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Nonprofit corporation
A nonprofit corporation is an entity formed through articles of incorporation in a particular state that does not distribute its income to any unique individuals such as members, administrators or directors. Corporate status allows the Internal Revenue Service (IRS) to treat nonprofit corporations as unique taxpaying entities distinct from any individuals who manage or direct operations. According to IRS publications, the IRS honors corporate filing procedures at the state level and rarely investigates an organization's corporate status.[1][2]
Nonprofit corporations may apply for tax exempt status from the IRS. The majority of nonprofit corporations that receive tax exempt status are classified as 501(c)(3) organizations.[3][4]
Examples
Tax status
A nonprofit corporation may qualify as a 501(c)(3) tax exempt nonprofit organization. Its 501(c) designation refers to a section of the U.S. federal income tax code concerning charitable, religious and educational organizations.[5] Section 501(c) of the U.S. tax code has 29 sections that list specific conditions particular organizations must meet in order to be considered tax exempt. Organizations that have been granted 501(c)(3) status by the Internal Revenue Service are exempt from federal income tax.[6] This exemption requires that any political activity by the charitable organization be nonpartisan in nature.[7]
See also
External links
Footnotes
- ↑ Texas Secretary of State, "Nonprofit organizations," accessed November 24, 2015
- ↑ Internal Revenue Service, "IRC 7701 - General discussion," accessed November 24, 2015
- ↑ Internal Revenue Service, "Charities and other tax exempt organizations, 2010," accessed November 25, 2015
- ↑ Internal Revenue Service, "Federal tax obligations of non-profit corporations," accessed November 24, 2015
- ↑ Internal Revenue Service, "Exempt Purposes - Internal Revenue Code Section 501(c)(3)," accessed January 13, 2014
- ↑ Internal Revenue Service, "Life Cycle of a Public Charity/Private Foundation," accessed July 10, 2015
- ↑ Internal Revenue Service, "Exemption Requirements - 501(c)(3) Organizations," accessed January 13, 2014
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