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U.S. Code as of:
01/19/04
Section 511. Imposition of tax on unrelated business income of charitable, etc., organizations
(a) Charitable, etc., organizations taxable at corporation rates
(1) Imposition of tax
There is hereby imposed for each taxable year on the unrelated
business taxable income (as defined in section 512) of every
organization described in paragraph (2) a tax computed as
provided in section 11. In making such computation for purposes
of this section, the term "taxable income" as used in section 11
shall be read as "unrelated business taxable income".
(2) Organizations subject to tax
(A) Organizations described in sections 401(a) and 501(c)
The tax imposed by paragraph (1) shall apply in the case of
any organization (other than a trust described in subsection
(b) or an organization described in section 501(c)(1)) which is
exempt, except as provided in this part or part II (relating to
private foundations), from taxation under this subtitle by
reason of section 501(a).
(B) State colleges and universities
The tax imposed by paragraph (1) shall apply in the case of
any college or university which is an agency or instrumentality
of any government or any political subdivision thereof, or
which is owned or operated by a government or any political
subdivision thereof, or by any agency or instrumentality of one
or more governments or political subdivisions. Such tax shall
also apply in the case of any corporation wholly owned by one
or more such colleges or universities.
(b) Tax on charitable, etc., trusts
(1) Imposition of tax
There is hereby imposed for each taxable year on the unrelated
business taxable income of every trust described in paragraph (2)
a tax computed as provided in section 1(e). In making such
computation for purposes of this section, the term "taxable
income" as used in section 1 shall be read as "unrelated business
taxable income" as defined in section 512.
(2) Charitable, etc., trusts subject to tax
The tax imposed by paragraph (1) shall apply in the case of any
trust which is exempt, except as provided in this part or part II
(relating to private foundations), from taxation under this
subtitle by reason of section 501(a) and which, if it were not
for such exemption, would be subject to subchapter J (sec. 641
and following, relating to estates, trusts, beneficiaries, and
decedents).
(c) Special rule for section 501(c)(2) corporations
If a corporation described in section 501(c)(2) -
(1) pays any amount of its net income for a taxable year to an
organization exempt from taxation under section 501(a) (or which
would pay such an amount but for the fact that the expenses of
collecting its income exceed its income), and
(2) such corporation and such organization file a consolidated
return for the taxable year,
such corporation shall be treated, for purposes of the tax imposed
by subsection (a), as being organized and operated for the same
purposes as such organization, in addition to the purposes
described in section 501(c)(2).
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