
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC511]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                   Subchapter F--Exempt Organizations
 
  PART III--TAXATION OF BUSINESS INCOME OF CERTAIN EXEMPT ORGANIZATIONS
 
Sec. 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).

(Aug. 16, 1954, ch. 736, 68A Stat. 169; Pub. L. 86-667, Sec. 3, July 14, 
1960, 74 Stat. 535; Pub. L. 89-352, Sec. 2, Feb. 2, 1966, 80 Stat. 4; 
Pub. L. 91-172, title I, Sec. 121(a)(1)-(3), title III, Sec. 301(b)(8), 
title VIII, Sec. 803(d)(2), Dec. 30, 1969, 83 Stat. 536, 585, 684; Pub. 
L. 95-30, title I, Sec. 101(d)(6), May 23, 1977, 91 Stat. 133; Pub. L. 
95-600, title III, Sec. 301(b)(5), title IV, Sec. 421(e)(3), Nov. 6, 
1978, 92 Stat. 2821, 2876; Pub. L. 97-248, title II, Sec. 201(d)(5), 
formerly Sec. 201(c)(5), Sept. 3, 1982, 96 Stat. 419, renumbered 
Sec. 201(d)(5), Pub. L. 97-448, title III, Sec. 306(a)(1)(A)(i), Jan. 
12, 1983, 96 Stat. 2400; Pub. L. 100-647, title I, Sec. 1007(g)(6), Nov. 
10, 1988, 102 Stat. 3435.)


                               Amendments

    1988--Subsec. (d). Pub. L. 100-647 struck out subsec. (d) which read 
as follows: ``Tax Preferences.--
        ``(1) Organizations taxable at corporate rates.--If an 
    organization is subject to tax on unrelated business taxable income 
    pursuant to subsection (a), the tax imposed by section 56 shall 
    apply to such organizations with respect to items of tax preference 
    which enter into the computation of unrelated business taxable 
    income in the same manner as section 56 applies to corporations.
        ``(2) Organizations taxable as trusts.--If an organization is 
    subject to tax on unrelated business taxable income pursuant to 
    subsection (b), the taxes imposed by section 55 shall apply to such 
    organization with respect to items of tax preference which enter 
    into the computation of unrelated business taxable income.''
    1982--Subsec. (d)(2). Pub. L. 97-248 substituted ``section 55'' for 
``section 55 and section 56 (as the case may be)''.
    1978--Subsec. (a)(1). Pub. L. 95-600, Sec. 301(b)(5)(A), substituted 
``a tax'' for ``a normal tax and a surtax''.
    Subsec. (a)(2). Pub. L. 95-600, Sec. 301(b)(5)(B), substituted 
``tax'' for ``taxes'' wherever appearing.
    Subsec. (d). Pub. L. 95-600, Sec. 421(e)(3), substituted provisions 
relating to organizations taxable at corporate rates and organizations 
taxable as trusts, for provisions relating to imposition of the tax 
imposed by section 56 of this title to an organization subject to tax 
under this section for tax preferences computed in unrelated business 
taxable income.
    1977--Subsec. (b)(1). Pub. L. 95-30 substituted ``section 1(e)'' for 
``section 1(d)''.
    1969--Subsec. (a)(2)(A). Pub. L. 91-172, Sec. 121(a)(1), removed 
reference, in heading, to pars. (2), (3), (5), (6), (14)(B), (C), and 
(17) of section 501(c) of this title, and, in text, struck out 
exemptions to churches, conventions, or associations of churches, from 
the imposition of tax on their unrelated business income, made 
corporations organized under section 501(c)(1) of this title (i.e. 
organized under Acts of Congress), exempt from such tax, but made all 
such exemptions subservient to the exceptions in part II and section 
501(a) of this title.
    Subsec. (b)(1). Pub. L. 91-172, Sec. 803(d)(2), substituted section 
1(d) for section 1 in reference to section under which the computation 
of the tax dealing with the imposition of tax on the unrelated business 
taxable income of trusts, is computed.
    Subsec. (b)(2). Pub. L. 91-172, Sec. 121(a)(2), pluralized ``trust'' 
in heading and in text made the imposition of tax on the unrelated 
business income of exempt trusts subject to provisions of part II, and, 
for purposes of determining trusts exempt from taxation, substituted 
reference to section 501(a) for reference to ``section 501(c)(3) or (17) 
or section 401(a)''.
    Subsec. (c). Pub. L. 91-172, Sec. 121(a)(3), added subsec. (c). 
Former subsec. (c), covering the effective date, was struck out.
    Subsec. (d). Pub. L. 91-172, Sec. 301(b)(8), added subsec. (d).
    1966--Subsec. (a)(2)(A). Pub. L. 89-352 inserted ``(14)(B) or (C),'' 
after ``(6),'' in heading and in text.
    1960--Subsec. (a)(2). Pub. L. 86-667, Sec. 3(a), included 
organizations described in section 501(c)(17) within subpar. (A).
    Subsec. (b). Pub. L. 86-667, Sec. 3(b), inserted a reference to 
section 501(c)(17).


