2018 US Code
Title 26 - Internal Revenue Code
Subtitle A - Income Taxes
Chapter 1 - Normal Taxes and Surtaxes
Subchapter F - Exempt Organizations
Part I - General Rule
Sec. 502 - Feeder organizations

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Citation 26 U.S.C. § 502 (2018)
Section Name §502. Feeder organizations
Section Text (a) General rule

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 501.

(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.

Source Credit

(Aug. 16, 1954, ch. 736, 68A Stat. 166; Pub. L. 91–172, title I, §121(b)(7), Dec. 30, 1969, 83 Stat. 542.)

Editorial Notes AMENDMENTS

1969—Pub. L. 91–172 redesignated 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. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.

Publication Title United States Code, 2018 Edition, Title 26 - INTERNAL REVENUE CODE
Category Bills and Statutes
Collection United States Code
SuDoc Class Number Y 1.2/5:
Contained Within Title 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter F - Exempt Organizations
PART I - GENERAL RULE
Sec. 502 - Feeder organizations
Contains section 502
Date 2018
Laws In Effect As Of Date January 14, 2019
Positive Law No
Disposition standard
Statutes at Large References 83 Stat. 542
Public Law References Public Law 91-172
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