Answered

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4. Once an organization gets a 501(c)(3) designation from the IRS, what does this mean financially?

A. The organization has income.
B. The organization must pay taxes.
C. The organization does not have income.
D. The organization does not pay taxes.

Sagot :

GinnyAnswer

Final answer:

Receiving a 501(c)(3) designation from the IRS means exemption from income tax under specific conditions.


Explanation:

Once an organization receives a 501(c)(3) designation from the IRS, it means that the organization is exempt from federal and state income tax under section 501(c)(3) of the Internal Revenue Code and applicable state law. This exemption generally applies to the organization's income, donations, and activities directly related to its tax-exempt purpose.

For example, income from rental activities not directly related to the organization's tax-exempt purpose may still be subject to taxation. Overall, organizations with 501(c)(3) status do not pay income taxes on their exempt activities but may face taxation on unrelated business income if applicable.


Learn more about 501(c)(3) designation and income tax exemption here:

https://brainly.com/question/44066082


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