Page:United States Statutes at Large Volume 83.djvu/570

 542

PUBLIC LAW 91-172--DEC. 30, 1969

[83 STAT.

(within the taxable year or thereafter) used for, or diverted to, any purpose other than the providing of benefits under the plan, " (B) such benefits are payable to employees under a classification which is set forth in the plan and which is found by the Secretary or his delegate not to be discriminatory in favor of employees who are officers, shareholders, persons whose principal duties consist of supervising the work of other employees, or highly compensated employees, and " (C) such benefits do not discriminate in favor of employees who are officers, shareholders, persons whose principal duties consist of supervising the work of other employees, or highly compensated employees. A plan shall not be considered discriminatory within the meaning of this subparagraph merely because the benefits received under the plan bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of the employees covered by the plan." (B) CONFORMING AMENDMENTS.—

Ante, p. 527. Ante. p. 541.

ll%s^c^502^

Ante, pp. 538,

(i) Section 503(a)(1) (as amended by section lOl(j) (Y) of this Act) is amended by inserting after subparagraph (B) thereof the following new paragraph: n(^Q-^ ^ j ^ Organization described in section 501(c) (18) shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction after December 31, 1969." (ii) Section 503 (as so amended) is amended by striking out "(c) ( I T) " each place it appears therein and inserting in lieu thereof "(c) (17) or (18)". (7) SPECIAL RULES FOR FEEDER ORGANIZATIONS.—Section 502

(relating to feeder organizations) is amended to read as follows: "SEC. 502. FEEDER ORGANIZATIONS. "(a) GENERAL RULE.—An organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt from taxation under section 501 on the ground that all of its profits are payable to one or more organizations exempt from taxation under section 501. "(b) SPECIAL RULE. — For purposes of this section, the term "trade or business" shall not include— "(1) the deriving of rents which would be excluded under secI{QYI 512(b)(3), if section 512 applied to the organization, "(2) any trade or business in which substantially all the work in carrying on such trade or business is performed for the organization without compensation, or "(3) any trade or business which is the selling of merchandise, substantially all of which has been received by the organization as gifts or contributions." (c) ACTIVITIES INCLUDED AS UNRELATED TRADE OR BUSINESS,—

68A Stat. 172.

Section 513 (relating to unrelated trade or business) is amended by striking out subsection (c) and inserting in lieu thereof the following new subsection: "(c) ADVERTISING, ETC., ACTIVITIES.—For purposes of this section, the term 'trade or business' includes any activity which is carried on for the production of income from the sale of goods or the performance of services. For purposes of the preceding sentence, an activity does not lose identity as a trade or business merely because it is carried on within a larger aggregate of similar activities or within a larger complex of other endeavors which may, or may notj be related to the exempt purposes of the organization. Where an activity carried on for

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