Question

Which of the following organizations is exempt from federal income tax under Section 501(c)(3)?

A Cobra, Inc., a corporation, operated to advance the financial interests of its shareholders.
B Amelia Hendricks Trust, a trust set up for the benefit of Amelia Hendricks' four grandchildren.
C Reverend Tim Collins, a sole proprietorship, operated exclusively to advance a religious purpose.
D Beakers and Test Tubes, Inc., a corporation, operated exclusively to advance scientific purposes.

Answer 1

Beakers and Test Tubes, Inc., which operates exclusively to advance scientific purposes, is eligible for federal income tax exemption under Section 501(c)(3). Therefore correct option is D

Step-by-step explanation:

Under Section 501(c)(3) of the Internal Revenue Code, certain organizations are exempt from federal income tax if they are operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.

Based on the options provided, the organization that is exempt from federal income tax is D Beakers and Test Tubes, Inc., a corporation operated exclusively to advance scientific purposes. This aligns with the criteria specified in Section 501(c)(3) as they are conducting activities for a scientific purpose, which is one of the exempt purposes.