501(c)(12)

## Contents

* 1 Examples
* 2 See also
* 3 External links
* 4 Footnotes

501(c)(12) is an Internal Revenue Service (IRS) tax exemption status that applies to "benevolent life insurance associations of a purely local character and like organizations, mutual ditch or irrigation companies and like organizations [and] mutual or cooperative telephone companies and like organizations."[1]

Though several exceptions exist, 501(c)(12) entities must generally meet certain criteria. The organizations must apply their revenue to existing liabilities and any remaining funds must be remitted to members or applied toward future expenses. In addition, revenue must satisfy the 85 percent requirement, which stipulates that 85 percent of the organization's income must come directly from the membership. Moreover, these organizations must operate for the benefit of all members to access services roughly at cost. Since 501(c)(12) organizations are built on what the IRS calls a mutual or cooperative basis, the members themselves must also have the ability to select management and recoup assets should the organization disband.[1]

The purely local character requirement applies to benevolent life insurance associations. On the other hand, ditch, irrigation or electric cooperatives may have broad operations that are subject to state and federal regulations.[2]

Individual donations to 501(c)(12) organizations are not tax-deductible.[1]

## Examples[edit]

American Municipal Power Inc. logo

* North Carolina Electric Membership Corporation
* American Municipal Power Inc.
* Dairyland Power Cooperative
* East Kentucky Power Cooperative Inc.
* Buckeye Power Inc.[3]

## See also[edit]

* 501(c)
* Internal Revenue Service
* Nonprofit organization

## External links[edit]

* Section 501 of the IRS code

## Footnotes[edit]

1. ↑ 1.0 1.1 1.2 IRS.gov, "Other section 501(c) organizations," September 21, 2015
2. ↑ Internal Revenue Manual, "Chapter 25. exempt organizations determinations manual, Section 12. organizations exempt under IRC 501(c)(12)," accessed September 21, 2015
3. ↑ National Center for Charitable Statistics, "Organizations by 501(c) subsection 501(c)(12)," accessed September 21, 2015

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