Exclusion Codes
Real property rental income that does not
depend on the income or prots derived
by the person leasing the property and is
excluded by section 512 (b)(3)
16—
General Exceptions Debt-Financed Income
Income exempt from debt-nanced
(section 514) provisions because at least
85% of the use of the property is for the
organization’s exempt purposes. (Note:
This code is only for income from the
15% or less non-exempt purpose use.)
(section 514(b)(1)(A))
Income from an activity that is not
regularly carried on (section 512(a)(1))
01— 30—
Income from an activity in which labor is
a material income-producing factor and
substantially all (at least 85%) of the work
is performed with unpaid labor (section
513(a)(1))
02—
17— Rent from personal property leased with
real property and incidental (10% or less)
in relation to the combined income from
the real and personal property (section
512(b)(3))
Gross income from mortgaged property
used in research activities described in
section 512(b)(7), (8), or (9) (section
514(b)(1)(C))
31—
Section 501(c)(3) organization—Income
from an activity carried on primarily for
the convenience of the organization’s
members, students, patients, visitors,
ofcers, or employees (hospital parking
lot or museum cafeteria, for example)
(section 513(a)(2))
03—
18— Gain or loss from the sale of investments
and other non-inventory property and
from certain property acquired from
nancial institutions that are in
conservatorship or receivership (sections
512(b)(5) and (16)(A))
19— Gain or loss from the lapse or termination
of options to buy or sell securities or real
property, and on options and from the
forfeiture of good-faith deposits for the
purchase, sale, or lease of investment real
estate (section 512(b)(5))
Gross income from mortgaged property
used in any activity described in section
513(a)(1), (2), or (3) (section 514(b)(1)(D))
32—
20— Income from research for the United
States; its agencies or instrumentalities;
or any state or political subdivision
(section 512(b)(7))
Section 501(c)(4) local association of
employees organized before May 27,
1969— Income from the sale of
work-related clothes or equipment and
items normally sold through vending
machines; food dispensing facilities; or
snack bars for the convenience of
association members at their usual places
of employment (section 513(a)(2))
04— Income from mortgaged property
(neighborhood land) acquired for exempt
purpose use within 10 years (section
514(b)(3))
33—
21— Income from research conducted by a
college, university, or hospital (section
512(b)(8))
Income from mortgaged property
acquired by bequest or devise (applies to
income received
within 10 years from the
date of acquisition) (section 514(c)(2)(B))
34—
22— Income from research conducted by an
organization whose primary activity is
conducting fundamental research, the
results of which are freely available to the
general public (section 512(b)(9))
Income from the sale of merchandise,
substantially all of which (at least 85%)
was donated to the organization (section
513(a)(3))
05—
Income from mortgaged property
acquired by gift where the mortgage was
placed on the property more than 5 years
previously and the property was held by
the donor for more than 5 years (applies
to income received within 10 years from
the date of gift) (section 514(c)(2)(B))
35—
23— Income from services provided under
license issued by a federal regulatory
agency and conducted by a religious
order or school operated by a religious
order, but only if the trade or business
has been carried on by the organization
since before May 27, 1959 (section
512(b)(15))
Specific Exceptions
Section 501(c)(3), (4), or (5) organization
conducting an agricultural or educational
fair or exposition—Qualied public
entertainment activity income (section
513(d)(2))
06— Income from property received in return
for the obligation to pay an annuity
described in section 514(c)(5)
36—
Income from mortgaged property that
provides housing to low and moderate
income persons, to the extent the
mortgage is insured by the Federal
Housing Administration (section 514(c)(6)).
(Note: In many cases, this would be
exempt function income reportable in
column (e). It would not be so in the case
of a section 501(c)(5) or (6) organization,
for example, that acquired the housing as
an investment or as a charitable activity.)
37—
Foreign Organizations
Section 501(c)(3), (4), (5), or (6)
organization—Qualied convention and
trade show activity income (section
513(d)(3))
07—
Foreign organizations only—Income from
a trade or business NOT conducted in the
United States and NOT derived from
United States sources (patrons) (section
512(a)(2))
24—
Income from hospital services described
in section 513(e)
08—
Income from noncommercial bingo games
that do not violate state or local law
(section 513(f))
09—
Social Clubs and VEBAs
Section 501(c)(7), (9), or (17)
organization—Non-exempt function
income set aside for a charitable, etc.,
purpose specied in section 170(c)(4)
(section 512(a)(3)(B)(i))
25—
Income from games of chance conducted
by an organization in North Dakota
(section 311 of the Decit Reduction Act
of 1984, as amended)
10—
Income from mortgaged real property
owned by: a school
described in section
170(b)(1)(A)(ii); a section 509(a)(3) afliated
support organization of such a school; a
section 501(c)(25) organization; or by a
partnership in which any of the above
organizations owns an interest if the
requirements of section 514(c)(9)(B)(vi) are
met (section 514(c)(9))
38—
Section 501(c)(7), (9), or (17)
organization—Proceeds from the sale of
exempt function property that was or will
be timely reinvested in similar property
(section 512(a)(3)(D))
26—
Section 501(c)(12) organization— Qualied
pole rental income (section 513(g)) and/or
member income (described in section
501(c)(12)(H))
11—
Income from the distribution of low-cost
articles in connection with the solicitation
of charitable contributions (section 513(h))
12—
Section 501(c)(9) or (17) organization—
Nonfunction income set aside for the
payment of life, sick, accident, or
other benets (section 512(a)(3)(B)(ii))
27—
Special Rules
Income from the exchange or rental of
membership or donor list with an
organization eligible to receive charitable
contributions by a section 501(c)(3)
organization; by a war veterans’
organization; or an auxiliary unit or society
of, or trust or foundation for, a war
veterans’ post or organization (section
513(h))
13—
Section 501(c)(5) organization—Farm
income used to nance the operation and
maintenance of a retirement home,
hospital, or similar facility operated by the
organization for its members on property
adjacent to the farm land (section
1951(b)(8)(B) of Public Law 94-455)
39—
Veterans’ Organizations
Section 501(c)(19) organization—Payments
for life, sick, accident, or health insurance
for members or their dependents that are
set aside for the payment of such insurance
benets or for a charitable, etc., purpose
specied in section 170(c)(4) (section
512(a)(4))
28—
Trade or Business
41— Gross income from an unrelated activity
that is regularly carried on but, in light of
continuous losses sustained over a
number of tax periods, cannot be
regarded as being conducted with the
motive to make a prot (not a trade or
business)
Modifications and Exclusions
Dividends, interest, payments with
respect to securities loans, annuities,
income from notional principal contracts,
other substantially similar income from
ordinary and routine investments, and
loan commitment fees, excluded by
section 512(b)(1)
14—
Section 501(c)(19) organization— Income
from an insurance set-aside (see code 28
above) that is set aside for payment of
insurance benets or for a charitable, etc.,
purpose specied in section 170(c)(4)
(Regs. 1.512(a)-4(b)(2))
29—
Royalty income excluded by section
512(b)(2)
15—
Annual dues, not exceeding $191 (subject
to ination), paid to a section 501(c)(5)
agricultural or horticultural organization
(section 512(d))
40—
Other
Receipt of qualied sponsorship
payments described in section 513(i)
42—
Exclusion of any gain or loss from the
qualied sale, exchange, or other
disposition of any qualifying browneld
property (section 512(b)(19))
43—