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One of the Requirements for an Exempt Organization Being Classified

question 51

Essay

One of the requirements for an exempt organization being classified as an unrelated trade or business is the "not substantially related" requirement.That is, the trade or business is not substantially related to the exempt purpose of the organization.How can an exempt organization avoid satisfying this requirement?


Definitions:

Eli Lilly

An American pharmaceutical company known for developing a wide range of medications, including treatments for diabetes, cancer, and psychiatric disorders.

Endowments

Funds donated to institutions with the stipulation that the principal remains intact and only the investment income is spent.

After-Tax Rate

The rate of return on an investment after accounting for taxes, more reflective of the net gain to the investor.

Safety Of Principal

The assurance that an investment will be repaid or retained, primarily concerning the preservation of invested capital.

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