.B. 169.
218.292 Cooperatives; mutual ditch company.
A mutual ditch company that operates in a
traditional manner consistent with the provisions
of a particular state statute may qualify for exemption
under section 501(c)(12), even though it does
not satisfy all of the requirements of Rev. Rul.
72-36. Rev. Rul. 72-36 modified.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 81–109, 1981–1 C.B. 347.
218.293 Cooperatives; net operating loss;
effect on patronage dividends. The net operating
loss deduction allowed under section 172(a) does
not reduce the earnings of a cooperative that are
available for payment of patronage dividends.
§§1.172-4, 1.522-2, 1.1382-2. (Secs. 172, 522,
1382; ’86 Code.)
Rev. Rul. 65-106, 1965-1 C.B. 126.
218.294 Cooperatives; organization distributing
electric power to members. The Service
will not follow the Peninsula Light Co., Inc. decision
that an organization formed for the purpose of
distributing electric power to its members, not
operated on a patronage basis, whose charter provides,
instead, that each member has an equal
share in the organization’s assets, with its net
assets upon dissolution to be divided equally
among its then-cument members, and whose former
members’ rights and interests are forfeited
upon termination of membership, qualifies for
exemption as a mutual or cooperative organization.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–238, 1978–1 C.B. 161.
218.295 Cooperatives; requirements for
exemption. In order to retain their exempt status
under section 501(c)(12), cooperative companies
must: (1) determine the interests of members in
proportion to members’ business with the organization;
(2) use funds to meet losses and expenses
but may retain excess funds for certain purposes;
(3) keep such records as are necessary to determine
members’ interest; (4) not provide for or
cause a forfeiture of a member’s equity interest;
and (5) distribute certain funds. upon dissolution,
in a ‘prescribed manner. Modified by Rev. Rul.
81-109. §1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72–36, 1972-1 C.B. 151.
218.296 Cooperatives; stock ownership. Rev.
Proc. 73–39, 1973–2 C.B. 502, is revoked because
the patronage requirement under the stock ownership
test of section 521(b)(2) is a qualitative, not
quantitative, test. §1.521-1. (Sec. 601.105, S.P.R.;
Sec. 521, ’86 Code.)
Rev. Proc. 90-29, 1990-1 C.B. 533.
218.297 Cooperatives; stock ownership. Rev.
Rul. 77-440, 1977–2 C.B. 199, is revoked because
it applies the 50-percent patronage test of Rev.
Proc. 73–39, 1973–2 C.B. 502, that was revoked
by Rev. Proc. 90-29. 1.521-1. (Sec. 521, ’86
Code.)
Rev. Rul. 90-42, 1990-1 C.B. 117.
218.298 Cooperatives; telephone; higher service
rates charged nonmembers. A cooperative
telephone company deriving more than 85 percent
of its income from members is exempt from tax
notwithstanding that nonmembers are charged a
higher rate for service than the members.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-130, 1970-1 C.B. 133.
218.299 Cooperatives; telephone; nonmember
income. For taxable years of a mutual or cooperative
telephone company beginning after 1974,
the 85 percent member-income test for exemption
is applied without taking into account income
received or accrued from another telephone company
for the performance of communication services
involving the completion of long distance
calls to, from, or between members of the mutual
or cooperative telephone company. Rev. Rul.
74-362 obsoleted. §1.501(c)(12)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 81–291, 1981-2 C.B. 131.
218.300 Counseling widows. A nonprofit organization
formed to provide individual and group
counseling to widows to assist them in legal,
financial, and emotional problems caused by the
death of their husbands and that provides the widows
with information on available benefits and
services is considered to be operated excessively
for educational purposes and qualifies for exemption.
§1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-99, 1978-1 C.B. 152.
218.301 Creative arts awards. A nonprofit
organization providing awards and grants, including
scholarships and fellowship grants, to needy
individuals to continue their education or their
work in the creative arts. with no monetary benefit
to the donor, is exempt from tax. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 66-103, 1966-1 C.B. 134.
218.302 Credit counseling service. A nonprofit
organization formed to help reduce personal
bankruptcy by providing information to the public
on budgeting, buying practices, and the sound use
of consumer credit, and assisting low-income
individuals and families who have financial problems
by providing, without charge, counseling,
and, if necessary, budget plans for liquidation of
indebtedness, qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-441, 1969-2 C.B. 115.
218.303 Credit union; state-chartered
insurer. An organization created after August 31,
1957, for the purpose of insuring individuals’
deposits in state-chartered credit unions does not
qualify for exemption under either section
501(c)(6) or section 501(c)(14)(B).
§§1.501(c)(6)-1; 1.501(c)(14)-1, 301.7805-1.
(Secs. 501, 7805; ’86 Code.)
Rev. Rul. 83-166, 1983-2 C.B. 96.
218.304 Credit unions; state law requirement.
An organization must be formed and operated
under the state law governing the formation
of credit unions to qualify as a “credit union” subject
to the tax exemption provided by section
501(c)(14)(A). Clarified to provide that such
“credit union” must also operate without profit
and for the mutual benefit of its members.
§1.501(c)(14)-1. (Sec. 501. ’86 Code.)
Rev. Rul. 69–282, 1969-1 C.B. 155; Rev. Rul.
72-37, 1972-1 C.B. 152.
218.305 Credit unions; U.S. military base in
foreign country. An organization formed by a
group of individuals at a U.S. military base in a
foreign country, which meets all but the territorial
requirements of the Federal Credit Union Act, is
exempt as a credit union. §1.501(c)(14)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 69-283, 1969–1 C.B. 156.
218.306 Crop financing corporation; ownership
of stock in business corporation. A corporation
organized to finance crop operations and
exempt under section 501(c)(16) is not disqualified
from exemption by the corporation’s ownership
of all the stock of a business corporation.
§1.501(c)(16)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-434, 1978-2 C.B. 179.
218.307 Crop seed certification. A nonprofit
organization that has been delegated the responsibility
of certification of crop seed by a state university
in accordance with state and federal law, and
conducts research and educational programs qualifies
under section 501(c)(3). (Sec. 501, ’86
Code.)
Indiana Crop Improvement Association, Inc. 76
T.C. 394, Acq., 1981-2 C.B. 1.
218.308 Cultural foundation; aiding in establishing
repertory theatre. A foundation formed
to create interest in the development of the American
theatre by aiding local communities to establish
their own charitable and educational repertory
theatres qualifies for exemption. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 64-174, 1964-1 (Part 1) C.B. 183.
218.309 Cultural foundation; operating repertory
theatre. A nonprofit corporation which is
organized exclusively for charitable, scientific,
literary, or educational purposes and, more specifically,
to stimulate, promote and develop the interest
of the American public in the dramatic arts and
which operates a permanent repertory theatre in

furtherance thereof qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-175, 1964-1 (Part 1) C.B. 185.
218.310 Dancing school. A nonprofit organization
formed to operate a school to teach the art of
dancing, particularly contemporary dancing and
maintaining a regular faculty and curriculum with
a regularly enrolled body of students, is exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-270, 1965-2 C.B. 160.
218.311 Distributions to needy individuals.
An organization privately established and funded
as a charitable foundation may make distributions
to needy individuals without affecting its tax-exempt
status. However, adequate records and case
histories should be maintained. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 56-304, 1956-2 C.B. 306.
218.312 Distributions to nonexempt organization.
An organization will not jeopardize its
exemption even though it distributes funds to nonexempt
organizations, provided it retains control
and discretion over use of the funds far section
501(c)(3) purposes. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 68-489, 1968-2 C.B. 210.
218.313 Distributions to State or municipal
instrumentalities. Organizations may make distributions
of income or other unrestricted funds to
a state or municipality, or to an activity which is an
integral part thereof, without jeopardizing their
exempt status, provided such distributions are in
furtherance of the exempt purposes of the donor
organizations. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 62-78, 1962-1 C.B. 86.
218.314 Doctor-creator “hired” to conduct
medical practice. An organization formed and
controlled by a doctor of medicine who is “hired”
to conduct research programs consisting of
examining and treating patients who are charged
the prevailing fees for services rendered does not
qualify for exemption. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 69-266, 1969-1 C.B. 151.
218.315 Dog training club. A dog club exempt
under 501(c)(7) formed to promote ownership and
training of purebred dogs that provides facilities
and trainers for conducting obedience training
classes may not be reclassified as an educational
organization. §§1.501(c)(3)-1, 1.501(c)(7)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 71-421, 1971-2 C.B. 229.
218.316 Drama and musical arts appreciation.
A nonprofit organization created to develop
a community appreciation for drama and musical
arts by sponsoring professional presentations such
as plays, musicals, and concerts, qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-45, 1973-1 C.B. 220.
218.317 Educational; accreditation of educational
institutions. A nonprofit organization of
accredited educational institutions, whose membership
includes a small number of proprietary
schools, and whose activities include the preparation
of accreditation standards, identification of
schools and colleges meeting these standards, and
the dissemination of accredited institution lists is
exempt as an educational organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-146, 1974-1 C.B. 129.
218.318 Educational; aid to immigrants. A
nonprofit organization formed to aid immigrants
in overcoming social, cultural, and economic
problems by providing personal counseling, referrals
to helpful agencies, social and recreational
activities, instruction in English, and distribution
of a newsletter is operated exclusively for charitable
and educational purposes and qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-205, 1976-1 C.B. 154.
218.319 Educational; alternative education
information. A nonprofit membership corporation
founded to promote better education for children
through expanded private educational opportunities
and to provide, at little or no cost, the
public with information on alternatives to public
education is operated exclusively for educational
purposes and qualifies for exemption. (Sec. 501,
’86 Code.)
National Association for the Legal Support of
Alternative Schools, 71 T.C. 118, Acq., 1981-36
I.R.B. 5.
218.320 Educational; broadcast media
information and evaluations. A nonprofit organization
that provides information to the public
about the public’s right of access to the broadcast
media and objectively evaluates the performance
of local broadcasters in fulfilling their public service
obligations is operated exclusively for charitable
and educational purposes. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 79-26, 1979-1 C.B. 196.
218.321 Educational; children and adolescents
with learning disabilities. A nonprofit
organization formed to provide individual psychological
and educational evaluations, as well as
tutoring and therapy, for children and adolescents
with learning disabilities is operated exclusively
for charitable purposes. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 77-68, 1977-1 C.B. 142.
218.322 Educational; Civil War history. A
nonprofit organization formed to increase the
knowledge of its members and the public about
historic events of the Civil War by researching,
studying, and involving its members in historically
accurate reenactments of Civil War battles to
which the which is invited may be exempt from
tax. §1.501(c)(3)-1. (Sec. 501, - ’86 Code.)
Rev. Rul. 67-148, 1967-1 C.B. 132.
218.323 Educational; closed-circuit radio
broadcasting system. A nonprofit organization
that sets up closed-circuit radio transmitting
equipment in multiple residence structures such as
nursing homes, rest homes, and convalescent
homes, providing senior citizens within the buildings
an opportunity to listen to free, noncommercial
and educational broadcasts concerning their
special needs, is operated exclusively for charitable
and educational purposes and qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-42, 1977-1 C.B. 142.
218.324 Educational; community sports
activity. An otherwise qualifying nonprofit organization
that conducts clinics, workshops, lessons,
and seminars at municipal parks and recreational
areas to instruct and educate individuals in a particular
sport is operated exclusively for educational
purposes and qualifies for exemption. Rev.
Rul. 65-2 amplified. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 77-365, 1977-2 C.B. 192.
218.325 Educational; community sports
foundation. A foundation operated exclusively to
teach children a sport by holding clinics conducted
by qualified instructors in schools, play grounds,
and parks and by providing free instruction, equipment,
and facilities qualifies for exemption.
Amplified by Rev. Rul. 77-365. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 65-2, 1965-1 C.B. 227.
218.326 Educational; computer users. An
organization whose membership is limited to
organizations that own, rent, or use a specific type
Exempt organizations
of computer and whose activities are designed to
keep members informed of current scientific and
technical data of special interest to them as users
of the computer is not exempt. §1.501(c)(3)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 74-116, 1974–1 C.B. 127.
218.327 Educational; counseling men on voluntary
sterilization methods. An organization
that provides free counseling to men concerning
methods of voluntary sterilization, assists them in
obtaining sterilization operations, and distributes
pamphlets and brochures explaining the effectiveness
of sterilization in family planning is exempt.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-595, 1974–2 C.B. 164.
218.328 Educational; counseling women on
unwanted pregnancies. An organization that provides
free counseling to women on methods of
resolving unwanted pregnancies, including lawful
abortion, delivering and placing the child for
adoption, and delivering and keeping the child,
qualifies for exemption as an education organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-569, 1973-2 C.B. 178.
218.329 Educational; credit unions in developing
nations. An organization formed to assist
individuals in developing nations to improve their
living conditions through educational programs
on credit problems and to instruct and train individuals
from those nations in the techniques of
organizing and managing credit unions qualifies
for exemption as an educational organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-16, 1974-1 C.B. 126.
218.330 Educational; evaluating prospective
legislation. The exempt status of a nonprofit
educational organization is not affected by its non
partisan study, research, and assembly of materials
in connection with prospective legislation relating
to court reform and the dissemination of such
materials to the public. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 64-195, 1964-2 C.B. 138.
218.331 Educational; evaluating radio and
television programs. A nonprofit organization
formed for the purpose of educating the public as
to the quality of radio and television programs by
means of opinion polls, teaching evaluation
guides, newsletters, and study kits to better their
understanding and judgement of radio and television
programs and thereby encourage broadcasters
to fulfill their obligations to better serve the
public interest, may qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-192, 1964-2 C.B. 136.
218.332 Educational; for-profit school converted
to nonprofit school. An otherwise qualifying
nonprofit organization that purchases or leases
at fair market value the assets of a former for-profit
school and employs the former owners, who are
not related to the current directors, at salaries commensurate
with their responsibilities is operated
exclusively for educational and charitable purposes.
An organization that takes over a school’s
assets and its liabilities, which exceed the value of
the assets and include notes owed to the former
owners and current directors of the school, is serving
the directors’ private interests and is not operated
exclusively for educational and charitable
purposes. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-441, 1976-2 C.B. 147.
218.333 Educational; health care improvements.
A nonprofit organization formed to
encourage and assist in establishment of nonprofit
regional health data systems, to conduct studies
and propose improvements with regard to quality,
utilization, and effectiveness of health care and
health care agencies, and to educate those
involved in furnishing, administering, and financing
health care is operated exclusively for scien-

Exempt organizations
tific and educational purposes and qualifies for
exemption. Rev. Rul. 74–553 distinguished.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-455, 1976-2 C.B. 150.
218.334 Educational; high school athletic
association. A nonprofit interscholastic association
whose primary purpose is the promotion and
direction of high school athletic programs is
exempt as an educational organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 55-587, 1955-2 C.B. 261.
218.335 Educational; homosexuality. A nonprofit
organization formed to educate the public
about homosexuality in order to foster an understanding
and tolerance of homosexuals and their
problmers qualifies for exemption under section
501(c)(3). §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-305, 1978-2 C.B. 172.
218.336 Educational; job training for American
Indians. An organization formed and operated
by a labor union at the request of the Bureau
of Indian Affairs to provide apprentice training in
a skilled trade to American Indians is operated
exclusively for charitable and educational purposes
and qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-272, 1977-2 C.B. 191.
218.337 Educational; law library. An organization
operating a law library whose rules limit
access and use to members, or their designees, of
a local bar association, composed of substantially
all of the members of the legal profession in the
municipality and providing the library’s primary
support, qualifies for exemption as educational in
nature. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 75–196, 1975–1 C.B. 155.
218.338 Educational; law student’s work in
legal aid. An otherwise qualifying nonprofit organization
formed for the purpose of assisting a
school’s law students, chosen on the basis of merit
and interest, to obtain practical experience with
exempt public interest law firms and legal aid
societies and that supplements the nominal salaries
paid to the students by the participating firms
and societies and obtains its funds from contributions
of students and alumni is operated exclusively
for charitable and educational purposes and
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 78-310, 1978-2 C.B. 173.
218.339 Educational; library computer network.
A library network organization that operates
a computer network to facilitate the exchange
of bibliographic information among member
libraries, some of which are not tax-exempt, may
qualify for exemption under section 501(c)(3).
Rev. Rul. 74-614 amplified. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 81-29, 1981–1 C.B. 329.
218.340 Educational; membership based on
compatibility. An organization that selects its
membership from the junior class of a college primarily
on the basis of compatibility without regard
to scholarship, and that holds closed meetings at
which personally oriented speeches and discussions
are carried on by the speaker-members, is
not operated for exclusively educational purposes
and does not qualify for exemption. Rev. Rul.
64-117 superseded. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 73-439, 1973–2 C.B. 176.
218.341 Educational; methodology test. Criteria
are set forth to determine whether an organization’s
viewpoint or position is considered
educational under Code section 501(c)(3) and reg.
section 1.503(c)(3)-1(d)(3). §1.501(c)-(3)-1.
(Sec. 601.201, S.P.R.; Sec. 501, ’86 Code.)
Rev. Proc. 86-43, 1986-2 C.B. 729.
218.342 Educational; newspaper accuracy
and quality monitoring. A nonprofit organization
whose purpose is to educate the public concerning
the accuracy and fairness of news coverage
by local newspapers and, by educational
methods, encourage the newspapers to meet high
standards of journalism qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-615, 1974-2 C.B. 165.
218.343 Educational; organizational test. An
organization whose articles stated its purpose in
the language of the statute and also stated the specific
type of activities in which it would engage is
not required to describe the manner of its operations
in detail. (Sec. 501 ’86 Code.)
Dumaine Farms, 73 T.C. 650, Nonacq. 1980-2
C.B. 2.
218.344 Educational; political activity;
“action” organization. Certain “voter education”
activities conducted in a nonpartisan manner
by an organization recognized as exempt under
section 501(c)(3) will not constitute prohibited
political activity disqualifying the organization
from exemption. Rev. Rul. 78–160 revoked.
Amplified by Rev. Rul. 80-282. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 78-248, 1978-1 C.B. 154.
218.345 Educational; program for bank
employees. A nonprofit organization formed and
operated to conduct an educational program for
bank employees in a particular urban area qualifies
for exemption. I.T. 3330 superseded.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-504, 1968-2 C.B. 211.
218.346 Educational; promoting sports for
children. An otherwise qualifying organization
that is formed to develop, promote, and regulate a
sport for individuals under 18 years of age by organizing
local and statewide competitions, promulgating
rules, organizing officials, presenting seminars,
distributing a newsletter, and otherwise
encouraging growth of the sport qualifies for
exemption. Rev. Rul. 70-4 distinguished.
§1.501(c)(3)-1. (Sec. 401, ’86 Code.)
Rev. Rul. 80-215, 1980-2 C.B. 174.
218.347 Educational; radio broadcasting station.
A nonprofit corporation organizal exclusively
for educational purposes to operate a noncommercial
educational broadcasting station presenting
educational, cultural, and public interest
programs is exempt from tax. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 66-220, 1966-2 C.B. 209.
218.348 Educational; regional computer network.
An otherwise exempt organization of
exempt colleges and universities that devises,
operates, and provides the organizational structure
for a regional network of member owned or leased
computers to collect and disseminate scientific
and educational information to exempt members’
faculties and students is operated exclusively for
charitable purposes and exempt under section
501(c)(3) of the Code. Amplified by Rev. Rul.
81-29. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-614, 1974-2 C.B. 164.
218.349 Educational; research in social
sciences. An organization formed for the primary
purpose of developing and disseminating a body
of new knowledge relating to the social sciences,
whose activities consist of the performance of
scientific research under the contracts with governmental
agencies, the results being communicated
to the public through seminar courses, lectures,
and public discussions, and through
publications distributed free to depositary
libraries qualifies for exemption. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 65-60, 1965-1 C.B. 231.
218.350 Educational; sponsoring musical
artists. A nonprofit organization which encourages
and promotes the advancement of young
musical artists by conducting weekly workshops,
sponsoring public concerts by the artists, and
securing paid engagements for the artists to
improve their professional standing may be
exempt from tax. §1.501(c)(3)–1. (Sec. 501, ’86
Code.)
Rev Rul. 67-392, 1967–2 C.B. 191.
218.351 Educational; state university store
and restaurant. A corporation organized for the
purpose of operating a book and supply store and
a restaurant on the campus of a state university for
the convenience of the student body and the faculty,
no part of the profits of which inures to the
benefit of any private shareholder or individual,
may be considered to be operated exclusively for
educational purposes and is exempt from tax. I.T.
2636 revoked. (Sec. 501, ’86 Code.)
Rev. Ru1. 58-194, 1958-1 C.B. 240.
218.352 Educational; survival school. An
organization exempt from tax under section
501(c)(3) that has full-time instructors who regularly
conduct a 26-day survival course, mostly
out-of-doors, to teach young people how to survive
in a natural environment, is an educational
organization within the meaning of section
170(b)(1)(A)(ii) and, therefore, is not a private
foundation by reason of section 509(a)(1).
§§1.170A-9, 1.509(a)-2. (Secs. 170, 509; ’86
Code.)
Rev. Rul. 73-434, 1973-2 C.B. 71.
218.353 Educational; television; international
cooperation for peace. A nonprofit organization
which is formed and operated to educate
the public on the need for international cooperation
in order to create and maintain a peaceful
world and which disseminates its educational
material by means of commercial television may
qualify for exemption. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 67-342, 1967-2 C.B. 187.
218.354 Educational; television program. A
nonprofit organization that makes facilities and
equipment available to the general public for the
production of noncommercial educational or cultural
television programs for communication to
the public via public and educational channels of
a commercial cable television company qualifies
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-443, 1976–2 C.B. 149.
218.355 Educational; television program
producer. An otherwise qualifying organization
that produces and distributes free (or at small costdefraying
fees) educational, cultural, and public
interest programs for public viewing via publiceducational
channels of commercial cable television
companies is operated exclusively for educational
purposes and is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-4, 1976-1 C.B. 145.
218.356 Educational; training in sail boat racing.
An organization formed for the purpose of
training suitable candidates in the techniques of
racing sailboats in national and international competition,
and thereby improving the calibre of candidates
representinmg the U.S. in O1ympic and Pan-
America games; qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-275, 1964-2 C.B. 142.
218.357 Educational; wild bird and animal
sanctuary. An organization formed for the purpose
of developing a sanctuary for wild birds and
animals for the education of the public may be
exempt as an educational organization. I.T. 2134
superseded. §1.501(c)(3)–1. (Sec. 501 ’86 Code.)
Rev. Rul. 67-292, 1967-2 C.B. 184.
218.358 Employees’ association; cooperative
buying services for members. A nonprofit orga-

