{"id":2910,"date":"2023-07-18T06:04:51","date_gmt":"2023-07-18T13:04:51","guid":{"rendered":"https:\/\/www.artsjournal.com\/worth\/?p=2910"},"modified":"2023-07-18T06:04:54","modified_gmt":"2023-07-18T13:04:54","slug":"producing-and-exhibiting-arts-as-a-nonprofit-entity-is-a-qualified-tax-exempt-activity","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/worth\/2023\/07\/producing-and-exhibiting-arts-as-a-nonprofit-entity-is-a-qualified-tax-exempt-activity\/","title":{"rendered":"Producing and exhibiting arts as a nonprofit entity is a qualified tax exempt activity"},"content":{"rendered":"\n
\"\"<\/a><\/figure>\n\n\n\n

Here’s what the Internal Revenue Service says<\/a>:<\/p>\n\n\n\n

\n

Organizations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes and that meet certain other requirements are tax exempt under Internal Revenue Code Section 501(c)(3).<\/p>\n<\/blockquote>\n\n\n\n

Organizations whose primary focus is literary or educational are exempt from the corporate income tax (they are also typically exempt from state property taxes, but that is a state government matter). An orchestra or museum qualifies as an educational institution, and this is not at all unreasonable: they educate the public about music and the arts.<\/p>\n\n\n\n

Here is the IRS, again<\/a>:<\/p>\n\n\n\n

\n

It has long been the position of the Service that “cultural” type organizations qualify for recognition of exemption under IRC 501(c)(3). S.M. 1176, C.B. 1, 147 (1919), holds that an association organized and operated exclusively for the purpose of giving musical concerts of an educational character is exempt.<\/p>\n<\/blockquote>\n\n\n\n

\n

Similarly, I.T. 1475, C.B. 1-2, 184 (1922), holds that a corporation organized to maintain a band for the purpose of giving free public concerts and to promote musical art is exempt as an educational organization. Example (4) of Reg. 1.501(c)(3)-1(d)(3)(ii) provides that museums, zoos, planetariums, symphony orchestras, and other similar organizations are examples of educational organizations. Building on the regulations example, Rev. Rul. 64-175, 1964-1 (Part 1) C.B. 185, holds that an organization whose main activity is producing plays and making classic plays of the theater available in cities and colleges throughout the United States by means of a permanent touring repertory theater company of the highest professional standards, qualifies for exemption under IRC 501(c)(3). Similarly, in Rev. Rul. 64-174, 1964-1 (Part 1) C.B. 183, an organization that assisted local communities in establishing their own repertory theaters was held to be exempt under IRC 501(c)(3). Also, Rev. Rul. 73-45, 1973-1 C.B. 220, holds that an organization formed to develop a community appreciation for drama and musical arts by sponsoring professional presentations such as plays, musicals and concerts qualified for exemption under IRC 501(c)(3). Promotion of jazz festivals and concerts was held to be educational in Rev. Rul. 65-271, 1965-2 C.B. 161. Educating individuals in group harmony singing was also deemed an exempt activity in Rev. Rul. 66-46, 1966-1 C.B. 133. An organization that conducted weekly workshops, sponsored public concerts, and secured paid engagements for young musicians and singers interested in acquiring concert experience was held to be exempt under IRC 501(c)(3) in Rev. Rul. 67-392, 1967-2 C.B. 191. Finally, in Rev. Rul. 79-369, 1979-2 C.B. 226, the Service held that an organization created to develop and promote an appreciation of contemporary symphonic and chamber music by recording and selling, primarily to educational institutions, new works of unrecognized composers as well as neglected works of more established composers, was exempt under IRC 501(c)(3).<\/p>\n\n\n\n

I wrote about why nonprofits of all sorts are exempt from the corporate income tax here<\/a>, and why it is that nonprofit opera companies and food banks receive the same tax treatment in terms of exemptions and the deductibility of private contributions here<\/a>.<\/p>\n\n\n\n

