26 U.S.C. § 513
The term "unrelated trade or business" means, in the case of any organization subject to the tax imposed by section 511, any trade or business the conduct of which is not substantially related (aside from the need of such organization for income or funds or the use it makes of the profits derived) to the exercise or performance by such organization of its charitable, educational, or other purpose or function constituting the basis for its exemption under section 501 (or, in the case of an organization described in section 511(a)(2)(B), to the exercise or performance of any purpose or function described in section 501(c)(3)), except that such term does not include any trade or business-
The term "unrelated trade or business" means, in the case of-
any trade or business regularly carried on by such trust or by a partnership of which it is a member.
For purposes of this section, the term "trade or business" includes any activity which is carried on for the production of income from the sale of goods or the performance of services. For purposes of the preceding sentence, an activity does not lose identity as a trade or business merely because it is carried on within a larger aggregate of similar activities or within a larger complex of other endeavors which may, or may not, be related to the exempt purposes of the organization. Where an activity carried on for profit constitutes an unrelated trade or business, no part of such trade or business shall be excluded from such classification merely because it does not result in profit.
The term "unrelated trade or business" does not include qualified public entertainment activities of an organization described in paragraph (2)(C), or qualified convention and trade show activities of an organization described in paragraph (3)(C).
For purposes of this subsection-
The term "public entertainment activity" means any entertainment or recreational activity of a kind traditionally conducted at fairs or expositions promoting agricultural and educational purposes, including, but not limited to, any activity one of the purposes of which is to attract the public to fairs or expositions or to promote the breeding of animals or the development of products or equipment.
The term "qualified public entertainment activity" means a public entertainment activity which is conducted by a qualifying organization described in subparagraph (C) in-
For purposes of this paragraph, the term "qualifying organization" means an organization which is described in section 501(c) (3), (4), or (5) which regularly conducts, as one of its substantial exempt purposes, an agricultural and educational fair or exposition.
The term "convention and trade show activity" means any activity of a kind traditionally conducted at conventions, annual meetings, or trade shows, including, but not limited to, any activity one of the purposes of which is to attract persons in an industry generally (without regard to membership in the sponsoring organization) as well as members of the public to the show for the purpose of displaying industry products or to stimulate interest in, and demand for, industry products or services, or to educate persons engaged in the industry in the development of new products and services or new rules and regulations affecting the industry.
The term "qualified convention and trade show activity" means a convention and trade show activity carried out by a qualifying organization described in subparagraph (C) in conjunction with an international, national, State, regional, or local convention, annual meeting, or show conducted by an organization described in subparagraph (C) if one of the purposes of such organization in sponsoring the activity is the promotion and stimulation of interest in, and demand for, the products and services of that industry in general or to educate persons in attendance regarding new developments or products and services related to the exempt activities of the organization, and the show is designed to achieve such purpose through the character of the exhibits and the extent of the industry products displayed.
For purposes of this paragraph, the term "qualifying organization" means an organization described in section 501(c)(3), (4), (5), or (6) which regularly conducts as one of its substantial exempt purposes a show which stimulates interest in, and demand for, the products of a particular industry or segment of such industry or which educates persons in attendance regarding new developments or products and services related to the exempt activities of the organization.
An organization described in section 501(c) (3), (4), or (5) shall not be considered as not entitled to the exemption allowed under section 501(a) solely because of qualified public entertainment activities conducted by it.
In the case of a hospital described in section 170(b)(1)(A)(iii), the term "unrelated trade or business" does not include the furnishing of one or more of the services described in section 501(e)(1)(A) to one or more hospitals described in section 170(b)(1)(A)(iii) if-
The term "unrelated trade or business" does not include any trade or business which consists of conducting bingo games.
For purposes of paragraph (1), the term "bingo game" means any game of bingo-
in the presence of all persons placing wagers in such game,
In the case of a mutual or cooperative telephone or electric company, the term "unrelated trade or business" does not include engaging in qualified pole rentals (as defined in section 501(c)(12)(D)).
