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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.
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