# § 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)—
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).
**(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,
---
**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 169; Pub. L. 86–667, § 3, July 14, 1960, 74 Stat. 535; Pub. L. 89–352, § 2, Feb. 2, 1966, 80 Stat. 4; Pub. L. 91–172, title I, § 121(a)(1)–(3), title III, § 301(b)(8), title VIII, § 803(d)(2), Dec. 30, 1969, 83 Stat. 536, 585, 684; Pub. L. 95–30, title I, § 101(d)(6), May 23, 1977, 91 Stat. 133; Pub. L. 95–600, title III, § 301(b)(5), title IV, § 421(e)(3), Nov. 6, 1978, 92 Stat. 2821, 2876; Pub. L. 97–248, title II, § 201(d)(5), formerly § 201(c)(5), Sept. 3, 1982, 96 Stat. 419, renumbered § 201(d)(5), Pub. L. 97–448, title III, § 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 100–647, title I, § 1007(g)(6), Nov. 10, 1988, 102 Stat. 3435.)
## Editorial Notes
### Amendments
1988—Subsec. (d). struck out subsec. (d) which read as follows: “.—
“(1) .—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) .—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). substituted “section 55” for “section 55 and section 56 (as the case may be)”.
1978—Subsec. (a)(1). , substituted “a tax” for “a normal tax and a surtax”.
Subsec. (a)(2). , substituted “tax” for “taxes” wherever appearing.
Subsec. (d). , substituted provisions relating to organizations taxable at corporate rates and organizations taxable as trusts, for provisions relating to imposition of the tax imposed by to an organization subject to tax under this section for tax preferences computed in unrelated business taxable income.
1977—Subsec. (b)(1). substituted “section 1(e)” for “section 1(d)”.
1969—Subsec. (a)(2)(A). , removed reference, in heading, to pars. (2), (3), (5), (6), (14)(B), (C), and (17) of , 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 (i.e. organized under Acts of Congress), exempt from such tax, but made all such exemptions subservient to the exceptions in part II and .
Subsec. (b)(1). , 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). , 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). , added subsec. (c). Former subsec. (c), covering the effective date, was struck out.
Subsec. (d). , added subsec. (d).
1966—Subsec. (a)(2)(A). inserted “(14)(B) or (C),” after “(6),” in heading and in text.
1960—Subsec. (a)(2). , included organizations described in section 501(c)(17) within subpar. (A).
Subsec. (b). , inserted a reference to section 501(c)(17).
## Statutory Notes and Related Subsidiaries
### Effective Date of 1988 Amendment
Amendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1982 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1978 Amendment
Amendment by section 301(b)(5)(A), (B) of applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1977 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1969 Amendment
> “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
>
> . The amendments made by subsection (b)(3) [enacting
>
> ] shall apply to taxable years beginning after
>
> . The amendments made by subsection (e) [enacting
>
> ] shall apply with respect to transfers of property after
>
> . Where an organization makes a bargain purchase of property before
>
> , 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
>
> ], 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.”
, , , as amended by , , , provided that:
Amendment by applicable to taxable years ending after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1966 Amendment
> “The amendment made by section 2 [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [
>
> ].”
, , , provided in part that:
### Effective Date of 1960 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .