§502 — Feeder organizations

des the general rule that "An organization operated for the primary purpose ofcarrying on a trade or business for profit shall not be exempt from taxation under section 501 on the ground that all ofits profits are payable to one or more organizations exempt from taxation under section 501." Because we hold that petitioner will not operate exclusively for an exempt purpose and, therefore, is not an exempt organization under sec.

r than as expressly provided in"this Plans or, the Confirmation Order, whether or not (a) a proof of claim or proof of inter- est based on such debt or interest is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code, (b) à claim or interëst based on s ch debt or interest is allowed pursuant to section 502 of the Bankrupt-cy Code or (c) the holder of a claim or interest based on such debt or interest has accepted the Plan.

Petitioner suggests, however, that the operation of section 512(b)(4) is irrelevant for purposes of establishing eligibilit for the section 502(b)(1) exclusion . We disagree . Secti n 512(b)(4) provides that "Notwithstanding" the various ex lusi;ons from UBTI contained in section 512(b)(1), (2), (3), and ( ), unrelated debt-financed income is included in UBTI . Section 51 (b)(4) thereby "nullifies these exclusions for income derived fr m `debt-financed property"' . Bartels Trust v . United State

d prior to the Confirmation Date, other than as expressly provided in"this Plans or, the Confirmation Order, whether or not (a) a proof of claim or proof of inter- est based on such debt or interest is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code, (b) à claim or interëst based on s ch debt or interest is allowed pursuant to section 502 of the Bankrupt-cy Code or (c) the holder of a claim or interest based on such debt or interest has accepted the Plan.

(e.g. derivative or contractual rights to buy or 13 The reference to “property acquired” in the effective date provision more naturally relates to portions of the enacting statute other than the provision that enacted section 1234A. See, e.g., ERTA § 502, 95 Stat. at 327. But in any event we do not view it as inconsistent with our reading. 14 Additionally, we note that the enacting statute included section 1234A in “TITLE V—Tax Straddles” of the Act. See ERTA tit. V, 95 Stat. at 323. 20 sell ca

In general, the confirmation ofa bankruptcy plan "discharges the debtor from any debt that arose before the date ofsuch confirmation". 11 U.S.C. sec. 1141(d)(1)(A). 3(...continued) Commissioner, 118 T.C. 348 (2002), there was no final judgment on the merits as to petitioner's tax liability. - 13 - Thus, in a chapter 11 case, a garden-var

501(c)(3) also provides that a corporation must demonstrate that no part ofits net earnings inures to the benefit ofany private shareholder or individual, that no substantial part ofits activities consists ofpolitical or lobbying activities, and that no part ofits activities constitutes intervention or participation in any pol

Bankruptcy Discharge On November 12, 2015, the bankruptcy court granted petitioners a discharge under section 1328(b) ofthe Bankruptcy Code, and they were relieved from all unsecured debts provided for by the plan or disallowed under section 502 ofthe Bankruptcy Code, except any debt ofa kind specified in section 523(a) of the Bankruptcy Code.

570, 573 (1978)); see also Am.

exclusively for an exempt purpose. -22- [*22] Discussion Section 501(a) provides in relevant part that an organization described in section 501(c)(3) (including a corporation) shall be exempt from Federal income tax unless exemption is denied under section 502 or 503. To qualify as an exempt organization described in section 501(c)(3), a corporation generally must demonstrate that (1) it is organized and will operate exclusively for religious, charitable, scientific, educational, or other specif

502 (2006); Kendricks v. Commissioner, 124 T.C. 69, 77 (2005). Petitioner has not argued or demonstratedthat the liabilities for the years at issue should be reviewed de novo. - 14 - 112 T.C. 19, 23 (1999); Farao v. Commissioner, T.C. Memo. 2004-13, aff'd, 447 F.3d 706 (9th Cir. 2006). We now review collection proceeding requirements. Ifany p

in the following three years. The committee, therefore, modified the 6The 1989 amendments retained the sec. 41(a)(2) 20% basic research payment credit, as well. 7In the Ticket to Work and Work Incentives ImprovementAct of 1999, Pub. L. No. 106-170, sec. 502(c)(1), 113 Stat. at 1919, Congress expanded the definition ofgross receipts offoreign corporations, then set forth in sec. 41(c)(6), for purposes ofthe sec. 41 credit, to include those effectively connected with the conduct ofa trade or busi

ry Judgment . C. Whether Petitioner Is Entitled to Exempt Status A corporation that is organized and operated exclusively for charitable purposes, as described in section 501(c)(3), is exempt from Federal income tax unless exemption is denied under section 502 or 503 . Sec . 501(a) . To qualify as an exempt organization under section 501(c)(3), a corporation must satisfy all of the requirements stated therein, specifically including the requirements that the corporation must be both organized an

502(c), 111 Stat. 852. A QFOBI includes an interest as a proprietor in a business carried on as a proprietorship or an interest in an entity carrying on a business if at least 50 percent of the entity is owned, directly or indirectly, by the decedent or a member of the decedent's family. Sec. 2057(e)(1). If an estate qualifies for and elects t

Respondent advances the following grounds for revocation: (1) Petitioner had as its primary activity the operation of a trade or business, i.e., its gaming operation, that was not in furtherance of its exempt purpose, (2) petitioner operated as a “feeder organization” within the meaning of section 502, and (3) petitioner’s operation served the private interests of its founder, Parr, and his company.

le, 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

e of Gilford v. Commissioner, supra at 51. Section 501 provides in part: 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, and any community chest, fund, or foundation, organized and operated exclusively for r

Shortly after the decision in Squire, Treasury regulations acknowledged the existence of the integral part doctrine in - 76 - providing an exception to the feeder organization rules under section 502.23 Section 1.502-1(b), Income Tax Regs., provides as follows: (b) If a subsidiary organization of a tax-exempt organization would itself be exempt on the ground that its activities are an integral part of the exempt activities of the parent organization, its exemption will not be lost because, as a

lford v. Commissioner, supra at 51. - 9 - Section 501 provides in part: 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, and any community chest, fund, or foundation, organized and operated exclusively for re

e of Gilford v. Commissioner, supra at 51. Section 501 provides in part: 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, and any community chest, fund, or foundation, organized and operated exclusively for r

351 (1955); Estate of Gilford v. Commissioner, supra at 51. Section 501 provides: (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, and any community chest, fund, or foundation, organized and operated exclusively for r

502.64, 502.79 Subd. 2 (West 1990). We also disagree with the estate's alternative argument. The estate has set forth no good reason why we should disregard the validity of the Trust, and we decline to do so. Although the estate states correctly that we must (and do) interpret the language of the Agreement in accordance with the settlors' inte