nization whose membership is limited to the
employees of an employer in a particular municipality
and whose primary purpose is to obtain for
its members discount prices on merchandise, services,
and activities is not exempt as a local
association of employees under section 501(c)(4).
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 79-128, 1979-1 C.B. 197.
218.359 Employees’ association; membership.
For purposes of section 501(c)(4) the term
“employees” includes retired employees who
were members of an employees’ association at the
time of retirement. §1.501(c)(4)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 74-281, 1974-1 C.B. 133.
218.360 Employees’ association; operating
bus for members. An organization whose primary
purpose is the operation of a bus for the convenience
of its members, using the income from
fares to pay expenses, is not exempt as a local
association of employees. §§39.101(8)-1,
1.501(c)(4)-1. (Sec. 101(8), ’39 Code; Sec. 501,
’86 Code.)
Rev. Rul. 55-311, 1955-1 C.B. 72.
218.361 Employees’ association; operating
gasoline station. An employees’ association
organized exclusively for recreational purposes
operates a gasoline station on property owned by
the employer of its members. Sales are limited to
its members and to the employer company, and
income is used exclusively for members’ recreation.
Neither the operation of the gasoline station,
nor the selling of gasoline and oil to the employer
company adversely affects the association’s qualification
for exemption since all of its income is
used for recreational purposes, and the income
from sales to the employer is considered a form of
employer support of the association.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-180, 1966-1 C.B. 144.
218.362 Employees’ association; retirement
or death benefits. An organization of employees
whose purpose is to pay lump sum retirement
benefits to its eligible members or death benefits
to their survivors does not qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-59, 1966-1 C.B. 142.
218.363 Employees’ beneficiary association;
obsolete procedures. Rev. Proc. 66-30 is
declared obsolete with respect to future transactions
of section 501(c)(9) organizations.
§§1.501(c)(9)-1, 301.7805-1. (Sec. 601.201,
S.P.R.; Secs. 501, 7805, ’86 Code.)
Rev. Proc. 82-46, 1982-2 C.B. 788.
218.364 Employees’ beneficiary association;
obsolete rulings. Certain rulings are declared
obsolete with respect to future transactions of section
501(c)(9) organizations. Rev. Ruls. 57–61,
57-494, 58-442, 59-28, 64–258, and 65–81 obsolete.
§§1.501(c)(9)-1, 301.7805-1. (Secs. 501,
7805; ’86 Code.)
Rev. Rul. 82-148, 1982-2 C.B. 401.
218.365 Employees’ beneficiary association;
reimbursed medicare premium. A section
501(c)(9) organization does not jeopardize its
exemption by reimbursing its members for premiums
paid under the medical benefits program
(medicare) provided under the Social Security
Amendments of 1965. (Sec. 501, ’86 Code.)
Rev. Rul. 66-212, 1966-2 C.B. 230.
218.366 Employees’ beneficiary association;
workmen’s compensation benefits. An association
formed by a corporation to provide workmen’s
compensation benefits that the corporation
was already obligated to pay under State law does
not qualify for exemption. (Sec. 501, ’86 Code.)
Rev. Rul. 74-18, 1974-1 C.B. 139.
218.367 Employees’ pensions; discretionary
distribution. An exempt organization’s payment
of reasonable pensions to retired employees at the
discretion of its board of directors does not
adversely affect its exempt status. §1.501(c)(3)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 73-126, 1973-1 C.B. 220.
218.368 Employees’ trust. A trust organized
primarily to pay pensions to retired employees,
and to provide incidental benefits to employees or
their beneficiaries in times of need, is not exempt
as a charitable organization. Contributions to such
a trust are not deductible by the donors as charitable
contributions. (Secs. 170, 501; ’86 Code.)
Rev. Rul. 56-138, 1956-1 C.B. 202.
218.369 Employment assistance to the
elderly. A corporation organized to rehabilitate
unemployed persons over a stated age by educating
the general public in the special qualifications
of such persons, combating prejudice against
employment of such persons, and securing
employment of its members, is not exempt from
tax as a charitable organization where the members
were the beneficiaries and expected to contribute
to the organization in return for the benefits
secured. However, the corporation may qualify for
exemption as a civic organization. Distinguished
by Rev. Rul. 66-257. §1.501(c)(4)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 57-297, 1957-2 C.B. 307.
218.370 Employment assistance to the
elderly. A nonprofit organization which aids
elderly unemployed persons of limited means in
obtaining employment by providing them with
free services and by educating the public in the
employment capabilities of elderly persons qualifies
for exemption. Rev. Rul. 57–297 distinguished.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-257, 1966-2 C.B. 212.
218.371 Engineering society; heating and air
conditioning. An engineering society formed to
advance the arts and sciences of heating, ventilating,
and air conditioning for the benefit of the general
public by providing facilities for research and
the dissemination of scientific knowledge qualifies
for exemption. §§1.501(c)(3)-1,
1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-506, 1971-2 C.B. 233.
218.372 Environmental conservancy. A nonprofit
organization formed for the purpose of preserving
the natural environment by acquiring, by
gift or purchase, ecologically significant undeveloped
land, and either maintaining the land itself
with limited public access or transferring the land
to a government conservation agency by outright
gift or being reimbursed by the agency for its cost,
qualifies for exemption. Distinguished by Rev.
Rul. 78-384. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-204, 1976-1 C.B. 152.
218.373 Environmental conservancy. A nonprofit
organization that owns farmland and
restricts its use to farming or other uses the organization
deems ecologically suitable, but is not
operated for the purpose of preserving ecologically
significant land and does not otherwise
establish that it serves a charitable purpose, does
not qualify for exemption under section 501(c)(3).
Rev. Rul. 76-204 distinguished. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 78-384, 1978-2 C.B. 174.
218.374 Environmental disputes; international
mediation. An otherwise qualifying organization
that engages in legal research concerning
various means of adjusting and resolving international
environmental disputes and arranges for,
and participates in, the resolution of such disputes
Exempt organizations
through mediation is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-279, 1980-2 C.B. 176.
218.375 Environmental protection; litigation.
An otherwise qualifying organization that
was formed to protect and restore environmental
quality and whose principal activity consists of
instituting litigation as a party plaintiff to enforce
environmental legislation is operated exclusively
for charitable purposes and qualifies for exemption.
§1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-278, 1980-2 C.B. 175.
218.376 Equal job opportunities. A nonprofit
organization formed to advance equal job opportunities
for qualified workers discriminated
against because of race or creed may qualify for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-70, 1968-1 C.B. 248.
218.377 Equal rights; construction trade. A
nonprofit organization formed to eliminate discrimination
against members of minorities seeking
employment in the construction trades by
recruiting, educating, and counseling workers,
providing technical assistance to attorneys
involved in suits to enforce workers’ rights, and
acting as court-appointed monitor after successful
suits, is organized and operated exclusively for
charitable and educational purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 75-285, 1975-2 C.B. 203.
218.378 Equal rights for women. An organization
formed to promote equal rights for women by
investigating instances of discrimination in
employment and other economic opportunities
and to aid women in recognizing and dealing with
discrimination qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72-228, 1972-1 C.B. 148.
218.379 Evaluating scientific and medical literature.
An organization formed to survey medical
and scientific articles published throughout the
world and to abstract selected articles of note in a
monthly publication that is distributed free to
interested parties requesting to be put on the mailing
list is exempt from tax. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 66-147, 1966-1 C.B. 137.
218.380 Family controlled foundation. A
foundation controlled by the creator’s family,
operated to enable the creator and his family to
engage in financial activities beneficial to them,
results in the foundation’s ownership of non-income-producing
assets which prevents its carrying
on a charitable program commensurate in
scope with its financial resources is not entitled to
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-5, 1967-1 C.B. 123.
218.381 Farm bureaus; unrelated income. A
county-wide organization engaged in the
advancement and improvement of agriculture
may be considered to be tax exempt. Any income
it receives from the sale of supplies and equipment
to members, however, is taxable as unrelated business
income. (Sec. 501, ’86 Code.)
Rev. Rul. 57-466, 1957-2 C.B. 311.
218.382 Feeder organizations purchasing
agency. A corporation, organized and operated for
the primary purpose of operating and maintaining
a purchasing agency for the benefit of its otherwise
unrelated members who are exempt charitable
organizations, is engaged in business activities
which would be unrelated activities if carried on
by any one of the tax-exempt organizations
served, and therefore, is not entitled to exemption.
§39.101-2. (Sec. 101, ’39 Code; Sec. 501, ’86
Code.)
Rev. Rul. 54-305, 1954-2 C.B. 127.
218.383 Film festival sponsorship. A nonprofit
organization formed to promote the art of

Exempt organizations
filmmaking by conducting annual festivals to provide
unknown independent filmmakers with opportunities
to display their films and by sponsoring
symposiums on filmmaking qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 75-471, 1975-2 C.B. 207.
218.384 Financial assistance association. An
organization formed to provide financial assistance
to different types of exempt organizations
and carries on no operations other than to receive
contributions and incidental investment income,
which is not accumulated, and to make distributions
of income to such organizations at periodic
intervals, is exempt from tax. I.T. 1945 superseded.
§1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-149, 1967-1 C.B. 133.
218.385 Foreign charitable activities; domestic
corporation. A domestic corporation that conducts
a part or all of its charitable activities in foreign
countries is not precluded from exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-460, 1971–2 C.B. 231.
218.386 Foreign educational program. A nonprofit
organization that selects students and faculty
members who are interested in a particular
foreign history and culture and enrolls them in foreign
universities, transports them to and from that
country, and conducts on-site tours qualifies for
exemption. Rev. Rul. 67–327 distinguished.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-400, 1969-2 C.B. 114.
218.387 Foreign exchange program. An
otherwise qualifying organization that was
formed to foster the cultural and educational
development of children by arranging for, and participating
in, the temporary exchange of children
between families of a foreign country and the U.S.
qualifies for exemption. Fees paid by the participating
families equal to the cost of travel and
insurance and the expenses incurred on behalf of
the foreign child while living in the U.S. family’s
household are not charitable contributions. However,
contributions from a participating family
that exceed the fair market value of the services
received from the program are deductible. Rev.
Rul. 67-327 distinguished. §§1.170A-1,
1.501(c)(3)-1. (Sec. 170, 501; ’86 Code.)
Rev. Rul. 80-286, 1980-2 C.B. 179.
218.388 Foreign exchange program; Latin
American assistance. A domestic nonprofit corporation
(composed of educational, civic, business,
and other groups) that joins with a counterpart
group in a country in Latin America to
promote student and cultural exchanges and to
provide technical and material assistance for selfhelp
projects designed to improve the living
conditions of underprivileged people in Latin
America may be exempt from tax. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 68–165, 1968-1 C.B. 253.
218.389 Foreign language magazine. A nonprofit
corporation that publishes a foreign language
magazine containing fiction, poetry, book
reviews and articles alleged to be of a literary,
scientific and educational character and available
to the general public through regular paid subscriptions
does not qualify for exemption. Distinguished
by Rev. Rul. 67–4. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 60-351, 1960-2 C.B. 169.
218.390 Foreign news translation service. A
nonprofit corporation whose primary purpose is to
increase international understanding by making
world opinions and events available through
translations from the foreign press qualifies for
exemption under section 501(c)(3). (Sec. 501, ’86
Code.)
Peoples Translation Service/Newsfront International,
72 T.C. 42, Acq., 1981–2 C.B. 2.
218.391 Foreign organization. An organization
formed under foreign law which meets the
tests for exemption under section 501(a) qualifies
as an exempt organization. §1.501(a)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 66-177, 1966-1 C.B. 132.
218.392 Foreign students and visitors hospitality
center. A nonprofit corporation organized
to extend hospitality to foreign visitors and students,
promote cultural and educational programs,
and provide an environment for social contact
between American citizens and foreign visitors
and students and accomplishes these purposes by
maintaining and operating a community or hospitality
center is, under the circumstances, exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-191, 1965-2 C.B. 157.
218.393 Foreign travel; student and faculty
group tours. A nonprofit organization formed for
the purpose of arranging group tours for students
and faculty of a university to allow them to travel
abroad and which has no other activities is not
exempt from tax. Distinguished by Rev. Ruls.
69-430 and 80-286. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 67-327, 1967-2 C.B. 187.
218.394 Fraternal beneficiary society. A fraternal
beneficiary society that operates under the
lodge system and provides for member benefit
payments may qualify for exemption regardless of
whether the fraternal or the insurance features predominate,
as long as both features are present; I.T.
1516 superseded. §1.501(c)(8)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 73-165, 1973-1 C.B. 224.
218.395 Fraternal beneficiary society; beneficial
and social members. An organization operating
as a fraternal beneficiary society under the
“lodge system” which has two classes of members,
but only one is eligible to receive benefits, is
exempt from tax provided there is a legitimate reason
for restricting benefit payments to a certain
membership class and the benefit fund from which
payments are made is segregated from the organization’s
general fund so that there is no inurement
of income from non-beneficial members to
pay benefits to beneficial members.
§1.501(c)(8)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-194, 1964–2 C.B. 149.
218.396 Fraternal beneficiary society; legal
defense fund for law enforcement officers. A
fraternal beneficiary society, composed of law
enforcement officers and operating under the
lodge system, that provides legal expenses to
defend members accused of criminal, civil, or
administrative misconduct arising in the course of
their employment, provides “other benefits”
within the meaning of section 501(c)(8).
§1.501(c)(8)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 84-48, 1984-1 C.B. 133.
218.397 Fraternal beneficiary society;
optional insurance. A domestic fraternal beneficiary
society of farmers operated under the lodge
system that does not itself provide for the payment
of life, sick, accident, or other benefits to its members,
but arranges with insurance companies to
provide optional insurance to its members and
devotes its net earnings exclusively to religious,
charitable, scientific, literary, educational, and
fraternal purposes does not qualify for exemption
under section 501(c)(8) but does qualify under
section 501(C)(10). §§1.501(c)(8)-1,
1.501(c)(10)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-457, 1976-2 C.B. 155.
218.398 Fraternal beneficiary society;
orphanage for deceased members’ dependent
children. A fraternal beneficial society that
operates an orphanage for surviving children of
deceased members provides “other benefits”
within the meaning of section 501(c)(8).
§1.501(c)(8)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 84-49, 1984-1 C.B. 134.
218.399 Fraternal beneficiary society; separate
support organization. An organization not
operating under the lodge system, whose sole
activity is to provide life, sick, and accident benefits
exclusively for members of a fraternal beneficiary
society operating under the lodge system,
may qualify for exemption. §1.501(c)(8)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 73-192, 1973–1 C.B. 224.
218.400 Fraternal beneficiary society; separate
support organization. An organization that
does not conduct any fraternal activities or operate
under the lodge system, but does operate exclusively
for the benefit of members of certain related
domestic fraternal societies operating under the
lodge system, does not qualify for exemption
under
1.501(c)(10)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 81-117, 1981–1 C.B. 346.
section 501(c)(10). §§1.508(c)(8)-1,
218.401 Fraternal beneficiary society; statesponsored
reinsurance pool. A fraternal beneficiary
society that conducts an insurance operation
for its members in all 50 states does not lose its
exempt status by participating in a state sponsored
reinsurance pool that protects participating insurers
from excessive losses on major medical health
and accident insurance. §1.501(c)(8)–1. (Sec.
510, ’86 Code.)
Rev. Rul. 78-87, 1978–1 C.B. 160.
218.402 Fraternal beneficiary society; subordinate
organization formed by local lodge. A
nonprofit, subordinate organization, formed and
charted by a local lodge of a fraternal beneficiary
society exempt from tax under section 501(c)(10)
to carry on the fraternal and charitable activities of
the society in a particular geographical area, is
also exempt. §1.501(c)(10)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 73-370, 1973-2 C.B. 184.
218.403 Fraternal beneficiary society; whole
life insurance with investment features. Whole
life insurance constitutes a life benefit under section
501(c)(8) even though the policies contain
investment features such as cash surrender value
and policy loan. §1.501(c)(8)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 86-75, 1986-1 C.B. 245.
218.404 Fraternal society; promotion of fortune
telling method. A domestic fraternal society
operating under the lodge system, which does not
provide life, sick, accident, or other benefits,
whose members are interested in the use of and
philosophy behind a method of attempting to
divine the future, and whose net income is used to
provide instruction on the use of the method,
maintain a reference library, and supply information
on the method to the public, qualifies for
exemption under section 501(c)(10).
§1.501(c)(10)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-258, 1977-2 C.B. 195.
218.405 Fraternity chapter house. An organization
does not qualify for exemption under section
501(c)(3) as an educational organization
where its primary activity is to furnish, on a rental
basis, a chapter house to a fraternity. However, a
corporation, fund, or foundation so organized
may, under proper circumstances, be classified as
a club organized and operated exclusively for
pleasure, recreation and other nonprofitable purposes
and exempt under section 501(c)(7).
§§1.501(c)(3)-1, 1.501(c)(7)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 64-118, 1964-1 (Part 1) C.B. 182.
218.406 Garden clubs. Illustrations under
which garden clubs may establish exemption as
charitable or educational organizations, civic

