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Rev. Rul. 1977-4 Document Info Printer

Revenue Rulings
Internal Revenue Service
 Revenue Ruling

Rev. Rul. 77-4

1977-1 C.B. 141

Section 501

IRS Headnote

Publication of ethnic newspaper. A nonprofit organization, whose only
activities are preparing and publishing a newspaper of local, national, and
international news articles with an ethnic emphasis, soliciting advertising
and selling subscriptions to that newspaper in a manner indistinguishable
from ordinary commercial publishing practices, is not operated exclusively
for charitable and educational purposes and does not qualify for exemption.


Full Text

Rev. Rul. 77-4 

Advice has been requested whether the nonprofit organization described
below, which otherwise qualifies for exemption from Federal income tax
under section 501(c)(3) of the Internal Revenue Code of 1954, is operated
exclusively for charitable and educational purposes. 

The organization is a nonprofit corporation the only activity of which is
the publication and distribution of a weekly newspaper that presents local,
national, and world news. The pages of the newspaper are equally divided
between community interest items of significance to the members of a
certain ethnic group, national and international news articles of special
interest to the members of the group, and regular commercial advertising.
It also republishes syndicated editorials. The newspaper operates with a
paid staff. The staff has no special skills and abilities other than those
that are generally found on the staff of any other newspaper. 

The corporation's income is derived from the sale of advertising and the
sale of subscriptions to the general public. Its primary expenses are the
payment of wages and printing costs. Although the organization has been in
existence several years, it has yet to realize a profit from its
operations. 

Section 501(c)(3) of the Code provides for the exemption from Federal
income tax of organizations organized and operated exclusively for
charitable and educational purposes. 

Section 1.501(c)(3)-1(d)(3) of the Income Tax Regulations states that the
term "educational," as used in section 501(c)(3) of the Code, relates to
the instruction of the public on subjects useful to the individual and
beneficial to the community. 

Rev. Rul. 67-4, 1967-1 C.B. 121, holds that an organization engaged in
publishing may qualify for exemption under section 501(c)(3) of the Code if
(1) the content of the publication is educational, (2) the preparation of
the material follows methods generally accepted as educational in
character, (3) the distribution of the materials is necessary or valuable
in achieving the organization's exempt purposes, and (4) the manner in
which the distribution is accomplished is distinguishable from ordinary
commercial publishing practices. 

This organization's only activities are preparing and publishing a
newspaper, soliciting advertising, and selling subscriptions to that
newspaper in a manner indistinguishable from ordinary commercial publishing
practices. Accordingly, it is not operated exclusively for charitable and
educational purposes and thus does not qualify for exemption from Federal
income tax under section 501(c)(3) of the Code. 

Compare Rev. Rul. 68-306, 1968-1 C.B. 257, which holds that a nonprofit
organization publishing a newspaper primarily devoted to news, articles,
and editorials relating to church and religious matters qualifies for
exemption from Federal income tax under section 501(c)(3) of the Code as a
charitable organization. By disseminating information about church
activities and by publishing inspirational articles, the organization
improved communication between the churches and their members and
stimulated the religious interests of its readers thereby contributing to
the advancement of religion. This organization was not operated in an
ordinary commercial manner.

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