
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC504]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                   Subchapter F--Exempt Organizations
 
                          PART I--GENERAL RULE
 
Sec. 504. Status after organization ceases to qualify for 
        exemption under section 501(c)(3) because of substantial 
        lobbying or because of political activities
        

(a) General rule

    An organization which--
        (1) was exempt (or was determined by the Secretary to be exempt) 
    from taxation under section 501(a) by reason of being an 
    organization described in section 501(c)(3), and
        (2) is not an organization described in section 501(c)(3)--
            (A) by reason of carrying on propaganda, or otherwise 
        attempting, to influence legislation, or
            (B) by reason of participating in, or intervening in, any 
        political campaign on behalf of (or in opposition to) any 
        candidate for public office,

shall not at any time thereafter be treated as an organization described 
in section 501(c)(4).

(b) Regulations to prevent avoidance

    The Secretary shall prescribe such regulations as may be necessary 
or appropriate to prevent the avoidance of subsection (a), including 
regulations relating to a direct or indirect transfer of all or part of 
the assets of an organization to an organization controlled (directly or 
indirectly) by the same person or persons who control the transferor 
organization.

(c) Churches, etc.

    Subsection (a) shall not apply to any organization which is a 
disqualified organization within the meaning of section 501(h)(5) 
(relating to churches, etc.) for the taxable year immediately preceding 
the first taxable year for which such organization is described in 
paragraph (2) of subsection (a).

(Added Pub. L. 94-455, title XIII, Sec. 1307(a)(2), Oct. 4, 1976, 90 
Stat. 1721; amended Pub. L. 100-203, title X, Sec. 10711(b)(1), (2)(A), 
Dec. 22, 1987, 101 Stat. 1330-464.)


                            Prior Provisions

    A prior section 504, acts Aug. 16, 1954, ch. 736, 68A Stat. 168; 
Oct. 22, 1968, Pub. L. 90-630, Sec. 6(a), 82 Stat. 1330, related to 
denial of exemption, prior to repeal by Pub. L. 91-172, title I, 
Sec. 101(j)(15), Dec. 30, 1969, 83 Stat. 527. For effective date of 
repeal, see section 101(k)(2)(B) of Pub. L. 91-172, set out as an 
Effective Date note under section 4940 of this title.


                               Amendments

    1987--Pub. L. 100-203, Sec. 10711(b)(2)(A), substituted 
``substantial lobbying or because of political activities'' for 
``substantial lobbying'' in section catchline.
    Subsec. (a)(2). Pub. L. 100-203, Sec. 10711(b)(1), amended par. (2) 
generally. Prior to amendment, par. (2) read as follows: ``is not an 
organization described in section 501(c)(3) by reason of carrying on 
propaganda, or otherwise attempting, to influence legislation,''.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-203 applicable with respect to activities 
after Dec. 22, 1987, see section 10711(c) of Pub. L. 100-203, set out as 
a note under section 170 of this title.


                        Construction of Amendment

    Section 1307(a)(3) of Pub. L. 94-455 provided that: ``It is the 
intent of Congress that enactment of this section [amending section 501 
and enacting section 504 of this title] is not to be regarded in any way 
as an approval or disapproval of the decision of the Court of Appeals 
for the Tenth Circuit in Christian Echoes National Ministry, Inc. versus 
United States, 470 F.2d 849 (1972), or of the reasoning in any of the 
opinions leading to that decision.''
