exempt organization (EO)

• include charities, labor organizations, social clubs, pension and profit sharing trusts, political organizations, and private foundations
• may be in the form of a corporation or a trust
• must apply for and receive an exemption from taxation (Form 1023, or Form 1024)

1. must file an information return (form 990) if gross receipts exceed $25,000
2. most exemption organizations not required to file form 990, must file an electronic notice with IRS (Form 990-N)
3. EO's that fail to meet filing requirements for 3 consecutive years lose tax-exempt status
4. most must make their last 3-year's tax returns available to interested parties

1. reports income, expenses, lobbying and political expenditures, and substantial contributors
2. churches don't have to file one
3. due 15th day of 5th month after close of tax year with an automatic 3 month extension

• includes demographic information and justifies it should still be tax exempt (gross receipts still under $25,000)
• not required for churches, state institutions, or governmental units

• tax-exempt organization which receives less than one-third of its annual support from its members and the general public
• must file Form 990-PF

• election to participate can be made by a charitable organization.
• churches and private foundations can't elect this

• 10% of the expenditure charged to the organization and
• 2.5% of the expenditure charged to manager who agreed to the expenditure ($5000 max charge per expenditure)

taxable to an EO if it exceeds $1,000.  qualifies as an UBI if it

• is from a business regularly carried on AND
• is unrelated to the EO exempt purposes
• examples: income from debt financed property unrelated to exempt function of the EO, income from avertising in journals of the EO

not subject to tax. examples:

1. an activity where substantially all work is performed for no compensation
2. business is carried on for the convenience of students, members of a charitable, religious, or scientific organization
3. sale of merchandise received as contributions
4. most investment income
5. rents from real property

1. entities that don't qualify for deductibility of contributions must disclose this in fundraising solicitations
2. charities eligible to receive tax deductible contributions and receive contributions over $75 must inform donator that the deduction is limited to excess of donation over value of goods or services received by charity