1 1924 ACT 101 [(3) The term "cash dividends" includes dividends 2 paid in interest-bearing scrip, if subject to tax in the hands of 3 the distributees to the same extent as a dividend paid in cash.] 5 CONDITIONAL AND OTHER EXEMPTIONS OF CORPORATIONS. SEC. 231. The following organizations shall be exempt 6 from taxation under this title 7 (1) Labor, agricultural, or horticultural organizations; (2) Mutual savings banks not having a capital stock 9 represented by shares; 10 (3) Fraternal beneficiary societies, orders, or associa11 tions, (a) operating under the lodge system or for the ex12 clusive benefit of the members of a fraternity itself oper13 ating under the lodge system; and (b) providing for the 14 payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents; (4) Domestic building and loan associations substan17 tially all the business of which is confined to making loans to 18 members; and cooperative banks without capital stock ar19 ganized and operated for mutual purposes and without profit; (5) Cemetery companies owned and operated ex21 clusively for the benefit of their members or which are not 22 operated for profit; and any corporation chartered solely for :; 20 23 burial purposes as a cemetery corporation and not permitted 24 by its charter to engage in any business not necessarily inci 1 2 103 Exhibit D Page 2 of 20 (10) [Farniers'] BENEVOLENT LIFE INSUR ANCE ASSOCIATIONS OF A PURELY LOCAL 8 CHARACTER, FARMERS' or other mutual hail, cyclone, 4 casualty. (76)[life.] or fire insurance companies, mutual 5 ditch or irrigation companies, mutual or cooperative tele6 phone companies. (77) [or casualty or fire reciprocal or in7 terinsurance exchanges.] or like organizations; but only if 8 (78)ultantially all 85 per centum or more of the income 9 consists of amounts collected from members for the sole purpose of meeting losses and expenses; (79)also benevolent 11 mutual life insurance associations not operated for profit. 12 whose business is purely local and wholly for benefit of its 13 members; 10 14 15 16 17 18 19 (11) Farmers', fruit growers', or like associations, organized and operated as sales agents for the purpose of marketing the products of members and turning back to them the proceeds of sales, less the necessary selling ex penses, on the basis of the quantity of produce furnished by them; or organized and operated as purchasing agents for the purpose of purchasing supplies and equipment for the use of members and turning over such supplies and equip22 ment to such members at actual cost, plus necessary ex 20 21 23 24 25 penses; (12) Corporations organized for the exclusive purpose of holding title to property, collecting income therefrom, and 221 hand at the end of the year is retained to meet losses and expenses of s returned to members. The phrase "of a purely local character" applies to benevolent life insurance associations, and not to the other organizations specified in meting 101(10). It applies, however, to any organization seeking Exemption on the ground that it is an organization similar to a benevolent life insurance association. An organization of a purely local character is one whose business activities are confined to a particular community, place, or district, irrespective, however, of political subdivisions. If the activities of an organization are limited only by the borders of a State it cannot be considered to be purely local in character (SEC. 101. EXEMPTIONS FROM TAX ON CORPORATIONS.] (The following organizations shall be exempt from taxation under this file) (11) Parmen' or other mutual hall, cyclone, casualty, or are insurance companies or associations (including interinsurers and reciprocal underwriters) the income of which in sand or held for the purpose of paying losses or aspenser, Arr. 101(11) Farmers' or other mutual hail, cyclone, casualty, or Are insurance companies or associations-To be exempt under section 1011) the business of the organization must be purely mutual and rs income must be used or held solely for the purpose of paying losses or expenses. Neither the extent of the territory in which the company may properly operate nor the fact that it accepts premium deposits instead of assessments is decisive as to its exemption. The writing of nonmutual insurance regardless of amount will deprive a company of the exemption The term "casualty" as used in section 101 (11) is limited to those forms of indemnity insurance providing for payment of loss or damage to property or personal injury to third persons resulting from accident or some such unanticipated contingency other than fire or the tements, and does not include indemnity from loss through socidape resulting in bodily injury to, or death of, the insured. [SEC. 191. EXEMPTIONS FROM TAX ON CORPORATIONE] The following organizations shall be exempt from taxation under this dule-) (12) Farmers', fruit growers', or like associations organised and operated on a cooperative basis (a) for the purpose of marketing the products of members or other producers, and turning back to them the proceeds of males, lean the necessary marketing expenses, on the basis of either the quantity or the value of the products forniabed by them, or (b) for the purpose of parebasing supplies and equipment for the use of members or other persons, and turn Exhibit D Page 4 of 20 |