26Title 26The US tax code, read & explained

26 U.S.C. § 502

§ 502. Feeder organizations

139 words · amended 1 times · cited by 3 other sections

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No plain-English explainer yet. Below is the official text. Explainers are being added section by section.

History

Part of the code since 1954. Last changed December 30, 1969 by the Tax Reform Act of 1969.

Every change, newest first (2)
  1. December 30, 1969Tax Reform Act of 1969
  2. August 16, 1954Internal Revenue Code of 1954 (original text)

The law as written

Current through Public Law 119-102. Amendment notes omitted.

Structure

  1. (a) General rule
  2. (b) Special rule
(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.