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U.S. Code as of:
01/19/04
Section 509. Private foundation defined
(a) General rule
For purposes of this title, the term "private foundation" means a
domestic or foreign organization described in section 501(c)(3)
other than -
(1) an organization described in section 170(b)(1)(A) (other
than in clauses (vii) and (viii));
(2) an organization which -
(A) normally receives more than one-third of its support in
each taxable year from any combination of -
(i) gifts, grants, contributions, or membership fees, and
(ii) gross receipts from admissions, sales of merchandise,
performance of services, or furnishing of facilities, in an
activity which is not an unrelated trade or business (within
the meaning of section 513), not including such receipts from
any person, or from any bureau or similar agency of a
governmental unit (as described in section 170(c)(1)), in any
taxable year to the extent such receipts exceed the greater
of $5,000 or 1 percent of the organization's support in such
taxable year,
from persons other than disqualified persons (as defined in
section 4946) with respect to the organization, from
governmental units described in section 170(c)(1), or from
organizations described in section 170(b)(1)(A) (other than in
clauses (vii) and (viii)), and
(B) normally receives not more than one-third of its support
in each taxable year from the sum of -
(i) gross investment income (as defined in subsection (e))
and
(ii) the excess (if any) of the amount of the unrelated
business taxable income (as defined in section 512) over the
amount of the tax imposed by section 511;
(3) an organization which -
(A) is organized, and at all times thereafter is operated,
exclusively for the benefit of, to perform the functions of, or
to carry out the purposes of one or more specified
organizations described in paragraph (1) or (2),
(B) is operated, supervised, or controlled by or in
connection with one or more organizations described in
paragraph (1) or (2), and
(C) is not controlled directly or indirectly by one or more
disqualified persons (as defined in section 4946) other than
foundation managers and other than one or more organizations
described in paragraph (1) or (2); and
(4) an organization which is organized and operated exclusively
for testing for public safety.
For purposes of paragraph (3), an organization described in
paragraph (2) shall be deemed to include an organization described
in section 501(c)(4), (5), or (6) which would be described in
paragraph (2) if it were an organization described in section
501(c)(3).
(b) Continuation of private foundation status
For purposes of this title, if an organization is a private
foundation (within the meaning of subsection (a)) on October 9,
1969, or becomes a private foundation on any subsequent date, such
organization shall be treated as a private foundation for all
periods after October 9, 1969, or after such subsequent date,
unless its status as such is terminated under section 507.
(c) Status of organization after termination of private foundation
status
For purposes of this part, an organization the status of which as
a private foundation is terminated under section 507 shall (except
as provided in section 507(b)(2)) be treated as an organization
created on the day after the date of such termination.
(d) Definition of support
For purposes of this part and chapter 42, the term "support"
includes (but is not limited to) -
(1) gifts, grants, contributions, or membership fees,
(2) gross receipts from admissions, sales of merchandise,
performance of services, or furnishing of facilities in any
activity which is not an unrelated trade or business (within the
meaning of section 513),
(3) net income from unrelated business activities, whether or
not such activities are carried on regularly as a trade or
business,
(4) gross investment income (as defined in subsection (e)),
(5) tax revenues levied for the benefit of an organization and
either paid to or expended on behalf of such organization, and
(6) the value of services or facilities (exclusive of services
or facilities generally furnished to the public without charge)
furnished by a governmental unit referred to in section 170(c)(1)
to an organization without charge.
Such term does not include any gain from the sale or other
disposition of property which would be considered as gain from the
sale or exchange of a capital asset, or the value of exemption from
any Federal, State, or local tax or any similar benefit.
(e) Definition of gross investment income
For purposes of subsection (d), the term "gross investment
income" means the gross amount of income from interest, dividends,
payments with respect to securities loans (as defined in section
512(a)(5)), rents, and royalties, but not including any such income
to the extent included in computing the tax imposed by section 511.
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