Exempt
organizations
organizations, horticultural organizations, or as
social clubs. §§1.501(c)(3)–1, 1.501(c)(4)–1,
1.501(c)(5)-1, 1.501(c)(7)–1. (Sec. 501,
’86 Code.)
Rev. Rul. 66-179,1966-1 C.B. 139.
218.407 Gem and mineral clubs. Gem and
mineral clubs and a federation of such clubs may
qualify for exemption under section 501(c)(3) or
501(c)(7) depending upon their forms of organization
and methods of operation. §§1.501(c)(3)-1,
1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-139, 1967-1 C.B. 129.
218.408 Genealogical research; private, public
or religious interests. An organization that
limits its membership to descendants of a particular
family and compiles genealogical research
data on the family for purposes of publishing volumes
of family history and of promoting social
activities among family members does not qualify
for exemption under section 501(c)(3) of the
Code. A similar organization that compiles genealogical
data on its family members in order to perform
religious ordinances in accordance with their
religious precepts may qualify for the exemption,
as may another organization that provides instruction
in genealogical research techniques to its
members as well as to the general public.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71–580, 1971–2 C.B. 235; Rev. Rul.
80-301, 1980-2 C.B. 180; Rev. Rul. 80-302,
1980-2 C.B. 182.
218.409 Grants for developing and designing
machinery. An organization which promotes and
fosters the development and design of machinery
in connection with a commercial operation, and in
connection therewith has the power to sell, assign
and grant licenses with respect to its copyrights,
trademarks, trade names, or patent rights, does not
qualify for exemption. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 65-1, 1965-1 C.B. 226.
218.410 Grants to city transit authority. A
grant to a city transit authority for the purpose of
maintaining a mass transportation system qualified
as a charitable disbursement in furtherance of
an organization’s exempt purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 C0de.)
Rev. Rul. 71-29, 1971-1 C.B. 150.
218.411 Gratuity Fund; stock exchange. In
1876 the Philadelphia-Baltimore Stock Exchange
established a Gratuity Fund. Since its establishment
the Fund has been maintained exclusively to
provide benefits upon the death of members of the
Exchange. Held, the Gratuity Fund was taxable as
a mutual insurance company other than life,
marine, or fire, for the taxable years 1953 through
1955, but was exempt from tax where its gross
receipts from all sources for each of the years 1953
through 1955 did not exceed $75,000. (Secs.
101(11), 207, ’39 Code; Secs. 501, 821, ’86 Code.)
Clarence L. Moyer, 32 T.C. 515, Acq., 1960-2
C.B. 6.
218.412 Health care facility; Christian Science.
An otherwise qualifying nonprofit organization
that operates a health care facility for patients
under the care of Christian Science practitioners
receives its income principally from contributions,
patients’ fees, medicare, medicaid, and
health insurance. The organization accepts
patients who are unable to pay as funds permit.
The organization qualifies for exemption under
section 501(c)(3). Rev. Rul. 78-427 superseded.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-l14, 1980-1 C.B. 115.
218.413 Health planning and resources
development. A Health Systems Agency organized
and operated pursuant to the National Health
Planning and Resources Development Act of 1974
to establish and maintain a system of health planning
and resources development aimed at providing
adequate health care for a specified geographic
area is operated exclusively for charitable purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-69, 1977-1 C.B. 143.
218.414 Home for aged. Criteria under which
an organization that otherwise qualifies for
exemption is operated for charitable purposes
where it provides special residential facilities and
continuous health care for aged persons at the lowest
feasible cost and maintains in residence those
who become unable to pay the regular charges.
Rev. Rul. 57-467 superseded. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 72-124, 1972-1 C.B. 145.
218.415 Home for aged; entrance fee. An
entrance fee, paid as a prerequisite to obtaining
residence and personal services in a home for the
aged, must be included along with any lump sum
life-care payment to the home in determining
whether the home renders services to all or a reasonable
proportion of its residents at substantially
less than cost, to the extent of the organization’s
financial ability to do so, for purposes of qualifying
as an exempt charitable organization. In making
such a determination the total payment may be
amortized over the remaining life expectancy of
each resident as of his date of entry into the home.
Distinguished by Rev. Rul. 73-549.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-231, 1964-2 C.B. 139.
218.416 Home for aged; rates less than cost.
If otherwise qualified, a home for the aged which
is dedicated to providing and does furnish care and
housing to its residents at established rates which
are substantially less than the costs of the services
furnished is exempt. Rev. Rul. 57-467 distinguished.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 61-72, 1961-1 C.B. 188.
218.417 Home health care. A nonprofit organization,
a qualified “home health agency” as
defined in section 1861(c) of the Social Security
Act, formed to provide low-cost home health care
for people of a community may qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72-209, 1972-1 C.B. 148.
218.418 Home show conductor. A corporation
organized for the purpose of promoting and conducting
home shows, the net earnings of which
inure to the benefit of a county recreational board
in the form of rent for the use of its premises, is not
exempt from tax. (Sec. 501, ’86 Code.)
Rev. Rul. 57-52, 1957-1 C.B. 196.
218.419 Honor society for women. A national
honor society for women organized to recognize
scholastic achievements and to serve various universities
and colleges where chapters are established
in furthering education qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-97, 1971-1 C.B. 150.
218.420 Hospice; care for the terminally ill. A
nonprofit hospice, operated on both an inpatient
and outpatient basis to alleviate the physical and
mental distress of the terminally ill, is operated
exclusively for charitable purposes and qualifies
for exemption under section 501(c)(3).
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 79-17, 1979-1 C.B. 193.
218.421 Hospital service organization; industrial
engineering. An organization performing
services consisting of the installation, maintenance,
and repair of biomedical equipment for its
member hospitals is performing “industrial engineering”
services within the meaning of section
501(e)(1)(A) for purposes of tax exemption as a
cooperative hospital service organization. (Sec.
501, ’86 Code.)
Rev. Rul. 74-443, 1974-2 C.B. 159.
218.422 Hospital service organization; laundry.
A hospital service organization that performs
laundry service for its member hospitals does not
qualify for exemption. (Sec. 501, ’86 Code.)
Rev. Rul. 69-160, 1969-1 C.B. 147.
218.423 Hospital service organization; purchasing;
legal title. An otherwise qualifying
cooperative hospital service organization, that
buys hospital equipment for its patron hospitals
and holds legal title to the equipment while the
hospitals repay a commercial lender for the loan
used to purchase the equipment is operated solely
to perform the service of “purchasing”. (Sec. 501,
’86 Code.)
Rev. Rul. 80-316, 1980-2 C.B 172.
218.424 Hospitals. The criteria or tests to be
met in determining whether a hospital can qualify
for exemption as a public charitable organization
are outlined. Modified by Rev. Rul. 69–545, to
remove the requirements relating to caring for
patients without charge or at rates below cost.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 56-185, 1956-1 C.B. 202.
218.425 Hospitals. Examples illustrate whether
a nonprofit hospital claiming exemption under
section 501(c)(3), is operated to serve a public
rather than a private interest. Rev. Rul. 56-185
modified. Amplified by Rev. Rul. 83–157.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-545, 1969–2 C.B. 117.
218.426 Hospitals. Indigent individuals and
organizations representing the interests of low-in
come members in obtaining hospital care and services
lack standing in a suit challenging Rev. Rul.
69-545.
Eastern Kentucky Welfare Rights Organization,
426 U.S. 26, Ct. D. 1979, 1976-2 C.B. 609.
218.427 Hospitals, nonprofit; no emergency
room. A nonprofit hospital that is not required to
operate an emergency room where a state or local
health planning agency has found that this would
unnecessarily duplicate emergency services and
facilities that are adequately provided by another
medical institution in the community is exempt
under section 501(c)(3). Rev. Rul. 69–545 amplified.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 83-157, 1983-2 C.B. 94.
218.428 Hospitals; fees charged for use of
facilities. Where an exempt hospital institutes a
practice of charging fees to its doctor staff members
to obtain funds to build a new hospital, and
such fees are required as a prerequisite to the use
of the hospital facilities, the exempt status of the
hospital will not be jeopardized if the fee payments
are reasonable in amount and the fee practice
is non-discriminatory. §1.501(c)(3)–1. (Sec.
501, ’86 Code.)
Rev. Rul. 65-269, 1965-2 C.B. 159.
218.429 Hospitals; organization formed to
construct, maintain, and operate or lease. An
otherwise qualifying nonprofit organization that
was created to construct, maintain, and operate or
lease a public hospital and related facilities for the
benefit of a city and the surrounding communities
is operated exclusively for charitable purposes
and qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 80-309, 1980-2 C.B. 183.
218.430 Hospitals; power of eminent domain.
A public hospital corporation granted the power of
eminent domain by a State may qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-290, 1967-2 C.B. 183.
218.431 Hospitals; purchase of intangible
assets by related organization. The purchase, in
a transaction not at arm’s length, of all of the assets
of a profit-making hospital by a nonprofit hospital
corporation at a price that includes the value of

Exempt organizations
intangible assets, determined by the capitalization
of excess earnings formula, does not result in the
inurement of the hospital’s net earnings to the
benefit of any private shareholder or individual or
serve a private interest precluding exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-91, 1976-1 C.B. 149.
218.432 Hospitals; radiologist compensated
on percentage of departmental income. The
exempt status of a hospital will not be jeopardized
where, after arm’s length negotiations, it enters
into an agreement with a hospital-based radiologist
to compensate him on the basis of a fixed percentage
of the departmental income.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-383, 1969–2 C.B. 113.
218.433 Housing; community chest agencies.
A nonprofit organization, created to construct and
maintain a building for the exclusive purpose of
housing and serving exempt member agencies of
a community chest, may be exempt. Rev. Rul.
58-547 distinguished. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 69-572, 1969-2 C.B. 119.
218.434 Housing; elderly. A nonprofit organization
that provides specially designed housing
to elderly persons at the lowest feasible cost and
maintains in residence those tenants who subsequently
become unable to pay its monthly fees is
an organization operated exclusively for charitable
purposes within the meaning of section
501(c)(3). §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 79-18, 1979–1 C.B. 194.
218.435 Housing; employees of farm proprietorship.
An organization formed to provide low
income housing to families but giving preference
for housing to employees of a farm proprietorship
operated by the individual who created and controls
the organization does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72-147, 1972–1 C.B. 147.
218.436 Housing; guidance to low-income
families. A nonprofit organization created to provide
instruction and guidance to low-income families
in need of adequate housing and interested in
building their own homes is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67–138, 1967–1 C.B. 129.
218.437 Housing; integrated. A nonprofit
organization formed to promote racial integration
in housing, to lessen neighborhood tension, and to
prevent deterioration of neighborhoods may qualify
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 68-655, 1968-2 C.B. 213.
218.438 Housing; leased to city for tire victims.
A nonprofit organization that provides rental
housing and related services at cost to a city for its
use as free temporary housing for families whose
homes have been destroyed by fire is not an
exempt charitable organization. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 77-3, 1977-1 C.B. 140.
218.439 Housing; low income homeowners;
home repair loans. A nonprofit organization that
provides interest-free home repair loans in a badly
deteriorated urban residential area to low-income
homeowners who are unable to obtain loans elsewhere
qualifies for exemption as operated exclusively
for charitable purposes. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Ru1. 76-408, 1976–2 C.B. 145.
218.440 Housing; low or moderate income
families. Nonprofit organizations created to provide
housing for low and moderate income families
thereby lessening neighborhood tensions,
eliminating prejudice and discrimination, and
combating deterioration qualify for exemption,
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-585, 1970-2 C.B. 115.
218.441 Housing; missionary families. An
organization established to provide temporary
low-cost housing and related services for missionary
families on furlough for recuperation or training
in the U.S. from their assignments abroad is
operated exclusively for charitable purposes and
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75-434, 1975–2 C.B. 205.
218.442 Housing; municipal instrumentality.
A public housing authority incorporated under a
State statute conferring upon it the power to conduct
examinations and investigations, to administer
oaths, issue subpoenas, and make its findings
and recommendations available to appropriate
agencies does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-14, 1974–1 C.B. 125.
218.443 Housing; nondiscriminatory. An
organization formed to educate the public about
the need for making housing available to members
of the public on a nondiscriminatory basis and to
encourage investment in such housing may be
exempt from tax. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-250, 1967-2 C.B. 182.
218.444 Housing; physically handicapped. A
nonprofit organization that provides specially
designed housing to physically handicapped persons
at the lowest feasible cost and maintains in
residence those tenants who subsequently become
unable to pay its monthly fees is operated exclusively
for charitable purposes within the meaning
of section 501(c)(3). §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 79-19, 1979-1 C.B. 195.
218.445 Housing, transportation and counseling
for relatives of hospital patients. A nonprofit
organization that provides housing, transportation,
and counseling to hospital patients’
relatives and friends who travel to the locality to
assist and comfort the patients qualifies for
exemption under section 501(c)(3).
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 81-28, 1981-1 C.B. 328.
218.446 Housing; tenant groups. An organization
comprised of public housing tenant groups in
a state and formed to promote the rights and welfare
of public housing tenants by providing them
with information and technical assistance regarding
regulations and laws concerning public housing
and acting as the state recognized agent for
public housing tenant organizations qualifies for
exemption as operated exclusively for charitable
purposes. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Ru1. 75–283, 1975-2 C.B. 201.
218.447 Income-producing asset subject to
life estate and annuity. The exempt status of an
organization is not affected by the acceptance of
an income-producing asset subject to a reserved
life estate in the transferor or in exchange for an
annuity specifically charged against the asset.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-176, 1969-1 C.B. 150.
218.448 Income-producing property; predicated
foundations purpose. A foundation was
established under the decedent’s will providing
primarily for the continuance of the pyrometric
cone manufacturing business and secondarily for
the advancement of the ceramic arts and industries.
Under the will, approximately 80 percent of
the business gross income would be required to
meet manufacturing costs and other expenses and
the remaining 20 percent would be spent in
research in the field of ceramics through fellowships
granted to selected graduate students. Held,
the foundation is an exempt organization under
section 501(c)(3) and did not receive unrelated
business income under section 511 or 513; the purpose
of the business was not merely to provide a
source of income but to predicate the foundation’s
scientific and educational purposes. (Secs. 501,
502, 511, 513; ’86 Code.)
Edward Orton, Jr. Ceramic Foundation, 56 T.C.
147, Nonacq., 1972-1 C.B. 4.
218.449 International exposition. An organization
that conducts an international exposition
commemorating certain historical events and cultural
achievements, and exhibiting products of
various nations, qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-545, 1971-2 C.B. 235.
218.450 Investment clubs. An association of
investment clubs formed to enable members and
prospective investors to make sound investments
by the mutual exchange of investment information,
that carries on not only educational activities
but other activities directed to the support and
promotion of the economic interests of its members,
does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-366, 1976-2 C.B. 144.
218.451 Investment management services.
An organization regularly carrying on an investment
service that would be unrelated trade or business
if carried on by any of the exempt organizations
on whose behalf it operates is not exempt.
Distinguished by Rev. Rul. 71-529. §1.502-1.
(Sec. 502, ’86 Code.)
Rev. Rul. 69-528, 1969-2 C.B. 127.
218.452 Investment management services;
colleges and universities. A nonprofit organization
that provides assistance in the management of
participating colleges’ and universities’ endowment
or investment funds for a fee substantially
below the cost of providing such service, qualifies
for exemption. Rev. Rul. 69–528 distinguished.
Distinguished by Rev. Rul. 72-369.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71-529, 1971-2 C.B. 234.
218.453 Jazz music appreciation. A nonprofit
organization created to develop and promote an
appreciation of jazz music as an American art
form through the presentation of public jazz festivals
or concerts is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-271, 1965-2 C.B. 161.
218.454 Journal on physical and mental disorders.
An organization formed to encourage
basic research in specific types of physical and
mental disorders, improve educational procedures
for teaching those afflicted with those disorders,
and disseminate educational information about
such disorders, by the publication of a journal containing
current technical literature relating to these
disorders may qualify for exemption. Rev. Rul.
60-351 distinguished. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 67-4, 1967-1 C.B. 121.
218.455 Labor; apprenticeship and training
committee. A nonprofit apprenticeship and training
committee formed by a union and an employers’
association of a particular industry in connection
with a collective bargaining agreement,
which conducts educational courses and programs
in various aspects of the trade for local members,
employees, or associates of the industry to ensure
that local standards on the quality of work conform
with national codes for the industry, and, also
selects and supervises the training of apprentices,
is exempt. §1.501(c)(5)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-42, 1978-1 C.B. 158.
218.456 Labor; apprenticeship committee.
An apprenticeship committee organized primarily

Exempt organizations
to establish standards of employment in various
skilled crafts, determine journeymen’s qualifications,
help settle labor disputes, and also cooperate
with the local schools in establishing supplementary
classroom instruction is exempt from tax as a
labor organization. §1.501(c)(5)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 59-6, 1959-1 C.B. 121.
218.457 Labor; benefit payments to members;
effect on status. The payment of death, sick,
accident and similar benefits to its individual
members by a labor organization if made under a
plan which has as its object the betterment of the
conditions of the members of the organization
does not preclude exemption. Rev. Rul. 58-143
revoked. §1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 62-17, 1962-1 C.B. 87.
218.458 Labor; litigation activities. An organization
whose members are exempt labor unions
representing public employees and which is primarily
engaged in supporting litigation activities,
proper for any one of its member unions, directed
to the betterment of conditions for public
employees qualifies for exemption.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-596, 1974-2 C.B. 167.
218.459 Labor; members self-employed. An
organization whose members are engaged in harness
racing in a specific geographic area as drivers,
trainers, and horse owners, most of whom are
independent contractors or entrepreneurs, and that
negotiates with operators of area raceways for
larger purses, better hours, and safer operating
conditions does not qualify for exemption as a
labor organization under section 501(c)(5).
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-288, 1978-2 C.B. 179.
218.460 Labor; membership including selfemployed.
The inclusion of some self-employed
persons in the membership of a qualified labor
organization does not affect the organization’s
exempt status. §1.501(c)(5)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 74-167, 1974-1 C.B. 134.
218.461 Labor; newspaper publication. An
organization publishing a labor newspaper may
qualify for exemption. S.M. 2558 superseded.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-534, 1968-2 C.B. 217.
218.462 Labor; nurses’ association; membership
including self-employed. A nurses’
association whose membership includes a small
percentage of self-employed private duty nurses
and whose primary activity is acting as a collective
bargaining agent for its members qualifies for
exemption as a labor organization.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-154, 1977-1 C.B. 148.
218.463 Labor; payment of members’ legal
defense. The payment by an organization of law
enforcement officers for its members’ legal
defense in actions brought against them in connection
with the performance of their official duties
does not adversely affect the exempt status of the
organization. §1.501(c)(5)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-288, 1975-2 C.B. 212.
218.464 Labor; savings plan. A nonprofit
organization established under a collective bargaining
agreement between a union and an
employers’ association to enable members of the
union to save money by having a set amount withheld
from their pay and deposited in a bank
account, the funds to be paid to them with any
interest remaining after payment of administration
expenses on a specified date each year, fails to
qualify for exemption. §1.501(c)(5)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 77-46, 1977-1 C.B. 147.
218.465 Labor; strike and lockout benefits to
union members. An organization established by
a labor union to provide strike and lockout benefits
to its members is exempt. §1.501(c)(5)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 67-7, 1967-1 C.B. 137.
218.466 Labor; strike benefits to members.
An organization, controlled by private individuals,
that provides weekly income to its members in
the event of a lawful strike by the member’s labor
union in return for an annual payment by the member
does not qualify for exemption as a labor organization.
§1.501(c)(5)-1 . (Sec. 501, ’86 Code.)
Rev. Rul. 76-420, 1976-2 C.B. 153.
218.467 Labor; teachers’ association. A city
school teachers’ association, formed to improve
its members’ professional abilities and to secure
for them better salaries and working conditions,
that sponsors seminars and courses for its members,
participates in teacher conventions, bargains
collectively and processes grievances, and keeps
its members informed of its activities through regular
meetings and a newsletter, may qualify for
exemption as a labor organization.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-31, 1976-1 C.B. 157.
218.468 Labor; union and employer operated
dispatch hall. A nonprofit organization, controlled
and funded jointly by a labor union and an
employer association, that operates a dispatch hall
to allocate work assignments among union members
and engages in other activities appropriate to
a labor union qualifies for exemption as a labor
organization. §1.501(c)(5)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-473, 1975-2 C.B. 213.
218.469 Labor; union and employer stewardship
trust. A trust, established pursuant to a collective
bargaining agreement, that is funded and
administered by the employers in an industry to
compensate a multi-employer steward who is
under the union’s direct control with responsibility
to settle disputes, investigate complaints, and
otherwise encourage compliance with the agreement
throughout the whole industry, is a trust qualifying
for exemption as a labor organization.
§1.501(c)(5)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-5, 1977-1 C.B. 146.
218.470 Laundry supplying hospitals. A nonprofit
hospital service organization that operates
and maintains a laundry and linen service for
exempt hospitals is not entitled to tax-exempt status.
(Sec. 501, ’86 Code.)
HCSC Laundry, 450 U.S., Ct. D. 2005, 1981-1
C.B. 324.
218.471 Legal; personal tax and estate planning.
A nonprofit organization whose primary
activity is the offering of free legal services for
personal tax and estate planning to individuals
who wish to make current and deferred gifts to
charity as part of their overall tax and estate planning
does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-442, 1976-2 C.B. 148.
218.472 Legal; public interest law firm. A
public interest law firm that provides representation
in cases it selects as having significant public
interest and for which representation by traditional
private law firms is not economically feasible
is operated exclusively for charitable purposes
and qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75-74, 1975-1 C.B. 152.
218.473 Legal; public interest law firm; feesharing
agreements. A public interest law firm
will no longer be recognized as exempt under section
501(c)(3) after it enters into a fee-sharing
arrangement with a private attorney who will keep
the portion of any court-awarded fee that exceeds
the amount the firm has paid to the private attorney
for services rendered on the particular case.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-5, 1976-1 C.B. 146.
218.474 Legal; public interest law firm; fees
awarded by court or administrative agency. An
exempt public interest law firm’s policy of accepting
only fees awarded or approved by a court or an
administrative agency and paid by an opposing
party will not adversely affect its exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 75-76, 1975–1 C.B. 154. Legal;
referral service. A nonprofit lawyer referral service
arranges at the request of any member of the
public an initial half-hour appointment for anominal
charge with a lawyer whose name is on an
approved list maintained by the organization. Any
further contact between the lawyer and the client
is arranged without the involvement of the organization.
The referral service is not exempt under
section 501(c)(3), but is exempt as a business
league. Rev. Ruls. 61–170 and 74-308 distinguished.
§1.501(c)(3)–1, 1.501(c)(6)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 80-287, 1980-2 C.B. 185.
218.475 Legal aid; economically depressed
communities. An organization formed to provide
substantial free legal services to low income residents
of economically depressed communities
through the subsidization of recent law graduates
who have been admitted to the bar is operated for
charitable purposes and qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72-559, 1972–2 C.B. 247.
218.476 Legal aid society. A nonprofit legal aid
society providing free legal services to indigent
persons, otherwise financially incapable of
obtaining such services qualifies for exemption.
Amplified by Rev. Rul. 78-428. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 69-161, 1969-1 C.B. 149.
218.477 Legal assistance; bond posting. An
organization that, as part of its integrated program
of providing legal, rehabilitative, employment,
and other services to persons accused of crimes,
posts its own money or property with the court as
total or partial bail for indigent defendants unable
to provide funds with which to post bail may qualify
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-21, 1976-1 C.B. 147.
218.478 Legal assistance; bondsmen’s fees.
An organization otherwise qualifying for exemption
that provides free legal services and funds
necessary to pay the commercial bondsmen’s fees
for indigent persons accused of crimes is operated
exclusively for charitable purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-22, 1976-1 C.B. 148.
218.479 Legal defense funding; religious sect
members. An organization that provides funds to
defend members of a religious sect in legal actions
involving substantial constitutional issues of state
abridgement of religious freedom is exempt.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73–285, 1973–2 C.B. 174.
218.480 Legal service. A nonprofit organization
formed and operated to provide legal services
to indigent persons at a fee based upon the indigent
clients’ abilities to pay qualifies for exemption
under section 501(c)(3). Rev. Rul. 69–161 amplified.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-428, 1978–2 C.B. 177.
218.481 Legislative activities; foreign laws. A
nonprofit organization that attempts to influence

