§503 — Requirements for exemption
85 cases·8 followed·5 distinguished·2 criticized·1 overruled·69 cited—9% support
Statute Text — 26 U.S.C. §503
An organization described in paragraph (17) or (18) of section 501(c), or described in section 401(a) and referred to in section 4975(g) (2) or (3), shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction.
An organization described in paragraph (1) shall be denied exemption from taxation under section 501(a) by reason of paragraph (1) only for taxable years after the taxable year during which it is notified by the Secretary that it has engaged in a prohibited transaction, unless such organization entered into such prohibited transaction with the purpose of diverting corpus or income of the organization from its exempt purposes, and such transaction involved a substantial part of the corpus or income of such organization.
For purposes of this section, the term “prohibited transaction” means any transaction in which an organization subject to the provisions of this section—
lends any part of its income or corpus, without the receipt of adequate security and a reasonable rate of interest, to;
pays any compensation, in excess of a reasonable allowance for salaries or other compensation for personal services actually rendered, to;
makes any part of its services available on a preferential basis to;
makes any substantial purchase of securities or any other property, for more than adequate consideration in money or money’s worth, from;
sells any substantial part of its securities or other property, for less than an adequate consideration in money or money’s worth, to; or
engages in any other transaction which results in a substantial diversion of its income or corpus to;
the creator of such organization (if a trust); a person who has made a substantial contribution to such organization; a member of the family (as defined in section 267(c)(4)) of an individual who is the creator of such trust or who has made a substantial contribution to such organization; or a corporation controlled by such creator or person through the ownership, directly or indirectly, of 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock of the corporation.
Any organization described in subsection (a)(1) which is denied exemption under section 501(a) by reason of subsection (a) of this section, with respect to any taxable year following the taxable year in which notice of denial of exemption was received, may, under regulations prescribed by the Secretary, file claim for exemption, and if the Secretary, pursuant to such regulations, is satisfied that such organization will not knowingly again engage in a prohibited transaction, such organization shall be exempt with respect to taxable years after the year in which such claim is filed.
For purposes of subsection (b)(1), a bond, debenture, note, or certificate or other evidence of indebtedness (hereinafter in this subsection referred to as “obligation”) shall not be treated as a loan made without the receipt of adequate security if—
such obligation is acquired—
on the market, either (i) at the price of the obligation prevailing on a national securities exchange which is registered with the Securities and Exchange Commission, or (ii) if the obligation is not traded on such a national securities exchange, at a price not less favorable to the trust than the offering price for the obligation as established by current bid and asked prices quoted by persons independent of the issuer;
from an underwriter, at a price (i) not in excess of the public offering price for the obligation as set forth in a prospectus or offering circular filed with the Securities and Exchange Commission, and (ii) at which a substantial portion of the same issue is acquired by persons independent of the issuer; or
directly from the issuer, at a price not less favorable to the trust than the price paid currently for a substantial portion of the same issue by persons independent of the issuer;
immediately following acquisition of such obligation—
not more than 25 percent of the aggregate amount of obligations issued in such issue and outstanding at the time of acquisition is held by the trust, and
at least 50 percent of the aggregate amount referred to in subparagraph (A) is held by persons independent of the issuer; and
immediately following acquisition of the obligation, not more than 25 percent of the assets of the trust is invested in obligations of persons described in subsection (b).
Subsection (b)(1) shall not apply to a loan made by a trust described in section 401(a) to the employer (or to a renewal of such a loan or, if the loan is repayable upon demand, to a continuation of such a loan) if the loan bears a reasonable rate of interest, and if (in the case of a making or renewal)—
the employer is prohibited (at the time of such making or renewal) by any law of the United States or regulation thereunder from directly or indirectly pledging, as security for such a loan, a particular class or classes of his assets the value of which (at such time) represents more than one-half of the value of all his assets;
the making or renewal, as the case may be, is approved in writing as an investment which is consistent with the exempt purposes of the trust by a trustee who is independent of the employer, and no other such trustee had previously refused to give such written approval; and
immediately following the making or renewal, as the case may be, the aggregate amount loaned by the trust to the employer, without the receipt of adequate security, does not exceed 25 percent of the value of all the assets of the trust.
For purposes of paragraph (2), the term “trustee” means, with respect to any trust for which there is more than one trustee who is independent of the employer, a majority of such independent trustees. For purposes of paragraph (3), the determination as to whether any amount loaned by the trust to the employer is loaned without the receipt of adequate security shall be made without regard to subsection (e).
