A feeder organization is exempt from Federal income taxation because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity.

Question

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A feeder organization is not automatically exempt from Federal income taxation simply because it carries on a trade or business for the benefit of an exempt organization and remits its profits to the exempt entity. To be exempt, the organization itself must meet specific requirements and obtain tax-exempt status from the IRS.

A Feeder Organization Is Exempt from Federal Income Taxation Because