Exempt organizations
and advocates changes in the laws of a foreign
country is an “action” organization within the
meaning of reg. 1.501(c)(3)-1(c)(3), and therefore
does not qualify for exemption from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-440, 1973-2 C.B. 177.
218.482 Lobbying organization; denial of
501(c)(3) status. A nonprofit corporation organized
to promote its view of the “public interest”
in the area of federal taxation was formed to take
over the operations of two other nonprofit organizations,
one exempt under 501(c)(3) and the
other under section 501(c)(4). The Service denied
section 501(c)(3) status for the newly formed
organization, concluding that a substantial part of
its operation involved lobbying. The section
501(c)(3) prohibition against lobbying does not
violate either the First Amendment or the equal
protection component of the Fifth Amendment’s
Due Process Clause. (Sec. 501, ’86 Code.)
Taxation With Representation of Washington,
461 U.S., Ct. D. 2021, 1983-2 C.B. 90.
218.483 Local benevolent life insurance
association; local character. A life insurance
company is authorized under a State permit to
operate as a local mutual aid association in those
counties any part of which is within a radius of 75
miles from its home office. The authorized territory
includes 32 counties in which three large metropolitan
trade centers are located. Although the
organization has conducted most of its business in
the rural counties around its home office, it has
conducted some business in a different locality.
The operations of the organization are not of a
purely local character and therefore the organization
cannot qualify for exemption.
§1.501(c)(12)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-193, 1964-2 C.B. 151.
218.484 Local benevolent life insurance
association; local character. A benevolent life
insurance association that does not terminate
membership when a member moves from the local
area in which the association operates is of a
purely local character and may qualify for exemption
under section 501(c)(12). §1.501(c)(12)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 83-43, 1983-1 C.B. 108.
218.485 Low income housing. A reprint is provided
of the safe harbor guideline for low income
housing with additional explanation and request
for comments.
Notice 93-1, 1993-1 C.B. 290.
218.486 Managerial and consulting services;
unrelated exempt organizations. An organization
formed to provide managerial and consulting
services at cost to unrelated exempt organizations
does not qualify for exemption. Rev. Rul. 71-529
distinguished. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 72-369, 1972-2 C.B. 245.
218.487 Marriage counseling service. A nonprofit
organization that provides personal marriage
counseling services and conducts workshops
and seminars on the subject of marital adjustment
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 70-640, 1970-2 C.B. 117.
218.488 Meals delivered to elderly and handicapped.
A nonprofit organization that provides
home delivery of meals to elderly and handicapped
people by volunteers, for a fee insufficient
to cover the cost of operations but approximating
the cost of the meals provided, or for a reduced fee
or no fee depending on the recipient’s ability to
pay, is operated for charitable purposes and qualifies
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 76-244, 1976-1 C.B. 155.
218.489 Medical individual practice association.
An individual practice association that provides
health services through written agreements,
with health maintenance organizations does not
qualify for exemption from federal income tax as
a social welfare organization under section
501(c)(4), or as a business league under section
501(c)(6). §§1.501(c)(4)-1, 1.501(c)-(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 86-98 .1986-2 C.B. 74.
218.490 Medical information retrieval system;
donated body organs. A nonprofit organization
that operates a free computerized donor
authorization retrieval system to facilitate transplantation
of body organs upon a donor’s death
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75-197, 1975-1 C.B. 156.
218.491 Medical peer review board. A nonprofit
organization formed by members of a State
medical association to operate peer review boards
for the primary purpose of establishing and maintaining
standards for quality, quantity, and reasonableness
of costs of medical services, and that
derives its income from contributions from the
State medical association and insurance carriers,
qualifies for exemption under section 501(c)(6),
but not under section 501(c)(3). Distinguished by
Rev. Ruls. 76-455 and 81-276. §§1.501(c)(3)-1,
1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-553, 1974-2 C.B. 168.
218.492 Medical research. An organization
formed by a group of physicians specializing in
heart disease to research and to publish treatments
of heart defects qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–526, 1969-2 C.B. 115.
218.493 Medical research and education. A
nonprofit organization, organized and operated on
a non-membership basis exclusively for the purpose
of carrying on research as to diseases and
other disorders of the human body and to develop
scientific methods for diagnosis, prevention, and
treatment thereof, and then to demonstrate the
results of such research to other physicians and the
public through means of seminars, qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-298, 1965-2 C.B. 163.
218.494 Medical society; local. A city medical
society exempt under section 501(c)(6), that primarily
directs its activities to the promotion of the
common business purposes of its members may
not be reclassified as an educational or charitable
organization under section 501(c)(3). I.T. 3182
superseded. §§1.501(c)(3)-1, 1.501(c)(6)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 71-504, 1971-2 C.B. 231.
218.495 Medical specialty board. A medical
specialty board that devises and administers written
examinations to physicians in a particular
medical specialty and issues certificates to successful
candidates is exempt from tax as a business
league under section 501(c)(6), but is not exempt
under
1.501(c)(6)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-567, 1973-2 C.B. 178.
section 501(c)(3). §§1.501(c)(3)-1,
218.496 Medical staff of hospital. A nonprofit
organization formed by a medical staff of an
exempt hospital to carry on a charitable program
of benefit to the hospital qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-631, 1969-2 C.B. 119.
218.497 Ministering nonmedical needs of
hospital patients. A nonprofit organization
created to minister to the nonmedical needs of
patients in a proprietary hospital may be exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-73, 1968-1 C.B. 251.
218.498 Model housing program. A nonprofit
organization that conducts a model demonstration
housing program for low-income families and disseminates
information about the results of the program
may qualify for exemption. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 68-17, 1968–1 C.B. 247.
218.499 Music; classical programs on radio.
A nonprofit organization formed to generate community
interest in the retention of classical music
programs by a local for-profit radio station by
seeking program sponsors, encouraging continuation
of contracts by existing sponsors, urging the
public to patronize the sponsors, soliciting subscriptions
to the station’s program guide, and distributing
materials promoting the classical music
programs, all of which activities tend to increase
the station’s revenues, does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-206, 1976-1 C.B. 154.
218.500 Music; group harmony singing. A
nonprofit organization, formed to promote public
appreciation of group harmony singing and to educate
its members and the general public in this type
of music,
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-46, 1966-1 C.B. 133.
may qualify for exemption.
218.501 Music; recording and sale of composers’
works. An otherwise qualifying organization
created to develop and promote an appreciation
of contemporary symphonic and chamber
music by recording and selling, primarily to
educational institutions, new works of unrecognized
composers as well as neglected works of
more established composers is exempt from tax
under section 501(c)(3). §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 79-369, 1979–2 C.B. 226.
218.502 Mutual insurance company; definition.
To qualify as a mutual insurance company
under section 501(c)(15) the following characteristics,
while not conclusive, must be present: (1)
the right of policyholders to be members to the
exclusion of others and the right of such members
to choose the management; (2) the sole business
purpose is to supply insurance substantially at
cost; (3) the right of members to the return of premiums
in excess of those amounts needed to cover
losses and expenses; and (4) common equitable
ownership of the assets by the members. G.C.M.
25497 superseded. §§1.501(c)(15)-1, 1.801-3,
1.821-4. (Sec. 501, 801, 821; ’86 Code.)
Rev. Rul. 74-196, 1974-1 C.B. 140.
218.503 Mutual insurance company; reinsurance
or return premiums. In determining the
gross income received by a mutual insurance company
during the year for purposes of the limitation
provided in section 501(c)(15), premiums written
or received on insurance contracts during the taxable
year are to be taken into account without
deduction for amounts paid or incurred for reinsurance
or for return premiums. §1.501(c)(15)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 67-80, 1967-1 C.B. 143.
218.504 National Park Service programs. A
nonprofit organization formed to assist the
National Park Service, Department of the Interior,
in furthering its educational and scientific programs
may be exempt from tax. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 68–307, 1968–1 C.B. 258.
218.505 National sorority; controlled by
profit-making corporation. When a national
sorority is created and controlled by a business
corporation engaged in furnishing services and

supplies to the sorority and its member chapters,
neither the sorority nor its chapters can qualify for
exemption as a social club or a civic or social welfare
organization. §§1.501(c)(4)-1,
1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-360, 1966-2 C.B. 228.
218.506 Nurses’ association; maintaining
employment registry. A nurses’ association
which maintains an employment registry primarily
for the employment of members is not entitled
to exemption as a charitable organization or as a
business league since its primary purpose is the
operation of a regular business of a kind ordinarily
carried on for profit and it is engaged in rendering
particular services for individual persons rather
than promoting the general business conditions of
the nursing profession. Rev. Rul. 55-656 distinguished.
Distinguished by Rev. Rul. 80-287.
§§1.501(c)(3)-1, 1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 61-170, 1961-2 C.B. 112.
218.507 Nursing bureau. A community nursing
bureau operated as a community project,
which maintains a nonprofit register of qualified
nursing personnel, including graduate nurses,
unregistered nursing school graduates, licensed
attendants and practical nurses, for the benefit of
hospitals, health agencies, doctors and individuals,
which receives its primary financial support
from various community organizations and public
contributions, qualifies for exemption. Distinguished
by Rev. Rul. 61-170. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 55-656, 1955-2 C.B. 262.
218.508 Oil production payments acquired
with borrowed funds. A nonprofit organization
may qualify for exemption from tax where it
obtains funds for charitable grants and contributions
through acquisition, with borrowed money,
of oil and gas production payments.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-296, 1966-2 C.B. 215.
218.509 Pension to retired employees. An
organization created pursuant to the will of a
stockholder of a company to pay pensions to all
retired employees of that company does not qualify
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 68-422, 1968-2 C.B. 207.
218.510 Police-firemen’s benefit association.
A corporation organized and operated exclusively
for the benefit of dependent widows and children
of policemen or firemen killed in the line of duty
may, under certain circumstances, qualify for
exemption as a charitable organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 55-406, 1955-1 C.B. 73.
218.511 Political; separate bank account. A
separate bank account used by a candidate for state
public office to receive deposits of political campaign
funds that are disbursed only for bona fide
political campaign expenses qualifies as a political
organization under section 527. (Sec. 527, ’86
Code.)
Rev. Rul. 79-11, 1979-1 C.B. 207.
218.512 Political activities; assisting in transition
of office of Governor. A nonprofit organization
formed to implement an orderly change
of administration of the office of Governor of a
State by assisting the Governor-elect, during the
period between his election and inauguration in
screening and selecting applicants for State
appointive offices and preparing a legislative message
and program reflecting the party’s platform
and budget, is an “action” organization, and does
not qualify for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 74-117, 1974-1 C.B. 128.
218.513 Political activities; newsletter publication;
congressional voting records. Certain
publications in a nonpartisan newsletter of congressional
incumbents’ voting records on selected
issues do not constitute participation or intervention
in any political campaign. Rev. Rul. 78–248
amplified. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-282, 1980-2 C.B. 178.
218.514 Political campaign practices. An
organization formed to elevate the standards of
ethics and morality in the conduct of political campaigns
that disseminates information concerning
general campaign practices, furnishes teaching
aids to political science and civics teachers, and
publicizes its proposed code of fair campaign
practices without soliciting the signing or
endorsement of the code by candidates qualifies as
an educational organization. Rev. Ruls. 60-193
modified and 66-258 superseded. §1.501(c)(3)–1.
(Sec. 501, ’86 Code.)
Rev. Rul. 76-456, 1976-2 C.B. 151.
218.515 Political education organization. A
corporation created to encourage greater participation
in government and political affairs through
the use of seminars, non-partisan workshops, and
through the distribution of educational materials
does not qualify for exemption as an educational
organization but may qualify as a social welfare
organization. Modified by Rev. Rul. 76-456.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 60-193, 1960-1 C.B. 195.
218.516 Political education organization. An
organization which, as its primary objective,
advocates the adoption of a doctrine or theory
which can become effective only by the enactment
of legislation is not entitled to exemption since it
is an “action” organization and thus is not operated
exclusively for educational purposes.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 62-71, 1962-1 C.B. 85.
218.517 Premiums paid on assigned life
insurance policy. A section 501(c)(3) organization
will not lose its exempt status if it accepts, and
pays premiums on an assigned life insurance
policy in which the assignor retains the right to
select the method of payment of the proceeds due
upon his death. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-381, 1967-2 C.B. 189.
218.518 Preservation of buildings having historical
or architectural significance. A nonprofit
organization formed to promote an appreciation
of history through the acquisition,
restoration, and preservation of homes, churches,
and public buildings having special historical or
architectural significance and to open the structures
for viewing by the general public qualifies
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-470, 1975-2 C.B. 207.
218.519 Preservation of properties having
historical or architectural significance. An
organization formed for the purposes of preserving
the historic or architectural character of a community
through the acquisition and occasional restoration
of historically or architecturally
significant properties, and subsequent disposition
of these properties qualifies for exemption under
section 501(c)(3). §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 86-49, 1986-1 C.B. 243.
218.520 Prevention of cruelty to animals;
birth control. A nonprofit organization formed to
prevent the overbreeding of cats and dogs by providing
funds to pet owners who wish to have their
pets spayed or neutered but cannot afford the cost
of such operations qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-194, 1974-1 C.B. 129.
Exempt organizations
218.521 Prevention of cruelty to animals; legislative
activities. An organization operated for
the prevention of cruelty to animals, exempt under
section 501(c)(4), is not exempt under section
501(c)(3) if it substantially engages in promoting
legislation for the humane treatment of animals,
even though the legislation it advocates may be
beneficial to the community, and even though
most of its attempts to influence legislation may be
indirect. Contributions to it are not deductible.
§§1.170-2, 1.501(c)(3)-1, 1.501(c)(4)-1. (Secs.
170, 501; ’86 Code.)
Rev. Rul. 67–293, 1967–2 C.B. 185.
218.522 Prevention of cruelty to children. An
organization formed and operated for the purpose
of preventing children from working in hazardous
trades or occupations in violation of state laws, to
protect children, and eliminate conditions detrimental
to them, the income of which is derived
from contributions solicited from the public
through various agencies, is exempt from tax. I.T.
2143 superseded. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-151, 1967-1 C.B. 134.
218.523 Private club operated by motel. A
private club, controlled by the owners of an
adjoining motel, which provides entertainment
and operates a cocktail lounge as an integral part
of the motel business does not qualify for exemption
as a social club. §1.501(c)(7)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 66-225, 1966–2 C.B. 227.
218.524 Private foundation; governing
instrument provision; dissolution requirements.
Provisions in an organization’s governing
instrument that satisfy the requirements of section
508(e), for purposes of qualification for exemption
under section 501(a) as a private foundation,
are not in themselves sufficient to meet the
requirement of reg. 1.501(c)(3)-1(b)(4), that upon
dissolution, the organization’s assets be dedicated
to an exempt purpose. §§1.501(c)(3)-1, 1.508-3,
53.4947-1. (Secs. 501, 508, 4947; ’86 Code.)
Rev. Rul. 85-160, 1985-2 C.B. 162.
218.525 Private hospital rooms. An otherwise
qualifying organization that makes a private hospital
room available to patients who can benefit
medically from a private room but who cannot
afford the expense of such a room is operated
exclusively for charitable purposes and is exempt
from tax. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 79-358, 1979-2 C.B. 225.
218.526 Private school; racially discriminatory.
Private schools that practice racial discrimination
do not qualify as tax-exempt organizations
under section 501(c)(3). Contributions to such
schools are not deductible under section 170.
(Secs. 170, 501; ’86 Code.)
Bob Jones University, 461 U. S., Ct. D. 2018,
1983–28 I.R.B. 8.
218.527 Private schools; racially discriminatory.
Respondents lack standing to bring suit
charging the federal tax exemption granted to
racially discriminatory private schools in their
communities impairs their ability to have their
public schools desecrated. (Sec. 501, ’86 Code.)
Allen v. Wright, 468 U. S., Ct. D. 2027, 1984-2
C.B. 106.
218.528 Private school; racially nondiscriminatory
policy. A private school that does not have
a racially nondiscriminatory policy as to students
does not qualify for exemption. §§1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 71-447, 1971-2 C.B. 230.
218.529 Professional standards review. An
organization was established to perform the services
of a professional standards review organization
(PSRO) pursuant to section 249F of the Social
Security Amendments of 1972, and was desig-

Exempt organizations
nated as a PSRO for a particular area by the
Department of Health and Human Services
(HHS). It derives all of its support from contracts
with HHS which provide for payment for all reasonable
and necessary expenses incurred by it in
the performance of its functions. The organization
qualifies for exemption under section 501(c)(3) of
the Code and is not a private foundation under section
509(a) because it is described in section
170(b)(1)(A)(vi). Rev. Rul. 74–553 distinguished.
§§1.170A-9, 1.501(c)(3)-1, 1.509(a)-2. (Secs.
170, 501, 509; ’86 Code.)
Rev. Rul. 81–276, 1981–2 C.B. 128.
218.530 Promoting circulation of founder’s
books. An organization whose primary purpose is
to promote the circulation of books of one of its
incorporators and whose activities consist of purchasing
such works and making them available for
public use is not organized and operated exclusively
for educational purposes. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 55-231, 1955-1 C.B. 72.
218.531 Property purchased in “bargainsale”
transaction. A charitable organization’s
exemption from tax will not be affected by purchasing
securities from its creator (and sole
trustee) at the price he paid for them and reselling
them at a profit. §1.501(c)(3)–1. (Sec. 501, ’86
Code.)
Rev. Rul. 69-39, 1969-1 C.B. 148.
218.532 Public forums; congressional candidates.
The conduct of public forums involving
qualified congressional candidates in the manner
described by an organization otherwise exempt
under section 501(c)(3), will not constitute participation
or intervention in any political campaign
within the meaning of section 501(c)(3). Rev. Rul.
66-256 amplified. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 86-95, 1986-2 C.B. 73.
218.533 Public forums on national and community
interests. A nonprofit organization
formed to conduct public forums at which lectures
and debates on social, political, and international
matters are presented qualifies for exemption even
though some of its programs include controversial
speakers or subjects. I.T. 1224 superseded.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-256, 1966-2 C.B. 210.
218.534 Public interest law firms. This procedure
sets forth guidelines for public interest law
firms, including procedures under which a public
interest law firm may accept fees for its service.
Rev. Rul. 75–75 revoked; Rev. Rul. 75–76 amplified;
Rev. Proc. 71–39 superseded; and Rev. Proc.
75-13 modified and superseded. §1.501(c)(3)-1.
(Sec. 601.201, S.P.R.; Sec. 501, ’86 Code.)
Rev. Proc. 92–59, 1992-2 C.B. 411.
218.535 Public park maintenance. A nonprofit
organization with membership open to the
general public that was formed by residents of a
city to help preserve, beautify, and maintain a public
park located in the city and whose support is
derived from membership dues and contributions
from the general public is operated exclusively for
charitable purposes. Rev. Rul. 75–286 distinguished.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–85, 1978-1 C.B. 150.
218.536 Public recreation facilities. A nonprofit
corporation organized to establish, maintain,
and operate a public swimming pool, playground
and other recreation facilities for
community residents is tax-exempt and contributions
there to are deductible as charitable contributions.
§1.501(c)(3)-1. (Sec. 23(o), ’39 Code; Secs.
170, 501, ’86 Code.)
Rev. Rul. 59–310, 1959–2 C.B. 146; Isabel
Peters, 21 T.C. 55, Acq., 1959-2 C.B. 6.
218.537 Publication; discrediting persons or
institutions. An organization does not qualify for
exemption where a substantial part of its activities
is the distribution of publications that seek to discredit
particular institutions and individuals on the
basis of unsupported opinions and incomplete
information about their affiliations and activities.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–263, 1968-1 C.B. 256.
218.538 Publication; ethnic newspaper. A
nonprofit organization, whose only activities are
preparing and publishing a newspaper of local,
national, and international news articles with an
ethnic emphasis, soliciting advertising and selling
subscriptions to that newspaper in a manner indistinguishable
from ordinary commercial publishing
practices, is not operated exclusively for charitable
and educational purposes and does not
qualify for exemption. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 77-4, 1977-1 C.B. 141.
218.539 Publishing library classification system;
corporation. A corporation, organized
under an unrestricted charter to edit and publish a
library classification system, distributed all its
stock to the foundation that had previously handled
the system. Dividends paid the foundation
were expended as awards in recognition of outstanding
library contributions. Held, the corporation
was operated for educational purposes and
was entitled to tax exemption. (Sec. 101(6), ’39
Code; Sec. 501, ’86 Code.)
Forest Press, Inc., 22 T.C. 265, Acq., 1954-2
C.B. 4.
218.540 Publishing teaching materials and
textbooks. A nonprofit organization which makes
funds available to authors and editors for preparing
teaching materials and writing textbooks, and,
under the terms of the contract with the publisher,
receives royalties from sales of the published
materials and then shares them with the editors
and authors, does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-104, 1966-1 C.B. 135.
218.541 Radio system maintained. A nonprofit
association which provides and maintains a
two-way radio system on a mutual or cooperative
basis qualifies for exemption provided that 85 percent
or more of its income consists of amounts collected
from members for the sole purpose of meeting
losses and expenses. §1.501(c)(12)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 57-420, 1957-2 C.B. 308.
218.542 Real estate boards; multiple listing
service. A real estate board whose primary purpose
or activity is the operation of a multiple listing
service for its members does not qualify for
exemption. §1.501(c)(6)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 59–234, 1959-2 C.B. 149.
218.543 Receipt and payment of employment
taxes owed by creators. An organization established
pursuant to a collective bargaining agreement
between an association of manufacturers and
a labor union in order to receive and pay over
employment taxes which the manufacturers are
required to deduct from the wages of employees
who are members of the union does not qualify for
exemption. §§1.501(a)-1, 1.501(c)(4)-1,
1.501(c)(5)-1, 1.501(c)(6)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 66-354, 1966-2 C.B. 207.
218.544 Recreational facility; preserving and
improving lake. A nonprofit organization formed
to preserve and improve a lake that is used extensively
as a public recreational facility qualifies for
exemption. §1.501(c)(3)–1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-186, 1970-1 C.B. 128.
218.545 Recreational facility; restricted use.
The Service will not follow the Eden Hall Farm
decision, which held that an organization providing
recreational facilities for employees of
selected corporations qualifies as a social welfare
organization under section 501(c)(4).
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-205, 1980-2 C.B. 184.
218.546 Rehabilitating ex-convicts and
parolees. A nonprofit organization which furthers
the rehabilitation of ex-convicts and parolees in
order to make them self-supporting and useful citizens
may be exempt from tax. I.T. 2088 superseded.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-150, 1967-1 C.B. 133.
218.547 Rehabilitation of alcoholics. A halfway
house, organized to provide room, board,
therapy, and counseling for persons discharged
from alcoholic treatment centers, which also operates
a furniture shop to provide full-time employment
for its residents with any profits applied to
operating costs of the halfway house, qualifies for
exemption and is not conducting an unrelated
trade or business. §§1.501(c)(3)-1, 1.513-1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 75-472, 1975-2 C.B. 208.
218.548 Rehabilitation of prisoners. A nonprofit
organization formed to develop and manage
community correctional centers for the rehabilitation
of prisoners in cooperation with the coourts and
government custodial agencies qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-583, 1970–2 C.B. 114.
218.549 Rehabilitation program; former
mental patients. An organization providing a residence
facility and therapeutic “group living program”
for individuals recently released from a
mental institution qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 72–16, 1972–1 C.B. 143.
218.550 Religious; broadcasting station. A
nonprofit religious broadcasting station that does
not sell commercial or advertising time is exempt
even though it operates on a commercial license.
Amplified-by Rev. Rul. 78-385. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 68-563, 1968-2 C.B. 212.
218.551 Religious; burial services. An otherwise
qualifying organization whose purpose is to
provide traditional burial services that directly
support and maintain basic tenets and beliefs of a
religion regarding burial of its members is operated
exclusively for charitable purposes and is
exempt from tax. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 79–359, 1979-2 C.B. 226.
218.552 Religious; educational tours. A nonprofit
organization that arranges and conducts
winter-time ocean cruises during which activities
to further religious and educational purposes are
provided in addition to extensive social and recreational
activities is not operated exclusively for
exempt purposes and does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-366, 1977-2 C.B. 192.
218.553 Religious; operating businesses.
Through subsidiary organizations, a church
owned and managed the personal, real, and business
properties of its members. Held, business
activities were conducted as training projects for
student ministers to illustrate the church’s concept
of religious precepts applicable to daily business
activities and the organizations are exempt. (Sec.
501, ’86 Code.)
Golden Rule Church Assn., 41 T.C. 719, Nonacq.,
1964-2 C.B. 8.
218.554 Religious; supervision and inspection
of commercially prepared food products. A

