Section 28 Organizations Exempt or Partially Exempt From Federal Income Tax

• Library: Tax Law 2009

The Code grants special status, akin to exemption, to a variety of organizations. In some instances, exempt status is explicit; in others, exempt status is determined by the structure of the Code provisions that do not explicitly grant exempt status but effectively do so. If an otherwise tax-exempt organization has taxable “unrelated business income” for federal income tax purposes, it will have taxable income for Missouri income tax purposes. For example, I.R.C. § 521 grants federal income tax exemption to farmers’ cooperative organizations, except for the tax on cooperatives governed by Subchapter T of Chapter 1 of the Code, I.R.C. §§ 1381 et seq. To the extent that such a cooperative is not exempt under § 521, it is treated for federal purposes as a taxable corporation. It may also be taxable to the same extent under Chapter 143, RSMo. A shipowner’s mutual protection and indemnity association is another example of a hybrid exempt organization for which exemption is not explicit, but the Code effectively reduces the gross income of the organization...