We might think these are good or bad public policies, but there they are.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Here’s what the Internal Revenue Service says: Organizations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes and that meet certain other requirements are tax exempt under Internal Revenue Code Section 501(c)(3). Organizations whose primary focus is literary or educational are exempt from the corporate income […]<\/p>\n","protected":false},"author":3,"featured_media":2913,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[26],"tags":[],"class_list":{"0":"post-2910","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-issues","8":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.artsjournal.com\/worth\/wp-content\/uploads\/2023\/07\/Mitchell_Opera_House-scaled.jpg","jetpack_shortlink":"https:\/\/wp.me\/p3dIW5-KW","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1756,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/12\/should-nonprofit-museums-have-free-admission-because-they-are-tax-exempt\/","url_meta":{"origin":2910,"position":0},"title":"Should nonprofit museums have free admission because they are tax exempt?","author":"Michael Rushton","date":"December 20, 2014","format":false,"excerpt":"No. But Christopher Knight\u00a0at the LA Times thinks they should: Yes, every art museum needs multiple sources of revenue. It does cost money to run the place. However, because they are tax exempt, art museums already count the public as a major, indirect source of revenue. Required admission fees add\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"And everybody should have one","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":1629,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/10\/deaccessioning-a-puzzle-and-a-speculative-answer\/","url_meta":{"origin":2910,"position":1},"title":"Deaccessioning: A puzzle, and a speculative answer (updated)","author":"Michael Rushton","date":"October 19, 2014","format":false,"excerpt":"Why is it considered unethical for nonprofit or public sector museums to sell art, except for cases when the proceeds will be directly used to acquire new art? At the Art Law Blog, Donn Zaretsky points out that if a private collector decided to open a space to display some\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"so, why no deaccessioning?","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/ask-a-curator12.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/ask-a-curator12.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/ask-a-curator12.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/ask-a-curator12.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/ask-a-curator12.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":1357,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/06\/earmarked-taxes-for-the-arts\/","url_meta":{"origin":2910,"position":2},"title":"Earmarked taxes for the arts","author":"Michael Rushton","date":"June 18, 2014","format":false,"excerpt":"Last night Mecklenburg County (where Charlotte, NC is) commissioners voted to approve a referendum on increasing the sales tax by a quarter of a cent, some of which would be dedicated to culture: 7.5% of the proceeds to the Arts & Science Council and 5% of the proceeds to the\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"I admit only having been to the airport","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/06\/charlotte-north-carolina.jpeg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/06\/charlotte-north-carolina.jpeg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/06\/charlotte-north-carolina.jpeg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":377,"url":"https:\/\/www.artsjournal.com\/worth\/2013\/02\/targets-the-cost-of-bread-and-nonprofit-arts-pricing\/","url_meta":{"origin":2910,"position":3},"title":"Targets, The Cost of Bread, and Nonprofit Arts Pricing","author":"Michael Rushton","date":"February 25, 2013","format":false,"excerpt":"My previous post drew lessons for museum pricing from what we observe in the prices set by cable television providers. But how can for-profit pricing be relevant to nonprofit museums, to orchestras and opera? Don\u2019t the nonprofit arts, unlike cable companies, have a mission to be accessible to all patrons,\u2026","rel":"","context":"With 5 comments","block_context":{"text":"With 5 comments","link":"https:\/\/www.artsjournal.com\/worth\/2013\/02\/targets-the-cost-of-bread-and-nonprofit-arts-pricing\/#comments"},"img":{"alt_text":"Focus on the target","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2013\/02\/archersDM1304_468x364-300x233.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1189,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/03\/deaccessioning-as-a-singular-event\/","url_meta":{"origin":2910,"position":4},"title":"Deaccessioning as a singular event (updated again)","author":"Michael Rushton","date":"March 26, 2014","format":false,"excerpt":"The Delaware Art Museum is planning on selling some works to pay off debt. The New York Times reports here, noting that \"selling works to pay for operations or capital projects is widely considered an ethical violation, a betrayal of a museum\u2019s role of holding art in public trust\" (and\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"in debt","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/03\/DAM.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/03\/DAM.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/03\/DAM.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/03\/DAM.jpg?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":1325,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/06\/cutting-wages-is-hard-to-do\/","url_meta":{"origin":2910,"position":5},"title":"Cutting wages is hard to do","author":"Michael Rushton","date":"June 8, 2014","format":false,"excerpt":"Peter Gelb says New York's Metropolitan Opera will go broke within the next few years without wage cuts. The BBC reports: He proposed cutting 16% of its $200m (\u00a3119m) labour costs by changing work rules for the orchestra and chorus. Gelb also defended spending $169,000 (\u00a3100,000) on a poppy field\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"what goes up is tough to get down","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/06\/ladder.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/2910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/comments?post=2910"}],"version-history":[{"count":3,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/2910\/revisions"}],"predecessor-version":[{"id":2914,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/posts\/2910\/revisions\/2914"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/media\/2913"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/media?parent=2910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/categories?post=2910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/worth\/wp-json\/wp\/v2\/tags?post=2910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}