501(C)(3) NOTES

REV. RUL. 70-4, 1970-1 C.B. 126

Org. promoting and regulating a sport for amateurs is not exempt. Does this non-profit qualify? o Org. formed for: Encouraging improvement of physical condition; and Educating public in a particular sport for amateurs. o Org.'s primary activities: Reviving and promoting a sport by circulating printed material; Conducting exhibitions to introduce the sport to the public; Conducting tournaments; Giving occasional instructive clinics; Set standards for the equipment to be used; Establishes the official rules of the games; and Prescribes the official size of the playing area. Section 501(c)(3) provides exemption for orgs operated exclusively for educational purposes. o "Operated exclusively" org. means it engages primarily in activities accomplishing exempt purposes per section 501(c)(3). An org. will not be so regarded if more than an insubstantial part of activities is not in furtherance of an exempt purpose. [Section 1.501(c)(3)-1(c)(1)] o Educational" means including the instruction/training of the individual to improve/develop capabilities, or the instruction of the public on subjects useful to the individual and beneficial to the community. [Section 1.501(c)-1(d)(3)] Section 501(c)(4) for civil league or org. operated exclusively for promotion of social welfare. Operated exclusively for the promotion of social welfare means it primarily promotes the common good & general welfare of the people of the community. [Section 1.501(c)(4)-1(2)]

REV. RUL. 69-384, 1969-2 C.B. 122

An amateur baseball assoc. of teams with amateur players of college age is exempt per 501(c)(4). Does a nonprofit org. created for maintaining an amateur baseball assoc. & conducting games among its member teams qualify per 501(c)(4)? o Org. formed to: Unite those for advancing amateur baseball for college-aged men; and Develop a program of sportsmanship, character-building, citizenship, and physical and mental well-being. o Org. primarily: Creates schedules and sets standards, policies, and ethics for member teams in a particular community; Operating funds obtained through league, forfeit, and tournament fees; Funds used to purchase trophies and to pay umpires, ballboys, insurance, and other necessary costs; and Players do not receive any pay or share in the funds of the org. Section 501(c)(4) provides for exemption non-profit civic leagues/org. operated exclusively for promotion of social welfare. Section 1.501(c)(4)-1(a)(2) of the Income Tax Regulations provides that an org. is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. An org.

embraced within this section is one that is operated primarily for the purpose of bringing about civic betterments and social improvements. By helping to develop good sportsmanship, high character, and the physical and mental wellbeing of young adults through the operation of an amateur baseball league, it is held that the org. is promoting the common good and general welfare of the people of the community. Accordingly, this org. is exempt from Federal income tax under section 501(c)(4) of the Code. Compare Revenue Ruling 55-516, C.B. 1955-2, 260, which holds that a semiprofessional baseball club is not exempt under section 501(c)(4) of the Code. Even though an org. considers itself within the scope of this Revenue Ruling, it must (in order to establish exemption under section 501(c)(4) of the Code) file Form 1024, Exemption Application, with the District Director of Internal Revenue for the internal revenue district in which is located the principal place of business or principal office of the org.. See section 1.501(a)-1 of the regulations.