Why Are Charities Tax-Exempt?

Charitable organizations are eligible to be tax-exempt under section 501(c)(3) of the Internal Revenue Code. This is based on a common belief that giving to charities is good for society. However, with ever increasing reports of corruption and fraud, very large amounts of monies tied up in endowment funds of universities and foundations, and cries of unfair competition by taxable for-profits, some […]

Tax Exempt Organizations with For-Profit Subsidiaries

Federal tax law permits a tax-exempt organization to have one or more for-profit subsidiaries. The tax-exempt parent organization may own some or all of the equity of the for-profit subsidiary. As discussed below, the extent of stock ownership affects the taxability of income from a for-profit subsidiary received by a tax-exempt parent.

The tax-exempt organization must determine the organizational form of […]