- 11 -
and other cooperatives. Petitioner has also afforded some
visibility to Countrymark, the merged entity, by mentioning it in
the Buckeye Farm News and permitting Countrymark representatives
to appear at petitioner’s youth camps and annual meetings.
OPINION
The parties agree that petitioner is a "Labor, agricultural,
or horticultural" organization exempt from tax pursuant to
section 501(c)(5). Such organizations are described in the
regulations as those that (1) have no net earnings inuring to the
benefit of any member and (2) have as their objects the
betterment of the conditions of those engaged in agricultural
pursuits, the improvement of the grade of their products, and the
development of a higher degree of efficiency in their
occupations. Sec. 1.501(c)(5)-1, Income Tax Regs.
Notwithstanding this general exemption from taxation,
section 511(a) imposes a tax on the "unrelated business taxable
income" (UBTI) of section 501(c)(5) organizations. UBTI is
defined in section 512(a)(1) as "the gross income derived by any
organization from any unrelated trade or business (as defined in
section 513) regularly carried on by it, less the deductions
* * * which are directly connected with the carrying on of such
trade or business". Section 513(a), in turn, defines "unrelated
trade or business" as "any trade or business the conduct of which
is not substantially related * * * to the exercise or performance
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011