Agricultural or Horticultural
Organization - 501(c)(5)
The activities of
agricultural and horticultural organizations involve raising
livestock, forestry, cultivating land, raising and harvesting
crops or aquatic resources, cultivating useful or ornamental
plants, and similar pursuits.
For this purpose,
aquatic resources include only animal or vegetable
life, but not mineral resources. The term harvesting,
in this case, includes fishing and related pursuits.
The primary
purpose of exempt agricultural and horticultural organizations
under Internal Revenue Code section 501(c)(5) must be to better
the conditions of those engaged in agriculture or horticulture,
develop more efficiency in agriculture or horticulture, or
improve the products. Their net earnings may not
inure to the benefit of any member.
Agricultural
organizations may be quasi-public and are often designed to
encourage better agricultural and horticultural products through
a system of awards, using income from entry fees, gate receipts,
and donations to meet expenses of upkeep and operation. When the
activities are directed toward improving marketing or other
business conditions in one or more lines of business, rather
than improving production techniques or bettering the conditions
of persons engaged in agriculture, the organization may qualify
for exemption as a
business league, board of trade, or other organization under
Code section 501(c)(6). In addition, an organization may
qualify for exemption under
section 501(c)(3) if its primary purpose is educating the
public on horticultural or agricultural subjects.
During its
existence, a tax-exempt agricultural or horticultural
organization has numerous interactions with the IRS – from
filing an application for recognition of tax-exempt status, to
filing the required annual information returns, to making
changes in its mission and purpose.
The illustration below provides an easy-to-use way of
linking to the documents most organizations will need as they
proceed though the phases of their “life cycle.”
**Agricultural and horticultural organizations
promote the interests of persons engaged in raising livestock, harvesting crops
or aquatic resources, cultivating useful or ornamental plants, or similar
pursuits. Generally, agricultural and horticultural activities are those
involved in the art or science
of cultivating land, including preparing the soil, planting seeds, raising and
harvesting crops or aquatic resources (including fishing and related pursuits),
and rearing, feeding and managing livestock. Livestock includes
fur-bearing animals raised in captivity for their pelts, as well as domestic
farm animals such as sheep, cattle, hogs, etc. Aquatic resources does
not include mineral resources.
DISCLAIMER: This information is not intended to provide legal
or accounting advice,
or to address specific situations. Please consult with
your legal or tax advisor to supplement and verify what you learn here.
NonProfitExpert.com Copyright 1998 - 2012 All Rights Reserved.