Exempt
organizations
nonprofit organization that supervises the preparation
and inspection of food products prepared
commercially in a particular locality to insure that
they satisfy the dietary roles of a particular
religion, thereby assisting the individual members
of the religion to comply with its tenets and dictates,
qualifies for exemption. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 74-575, 1974-2 C.B. 161.
218.555 Religious; weekend retreat center.
An otherwise qualifying nonprofit organization
that conducts weekend religious retreats, open to
individuals of diverse Christian denominations, at
a rural lakeshore site at which the participants may
enjoy the recreational facilities in their limited
amount of free time and that charges no fees qualifies
for exemption as operated exclusively for
religious purposes. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 77-430, 1977-2 C.B. 194.
218.556 Religious and educational broadcasting
station. An otherwise qualifying nonprofit
organization broadcasts religious and
educational programs from a commercially
licensed television station it owns and operates.
An “insubstantial” amount of total air time is
devoted to nonreligious, noneducational, commercially
sponsored programs, the income from
which is put toward the organization’s exempt
purpose. The organization is considered to be
operated exclusively for charitable purposes and
is exempt from tax under section 501(c)(3). Rev.
Rul. 68-563 amplified. §§1.501(c)(3)-1, 1.511-2,
1.513-1. (Secs. 501, 511, 513; ’86 Code.)
Rev. Rul. 78–385, 1978–2 C.B. 174.
218.557 Religious organization dependent on
wages of members. An organization that is substantially
dependent on wages earned by some of
its members from outside employment, rather than
on an internally operated business, does not qualify
for exemption under section 501(d); Rev. Rul.
77–290 amplified. §1.61–2, 1.501(d)-1. (Secs.
61, 501, 3121, 3401; ’86 Code.)
Rev. Rul. 80-332, 1980-2 C.B. 34.
218.558 Rescue and emergency services. A
nonprofit organization formed to provide free rescue
and emergency services to distressed persons
may qualify for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 69-174, 1969-1 C.B. 149.
218.559 Research in anthropology. An organization
formed to support research in
anthropology by manufacturing quality cast
reproductions of anthropological specimens
which are sold to scholars and educational institutions
in a noncommercial manner qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-129, 1970-1 C.B. 128.
218.560 Rest home for elderly poor. A nonprofit
publicly-supported organization that operates
a rural rest home to provide, at a nominal
charge, two-week vacations for elderly poor
people from nearby metropolitan areas qualifies
for exemption as a charitable organization under
section 501(c)(3). §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-385, 1975-2 C.B. 205.
218.561 Scholarship awarded for scholastic
ability. A nonprofit organization awarding scholarships
to students based on scholastic ability,
without regard to financiaI need, may qualify for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–257, 1969–1 C.B. 151.
218.562 Scholarship plan for pre-selected
individuals. A nonprofit organization whose sole
activity is the operation of a “scholarship fund”
plan for making payments to pre-selected, specifically
named individuals does not qualify for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-367, 1967-2 C.B. 188.
218.563 Securities fund for student management.
A fund set up as an adjunct to an exempt
school of business administration for the sole purpose
of providing business students with instruction
and experience in managing securities may be
exempt from tax. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 68-16, 1968-1 C.B. 246.
218.564 Security services. A nonprofit organization
that provides security services for residents
and property owners of a particular community,
who agree to voluntarily donate money at a
specified hourly rate to defray the cost of the services,
is carrying on a business with the general
public in a manner similar to organizations operated
for profit and does not qualify for exemption.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-273, 1977-2 C.B. 195.
218.565 Senior citizen center. An organization
that establishes a service center providing
information, referral, counseling services relating
to health, housing, finances, education, and
employment, as well as a facility for specialized
recreation for a particular community’s senior citizens,
who need not become members to obtain the
services or participate in the activities, may qualify
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 75-198, 1975-1 C.B. 157.
218.566 Social clubs; automobile club. An
automobile club whose principal activity is rendering
automobile services to its members and
there is no commingling of its members does not
qualify for exemption. G.C.M. 23688 superseded.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-635, 1969-2 C.B. 126.
218.567 Social clubs; aviation clubhouse
leased; rent based on clubhouse profits. An aviation
club, otherwise qualifying for exemption as
a private social club, rented a facility for use as a
clubhouse under a lease which provided for a
facility partner, who was in no way related to the
club, to manage the clubhouse and for rent to be a
percentage of the clubhouse profits. Held, the aviation
club qualified as an exempt social club. (Sec.
101(9), ’39 Code; Sec. 501, ’86 Code.)
Aviation Country Club, Inc., 21 T.C. 807, Acq.,
1954-2 C.B. 3.
218.568 Social clubs; bowling tournaments.
A nonprofit organization that conducts regular
bowling tournaments for its members qualifies for
exemption where its overall program is designed
to effect a commingling of members for their pleasure
and recreation. The awarding of cash prizes
to tournament winners from tournament entry fees
is not an inurement of net income to members.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-148, 1974-1 C.B. 138.
218.569 Social clubs; business endeavors;
assistance to members. A social club formed to
assist its members in their business endeavors
through study and discussion of problems and
other activities at weekly luncheon meetings does
not qualify for exemption. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 69–527, 1969–2 C.B. 125.
218.570 Social clubs; business with public;
taxable subsidiary. The activities of a taxable
subsidiary of an exempt social club are considered
to be those of the parent club for the purpose of
determining whether the parent is engaging in
business with the general public for profit.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-74, 1968-1 C.B. 267.
218.571 Social clubs; college fraternity. A college
fraternity organized on a nonprofit basis that
maintains a chapter house for active members who
are students of the school, is exempt from tax as a
social club under section 501(c)(7) but is not
exempt under section 501(c)(3). Contributions to
the fraternity are not deductible. I.T. 1427 and
G.C.M. 5952 superseded. §§1.170-1,
1.501(c)(3)-1, 1.501(c)(7)-1. (Secs. 170, 501; ’86
Code.)
Rev. Rul. 69-573, 1969-2 C.B. 125.
218.572 Social clubs; corporate members. A
country club, exempt as a social club under
501(c)(7), that issues corporate memberships is
dealing with the general public in the form of the
corporations’ employees. Gross receipts from
such “members” will be a factor in determining
whether the club continues to qualify as a social
club. §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-489, 1974–2 C.B. 169.
218.573 Social clubs; corporation sponsored
membership. An exempt social club does not
jeopardize its status by admitting corporation
sponsored individuals who have the same rights
and privileges as regular individual members, who
must be approved by the membership committee
as provided in the club’s bylaws, and whose corporate
sponsor is not entitled to vote, has no control
over the club management, and enjoys no ownership
rights. §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-168, 1974–1 C.B. 139.
218.574 Social clubs; distribution of condemnation
proceeds. A distribution of cash to the
members of a club formed for the purpose of providing
hunting and fishing facilities for its members
through the propagation and stocking of fish
and game on the club property does not adversely
affect its exemption where such distribution represents
an amount received from the state highway
department in payment of land condemned for
road building purposes. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 65-64, 1965-1 C.B. 241.
218.575 Social clubs; dues inequity; associate
membership. A social club whose active members
pay substantially lower dues and initiation
fees than associate members although both classes
enjoy the rights and privileges in the club’s facilities
does not qualify for exemption.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-48, 1970- 1 C.B. 133.
218.576 Social clubs; equestrian sports;
annual steeplechase. A social club organized to
promote the enjoyment of equestrian sports does
not, under certain conditions, jeopardize its
exemption by charging the public admission to its
annual steeplechase. §1.501(c)(7)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 68–119, 1968–1 C.B. 268.
218.577 Social clubs; facilities available for
charitable fund-raising activities. The exempt
status of a country club will not be adversely
affected if it makes its facilities available to an
exempt organization for charitable fund-raising
activities at a charge equal to or less than direct
cost. §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-636 .1969-2 C.B. 126.
218.578 Social clubs; family; historical and
social activities. A nonprofit membership corporation
which was formed to bring the members of
a particular family into closer association through
social and historical activities is exempt.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67–8, 1967–1 C.B. 142.
218.579 Social clubs; federation of sporting
clubs. A federation of sporting clubs formed for
the purpose of governing and developing an amateur
sport in the U.S. does not qualify for exemp-

Exempt organizations
tion. G.C.M. 13067 superseded. §1.501(c)(7)-1
(Sec. 501, ’86 Code.)
Rev. Rul. 67-428, 1967–2 C.B. 204.
218.580 Social clubs; fees paid to members.
An exempt social club may pay a reasonable fixed
fee to members who bring in new members to the
club without disqualifying the club from exemption.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-130, 1980-1 C.B. 117.
218.581 Social clubs; flying club. A flying club
of limited membership that provides flying privileges
solely for its members, assesses dues based
on the club’s fixed operating costs and charges
fees based on variable operating expenses, and
whose members are interested in flying as a hobby,
constantly comingle in informal meetings, maintain
and repair the aircraft owned by the club, and
fly together in small groups qualifies for exemption.
Rev. Rul. 70-32 distinguished.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 74-30, 1974-1 C.B. 137.
218.582 Social clubs;flying club. A flying club
providing economical flying facilities for its
members but having no organized social or recreational
program does not qualify for exemption.
Distinguished by Rev. Rul. 74-30.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-32, 1970-1 C.B. 132.
218.583 Social clubs; gaming devices. The
operation of gaming devices by a nonprofit club
for the pleasure of its members and guests does not
affect the club’s exempt status, even though the
operation of gaming devices is illegal under local
law. §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–68, 1969-1 C.B. 153.
218.584 Social clubs; golf course open to general
public. A social club that regularly holds its
golf course open to the public for use upon payment
of established green fees and uses this
income for the maintenance and improvement of
club facilities does not qualify for exemption.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–219, 1969–1 C.B. 153.
218.585 Social clubs; golf tournament. A
country club that annually hosts a golf tournament
to which the general public is admitted for a charge
and uses the net income therefrom for club purposes
does not qualify for exemption.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–638, 1968-2 C.B. 220.
218.586 Social clubs; gross receipts from nonmembers;
information returns. Guidelines are
set forth for determining the effect of gross
receipts derived from nonmember use of a social
club’s facilities on the club’s exempt status in the
examination of annual information returns. Forms
990 and 990T. Recordkeeping requirements when
nonmembers use a club’s facilities and circumstances
under which a host-guest relationship will
be assumed are set forth. Rev. Proc. 64–36 superseded.
§§1.501(c)(7)-1, 1.512(a)-1. (Sec.
601.105, S.P.R.; Secs. 501, 512, ’86 Code.)
Rev. Proc. 71-17, 1971–1 C.B. 683.
218.587 Social clubs; home associations; recreational
and nonrecreational facilities. A club
providing social and recreational facilities, whose
membership is limited to homeowners of a housing
development, will be precluded from qualifying
for exemption by owning and maintaining residential
streets, enforcing restrictive covenants, or
providing residential fire and police protection
and trash collection service. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75-494, 1975-2 C.B. 214.
218.588 Social clubs; home associations; recreational
facilities. A club operating social facilities,
including a swimming pool, providing exclusive
and automatic membership to home owners in
a housing development, with no part of its earnings
inuring to the benefit of any member, may
qualify for exemption, even though it contracts
with the housing developer for the construction of
its recreational facilities. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 69-281, 1969-1 C.B. 155.
218.589 Social clubs; income derived from
fees for service. An organization formed by several
individuals to operate a health and recreation
al club, but whose predominant activity is selling
services for profit to an unlimited number of socalled
members who have no voice in the management
of the club and whose only rights are to use
the club’s facilities upon the payment of specified
fees, is not a social club entitled to exemption.
§1.501(c)(7)1. (Sec. 501, ’86 Code.)
Rev. Rul. 58-588, 1958-2 C.B. 265.
218.590 Social clubs; income from investments.
A social club is not exempt where it regularly
derives a substantial part of its income from
nonmember sources, such as dividends and interest
on investments which it owns. However, the
right of a social club to exemption is not affected
by the fact that for a relatively short period a substantial
part of its income is derived from investment
of the proceeds of the sale of its former clubhouse
pending the acquisition of a new clubhouse.
I.T. 3302 superseded. §1.501(c)(7)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 66-149, 1966-1 C.B. 146.
218.591 Social clubs; leasing lots to members.
A non profit organization that leases building lots
to its members on a long-term basis is not exempt.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-168, 1968-1 C.B. 269.
218.592 Social clubs; liquor sold for consumption
off premises. A social club that regularly
sells liquor for consumption off its premises
is not entitled to exemption. Rev. Rul. 44 distinguished.
Not applicable with respect to sales of
liquor prior to 1969. §§1.501(c)(7)-1,
301.7805-1. (Secs. 501, 7805; ’86 Code.)
Rev. Rul. 68-535, 1968-2 C.B. 219.
218.593 Social clubs; management and lease
agreement. A social club which entered into a
management and lease agreement for the management
and operation of its facilities by the lessor
may be exempt where the club retains control over
the selection of its membership, the initiation fees
and dues, has an option to purchase the property
leased by the club, and can terminate the agreement.
Rev. Rul. 65–219 distinguished.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-302, 1967-2 C.B. 203.
218.594 Social clubs; operating meeting
place. An organization which owns and operates
a building and conducts club activities for the
benefit of a tax exempt lodge may itself be exempt
as a social club. §1.501(c)(7)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 56-305, 1956-2 C.B. 307.
218.595 Social clubs; operation of bar or restaurant.
A social club should not be denied
exemption because it derives its principal income
from the operation of a bar or restaurant, provided
that only members and their guests are permitted
the use of the club’s facilities. Distinguished by
Rev. Rul. 68-535. §29.101(9)-1. (Sec. 101, ’39
Code; Sec. 501, ’86 Code.)
Rev. Rul. 44, 1953-1 C.B. 109.
218.596 Social clubs; political membership.
A nonprofit social club composed of persons who
are members of a particular political party and persons
interested in the affairs of such party may be
exempt even though it occasionally invites political
candidates to address its members.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-266, 1968-1 C.B. 270.
218.597 Social clubs; providing facilities for
exempt parent. A subsidiary of a veteran’s organization
which holds title to a building housing its
parent, which is exempt under section 501(c)(4),
maintains the building, and operates the social
facilities located in the building, does not qualify
for exemption under section 501(c)(2) or
501(c)(4), but does qualify for exemption under
section 501(c)(7). §§1.501(c)(2)-1,
1.501(c)(4)-1, 1.501(c)(7)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 66-150, 1966-1 C.B. 147.
218.598 Social clubs; redemption of member’s
stock. The exempt status of asocial club will
not be adversely affected where it redeems certain
members’ stock at the book value of the shares at
the time of redemption, even though the stockholder
may realize gain therefrom.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-639, 1968–2 C.B. 220.
218.599 Social clubs; rental of property. A
social club that receives a substantial portion of its
income from the rental of property to commercial
tenants and uses this income to defray operating
expenses and to improve and expand the facilities
does not qualify for exemption. G.C.M. 20647
superseded. §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-220, 1969-1 C.B. 154.
218.600 Sociat clubs; sale and distribution of
liquidated assets. Where an exempt social club
finds it impracticable to conduct its exempt activities
and, as a result, sells its property and liquidates,
such sale is incidental to its exempt purposes
and the club is still considered as operated
exclusively for pleasure, recreation and similar
purposes up through the date of the sale and distribution
of the liquidated assets to its active members.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 58-501, 1958-2 C.B. 262.
218.601 Social clubs; sale of property. Three
situations illustrate the application of the following
concepts that were considered in determining
the effect of the sale of property on the exempt status
of a social club: (1) the purpose of the club in
purchasing the property; (2) the use the club
makes of the property; (3) the reasons for the sale;
and (4) the method used in making the sale.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69–232, 1969-1 C.B. 154.
218.602 Social clubs; sports car events. A
nonprofit organization which, in conducting
sports car events for the pleasure and recreation of
its members, permits the general public to attend
such events for a fee on a recurring basis and solicits
patronage by advertising, does not qualify for
exemption §1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 65-63, 1965–1 C.B. 240.
218.603 Social clubs; stock car organization.
A nonprofit corporation formed to promote interest
in stock cars, that conducts racing events in
cooperation with community organizations under
agreements permitting part of the proceeds to be
paid to members participating in the races, does
not qualify for exemption. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 56-475, 1956-2 C.B. 308.
218.604 Social clubs; swimming club. A
swimming club which is operated under an agreement
with its resident agent whereby he controls
the size of the club membership, the amounts of
initiation fees and annual club dues, and retains all
initiation fees and ninety percent of dues and
transfer fees in return for the exclusive use of the
swimming pool which he owns and operates is a
commercial venture operated for the agent’s bene-

fit and is not exempt from tax. Distinguished by
Rev. Rul. 67-302. §1.501(c)(7)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 65-219, 1965-2 C.B. 168.
218.605 Social clubs; tests to establish exemption.
Criteria or tests for determining whether an
organization qualifies for exemption from tax as a
social club are set forth. §1.501(c)(7)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 58-589, 1958-2 C.B. 266.
218.606 Social clubs; use by outside organizations.
An exempt social club may lose its exemption
if it makes its club facilities available to the
general public on a regular, recurring basis since
it may then no longer be considered to be organized
and operated exclusively for its exempt purpose.
§1.501(c)(7)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 60-324, 1960-2 C.B. 173.
218.607 Special rules; 501(c)(3) organizations.
Guidance is provided in three factual situations
as to whether the described organizations
have given the notice required by section 508(a)
within the 15-month period described in section
1.508-1(a)(2)(i) of the regulations.
§§1.501(c)(3)-1, 1.9100-1. (Secs. 501, 508; ’86
Code.)
Rev. Rul. 90-100, 1990-2 C.B. 156.
218.608 Sports museum. A nonprofit organization
that procures, cares for, and displays
objects of lasting interest or value relating to a particular
sport is operating a museum that educates
the public and is exempt. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 68-372, 1968-2 C.B. 205.
218.609 State activity; promotion of the
United Nations. A committee created by executive
order of the governor of a state as an official
agency to commemorate “United Nations Day”
and to conduct a continuing program for the
education of the public, with respect to the purposes
and the activities of the United Nations, is
not entitled to exemption under section 501(c)(3).
However, contributions made to or for the use of
the committee for exclusively public purposes are
deductible. §§1.170-1, 1.501(c)(3)-1. (Secs. 170,
501; ’86 Code.)
Rev. Rul. 62-66, 1962-1 C.B. 83.
218.610 State instrumentality. A wholly
owned State instrumentality may in some circumstances
qualify for exemption under section
501(c)(3). Social security coverage of employees
of a wholly owned State instrumentality may be
effected only pursuant to a compact under section
218 of the Social Security Act. The “waiver” procedure
provided in section 3121(k) of the FICA is
not applicable. Amplified to provide that a wholly
owned State or municipal instrumentality which is
a separate entity may qualify for exemption.
§§1.403(b)-1, 1.501(c)(3)-1. (Secs. 403, 501; ’86
Code.)
Rev. Rul. 55-319, 1955-1 C.B. 119; Rev. Rul.
60-384, 1960-2 C.B. 172.
218.611 State instrumentality public library.
A public library organized as a separate entity
under a State statute, without power to impose
taxes for its operation but whose funds are
obtained by certification of a tax rate needed for its
operation to the rate-making authority, qualifies
for exemption. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 74-15, 1974-1 C.B. 126.
218.612 Student aid corporations. An organization
which provides housing, books and
educational supplies, as a gift or on an interest-free
loan basis, to qualified students who would otherwise
have to discontinue their education for lack
of funds, is exempt as a charitable organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-274, 1964-2 C.B. 141.
218.613 Student loan corporations. A corporation
formed primarily to make unsecured loans
to students at low rates of interest to enable such
students to complete their educational programs
and which also guarantees loans, when such loans
are made to qualified students by commercial
banks, is exempt as a charitable organization.
Amplified by Rev. Rul. 63–220 with respect to
secured loans. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 61-87, 1961-1 C.B. 191.
218.614 Student loan corporations. A corporation
organized to make loans to needy college
students for educational purposes, which grants
such loans on either a secured or unsecured basis
at nominal rates substantially lower than commercial
rates, may qualify for exemption as a charitable
organization. Rev. Rul. 61–87 amplified.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 63-220, 1963-2 C.B. 208.
218.615 Supplemental unemployment benefit
plan trust; union dues deducted from benefit
payments. An amendment to a supplemental
unemployment benefit plan trust permitting an
employee to authorize the trustee to deduct and
pay union dues from the employee’s benefit payments
will not adversely affect the qualification of
the plan. §1.501(c)(17)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-307, 1973-2 C.B. 185.
218.616 Supplemental unemployment benefit
trust; anticipated lost wages. A trust established
pursuant to a collective bargaining agreement
between an association of employers and a
labor union to compensate union members for
anticipated lost wages because of the adoption of
a new loading process in the shipping industry,
with eligibility for benefits not limited to those
union members suffering a loss of hours worked or
wages, does not qualify for exemption.
§1.501(c)(17)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 77-43, 1977-1 C.B. 151.
218.617 Supplemental unemployment benefit
trust; distribution of excess funding. An
amendment to a supplemental unemployment
benefit plan providing for distributions to
employees of funds representing contributions in
excess of maximum funding adversely affects the
trust’s exempt status. §1.501(c)(17)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 71-156, 1971-1 C.B. 153.
218.618 Supplemental unemployment benefit
trust; investment of funds. An amendment to
a supplemental unemployment benefit permitting
low-risk income-producing investments that serve
social purposes and that provides sufficient safeguards
to insure the funds are not invested for the
benefit of related parties or in a manner contrary
to the interests of the employees will not affect the
exempt status of the trust. §1.501(c)(17)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 70-536, 1970-2 C.B. 120.
218.619 Supplemental unemployment benefit
trust; relocation allowances. Relocation
expenses paid, by a supplemental unemployment
benefit trust that qualified for exemption, to
employees who otherwise would have been involuntarily
separated from employment constitute
supplemental unemployment compensation benefits.
§1.501(c)(17)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-188, 1970-1 C.B. 133.
Exempt organizations
218.620 Supplemental unemployment benefit
trust; short work week benefits. Short work
week benefits paid by a supplemental unemployment
benefit trust to employees not wholly separated
from employment will be treated as supplemental
unemployment compensation benefits.
§1.501(c)(17)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-189, 1970-1 C.B. 134.
218.621 Supplemental unemployment benefit
trust; termination. A provision in a new collective
bargaining agreement that calls for the termination
of a supplemental unemployment
benefit plan and the distribution of residuary
assets to employees covered by the plan will not
affect the exempt status of a trust created to administer
the plan, if the plan has been in effect long
enough to satisfy the requirements of reg.
1.501(c)(17)-2(d) and satisfaction of all liabilities
to employees is guaranteed. §1.501(c)(17)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 81-68, 1981-1 C.B. 349.
218.622 Teaching painless method of childbirth.
A nonprofit organization which through
meetings, films, forums, and publications educates
the public in a particular method of painless
childbirth is entitled to exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-255, 1966-2 C.B. 210.
218.623 Tenant membership; apartment
complex; representation. A nonprofit organization
formed to represent member-tenants of an
apartment complex in negotiations with landlords,
in litigation, and before local and Federal regulatory
agencies with respect to matters of mutual
concern to the tenants does not qualify for exemption.
Distinguished by Rev. Rul. 80-206.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-306, 1973-2 C.B. 179.
218.624 Tenants in particular community;
representation. A nonprofit organization that
promotes the legal rights of tenants in a particular
community and occasionally initiates litigation to
contest the validity of legislation adversely affecting
tenants may qualify for exemption as a social
welfare organization. Rev. Rul. 73–306 distinguished.
§1.501(c)(4)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 80-206, 1980-2 C.B. 185.
218.625 Testing boat products for safety. An
organization organized for the purpose of testing
for safety certain products normally used aboard
pleasure boats by the boating public is held, under
the circumstances involved, exempt from tax. Distinguished
by Rev. Rul. 78-426. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 65-61, 1965-1 C.B. 234.
218.626 Testing cargo containers. An organization
whose activities include the inspection,
testing, and safety certification of cargo shipping
containers and research, development, and reporting
of information in the field of containerization
is not operated exclusively for the purpose of testing
for public safety or for scientific purposes.
Rev. Rul. 65-61 distinguished. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 78-426, 1978-2 C.B. 175.
218.627 Testing drugs for commercial company.
A nonprofit organization primarily engaged
in testing drugs for commercial pharmaceutical
companies does not qualify for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68-373, 1968-2 C.B. 206.
218.628 Thrift shop; items on consignment.
An organization operates a thrift shop that sells
items that are either donated or received on consignment.
Substantially all of the work in operating
the thrift shop is performed without compensation,
all transactions are at arm’s length, and all
profits are distributed to section 501(c)(3) organizations.
The organization is not a feeder organization
and qualifies for exemption as an organization
operated for charitable purposes.
§§1.501(c)(3)-1, 1.502-1. (Secs. 501, 502; ’86,
Code.)
Rev. Rul. 80-106, 1980-1 C.B. 113.

Exempt organizations
218.629 Thrift shop. An orgrrnization that operates
a separately incorporated thrift shop to raise
funds for a group of specified exempt organizations
does not constitute a trade or business and
may qualify for exemption. Rev. Rul. 68-439
revoked. §§1.501(c)(3)-1, 1.502-1, 1.513-1.
(Secs. 501, 502, 513; ’86 Code.)
Rev. Rul. 71-581, 1971-2 C.B. 236.
218.630 Title holding corporations. A corporation
will not be considered a holding company
where it has broad powers and business purposes
far beyond the scope necessary to a holding company.
Furthermore, where part of its income is
used to reduce indebtedness on property which
will ultimately revert to private individuals, it will
not be considered as being operated for exempt
purposes. §1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 58-566, 1958-2 C.B. 261.
218.631 Title holding corporations. A nonprofit
corporation formed to hold title to securities
transferred to it by a group of philanthropists, and
turns over its income to a selected exempt organization
that has no control over the corporation,
is not an exempt title holding corporation.
§1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 71–544, 1971–2 C.B. 227.
218.632 Title holding corporations; building
and trucks rented. A title holding corporation
renting a building and trucks under separate unrelated
leases to exempt fraternal beneficiary societies
is engaged in the business of renting personal
not exempt from tax.
property and is
§1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-278, 1969-1 C.B. 148.
218.633 Title holding corporations; depreciation
allowance. The term “expenses,” as used in
section 501(c)(2), of an exempt corporation which
holds title to property, collects income therefrom,
and turns over the entire amount, less expenses, to
another exempt organization includes a reasonable
allowance for depreciation determined in
accordance with section 167. §1.501(c)(2)-1.
(Sec. 501, ’86 Code.)
Rev. Ru1. 66-102, 1966-1 C.B. 133.
218.634 Title holding corporations; distribution
to non-exempt organization. An exempt
title holding corporation will not continue to qualify
for exemption where one of the organizations
to which it makes distributions of income ceases
to qualify for exemption under section 501(a).
§1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 68–371, 1968–2 C.B. 204.
218.635 Title holding corporations; fraternity
house; stock ownership. A corporation
created to hold title to the chapter house of an
exempt college fraternity, whose members hold
the stock of the corporation, will not be precluded
from exemption provided the stockholders can in
no case receive any dividends or profits and all
income from the property, less expenses, is paid
over to the exempt organization. I.T. 3264 and I.T.
3860 superseded. §§1.501(c)(2)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 68-222, 1968-1 C.B. 243.
218.636 Title holding corporations; leasehold
interest in an office building. A corporation that
holds a leasehold interest in an office building,
derives all its income from subleasing space in the
building to the general public, and turns over the
net rents to its exempt parent qualifies for exemption
under section 501(c)(2). §1.501(c)(2)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 81-108, 1981-1 C.B. 327.
218.637 Title holding corporations; oil production
payments acquired with borrowed
funds. The acquisition of oil and gas production
payments through the use of borrowed funds will
not preclude exemption of an organization which
otherwise qualifies for exemption, provided the
organization owns no working interests in the oil
properties. §1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 66-295, 1966-2 C.B. 207.
218.638 Title holding corporations; real
property rented to general public. A title holding
corporation that leases a building to the general
public and turns over the rents less expenses
incident to the operation and maintenance of the
building to its parent, an exempt charitable organization,
is not precluded from exemption.
§1.501(c)(2)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-381, 1969-2 C.B. 113.
218.639 Title holding corporations; subsidiary.
An organization incorporated as a subsidiary
of an exempt title holding corporation for the
exclusive purpose of holding title to investment
property, collecting the income therefrom, and
turning over such income, less expenses, to the
parent, qualifies for exemption. §1.501(c)(2)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 76-335, 1976-2 C.B. 141.
218.640 Trade association; loan fund. A member
of a trade association may deduct the increased
dues charged to all members of the association by
the association when the increased charges are
allocated to a special loan fund to be used for the
benefit of the association’s members. §§1.162-15,
1.501(c)(6)-1. (Secs. 162, 501; ’86 Code.)
Rev. Rul. 82-15, 1982-1 C.B. 29.
218.641 Trade school. A nonprofit organization
created as a result of collective bargaining
agreements to train individuals desiring to acquire
skills in an industry is exempt under section
501(e)(3); it is also an educational organization
described in section 170(b)(1)(A) and, therefore,
is not a private foundation under section 509(a).
§§1.170-1, 1.501(c)(3)-1. (Secs. 170, 501, 509;
’86 Code.)
Rev. Rul. 72-101, 1972-1 C.B. 144.
218.642 Training; college students; internship
programs. A nonprofit organization formed
to recruit college students for internship programs
providing work experience in various phases of
local and municipal government related to their
studies while enabling them to contribute to the
community qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-584, 1970-2 C.B. 114.
218.643 Training; on-the-job; construction
trades. A nonprofit organization that purchases
building lots, furnishes funds to a public vocational
training center for use in its on-the-job home
construction training program, sells the completed
homes to the general public at fair market value,
and uses the income from home sales to finance
new projects and obtain vocational training equipment
for the public school system, qualifies for
exemption. The income from the sale of the homes
is not unrelated business income.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 76-37, 1976-1 C.B. 148.
218.644 Training; on-the-job; hard-core
unemployed; retail grocery. A nonprofit organization
that operates a low cost retail grocery
store and allocates a small portion of its earnings
to provide on-the-job training of hard-core unemployed
of a poverty area does not qualify for
exemption. Distinguished by Rev. Rul. 76-94.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 73-127, 1973-1 C.B. 221.
218.645 Training; on-the-job; high school
graduates and college students. A nonprofit
organization that was formed to provide high
school graduates and college students with work
experience, for which they receive no compensation,
in selected trades or professions, and that is
financed by tuition and contributions from the
general public, is an organization operated exclusively
for charitable and education purposes and
qualifies for exemption. §1.501(c)(3)-1. (Sec.
501, ’86 Code.)
Rev. Rul. 75–284, 1975-2 C.B. 202.
218.646 Training; on-the-job; manufacturing
and sales operation. An organization that is
otherwise qualified for exemption will not fail to
qualify because its educational and vocational
training of unemployed and under-employed persons
is carried out through the manufacturing and
selling of toy products. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 73-128, 1973-1 C.B. 222.
218.647 Training table for university’s athletic
teams. A nonprofit organization which subsidizes
a training table for coaches and members
of a university’s athletic teams furthers the educational
program of the university and may be
exempt. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 67-291, 1967-2 C.B. 184.
218.648 Travel study tours. A nonprofit organization
whose primary activity is conducting
travel study tours that include courses on the culture
of the U.S., foreign countries, and nature studies
taught by certified personnel qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 70-534, 1970-2 C.B. 113.
218.649 Trust; percentage of income paid
settler. An irrevocable inter vivos trust created by
a settler is not exempt where the trust instrument
provides that a fixed percentage of all in come
earned by the trust during the settler’s lifetime
must be paid over to him annually with the balance
to charity, and upon the death of the settler, all of
the trust income is to go to charity. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 69-279, 1969-1 C.B. 152.
218.650 Trust; perpetual care of grantor’s
burial lot. A testamentary trust established to
make annual payments to exempt charitable organizations
and to use a fixed sum for the perpetual
care of the testator’s burial lot does not qualify for
exemption. On the other hand, if the trustee
obtains a court order directing the creation of a
separate trust for the perpetual care of the burial
lot, the charitable trust remaining may qualify for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 69-256, 1969-1 C.B. 151.
218.651 Trust; reversionary interest. A trust
which provides for the reversion of principal to the
creator on termination does not qualify for exemption;
however, where the net income of the trust is
required, under the terms of the governing trust
instrument, to be used exclusively for religious,
charitable or educational purposes, the organization
is allowed deductions by section 642(c) (subject
to the limitations of that section) of an amount
equal to its entire net income. §§1.501(c)(3)-1,
1.642(c)-1. (Secs. 501, 642; ’86 Code.)
Rev. Rul. 66-259, 1966–2 C.B. 214.
218.652 Trust used to satisfy hospital’s malpractice
claims. A trust created by an exempt hospital
for the sole purpose of accumulating and
holding funds to be used to satisfy malpractice
claims against the hospital, and from which the
hospital directs the bank-trustee to make payments
to claimants, is operated exclusively for
charitable purposes and is exempt from tax.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78-41, 1978-1 C.B. 148.
218.653 University; adjunct publishing law
review journal. A corporation organized as an
adjunct to a university law school to publish a law
review journal for the purpose of training students
in legal research, writing and editing qualifies for
exemption. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 63–235, 1963-2 C.B. 210.

218.654 University alumni association. An
alumni association controlled by a university and
operated as an integral part thereof qualifies for
exemption as an educational organization.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 56-486, 1956-2 C.B. 309.
218.655 University alumni association. Social
and recreational activities carried on by an alumni
association of a university, which are merely incidental
to its basic purpose and objective of
advancing the interests of the university, do not of
themselves preclude such organization from tax
exemption as a charitable and educational association.
Contributions, exclusive of membership
dues, to such association are deductible. G.C.M.
22116 revoked. §§1.170-1, 1.501(c)(3)-1. (Secs.
170, 501; ’86 Code.)
Rev. Rul. 60-143, 1960-1 C.B. 192.
218.656 University campus newspaper; political
and legislative comments. A university that
provides facilities and faculty advisors for a campus
newspaper that publishes the student’s editorial
opinions on political and legislative matters
has not attempted to influence legislation or participate
in political campaigns. §1.501(c)(3)-1.
(Sec. 501, ’86 Code.)
Rev. Rul. 72-513, 1972-2 C.B. 246.
218.657 University housing and food service.
A nonprofit organization may qualify for exemption
where it is formed to provide housing and
food service exclusively for students and faculty
of a university in accordance with the rules and
regulations of the university and offers the university
an option to acquire the property at any time
upon payment of an amount equal to the outstanding
indebtedness. §1.501(c)(3)-1. (Sec. 501, ’86
Code.)
Rev. Rul. 67-217, 1967-2 C.B. 181.
218.658 University housing for students. A
nonprofit organization formed to provide housing
for students of a college unable to provide adequate
student housing and located in a community
in which suitable housing is not otherwise available
is operated exclusively for charitable purposes
and qualifies for exemption.
§1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 76-336, 1976-2 C.B. 143.
218.659 University political science course;
political campaign participation. A university is
not participating in political campaigns on behalf
of candidates for public office by providing a
political science credit course that requires students’
participation in political campaigns of candidates
of their choice. §1.501(c)(3)-1. (Sec. 501,
’86 Code.)
Rev. Rul. 72-512, 1972-2 C.B. 246.
218.660 Unrelated business activity; rental of
office building; income to charity. A corporation
organized exclusively for charitable purposes
which derives its income principally from the
rental space in a large commercial office building
which it owns, maintains, and operates and uses
such income to aid other charitable organizations
through contributions and grants is deemed to
meet the primary purpose test of the income tax
regulations and is, therefore, entitled to exemption
where it is shown to be carrying on through such
contributions and grants a charitable program
commensurate in scope with its financial
resources. §1.501(c)(3)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 64-182, 1964-1 (Part 1) C.B. 186.
218.661 Veterans; membership requirements;
“period of war”. The dates of “a period
of war,” for purposes of the definition of war veterans
in reg. 1.501(c)(19)-1(b)(1), will be the
dates of periods of war set forth in 38 U.S.C. section
101 relating to veterans’ benefits.
§1.501(c)(19)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 78–239, 1978–1 C.B. 162.
218.662 Voluntary employees’ beneficiary
association; one employee member. A trust
created to provide life, sick, accident, and other
benefits to only one employee does not qualify for
exemption under section 501(c)(9).
§1.501(c)(9)-1. (Sec. 501, ’86 Code.)
Rev. Rul. 85-199, 1985-2 C.B. 163.
218.663 Volunteer fire company. A nonprofit
organization that was organized and operated as a
volunteer fire company to provide fire protection
and ambulance and rescue services to a community
qualifies for exemption as a charitable organization
and contributions made to the organization
are deductible. The organization may also
qualify for exemption as a social welfare organization.
Further, under section 513(a)(1), conducting
the weekly public dances does not constitute an
unrelated trade or business. Rev. Rul. 66-221
superseded and Rev. Rul. 71-47 clarified.
§§1.170A-1, 1.501(c)(3)-1, 1.501(c)(4)-1,
1.513-1. (Secs. 170, 501, 513; ’86 Code.)
Rev. Rul. 74-361, 1974–2 C.B. 159.
Unrelated income
220.1 $1,000 deduction. An exempt organization
is entitled to only one $1,000 deduction in
computing its unrelated business taxable income
regardless of the number of unrelated businesses
in which it is engaged. §1.512(b)-1. (Sec. 512, ’86
Code.)
Rev. Rul. 68-536, 1968-2 C.B. 244.
220.2 Advertising revenues of monthly medical
journals. The publication of paid advertising
in a monthly medical journal is not substantially
related to the educational purposes of the journal
and the profits from advertising are unrelated business
taxable income. §1.513-1. (Sec. 513, ’86
Code.)
American College of Physicians, U.S., Ct. D,
2035, 1986-2 C.B. 76.
220.3 Agricultural organization; club facilities.
The operation of extensive club facilities,
consisting of a restaurant, a bar, and a cocktail
lounge for members and guests, by an exempt
agricultural organization constitutes the carrying
on of an unrelated trade or business and the organization
is subject to the tax on the unrelated business
income resulting from the operation of such
facilities. §1.501(c)(5)-1, 1.511-1, 1.513-1.
(Secs. 501, 511, 513; ’86 Code.)
Rev. Rul. 60-86, 1960-1 C.B. 198.
220.4 Agricultural organization; insurance
company services. An exempt agricultural organization
is subject to tax on the unrelated business
income resulting from services rendered to certain
insurance companies and from the performance of
property management services. §§1.511-1,
1.513-1. (Secs. 511, 513; ’86 Code.)
Rev. Rul. 60-228, 1960-1 C.B. 200.
220.5 Agricultural organization; marketing
livestock for members. The sale of cattle for its
members on a commission basis by a section
501(c)(5) agricultural organization constitutes
unrelated trade or business. §§1.511–1, 1.513–1.
(Secs. 511, 513; ’86 Code.)
Rev. Rul. 69-51, 1969-1 C.B. 159.
220.6 Allocation of membership receipts. The
proper method of allocating membership receipts
to circulation income under the formula in reg.
1.512(a)-1(f)(4)(iii) is illustrated. §1.512(a)-1.
(Sec. 512, ’86 Code.)
Rev. Rul. 81-101, 1981-1 C.B. 352.
220.7 Art museum; book and souvenir sales.
The sale of scientific books and city souvenirs by
an exempt museum constitutes unrelated trade or
business even though other items sold in the same
Exempt organizations
museum shop are related to its exempt function.
§1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 73-105, 1973-1 C.B. 264.
220.8 Art museum; dining room, cafeteria,
and snack bar. The operation of a dining room,
cafeteria, and snack bar by an exempt art museum
for use by the museum staff, employees, and members
of the public visiting the museum does not
constitute an unrelated trade or business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 74-399, 1974-2 C.B. 172.
220.9 Art museum; greeting card sales. The
sale of greeting card reproductions of art works by
an exempt art museum does not constitute unrelated
trade or business activity. §1.513-1. (Sec.
513, ’86 Code.)
Rev. Rul. 73-104, 1973-1 C.B. 263.
220.10 Bar association; sale of legal forms.
The sale at a profit of standard legal forms to its
members by a local bar association that is exempt
under section 501(c)(6) is an unrelated trade or
business. §§1.501(c)(6)-1, 1.513-1. (Secs. 501,
513; ’86 Code.)
Rev. Rul. 78-51, 1978-1 C.B. 165.
220.11 Bar association journal; commercial
advertising; legal notices. The publication of
ordinary commercial advertising for products and
services used by the legal profession in a bar
association’ s journal is unrelated trade or business
under section 513. However, the publication of
legal notices is not unrelated trade or business.
§§1.501(c)(6)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 82-139, 1982-2 C.B. 108.
220.12 Bingo games. The holding of semiweekly
bingo games by an exempt labor organization
is a profit-making enterprise not related to the
exempt purposes of the organization and, therefore,
constitutes unrelated trade or business. The
income derived therefrom is subject to the tax
imposed on unrelated business taxable income.
§§1.501(c)(5)-1, 1.511-1, 1.512(a)-1, 1.513-1.
(Secs. 501, 511, 512, 513; ’86 Code.)
Rev. Rul. 59-330, 1959-2 C.B. 153.
220.13 Blood bank. A blood bank organized
and operated to provide a community with permanent
facilities for the collection and storage of
human blood and blood products and to provide
for the public distribution thereof may be exempt
from tax. Modified by Rev. Rul. 78-145.
§§1.501(c)(3)-1, 1.511-2, 1.513-1. (Secs. 501,
511, 513; ’86 Code.)
Rev. Rul. 66-323, 1966-2 C.B. 216.
220.14 Blood bank. Sale of plasma to commercial
laboratories by an exempt blood bank,
engaged in collecting and maintaining blood products
for use by hospitals, is not unrelated trade or
business where the blood bank sells either byproduct
plasma from which red blood cells have
been removed for use by hospitals or plasma salvaged
from whole blood nearing the end of its
shelf life. However, sale of plasma derived from
donors through plasmapheresis or purchased from
other blood banks is unrelated trade or business.
Rev. Rul. 66-323 modified. §1.513-1. (Sec. 513,
’86 Code.)
Rev. Rul. 78-145, 1978-1 C.B. 169.
220.15 Broadcasting rights; amateur athletic
events. The sale of television and radio broadcasting
rights to an independent producer by an
exempt organization created as a national governing
body for amateur athletics is not unrelated
trade or business. §1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 80-295, 1980-2 C.B. 194.
220.16 Broadcasting rights; tournaments.
The sale of broadcasting rights to a national radio
and television network by an organization created

