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Section 501(a)1 exempts organizations described in section
501(c)(3) from Federal income tax. In order to qualify for an
exemption under section 501(c)(3), the organization must be not
only organized exclusively for exempt purposes but also operated
exclusively for exempt purposes. Quality Auditing Co. v.
Commissioner, 114 T.C. 498, 504 (2000). Respondent conceded that
petitioner is organized for exempt purposes but denies that
petitioner will be operated exclusively for exempt purposes.
Exempt purposes are broadly stated in section 501(c)(3) to
include religious, charitable, scientific, and educational
1 Sec. 501, in relevant part, provides:
SEC. 501. (a) Exemption From Taxation.— An organization
described in subsection (c) * * * shall be exempt from
taxation under this subtitle unless such exemption is denied
under section 502 or 503.
* * * * * * *
(c) List of Exempt Organizations.— The following
organizations are referred to in subsection (a):
* * * * * * *
(3) Corporations * * * organized and operated
exclusively for * * * charitable * * * purposes, * * *
no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no
substantial part of the activities of which is carrying
on propaganda, or otherwise attempting, to influence
legislation, * * * and which does not participate in, or
intervene in (including the publishing or distributing
of statements), any political campaign on behalf of (or
in opposition to) any candidate for public office.
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Last modified: May 25, 2011