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Tax Reform Act of 1986, 
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of 
Pub. L. 100-647, set out as a note under section 1 of this title.


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-248 applicable to taxable years beginning 
after Dec. 31, 1982, see section 201(e)(1) of Pub. L. 97-248, set out as 
a note under section 5 of this title.


                    Effective Date of 1978 Amendment

    Amendment by section 301(b)(5)(A), (B) of Pub. L. 95-600 applicable 
to taxable years beginning after Dec. 31, 1978, see section 301(c) of 
Pub. L. 95-600, set out as a note under section 11 of this title.
    Amendment by section 421(e)(3) of Pub. L. 95-600 applicable to 
taxable years beginning after Dec. 31, 1978, see section 421(g) of Pub. 
L. 95-600, set out as a note under section 5 of this title.


                    Effective Date of 1977 Amendment

    Amendment by Pub. L. 95-30 applicable to taxable years beginning 
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out as a 
note under section 1 of this title.


                    Effective Date of 1969 Amendment

    Section 121(g) of Pub. L. 91-172, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amendments 
made by this section [amending this section and sections 48, 501, 502, 
503, 512 to 514, 681, 801, 810, 1443, 1504, and 7605 of this title] 
(other than by subsections (b)(3) and (e) [enacting sections 277 and 
6050 of this title]) shall apply to taxable years beginning after 
December 31, 1969. The amendments made by subsection (b)(3) [enacting 
section 277 of this title] shall apply to taxable years beginning after 
December 31, 1970. The amendments made by subsection (e) [enacting 
section 6050 of this title] shall apply with respect to transfers of 
property after December 31, 1969. Where an organization makes a bargain 
purchase of property before October 9, 1969, which is subject to a 
mortgage which was placed on the property more than 5 years before the 
purchase, and the organization paid the seller a total amount no greater 
than the amount of the seller's cost (including attorneys' fees) 
directly related to the transfer of such property to the organization 
(but in any event no more than 10 percent of the value of the seller's 
equity in the property), the indebtedness secured by such mortgage shall 
not be treated, notwithstanding the amendments made by subsection (d)(1) 
[amending section 514 of this title], as acquisition indebtedness for 
purposes of section 514(c)(1) of the Internal Revenue Code of 1986 
[formerly I.R.C. 1954] during a period of 10 years following the date of 
the transaction.''
    Amendment by section 301(b)(8) of Pub. L. 91-172 applicable to 
taxable years ending after Dec. 31, 1969, see section 301(c) of Pub. L. 
91-172, set out as a note under section 5 of this title.
    Amendment by section 803(d)(2) of Pub. L. 91-172 applicable to 
taxable years beginning after Dec. 31, 1970, see section 803(f) of Pub. 
L. 91-172, set out as a note under section 1 of this title.


                    Effective Date of 1966 Amendment

    Section 3 of Pub. L. 89-352 provided in part that: ``The amendment 
made by section 2 [amending this section] shall apply to taxable years 
beginning after the date of the enactment of this Act [Feb. 2, 1966].''


                    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.

                  Section Referred to in Other Sections

    This section is referred to in sections 11, 12, 50, 168, 220, 337, 
408, 448, 501, 509, 512, 513, 514, 515, 527, 529, 530, 772, 856, 860E, 
904, 995, 1201, 1245, 1250, 1443, 1563, 2651, 4940, 6654, 6655, 7611, 
7871 of this title.