Exempt organizations
by a regional collegiate athletic conference made
up of universities to hold an annual athletic event
is not unrelated trade or business. §1.513-1. (Sec.
513, ’86 Code.)
Rev. Rul. 80-296, 1980-2 C.B. 195.
220.17 Broadcasting rights and rule book
sales; tournaments. An association, formed to
promote and conserve the best interests and true
spirit of a game, which has been held to be exempt
from tax, is not subject to the unrelated business
income tax on income derived from the operation
of championship tournaments, the grant of radio
and television broadcasting rights, and the sale of
publications relating to the rules of the game. Clarified
by Rev. Rul. 80-294. §§1.511-1,
1.512(a)-1, 1.513-1. (Secs. 511, 512, 513; ’86
Code.)
Rev. Rul. 58–502, 1958–2 C.B. 271.
220.18 Business league; coupon redemption
service. An exempt association of retail food merchants
that provides a coupon redemption service
for its members for a fee is engaged in an unrelated
trade or business. §§1.501(c)(6)-1, 1.513-1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 68–267, 1968-1 C.B. 284.
220.19 Business league; distribution of magazine.
An exempt association of credit unions that,
as part of its activities, publishes and sells to its
members a consumer-oriented magazine designed
as a promotional device for distribution to their
depositors is engaged in an unrelated trade or business.
§§1.501(c)(6)-1, 1.513-1. (Secs. 501, 513;
’86 Code.)
Rev. Rul. 78-52, 1978-1 C.B. 166.
220.20 Business league; job injury information
service. An exempt business league that provides
job injury histories on prospective
employees to business concerns from public state
workmen’s compensation records on an expedite
basis for a specified fee is engaged in an unrelated
trade or business. §1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 73-386, 1973–2 C.B. 191.
220.21 Business league; management of
health and welfare plans. The management of
health and welfare plans for a fee by an exempt
business league is an unrelated business.
§§1.511-1, 1.512(b)-1, 1.513-1. (Secs. 511, 512,
513; ’86 Code.)
Rev. Rul. 66-151, 1966-1 C.B. 152.
220.22 Business league; parking and shuttle
bus services. The operation of a fringe parking lot
and a shuttle bus service by an organization
exempt from tax under section 501(c)(6) whose
primary purpose is to retain and stimulate trade in
a city’s downtown area is not an unrelated trade or
business within the meaning of section 513. However,
the organization’s operation of a park and
shop plan in which patrons of particular member
merchants receive stamps entitling them to free
parking is an unrelated trade or business.
§§1.501(c)(6)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 79-31, 1979-1 C.B. 206.
220.23 Business league; trade show. An
exempt business league that receives reasonable
compensation for sponsoring and endorsing an
international commercial trade show, which is not
a sales facility and at which the league performs
educational and supporting services, is not
engaged in unrelated trade or business.
§§1.501(c)(6)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 78-240, 1978-1 C.B. 170.
220.24 Business leases. A lease, the parties to
which are both exempt under section 501(c)(3)
and which otherwise constitutes a business lease,
will not be considered as substantially related to
the charitable, educational, etc., purposes of the
lessor solely because the lessee is likewise an
exempt organization. Distinguished by Rev. Rul.
69-572 with respect to leases for the housing of
member agencies of a community chest.
§1.514(b)-1. (Sec. 514, ’86 Code.)
Rev. Rul. 58-547, 1958-2 C.B. 275.
220.25 Business leases. A mortgage or other
similar lien on real property acquired by a charitable
organization in a liquidating distribution from
a corporation is “business lease indebtedness.’’
§1.514(c)-1. (Sec. 514, ’86 Code.)
Rev. Rul. 66-107, 1966-1 C.B. 153.
220.26 Business leases; indebtedness. An
exempt employees’ pension trust does not incur
“business lease indebtedness” within the meaning
of section 514(c)(1) and (2) (prior to its amendment
by the Tax Reform Act of 1969), when it purchases
land free of mortgage indebtedness and
executes a lease for a term of 40 years to an unrelated
partnership that mortgages its leasehold
interest. §§1.401-1, 1.514(c)-1. (Secs. 401, 514;
’86 Code.)
Rev. Rul. 70-132, 1970-1 C.B. 138.
220.27 Call option sales. An exempt organization
which regularly sells “call” options on certain
securities held in its investment portfolio is
engaged in an unrelated trade or business as
defined in section 513 and income realized by the
organization from unexercised “call” options is
ordinary income subject to tax on unrelated business
income. §§1.501(c)(3)-1, 1.511-1,
1.512(b)-1, 1.513-1. (Secs. 501, 511, 512, 513;
’86 Code.)
Rev. Rul. 66-47, 1966-1 C.B. 149.
220.28 Chamber of commerce; certification
of export documents. The certification of export
documents by an exempt chamber of commerce is
not an unrelated trade or business.
§§1.501(c)(6)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 81-127, 1981-1 C.B. 357.
220.29 Charitable foundation; construction
of houses. The construction and sale of houses by
an exempt charitable foundation over a period of
18 months for the sole purpose of raising funds for
the support of a church constitute an unrelated
trade or business, notwithstanding the foundation
does not contemplate engaging further in such
activity. Where such activity is the primary activity
of the foundation, it is not entitled to exemption.
§§39.421-2, 39.422-3. (Secs. 421, 422, ’39
Code; Secs. 511, 512, ’86 Code.)
Rev. Rul. 55-449, 1955-2 C.B. 599.
220.30 Charitable trust; operation of
orchards and farms. The operation of orchards
and farms by employees of a charitable trust is a
profit-making enterprise not related to the charitable
purposes of the trust and, therefore, constitutes
an unrelated trade or business. The income
derived therefrom is taxable unrelated business
income; however, farm income derived by the
trust from a tenant under a lease, under the terms
of which the trust is neither a joint venture nor a
partner, is not unrelated business income.
§§1.511-1, 1.512(a)-1, 1.513-1. (Secs. 511, 512,
513; ’86 Code.)
Rev. Rul. 58-482, 1958-2 C.B. 273.
220.31 Convention display space rental;
trade show selling activity. Certain revenue rulings
that hold that income from the rental of booth
space at a show or convention is unrelated business
taxable income are revoked. Certain rulings
that imply that selling activity at a trade show
would result in unrelated trade or business are
obsoleted. Rev. Ruls. 75-517, 75-518, 75-519,
and 75-520 revoked. Rev. Ruls. 67-219 and
75-516 obsoleted. §§1.501(c)(5)-1,
1.501(c)(6)-1, 1.513-3. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 85-123, 1985-2 C.B. 168.
220.32 County fair; horse racing with parimutuel
betting. An exempt county fair association
that conducts a horse racing meet with parimutuel
betting is engaged in unrelated trade or
business. §§1.511-2, 1.513-1. (Secs. 511, 513;
’86 Code.)
Rev. Rul. 68-505, 1968-2 C.B. 248.
220.33 Debt-financed; acquisition indebtedness.
Indebtedness owed to a labor union by its
wholly owned tax-exempt subsidiary title-holding
company resulting from a loan to pay debts
incurred to acquire two income-producing office
buildings is not
§1.514(c)-1. (Sec. 514, ’86 Code.)
Rev. Rul. 77-72, 1977-1 C.B. 157.
“acquisition indebtedness”.
220.34 Debt-financed; co-owner indebtedness.
An organization, exempt under section
501(c)(3), that acquires an undivided interest in
rental property subject to a mortgage and prepays
its proportionate share of the mortgage indebtedness,
receiving releases of liability from the mortgagee
and co-owners, has no acquisition indebtedness
within the meaning of section 514(c)(1) even
though the entire property remains encumbered by
the mortgage. §1.514(c)-1. (Sec. 514, ’86 Code.)
Rev. Rul. 76-95, 1976-1 C.B. 172.
220.35 Debt financed; mineral production
payments. The income derived by an exempt
organization from mineral production payments
purchased with borrowed funds constitutes unrelated
business taxable income to the extent specified
in section 514. §§1.511-2, 1.512(b)-1,
1.514(a)-1. (Secs. 511, 512, 514; ’86 Code.)
Rev. Rul. 76-354, 1976-2 C.B. 179.
220.36 Debt-financed property; leased to
industrial tenant. An exempt organization that
was created by a chamber of commerce to encourage
business development in a particular area
obtained a mortgage to help finance the construction
of a building that is leased to an industrial tenant
at less than the fair rental value. The leasing of
the property is substantially related to the organization’s
exempt purpose, and the property is not
debt-financed property. Rev. Rul. 70-81 amplified.
§§1.513-1, 1.514(b)-1. (Secs. 513, 514; ’86
Code.)
Rev. Rul. 81-138, 1981-1 C.B. 358.
220.37 Debt financed property; transfer to
wholly-owned subsidiary. The transfer, subject
to an existing mortgage, of an appreciated apartment
complex by a tax-exempt hospital to its
wholly owned taxable subsidiary in exchange for
additional stock in the subsidiary does not result in
a gain with respect to which the hospital will be
taxed under section 511. §§1.351–1, 1.514(a)-1.
(Secs. 351, 514; ’86 Code.)
Rev. Rul. 77–71, 1977–1 C.B. 156.
220.38 Educational organization; sales of
membership mailing lists. The regular sales of
membership mailing lists by an exempt educational
organization to colleges and business firms
that use the lists for advertising their management
courses and books constitutes an unrelated trade or
business. §§1.511-1, 1.513-1. (Secs. 511, 513;
’86 Code.)
Rev. Rul. 72-431, 1972-2 C.B. 281.
220.39 Employees’ trust; debt-financed
investment. The investment by an exempt
employees’ trust in a partnership that was organized
to invest in securities and borrows funds for
that purpose may result in unrelated business taxable
income to the extent its share of partnership
income is derived from or on account of the debtfinanced
securities. Distinguished by 79-122.
§§1.511-2, 1.512(b)-1, 1.514(c)-1. (Secs. 511,
512, 514; ’86 Code.)
Rev. Rul. 74-197, 1974-1 C.B. 143.

220.40 Employees’ trust; debt-financed securities;
leveraged ESOP. Employer securities purchased
with borrowed funds by a qualified trust
forming part of a leveraged employee stock ownership
plan that satisfies the requirements of section
4975(e)(7) are not debt-financed property
within the meaning of section 514(b), and dividends
and interest earned on such securities are
not unrelated business taxable income to the trust.
Rev. Ruls. 71–311 and 74-197 distinguished.
§§1.401-1, 1.511-2, 1.512(b)-1, 1.513-1,
1.514(b)-1, 54.4975-1. (Secs. 401, 511, 512, 513,
514, 4975; ’86 Code.)
Rev. Rul. 79-122, 1979-1 C.B. 204.
220.41 Employees’ trust; installment notes
purchased from employer. The passive receipt of
income by an exempt employees’ trust from
installment notes bought from the employer-settlor
is not unrelated business taxable income.
§§1.512(a)-1, 1.513-1. (Secs. 512, 513; ’86
Code.)
Rev. Rul. 69-574, 1969-2 C.B. 130.
220.42 Employees’ trust; interest and service
fees on mortgage loans. Interest income earned
by an exempt employees trust from mortgage
loans, which form a significant portion of the
trusts’ assets, does not enter into the computation
of unrelated business taxable income under section
512. Service fee receipts earned by the trust in
connection with such loans, however, do enter into
the computation. §§1.401-1, 1.511-2,
1.512(b)-1, 1.513-1. (Secs. 401, 511, 512, 513;
’86 Code.)
Rev. Rul. 79-349, 1979-2 C.B. 233.
220.43 Employees’ trust; lease of railroad
tank cars. The trustee of an exempt employees’
trust purchased railroad tank cars in the name of
the trust and leased them to an industrial company
for a period of years. The trustee’s sole activity
with respect to this venture is to receive the periodic
rental income, the lessee having the responsibility
of maintaining and operating the tank cars.
The trust is subject to tax on the rental income as
unrelated business taxable income. §1.512(a)-1,
1.513-1. (Secs. 512, 513; ’86 Code.)
Rev. Rul. 60-206, 1960-1 C.B. 201.
220.44 Employees’ trust; limited partnership.
The investment of an exempt employees’
trust as a limited partner in a partnership carrying
on an unrelated trade or business may result in
unrelated business taxable income within the
meaning of section 512. §§1.511–2, 1.512(c)–1,
1.513-1. (Secs. 511, 512, 513; ’86 Code.)
Rev. Rul. 79-222, 1979-2 C.B. 236.
220.45 Employees’ trust; real estate investment
trust distributions. Amounts distributed by
a real estate investment trust, within the meaning
of section 856, to an exempt employees’ pension
trust do not constitute unrelated business taxable
income and are dividends where the distributions
were made out of the earnings and profits of the
real estate investment trust. §1.512(b)–1. (Sec.
512, ’86 Code.)
Rev. Rul. 66-106, 1966-1 C.B. 151.
220.46 Farm bureau; sale of supplies. A
county-wide organization engaged in the
advancement and improvement of agriculture
may be considered to be tax exempt. Any income
it receives from the sale of supplies and equipment
to members, however, is taxable as unrelated business
income. (Sec. 501, ’86 Code.)
Rev. Rul. 57-466, 1957–2 C.B. 311.
220.47 Gross receipts from nonmembers;
social clubs; information returns. Guidelines
are set forth for determining the effect of gross
receipts derived from nonmember use of a social
club’s facilities on the club’s exempt status in the
examination of annual information returns, Forms
990 and 990T. Recordkeeping requirements when
nonmembers use a club’s facilities and circumstances
under which a host-guest relationship will
be assumed are set forth. Rev. Proc. 64-36 superseded.
§§1.501(c)(7)-1, 1.512(a)-1. (Sec.
601.105, S.P.R.; Secs. 501, 512, ’86 Code.)
Rev. Proc. 71-17, 1971-1 C.B. 683.
220.48 Halfway house operating furniture
shop. A halfway house, organized to provide
room, board, therapy, and counseling for persons
discharged from alcoholic treatment centers,
which also operates a furniture shop to provide
full-time employment for its residents with any
profits applied to operating costs of the halfway
house, qualifies for exemption and is not conducting
an unrelated trade or business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 75-472, 1975-2 C.B. 208.
220.49 Health club. The operation of health
club facilities in a commercial manner by an
exempt organization whose purpose is to provide
for the welfare of young people, constitutes unrelated
trade or business. §§1.501(c)(3)-1, 1.513-1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 79-360, 1979-2 C.B. 236.
220.50 Hospital; cafeteria and coffee shop.
The operation of a cafeteria and coffee shop by a
section 501(c)(3) hospital does not constitute
unrelated trade or business. §§1.501(c)(3)-1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 69–268, 1969-1 C.B. 160.
220.51 Hospital; gift shop. The operation of a
gift shop, patronized by patients, visitors making
purchases for patients, and hospital employees, by
a section 501(c)(3) hospital does not constitute
unrelated trade or business. §§1.501(c)(3)–1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 69-267, 1969-1 C.B. 160.
220.52 Hospital; hearing aid sales. The sale of
hearing aids to its patients by an exempt hospital
whose primary activity is rehabilitating the handicapped,
including those with hearing deficiencies,
does not constitute unrelated trade or business
under section 513. §§1.501(c)(3)-1, 1.513–1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 78-435, 1978-2 C.B. 181.
220.53 Hospital; laboratory services for private
patients of staff physicians. The Service
will not follow that portion of the decision in St.
Luke's Hospital of Kansas City v. U.S. that held
that a tax exempt hospital’s performance of laboratory
testing upon referred specimens from private
patients of the hospital’s staff physicians is
not unrelated trade or business because the services
were performed for the convenience of the
hospital’s members. The Service disagrees with
the court’s characterization of staff physicians as
members of the hospital. §§1.501(c)(3)–1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 85-109, 1985-2 C.B. 165.
220.54 Hospital; laboratory services for private
patients of staff physicians. The performance
of diagnostic laboratory testing on referred
specimens from private patients of hospital staff
physicians, by a hospital exempt under section
501(c)(3) is unrelated trade or business if such services
are otherwise available in the community.
§§1.501(c)(3)-1, 1.513-1, 1.6001-1, 1.6033-2.
(Secs. 501, 513, 6001, 6033; ’86 Code.)
Rev. Rul. 85-110, 1985-2 C.B. 166.
220.55 Hospital; office building leased to
medical group. The leasing of its adjacent office
building, and the furnishing of certain office services,
by an exempt hospital to a hospital-based
medical group is not unrelated trade or business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 69-463, 1969-2 C.B. 131.
Exempt organizations
220.56 Hospital; office space leased to medical
staff. Leases of office space by an exempt hospital
to members of its medical staff, who contribute
importantly to the performance of hospital
functions, are not considered business leases.
§§1.501(c)(3)-1, 1.514(b)-1. (Secs. 501, 514; ’86
Code.)
Rev. Rul. 69-464, 1969-2 C.B. 132.
220.57 Hospital; parking lot. The operation of
a parking lot by a section 501(c)(3) hospital does
not constitute unrelated trade or business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 69–269, 1969–1 C.B. 160.
220.58 Hospital; pharmacy sales; general
public. Circumstances are set forth in which the
sale of pharmaceutical supplies to the general public
by the pharmacy of a hospital exempt under
section 501(c)(3) results in unrelated business taxable
income. §§1.501(c)(3)-1, 1.512(a)-1,
1.513-1. (Secs. 501, 512, 513; ’86 Code.)
Rev. Rul. 68-374, 1968-2 C.B. 242.
220.59 Hospital; pharmacy sales; hospital
patients. Situations are set forth in which persons
who purchase pharmaceutical supplies from the
pharmacy of a hospital exempt under section
501(c)(3) are considered “patients” of the hospital
within the meaning of section 513(a)(2).
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 68-376, 1968-2 C.B. 246.
220.60 Hospital; pharmacy sales; private
patients of physicians. A hospital exempt under
section 501(c)(3) operates a pharmacy in a medical
office building. Pharmaceutical supplies are
sold to the private patients of physicians practicing
medicine in the building. These sales constitute
unrelated business income. §§1.501(c)(3)–1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 68-375, 1968–2 C.B. 245.
220.61 Housing consultant service. The performance
for a fee of consulting services to aid
minority group employees in obtaining housing
does not constitute unrelated trade or business of
an exempt organization that promotes compliance
with fair housing laws. §1.513–1. (Sec. 513, ’86
Code.)
Rev. Rul. 68-225, 1968-1 C.B. 283.
220.62 Insurance board. The handling of an
insurance program for a municipal board of education
and the receipt of brokerage commissions
which are required to be deposited in a special
fund for public purposes does not affect the
exempt status of an insurance board. Further, such
activity is not considered an unrelated trade or
business and brokerage commissions allocated to
the special fund are not unrelated business
income. (Sec. 511, ’86 Code.)
Rev. Rul. 56-152, 1956–1 C.B. 56.
220.63 Interest on obligations of a State;
social club. Interest on obligations of a State
received by an exempt social club is not included
in computing unrelated business taxable income.
§1.512(a)-1. (Sec. 512, ’86 Code.)
Rev. Rul. 76-337, 1976-2 C.B. 177.
220.64 Labor organization; accounting and
tax service. An exempt labor organization is subject
to tax on unrelated business income with
respect to income derived from the performance of
accounting and tax services for certain of its members.
§1.511-2. (Sec. 511, ’86 Code.)
Rev. Rul. 62–191, 1962–2 C.B. 146.
220.65 Lease of pipeline system. Income
derived by an exempt organization from the lease
of a pipeline system, consisting of right-of-way
interests in land, pipelines buried in the ground,
pumping stations, plants, equipment, and other
appurtenant properties, constitutes rent from real

