Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 10Instrumentalities of Government and Title-Holding Corporations

• 10.1 §501(c)(1) Instrumentalities of the United States
• 10.2 Governmental Units
• 10.3 Qualifying for §501(c)(3) Status
  • (a) Disadvantages of §501(c)(3) Status
  • (b) Why Aren't Governments Exempt?
  • (c) Governmental Units
  • (d) Political Subdivisions
  • (e) Integral Parts
  • (f) Instrumentalities
  • (g) Affiliates
• 10.4 §501(c)(2) Title-Holding Corporations
  • (a) Organizational and Operational Requirements
  • (b) Turning Over the Income
  • (c) Why Form a Title-Holding Corporation?
• 10.5 §501(c)(25) Title-Holding Corporations

10.1 §501(c)(1) Instrumentalities of the United States

Internal Revenue Code (IRC) §501(c)(1) exempts “instrumentalities” of the United States organized specifically under an act of Congress. Among these instrumentalities are the following:

• Federal Deposit Insurance Corporation (FDIC)
• Federal Home Loan Banks
• Federal Land Banks
• Federal Intermediate Credit Banks
• Federal National Mortgage Association (FNMA)
• Federal Reserve Bank
• Federal Crop Insurance Corporation
• United States Housing Authority
• Pennsylvania Avenue Development Corporation
• Federal Credit Unions
• Pension Benefit Guaranty Corporation

These creations of Congress are considered exempt because they are wholly owned by the United States government. They are required neither to file annual information returns nor to apply for exemption from income tax.

10.2 Governmental Units

States, their municipalities, and other divisions thereof, interestingly, ...