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