501(c)

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DEFINITION of '501(c)'

A subsection under the United States Internal Revenue Code. The subsection relates to non-profit organizations and tax law and identifies which nonprofit organizations are exempt from paying federal income tax

BREAKING DOWN '501(c)'

Under subsection 501(c) there are 12 other sections that separate the different organizations according to operations. The most common include:

c(1) - Any corporation that is organized under an act of Congress that is exempt from federal
income tax
c(2) - Corporations that hold title of property for exempt organizations
c(3) - Corporations, funds or foundations that operate for religious, charitable, scientific,
literary or educational purposes
c(4) - Nonprofit organizations that promote social welfare
c(5) - Labor, agricultural or horticultural associations
c(6) - Business leagues, chambers of commerce, etc. that are not organized for profit
c(7) - Recreational organizations

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RELATED FAQS
  1. How does revenue recognition differ between profit and non-profit companies?

    Under the generally accepted accounting principles, or GAAP, for-profit companies recognize revenue as it is earned through ... Read Full Answer >>
  2. Do nonprofit organizations pay taxes?

    Section 501 of the Internal Revenue Service (IRS) tax code exempts qualified nonprofit organizations from federal taxes. ... Read Full Answer >>
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    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
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    The Social Security tax rate is 12.4% as of 2015. Of that amount, the employee is responsible for half, or 6.2%, and the ... Read Full Answer >>
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