Prior to the Tax Reform Act of 1969, IRC 503 denied exemption to certain organizations described in IRC 501(c)(3) for engaging in "prohibited transactions." Prior to 1970, IRC 503 also applied to pension trusts described in IRC 401(a) and supplemental unemployment benefit trusts described in IRC 501(c)(17). The Tax Reform Act of 1969 (P.L. 91–172) amended 503 to the extent that after December 31, 1969, its provisions no longer apply to IRC 501(c)(3) organizations. Section 503 now applies to IRC 501(c)(17) organizations, IRC 501(c)(18) organizations, and certain pension trusts described in 401(a). Since IRC 503 has limited applicability to exempt organizations covered in this Manual, it will not be discussed. For the answers to any questions about IRC 503, refer to the regulations under that section and other published precedents.
IRC 504 denied exemption status to IRC 501(c)(3) organizations, to which IRC 503 applied, for unreasonably accumulating income or which used accumulated income in a manner proscribed by that section. IRC 504 was repealed by the Tax Reform Act of 1969 (P.L. 91–172), effective for taxable years beginning after December 31, 1969.