Rev. Rul. 67-4

Advice has been requested whether a nonprofit organization formed and operated as described below qualifies for exemption from Federal income tax under section 501(c)(3) of the Internal Revenue Code of 1954.

The organization was formed to encourage scientific research in, and to disseminate educational information about, specific types of physical and mental disorders. This is accomplished by publishing a journal which contains abstracts of current information from the world's medical and scientific publications. The journal is sold, below cost, to the public.

The organization's staff consists of leading pathologists, other medical specialists, and teachers, most of whom donate their services. The organization receives income from the sale of subscriptions, contributions, and government grants. Its operating deficits are defrayed by contributions.

Section 501(c)(3) of the Code provides for the exemption from Federal income tax of organizations organized and operated exclusively for charitable, educational, and scientific purposes.

Section 1.501(c)(3)-1(d)(2) of the Income Tax Regulations defines the term `charitable' as used in section 501(c)(3) of the Code as including the advancement of education or science.

Revenue Ruling 66-147, C.B. 1966-1, 137, holds that the publication of abstracts of scientific and medical articles by an organization contributes to the advancement of education and science by providing an effective means for the increased dissemination and application of such knowledge.

An organization engaged in publishing scientific and medical literature may qualify for exemption from Federal income tax under section 501(c)(3) of the Code if (1) the content of the publication is educational, (2) the preparation of material follows methods generally accepted as `educational' in character, (3) the distribution of the materials is necessary or valuable in achieving the organization's educational and scientific purposes, and (4) the manner in which the distribution is accomplished is distinguishable from ordinary commercial publishing practices.

The methods used in preparing and presenting the abstracts conform to methods traditionally accepted as `educational' in character. The organization provides a reference to literature on the research undertaken in the area, and enables the afflicted to receive improved instruction and treatment. The distribution of the abstracts is carried out essentially in a `charitable' manner, in the sense that there is a public benefit derived from the distribution. The charges for the publication recover only a portion of the costs.

Accordingly, the organization qualifies for exemption from Federal income tax under section 501(c)(3) of the Code.

An organization which considers itself within the scope of this Revenue Ruling must, in order to establish exemption under section 501(c)(3) of the Code, file an application on Form 1023, Exemption Application, with the District Director of Internal Revenue for the internal revenue district in which is located the principal place of business or the principal office of the organization. See section 1.501(a)-1 of the regulations.

This case is distinguishable from that in Revenue Ruling 60-351, C.B. 1960-2, 169, involving an organization which is publishing a magazine and selling it to the general public in accordance with ordinary commercial publishing practices.