Exempt organizations
property (including personal property leased with
the property). §1.512(b)–1. (Sec. 512, ’86 Code.)
Rev. Rul. 67–218, 1967-2 C.B. 213.
220.66 Leases of historically or architecturally
significant buildings. Buildings that are
acquired through assumption of outstanding mortgages
by an exempt organization that acquires,
restores, preserves, and exhibits buildings of historical
and/or architectural significance and that
are leased at fair rental value for uses that neither
bear any relationship to the buildings’ historical or
architectural significance nor accommodate viewing
by the general public constitute debt-financed
property within the meaning of section 514(b)(1).
§§1.513-1, 1.514(b)-1. (Secs. 513, 514; ’86
Code.)
Rev. Rul. 77-47, 1977-1 C.B. 157.
220.67 Leases to subsidiaries. Leases of office
space to its taxable subsidiaries by an exempt agricultural
organization for purposes not substantially
related to the organization’s exempt function,
are business leases within the meaning of
section 514(b) (prior to its amendments by Pub. L.
91-172). §1.514(b)-1. (Sec. 514, ’86 Code.)
Rev. Rul. 70-95, 1970-1 C.B. 137.
220.68 Limitation period on assessment; corporation
no longer recognized as tax-exempt.
The unrelated business income tax shown on a
Form 990-T by a corporate taxpayer with respect
to which the period of limitations has already
expired can be used in determining the amount of
a deficiency of the corporation when it is no longer
recognized as an exempt organization where an
extension of the period of limitations was obtained
in connection with its Form 990. §§1.11–1,
1.511-1, 301.6211-1, 301.6501(a)-1,
301.6501(g)-1. (Secs. 11, 511, 6211, 6501; ’86
Code.)
Rev. Rul. 73-577, 1973–2 C.B. 405.
220.69 Limitation period on assessment;
Forms 990, 990-A, 990-P. The good faith filing of
an information return by an exempt organization
showing sufficient facts on Form 990, 990-A, or
990-P, to apprise the Service of the potential existence
of unrelated business taxable income on
which liability for tax could be determined starts
the running of the period of limitation on assessment.
Rev. Rul. 62–10 modified; §§1.511-1,
301.6501(g)-1. (Secs. 511, 6501; ’86 Code.)
Rev. Rul. 69–247, 1969–1 C.B. 303; California
Thoroughbred Breeders Assn., 47 T.C. 335, Acq.
in result, 1969–1 C.B. 21.
220.70 Loan of securities. Income derived by
an exempt organization from the temporary transferor
securities to a brokerage house to cover short
sales of the brokerage house in exchange for
collateral of equal value, which is held by the organization
pursuant to a contract requiring the brokerage
house to pay the organization an amount
equivalent to the dividend or interest income that
would have been earned by the securities plus
either a premium based on a percentage of the
value of the securities or income earned from
investing the collateral, is not subject to tax.
§§1.511-1, 1.513-1, 1.514(c)-1. (Secs. 511, 513,
514; ’86 Code.)
Rev. Rul. 78-88, 1978-1 C.B. 163.
220.71 Machine leasing arranged gratuitously.
A section 501(c)(3) organization’s leasing
of heavy machinery under long-term lease agreements
requiring the lessee to provide insurance,
pay the applicable taxes, and make and pay for
most repairs, with the functions of securing leases
and processing rental payments performed for the
organization without compensation, is not
excepted from the term “unrelated trade or business.”
§1.513–1. (Sec. 513, ’86 Code.)
Rev. Rul. 78–144, 1978–1 C.B. 168.
220.72 Mailing services. Income derived by an
exempt organization from the operation of a mailing
service for other organizations is income from
unrelated trade or business even though the mailing
equipment is also used for exempt activities,
§1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 68-550, 1968-2 C.B. 249.
220.73 Manufacturing business; pyrometric
cones. A foundation was established under the
decedent’s will providing primarily for the continuance
of the pyrometric cone manufacturing business
and secondarily for the advancement of the
ceramic arts and industries. Under the will,
approximately 80 percent of the business gross
income would be required to meet manufacturing
costs and other expenses and the remaining 20 percent
would be spent in research in the field of
ceramics through fellowships granted to selected
graduate students. Held, the foundation is an
exempt organization under section 501(c)(3) and
did not receive unrelated business income under
section 511 or 513; the purpose of the business was
not merely to provide a source of income but to
predicate the foundation’s scientific and educational
purposes. (Secs. 501, 502, 511, 513; ’86
Code.)
Edward Orton, Jr. Ceramic Foundation, 56 T.C.
147, Nonacq., 1972-1 C.B. 4.
220.74 Meeting hall rented. Income derived by
an exempt organization for the occasional use of
its meeting hall constitutes rents from real property
and, accordingly, is to be excluded in determining
unrelated business income. §1.512(b)–1.
(Secs. 512, ’86 Code.)
Rev. Rul. 69-178, 1969-1 C.B. 158.
220.75 Mineral interest. An exempt organization’s
income from a mineral interest is not a royalty
excluded from the computation of unrelated
business taxable income where the organization
must provide the operating expenses associated
with its interest. §1.512(b)-1. (Sec. 512, ’86
Code.)
Rev. Rul. 69-179, 1969-1 C.B. 158.
220.76 Mineral property transferred to controlled
corporation. The Revenue Service will
review all mineral property transfers by exempt
organizations to controlled corporations and will
characterize payments according to the substance
of the transaction regardless of form. The decision
in Robert A. Welch Foundation, which held that,
for purposes of defining unrelated business
income, rights to overriding royalties were not
working interests and, thus, were not a part of
unrelated business income will not be followed.
§1.512(b)-1. (Sec. 512, ’86 Code.)
Rev. Rul. 69–162, 1969-1 C.B. 158.
220.77 Miniature golfcourse. The operation of
a miniature golf course in a commercial manner by
an exempt organization whose purpose is to provide
for the welfare of young people, constitutes
unrelated trade or business. §§1.501(c)(3)–1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 79-361, 1979-2 C.B. 237.
220.78 Net operating loss. An exempt organization
with unrelated business taxable income,
in computing its net operating loss under section
172, must exclude the specific deduction of
$1,000 provided in section 512(b)(12) from such
computation. §§1.172–1, 1.512(b)–1. (Secs. 172,
512; ’86 Code.)
Rev. Rul. 68-59, 1968-1 C.B. 273.
220.79 Partnerships. This notice provides
guidance regarding the application of section
514(c)(9)(E) to certain partnerships in which one
or more (but not all) of the partners are qualified
tax-exempt organizations within the meaning of
section 514(c)(9)(C).
Notice 90-41, 1990-2 C.B. 350.
220.80 Pet boarding and grooming services.
The income derived by an exempt organization,
organized and operated for the prevention of
cruelty to animals, from providing pet boarding
and grooming services for the general public is
income from unrelated trade or business.
§1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 73-587, 1973-2 C.B. 192.
220.81 Political organizations; “exempt
function income”. A political organization sold
reproductions of an original work of art, which
was not of a political nature, over a period of several
months to raise operating funds. The sales
were not undertaken to encourage support (other
than financial) for the organization or for any individual
seeking political office. The proceeds were
not “exempt function income.” (Sec. 527, ’86
Code.)
Rev. Rul. 80-103, 1980-1 C.B. 120.
220.82 Professional association; tuition for
training classes. Income from classes conducted
by a professional association, exempt under section
501(c)(6), in order to qualify persons for a
specific status within the particular profession
does not constitute income from an unrelated trade
or business. §§1.511–1, 1.513–1. (Secs. 511, 513;
’86 Code.)
Rev. Rul. 67-296, 1967-2 C.B. 212.
220.83 Publication and sale of a book. Income
from the publication, distribution, and sale of a
book by an exempt organization is unrelated business
income; however, where an exempt organization
transfers the publication rights to a commercial
publisher, the royalty income derived is not
unrelated business income. §§1.512(a)-1,
1.513-1. (Secs. 512, 513; ’86 Code.)
Rev. Rul. 69-430, 1969-2 C.B. 129.
220.84 Publicity of certain documents. Documents
submitted in connection with a request for
a ruling concerning unrelated business income of
an otherwise tax-exempt organization are not subject
to public inspection. §301.6104-1. (Sec.
6104, ’86 Code.)
Rev. Rul. 59-267, 1959-2 C.B. 382.
220.85 Religious and educational broadcasting
station. A qualifying nonprofit organization
broadcasts religious and educational programs
from a commercially licensed television station it
owns and operates. An “insubstantial” amount of
total air time is devoted to nonreligious, noneducational,
commercially sponsored programs,
the income from which is put toward the organization’s
exempt purpose. The sale of advertising
constitutes unrelated trade or business and such
income is subject to the tax imposed by section
511. Rev. Rul. 68-563 amplified.
§§1.501(c)(3)-1, 1.511-2, 1.513-1. (Sec. 501,
511, 513; ’86 Code.)
Rev. Rul. 78-385, 1978-2 C.B. 174.
220.86 Religious order. An amount received by
a religious order from a member who is under a
vow of poverty and is instructed to work for the
local business office of the church and remit the
salary to the order is income to the order and may
be subject to the tax imposed by section 511. O.D.
119 superseded and Rev. Rul. 76-323 clarified.
Amplified by Rev. Ruls. 79-132 and 80-332.
§§1.61-2, 1.511-1. (Secs. 61, 511, 3121, 3401;
’86 Code.)
Rev. Rul. 77-290, 1977–2 C.B. 26.
220.87 Religious organization. The remuneration
received by a religious organization for services
performed by its members pursuant to contracts
between the organization and third parties
constitutes unrelated business taxable income.
§§1.61-2, 1.511-2, 1.512(a)-1, 1.513-1. (Secs.
61, 511, 512, 513, 3121, 3401; ’86 Code.)
Rev. Rul. 76-341, 1976-2 C.B. 307.
220.88 Rental of dormitory facilities. The
rental of dormitory rooms and similar residential

accommodations, primarily to people under age
25, by an exempt organization whose purpose is to
provide for the welfare of young people is substantially
related to the purpose constituting the basis
for the organization’s exemption and does not
constitute an unrelated trade or business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 76-33, 1976-1 C.B. 169.
220.89 Research. Income derived from
research by a tax-exempt college, university, or
hospital, or by a tax-exempt organization operated
primarily for the purpose of carrying on fundamental
research, does not constitute income from
an unrelated trade or business. Income derived by
any organization to which Supplement U is applicable
from research for the U.S. or any of its agencies
or for a State or political subdivision thereof
is not income from an unrelated trade or business.
§§39.101(6)-1, 39.421–1, 39.422–1. (Secs.
101(6), 421, 422, ’39 Code; Secs. 501, 511, 512,
’86 Code.)
Rev. Rul. 54-73, 1954-1 C.B. 160.
220.90 Research; commercially sponsored.
Commercially sponsored research otherwise qualifying
as scientific research under section
501(c)(3), the results of which, including all relevant
information, are timely published in such
form as to be available to the interested public,
constitutes scientific research carried on in the
public interest. Research, the publication of which
is withheld or delayed significantly beyond the
time reasonably necessary to establish ownership
rights, however, is not in the public interest and
constitutes the conduct of unrelated trade or business.
§§1.501(c)(3)–1, 1.513–1. (Secs. 501, 513;
’86 Code.)
Rev. Rul. 76-296, 1976-2 C.B. 141.
220.91 Research foundation; medical. An
exempt organization conducting and supporting
medical research will be taxed on income from
enterprises which, operated along the lines of
commercial undertakings, produce income which
is disproportionate when compared to the size and
extent of the exempt activities. (Secs. 511, 513;
’86 Code.)
Rev. Rul. 57-313, 1957-2 C.B. 316.
220.92 Retail grocery store. An exempt organization’s
operation of a retail grocery store as part
of its therapeutic program for emotionally disturbed
adolescents, almost fully staffed by the
adolescents, and on a scale no larger than is reasonably
necessary for the performance of the organization’s
exempt functions, is not unrelated trade
or business. Rev. Rul. 73–127 distinguished.
§1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 76-94, 1976-1 C.B. 171.
220.93 Revocation of exemption. An organization
whose exemption from tax under section
501(a) is revoked prospectively under the authority
of section 7805(b) is subject to the unrelated
business income tax for the period covered by section
7805(b) relief. §§1.511–2, 301.7805–1.
(Secs. 511, 7805; ’86 Code.)
Rev. Rul. 78-289, 1978-2 C.B. 180.
220.94 Royalties; beneficial owner of patents.
Amounts received from licensees by an exempt
organization, the legal and beneficial owner of
patents assigned to it by inventors for specified
percentages of future royalties, constitute royalty
income that is excludable in computing unrelated
business taxable income. Rev. Rul. 73–193 distinguished.
§1.512(b)-1. (Sec. 512, ’86 Code.)
Rev. Rul. 76-297, 1976-2 C.B. 178.
220.95 Royalties; endorsement of business
products and services by labor organization.
Payments an exempt labor organization receives
from various business enterprises for the use of the
organization’s trademark and similar properties
are royalties within the meaning of section
512(b)(2) and are not taken into account in determining
unrelated taxable income. However, payments
the organization receives for personal
appearances and interviews by its members are not
royalties but are compensation for personal services
and must be taken into account in computing
the organization’s unrelated business taxable
income. §§1.512(b)–1, 1.513–1. (Secs. 512, 513;
’86 Code.)
Rev. Rul. 81-178, 1981–2 C.B. 135.
220.96 Royalties; patent development deductions.
Patent development and management services
fees deducted from royalties collected from
licensees by an exempt charitable organization for
distribution to beneficial owners of the patents is
not within the exception for royalties provided by
section 512(b) in determining “unrelated business
taxable income” of the organization. Distinguished
by Rev. Rul. 76-297. §1.512(b)–1. (Sec.
512, ’86 Code.)
Rev. Rul. 73-193, 1973-1 C.B. 262.
220.97 Sale of advertising. Income derived by
an exempt organization from the sale of advertising
in its annual yearbook is unrelated business
taxable income where an independent commercial
firm under a contract covering a full calendar year
conducts an intensive advertising solicitation
campaign in the organization’s name and is paid a
percentage of the gross advertising receipts for
selling the advertising, collecting from advertisers,
and printing the yearbook. Distinguished by
Rev. Rul. 75–201. §§1.512(a)-1, 1.513–1. (Secs.
512, 513; ’86 Code.)
Rev. Rul. 73-424, 1973-2 C.B. 190.
220.98 Sale of advertising. The sale of advertising
during a four-month period by the paid
employees of an exempt organization, which
raises funds for an exempt symphony orchestra
and publishes a weekly concert program distributed
free at the symphony performances over an
eight-month period, is a business regularly carried
on in determining unrelated income.
§§1.512(a)-1, 1.513-1. (Secs. 512, 513; ’86
Code.)
Rev. Rul. 75–200, 1975-1 C.B. 163.
220.99 Sale of advertising. The sale of advertising
by volunteers of an exempt organization,
which raises funds for an exempt symphony
orchestra and publishes an annual concert book
distributed at the orchestra’s annual charity ball, is
not a business regularly carried on in determining
unrelated income under section 512. Rev. Rul.
73-424 distinguished. §§1.512(a)-1, 1.513-1.
(Secs. 512, 513 ’86 Code.)
Rev. Rul. 75-201, 1975-1 C.B. 164.
220.100 Sale of membership directory. The
sale of an exempt organization of a membership
directory that contributes to the organizations purpose
and confers no private commercial benefit on
any of the members, who are the directory’s sole
purchasers, does not constitute unrelated trade or
business within the meaning of section 513. Rev.
Rul. 74-38 distinguished. §§1.501(c)(6)-1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 79-370, 1979–2 C.B. 238.
220.101 Sale of space in journal. Income
derived by an association of law enforcement officials,
exempt under section 501(c)(6), from the
sale of space in its journal either for conventional
advertising or merely to identify the purchasing
organization without a further advertising message
constitutes unrelated trade or business
income. Clarified by Rev. Rul. 76-93. Distinguished
by Rev. Rul. 79-370. §1.513-1. (Sec. 513,
’86 Code.)
Rev. Rul. 74-38, 1974-1 C.B. 144.
220.102 Sale of space in journal. Income
derived by an organization, exempt under section
Exempt organizations
501(c)(3) from the sale of space in its journal for
advertising, except space for listings (60 or more
to the page) that merely identify the purchaser
without a further advertising message, constitutes
unrelated trade or business income. Rev. Rul.
74-38 clarified. §1.513–1. (Sec. 513, ’86 Code.)
Rev. Rul. 76-93, 1976-1 C.B. 170.
220.103 School; operating ski facility. An
exempt school operates a ski facility for use in its
physical education program and also for use, to a
substantial degree, for recreational purposes by
students attending the school and members of the
public who are required to pay slope and ski lift
fees comparable to nearby commercial facilities.
The recreational use of the facility by students is
substantially related to the school’s exempt purposes
and the income derived from the students’
use of the facility is not from unrelated trade or
business. However, income from use of the facility
by the public is from unrelated trade of business.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 78-98, 1978-1 C.B. 167.
220.104 School; summer tennis camp. An
exempt school annually contracts with an individual
who conducts a 10-week summer tennis camp
with the school furnishing the tennis courts, housing,
and dining facilities and the individual hiring
the instructors, recruiting campers, and providing
supervision. The amounts received are from dual
use of facilities and personnel and an allocable
portion of expenses attributable to such facilities
and personnel may be deducted in computing
unrelated business taxable income. Amplified by
Rev. Rul. 80-297. §1.512(a)-1. (Sec. 512, ’86
Code.)
Rev. Rul. 76-402, 1976-2 C.B. 155.
220.105 School; summer tennis club. An
exempt school that uses its tennis facilities for ten
weeks in the summer as a public tennis club operated
by employees of the school’s athletic department
is engaged in unrelated trade or business, and
the income earned is not excludable from unrelated
business taxable income as rent from real
property. If the school leases the tennis facilities
for a fixed fee to an unrelated individual who operates
a tennis club for the public, the school is still
engaged in unrelated trade or business, but the
lease income is excluded from unrelated business
taxable income as rent from real property. Rev.
Rul. 76-402 amplified. §§1.512(b)-1, 1.513-1.
(Sec. 512, 513; ’86 Code.)
Rev. Rul. 80-297, 1980-2 C.B. 196.
220.106 Senior citizens’ center; beauty shop
and barber shop. The operation of a beauty shop
and a barber shop by an exempt senior citizens’
center for use by senior citizens is not unrelated
trade or business. §§1.501(c)(3)-1, 1.513–1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 81-61, 1981-1 C.B. 355.
220.107 Senior citizens’ center; sale of
appliances. The sale of heavy-duty appliances to
senior citizens by an exempt senior citizens’ center
is unrelated trade or business. §§1.501(c)(3)-1,
1.513-1. (Secs. 501, 513; ’86 Code.)
Rev. Rul. 81-62, 1981-1 C.B. 355.
220.108 Social club, losses from nonprofit
activity. A social club operates a food and beverage
concession catering to nonmembers and has
consistently sold the food and beverages at prices
insufficient to recover the cost of sales. The club
may not, in determining its unrelated business taxable
income, reduce its net investment income by
the losses from these sales to nonmembers.
§§1.501(c)(7)-1, 1.512(a)-1. (Secs. 501, 512; ’86
Code.)
Rev. Rul. 81–69, 1981–1 C.B. 351.
220.109 State college or university; investment
credit. Property used predominantly in an
unrelated trade or business of a college or univer-

Exempt organizations
sity that is both an instrumentality of a state and an
organization exempt from tax under section
501(c)(3), is not excluded from the definition of
section 38 property by either section 48(a)(4) or
(a)(5) when the income from the unrelated trade or
business is subject to tax under section 511.
§§1.48-1, 1.501(c)(3)-1, 1.511-1. (Secs. 48, 501,
511; ’86 Code.)
Rev. Rul. 82-218, 1982-2 C.B. 30.
220.110 Studio apartments leased; operation
of dining hall. The leasing of studio apartments
and the operation of a dining hall by an exempt
organization constitutes unrelated trades or businesses
where occupancy in the apartments is not
primarily for the convenience of its members, and
the dining hall is operated primarily to serve tenants
of the apartments. §§1.512(b)–1, 1.513–1.
(Secs. 512, 513; ’86 Code.)
Rev. Rul. 69-69, 1969–1 C.B. 159.
220.111 Title holding corporation. An exempt
title holding corporation is subject to the unrelated
business income tax if one of its parent organizations
is subject to the tax. §§1.501(c)(2)-1,
1.511-2. (Secs. 501, 511; ’86 Code.)
Rev. Rul. 68-490, 1968-2 C.B. 241.
220.112 Trade association; language translation
service. A language translation service provided
by an exempt trade association that promotes
and develops trade relations between
business entities located in the U.S. and the government
of a foreign country is unrelated trade or
business. §§1.501(c)(6)-1, 1.513-1. (Secs. 501,
513; ’86 Code.)
Rev. Rul. 81-75, 1981–1 C.B. 356.
220.113 Transfers by wholly owned taxable
corporation. Amounts transferred without consideration
by a taxable corporation to its sole
stockholder, a tax-exempt organization, are distributions
constituting dividends to the extent provided
in section 316(a) and are not deductible as
charitable contributions under section 170 of the
Code. §§1.170-3, 1.316-1, 1.512(b)-1. (Secs.
170, 316, 512; ’86 Code.)
Rev. Rul. 68-296, 1968-1 C.B. 105.
220.114 University alumni association; travel
tour program. A travel tour program operated by
a university alumni association for members and
their families, under which the association, working
with various travel agencies, schedules several
tours annually to destinations around the world,
mails out promotional material, accepts reservations,
and is paid a fee by the travel agencies on a
per person basis, is an unrelated trade or business.
§1.513-1. (Sec. 513, ’86 Code.)
Rev. Rul. 78-43, 1978-1 C.B. 164.
220.115 University laundry, radio station,
cinder block plant. A radio station and cinder
block plant conducted in a manner similar to commercial
undertaking by an exempt university
constitute unrelated businesses. However, a laundry
operated primarily for the convenience of its
students, officers or employees, comes within the
exception of section 513(a)(2). (Sees. 511, 512,
513; ’86 Code.)
Rev. Rul. 55-676, 1955-2 C.B. 266.
220.116 University leasing stadium. An
exempt university that leases its stadium to a professional
football team for several months of the
year and provides the utilities, grounds maintenance,
and dressing room, linen, and stadium
security services is engaged in unrelated trade or
business. Further, the university’s income from
the lease is not excluded from unrelated business
taxable income as rent for real property.
§§1.512(b)-1, 1.513-1. (Secs. 512, 513; ’86
Code.)
Rev. Rul. 80-298, 1980–2 C.B. 197.
220.117 Vending machines and laundry facilities
operated on university campus. An organization
was formed to assist a university and
qualified for exemption under section 501(c)(3).
The organization’ s operation of machines that provide
soft drink and food vending services and
laundromat facilities on campus is not an unrelated
trade or business. §§.501(c)(3)–1, 1.513-1.
(Secs. 501, 513; ’86 Code.)
Rev. Rul. 81-19, 1981-1 C.B. 353.
220.118 Vocational school; sale of handicraft
articles. The sale by an exempt vocational school
of handicraft articles made by its students is a
related trade or business, but the sale of articles
made by non-students is unrelated trade or business.
§1.513–1. (Sec. 513, ’86 Code.)
Rev. Rul. 68-581, 1968-2 C.B. 250.
220.119 Vocational training center; sale of
homes. A nonprofit organization that purchases
building lots, furnishes funds to a public vocational
training center for use in its on-the-job home
construction training program, sells the completed
homes to the general public at fair market value,
and uses the income from home sales to finance
new projects and obtain vocational training equipment
for the public school system, qualifies for
exemption. The income from the sale of the homes
is not unrelated business income.
§§1.501(c)(3)-1, 1.513-1. (Secs. 501, 513; ’86
Code.)
Rev. Rul. 76-37, 1976-1 C.B. 148.
220.120 Volunteer tire company; public
dances. A nonprofit organization that was organized
and operated as a volunteer fire company to
provide fire protection and ambulance and rescue
services to a community qualifies for exemption
as a charitable organization and contributions
made to the organization are deductible. The organization
may also qualify for exemption as a social
welfare organization. Further, under section
513(a)(1), conducting the weekly public dances
does not constitute an unrelated trade or business.
Rev. Rul. 66-221 superseded and Rev. Rul. 71-47
clarified. §§1.170A-1, 1.501(c)(3)-1,
1.501(c)(4)-1, 1.513-1. (Secs. 170, 501, 513; ’86
Code.)
Rev. Rul. 74-361, 1974-2 C.B. 159.