Amended 1969
- 1969 Pub. L. 91-172 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).
Final rules 2
(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
Cited by 1
(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.