In the case of an organization which is described in section 501 and contributions to which are deductible under paragraph (2) or (3) of section 170(c), the term "unrelated trade or business" does not include-
For purposes of this subsection-
The term "low cost article" means any article which has a cost not in excess of $5 to the organization which distributes such item (or on whose behalf such item is distributed).
If more than 1 item is distributed by or on behalf of an organization to a single distributee in any calendar year, the aggregate of the items so distributed in such calendar year to such distributee shall be treated as 1 article for purposes of subparagraph (A).
In the case of any taxable year beginning in a calendar year after 1987, the $5 amount in subparagraph (A) shall be increased by an amount equal to-
For purposes of this subsection, any distribution of low cost articles by an organization shall be treated as a distribution incidental to the solicitation of charitable contributions only if-
The term "unrelated trade or business" does not include the activity of soliciting and receiving qualified sponsorship payments.
For purposes of this subsection-
The term "qualified sponsorship payment" means any payment made by any person engaged in a trade or business with respect to which there is no arrangement or expectation that such person will receive any substantial return benefit other than the use or acknowledgement of the name or logo (or product lines) of such person's trade or business in connection with the activities of the organization that receives such payment. Such a use or acknowledgement does not include advertising such person's products or services (including messages containing qualitative or comparative language, price information, or other indications of savings or value, an endorsement, or an inducement to purchase, sell, or use such products or services).
The term "qualified sponsorship payment" does not include any payment if the amount of such payment is contingent upon the level of attendance at one or more events, broadcast ratings, or other factors indicating the degree of public exposure to one or more events.
The term "qualified sponsorship payment" does not include-
For purposes of this subsection, to the extent that a portion of a payment would (if made as a separate payment) be a qualified sponsorship payment, such portion of such payment and the other portion of such payment shall be treated as separate payments.
The term "unrelated trade or business" includes the provision of debt management plan services (as defined in section 501(q)(4)(B)) by any organization other than an organization which meets the requirements of section 501(q).
26 U.S.C. § 513
Inflation Adjusted Items for Certain Years For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
EDITORIAL NOTES
AMENDMENTS2017-Subsec. (h)(2)(C)(ii). Pub. L. 115-97 substituted "for 'calendar year 2016' in subparagraph (A)(ii)" for "for 'calendar year 1992' in subparagraph (B)".2006-Subsec. (j). Pub. L. 109-280, which directed the addition of subsec. (j) to section 513, without specifying the act to be amended, was executed by making the addition to this section, which is section 513 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. 1997-Subsec. (i). Pub. L. 105-34 added subsec. (i).1993-Subsec. (h)(2)(C)(ii). Pub. L. 103-66 substituted "calendar year 1992" for "calendar year 1989". 1990-Subsec. (h)(2)(C)(ii). Pub. L. 101-508 inserted before period at end ", by substituting 'calendar year 1987' for 'calendar year 1989' in subparagraph (B) thereof". 1986-Subsec. (d)(3)(B). Pub. L. 99-514, §1602(a), inserted "or to educate persons in attendance regarding new developments or products and services related to the exempt activities of the organization".Subsec. (d)(3)(C). Pub. L. 99-514, §1602(b), substituted "section 501(c)(3), (4), (5), or (6)" for "section 501(c)(5) or (6)" and inserted "or which educates persons in attendance regarding new developments or products and services related to the exempt activities of the organization".Subsec. (h). Pub. L. 99-514, §1601(a), added subsec. (h).1980-Subsec. (g). Pub. L. 96-605 added subsec. (g). 1978-Subsec. (f). Pub. L. 95-502 added subsec. (f).1976-Subsec. (d). Pub. L. 94-455, §1305(a), added subsec. (d).Subsec. (e). Pub. L. 94-455, §1311(a), added subsec. (e). 1969-Subsec. (a)(2). Pub. L. 91-172, §121(b)(4), inserted reference to local associations of employees described in section 501(c)(4) of this title and organized before May 27, 1969. Subsec. (c). Pub. L. 91-172, §121(c), substituted "Advertising, etc., activities" for "Special rule for certain publishing businesses", in heading, and, in text, substituted provisions extending definition of trade or business to include any activity carried on for the production of income from the sale of goods or the performance of services, for provisions referring to publishing businesses carried on by an organization during a taxable year beginning before Jan. 1, 1953.1960-Subsec. (b)(2). Pub. L. 86-667 included trusts described in section 501(c)(17).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115-97, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109-280 applicable to taxable years beginning after Aug. 17, 2006, with transition rule for existing organizations, see section 1220(c) of Pub. L. 109-280, set out as a note under section 501 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105-34, §965(b), Aug. 5, 1997, 111 Stat. 894, provided that: "The amendment made by this section [amending this section] shall apply to payments solicited or received after December 31, 1997."
EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103-66 applicable to taxable years beginning after Dec. 31, 1992, see section 13201(c) of Pub. L. 103-66, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101-508 applicable to taxable years beginning after Dec. 31, 1990, see section 11101(e) of Pub. L. 101-508, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99-514, title XVI, §1601(b), Oct. 22, 1986, 100 Stat. 2767, provided that: "The amendment made by this section [amending this section] shall apply to distributions of low cost articles and exchanges and rentals of member lists after the date of the enactment of this Act [Oct. 22, 1986]."Pub. L. 99-514, title XVI, §1602(c), Oct. 22, 1986, 100 Stat. 2768, provided that: "The amendments made by this section [amending this section] shall apply to activities in taxable years beginning after the date of the enactment of this Act [Oct. 22, 1986]."
EFFECTIVE DATE OF 1980 AMENDMENT Pub. L. 96-605, title I, §106(c)(2), Dec. 29, 1980, 94 Stat. 3524, provided that: "The amendment made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 1969."
EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95-502, title III, §301(b), Oct. 21, 1978, 92 Stat. 1702, provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1969."
EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94-455, title XIII, §1305(b), Oct. 4, 1976, 90 Stat. 1717, provided that: "The amendments made by subsection (a) [amending this section] apply to qualified public entertainment activities in taxable years beginning after December 31, 1962, and to qualified convention and trade show activities in taxable years beginning after the date of enactment of this Act [Oct. 4, 1976]."Pub. L. 94-455, title XIII, §1311(b), Oct. 4, 1976, 90 Stat. 1730, as amended by Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The amendment made by this section [amending this section] shall apply to all taxable years to which the Internal Revenue Code of 1986 [formerly I.R.C. 1954] [this title] applies."
EFFECTIVE DATE OF 1969 AMENDMENT Amendment by Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91-172, set out as a note under section 511 of this title.
EFFECTIVE DATE OF 1960 AMENDMENT Amendment by Pub. L. 86-667 applicable to taxable years beginning after Dec. 31, 1959, see section 6 of Pub. L. 86-667, set out as a note under section 501 of this title.
CONDUCTING OF CERTAIN GAMES OF CHANCE NOT TREATED AS UNRELATED TRADE OR BUSINESSPub. L. 98-369, div. A, title III, §311, July 18, 1984, 98 Stat. 786, as amended by Pub. L. 99-514, §2, title XVIII, §1834, Oct. 22, 1986, 100 Stat. 2095, 2852, provided that:"(a) GENERAL RULE.-For purposes of section 513 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (defining unrelated trade or business), the term 'unrelated trade or business' does not include any trade or business which consists of conducting any game of chance if- "(1) such game of chance is conducted by a nonprofit organization,"(2) the conducting of such game by such organization does not violate any State or local law, and "(3) as of October 5, 1983-"(A) there was a State law (originally enacted on April 22, 1977) in effect which permitted the conducting of such game of chance by such nonprofit organization, but "(B) the conducting of such game of chance by organizations which were not nonprofit organizations would have violated such law. "(b) EFFECTIVE DATE.-Subsection (a) shall apply to games of chance conducted after June 30, 1981, in taxable years ending after such date."[Pub. L. 99-514, title XVIII, §1834, Oct. 22, 1986, 100 Stat. 2852, as amended by Pub. L. 100-647, title VI, §6201, Nov. 10, 1988, 102 Stat. 3730, provided in part that: "The amendment made by this section [amending section 311 of Pub. L. 98-369, set out above] shall apply to games of chance conducted after October 22, 1986, in taxable years ending after such date".]
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.