§ 105-125. Exempt corporations. - North Carolina Statutes

§ 105‑125.  Exemptcorporations.

(a)        Exemptions. – Thefollowing corporations are exempt from the taxes levied by this Article. Uponrequest of the Secretary, an exempt corporation must establish its claim forexemption in writing:

(1)        A charitable, religious,fraternal, benevolent, scientific, or educational corporation not operated forprofit.

(2)        An insurance companysubject to tax under Article 8B of this Chapter.

(3)        A mutual ditch orirrigation association, a mutual or cooperative telephone association orcompany, a mutual canning association, a cooperative breeding association, or asimilar corporation of a purely local character deriving receipts solely fromassessments, dues, or fees collected from members for the sole purpose ofmeeting expenses.

(4)        A cooperativemarketing association that operates solely for the purpose of marketing theproducts of members or other farmers and returns to the members and farmers theproceeds of sales, less the association's necessary operating expenses,including interest and dividends on capital stock, on the basis of the quantityof product furnished by them. The association's operations may includeactivities directly related to these marketing activities.

(5)        A production creditassociation organized under the federal Farm Credit Act of 1933.

(6)        A club organized andoperated exclusively for pleasure, recreation, or other nonprofit purposes, acivic league operated exclusively for the promotion of social welfare, abusiness league, or a board of trade.

(7)        A chamber ofcommerce or merchants' association not organized for profit, no part of the netearnings of which inures to the benefit of a private stockholder, anindividual, or another corporation.

(8)        An organization,such as a condominium association, a homeowners' association, or a cooperativehousing corporation not organized for profit, the membership of which islimited to the owners or occupants of residential units in the condominium,housing development, or cooperative housing corporation. To qualify for theexemption, the organization must be operated exclusively for the management,operation, preservation, maintenance, or landscaping of the residential unitsowned by the organization or its members or of the common areas and facilitiesthat are contiguous to the residential units and owned by the organization orby its members. To qualify for the exemption, no part of the net earnings ofthe organization may inure, other than through the performance of relatedservices for the members of the organization, to the benefit of any person.

(9)        Except as otherwiseprovided by law, an organization exempt from federal income tax under the Code.

Provided, that an entity thatqualifies as a real estate mortgage investment conduit, as defined in section860D of the Code, is exempt from all of the taxes levied in this Article. Uponrequest by the Secretary of Revenue, a real estate mortgage investment conduitmust establish in writing its qualification for this exemption.

(b)        (Effective fortaxable years beginning before January 1, 2009) Certain InvestmentCompanies. – A corporation doing business in North Carolina that qualifies as a"regulated investment company" under section 851 of the Code or as a"real estate investment trust" under section 856 of the Code and electsfor federal income tax purposes to be treated as a "regulated investmentcompany" or as a "real estate investment trust," may, indetermining its basis for franchise tax, deduct the aggregate market value ofits investments in the stocks, bonds, debentures, or other securities orevidences of debt of other corporations, partnerships, individuals,municipalities, governmental agencies, or governments.

(b)        (Effective fortaxable years beginning on or after January 1, 2009) Certain InvestmentCompanies. – A corporation doing business in North Carolina that meets one ormore of the following conditions may, in determining its basis for franchisetax, deduct the aggregate market value of its investments in the stocks, bonds,debentures, or other securities or evidences of debt of other corporations,partnerships, individuals, municipalities, governmental agencies, orgovernments:

(1)        A regulatedinvestment company. – A regulated investment company is an entity thatqualifies as a regulated investment company under section 851 of the Code.

(2)        A REIT, unless theREIT is a captive REIT. – The terms "REIT" and "captiveREIT" have the same meanings as defined in G.S. 105‑130.12.  (1939, c. 158, s. 213; 1951,c. 937, s. 3; 1955, c. 1313, s. 1; 1957, c. 1340, s. 3; 1963, c. 601, s. 3; c.1169, s. 1; 1967, c. 1110, s. 2; 1971, c. 820, s. 3; c. 833, s. 1; 1973, c.476, s. 193; c. 1053, s. 2; c. 1287, s. 3; 1975, c. 591, s. 1; 1983, c. 28, s.2; c. 713, s. 67; 1985 (Reg. Sess., 1986), c. 826, s. 4; 1991, c. 30, s. 6; 1993,c. 485, s. 4; c. 494, s. 1; 2008‑107, s. 28.7(c).)