85 Citing Cases
Accordingly, we hold that an individual well-category determination must be obtained in order to qualify for the section 29 tax credit attributable to tight formation gas.
ion stemming from respondent’s disallowance of a section 29 nonconventional fuels tax credit (credit). The issue we consider is whether the Hanson well qualifies for the credit even though it was not certified under the procedures contained in NGPA section 503. The parties approach the solution to this issue from different perspectives. Respondent contends that the statutes involved expressly and unambiguously require that a well-category determination must be obtained from the specified authori
2763, 2880. We consider the “term’s ‘ordinary, contemporary, common meaning’ . . . when Congress enacted” the relevant provision. Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2362 (2019) (quoting Perrin v. United States, 444 U.S. 37, 42 (1979)). According to the contemporary edition of Webster’s Third New International D
2763, 2880, the term “connection” was defined broadly (and in relevant part) to mean any link, association, or relationship, see, e.g., Connection, The American Heritage Dictionary of the English Language, New College Edition (1976) (“2. Anything that joins, relates, or connects; a bond; a link. 3. An association, alliance, or relat
ne of the consolidated offenses. Id. at 442. Petitioner alleges that he suffered a loss from embezzlement, which is defined under California law as “the fraudulent appropriation of property by a person to whom it has been intrusted”. Cal. Penal Code sec. 503 (West 2021). Pursuant to California law, embezzlement requires the following elements: (1) the owner entrusted his or her property to the defendant; (2) the owner did so because he or she trusted the defendant; (3) the defendant fraudulently
[Emphasis added.] These two "determin[ations]" correspond to the twojurisdiction-conferring determinations in section 7436(a)(1) (i.e., that the workers "are employees") and section 7436(a)(2) (i.e., that the employer "is not entitled to the treatment under subsection (a) ofsection 503").¹° The IRS thereby purported to determine what were in fact undisputed propositions; but for purposes ofthe existence ofa "determination", that lack of dispute is beside the point.
at 1003 (2003); Pub. L. No. 108-311, secs. (continued...) -33- disagreement with the construction ofthe statute that Treasury adopted in section 1.170A-14(g)(6), Income Tax Regs. This "strongly suggests that * * * [Congress] did not view Treasury's construction * * * as unreasonable or contrary to the law's purpose." SIH Partne
inserted a direct reference to the corresponding environmental statutes or regulations, as it did in section 45K(c)(2)(A), with respect to gas produced from a tight formation, by referring to the Natural Gas Policy Act of 1978, Pub. L. No. 95-621, sec. 503, 92 Stat. at 3397. See generally True Oil Co. v. Commissioner, 170 F.3d at 1300 (discussing congressional intent for referencing to Natural Gas Policy Act of 1978 sec. 503 and concluding that the taxpayerhad to follow certification procedures
inserted a direct reference to the corresponding environmental statutes or regulations, as it did in section 45K(c)(2)(A), with respect to gas produced from a tight formation, by referring to the Natural Gas Policy Act of 1978, Pub. L. No. 95-621, sec. 503, 92 Stat. at 3397. See generally True Oil Co. v. Commissioner, 170 F.3d at 1300 (discussing congressional intent for referencing to Natural Gas Policy Act of 1978 sec. 503 and concluding that the taxpayerhad to follow certification procedures
inserted a direct reference to the corresponding environmental statutes or regulations, as it did in section 45K(c)(2)(A), with respect to gas produced from a tight formation, by referring to the Natural Gas Policy Act of 1978, Pub. L. No. 95-621, sec. 503, 92 Stat. at 3397. See generally True Oil Co. v. Commissioner, 170 F.3d at 1300 (discussing congressional intent for referencing to Natural Gas Policy Act of 1978 sec. 503 and concluding that the taxpayerhad to follow certification procedures
247,'provided that "Where property- is transferred for:less than an adequate and full consideration in money or money's worth, then the amount by which the value of the property exce.eded the value of the consideration shall, for' the purpose of the tax imposed by this title, be deemed a gift". For gift tax purposes, the release
503, petitioner was required to file his section 475(f) election by April 17, 2000, the due date for his 1999 tax return. Petitioner contends that he should be allowed the benefit of section 9100 relief to extend the time to make the section 475(f) election because he acted reasonably and in good faith and the interests of the Government will
d be applied to the evidence of record, our conclusion that all of the opinions relied on by both sides are fairly distinguishable, and the absence of applicable Treasury regulations,8 we first consider the background of section 4975. b. Background: Sec. 503 (I.R.C. 1954); Sec. 4941 (TRA '69) The Internal Revenue Code of 1954, as originally enacted, provided that if a charitable organization (sec. 501(c)(3)) or a trust which is part of an employees plan (sec. 401(a)) engaged in a prohibited tran
* * * The Supreme Court has described previous versions of the gift tax statutes (section 501 imposing the tax on gifts and section 503 which is virtually identical to present section 2512(b)) in the following terms: Sections 501 and 503 are not disparate provisions.
The Supreme Court has described previous versions of the gift tax statutes (section 501 imposing the tax on gifts and section 503 which is virtually identical to present section 2512(b)) in the following terms: - 56 - Sections 501 and 503 are not disparate provisions.
The requests were made under section 503 of the Natural Gas Policy Act of 1978 (NGPA), Pub.
The Supreme Court has described previous versions of the gift tax statutes (section 501, imposing the tax on gifts and section 503, which is virtually identical to present section 2512(b)) in the following terms: Sections 501 and 503 are not disparate provisions.
* * * The Supreme Court has described previous versions of the gift tax statutes (section 501 imposing the tax on gifts and section 503, which is virtually identical to present section 2512(b)) in the following terms: Sections 501 and 503 are not disparate provisions.