Question

Which of the following types of corporations would be unlikely to obtain 501(c)(3) tax exemption?

		A charitable organization
		A church
		A school
		A grocery store
		None of these

Answer 1

For obtaining 501(c)(3) tax exemption, the corporation must be non- profit organization. The non- profit organization can be public charitable organization or private operating foundation. In other words, such non profitable corporations must not serve any benifit to any private individual or group of individuals.

According to the above explanation, the corporation that would be unlikely to obtain 501(c)(3) tax exemption is a grocery store.

Reason-

1. A charitable organization is a non profit corporation, working for charitable purposes can always obtain 501(c)(3) tax exemption.

2. A Church, may get 501(c)(3) tax exemption, due to the nature of operations. A Church is generally not involved in any profit making activities and usually perform charitable activities. So Church may likely obtain 501(c)(3) tax exemption .

3. A School, provided that it is operated on behalf on some private charitable corporation or public charitable corporation to provide free education or education at lower rates, may get 501(c)(3) tax exemption. But no individual should obtain any benifit by running a school.

4. A grocery store is unlikely to get 501(c)(3) tax exemption due to its nature of business. A grocery store owner, even if he sell grocery items at lower rate, would always ensure that he is earning profit, no matter if it is less. A grocery store is never operated for not making profit. So it is unlikely to obtain 501(c)(3) tax exemption by a grocery store.