An organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt from taxation under section
501 on the ground that all of its profits are payable to one or more organizations exempt from taxation under section
(b) Special rule
For purposes of this section, the term “trade or business” shall not include—
(1)the deriving of rents which would be excluded under section
512(b)(3), if section
512 applied to the organization,
(2)any trade or business in which substantially all the work in carrying on such trade or business is performed for the organization without compensation, or
(3)any trade or business which is the selling of merchandise, substantially all of which has been received by the organization as gifts or contributions.
1969—Pub. L. 91–172redesignated first sentence of existing provisions as subsec. (a), and substantial portion of second sentence as subsec. (b)(1), and, in subsec. (b)(1) as so redesignated, inserted reference to section
512 of this title, and added pars. (2) and (3).
Effective Date of 1969 Amendment
Amendment by Pub. L. 91–172applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) ofPub. L. 91–172, set out as a note under section
511 of this title.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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Description of Change
Statutes at Large
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