351 
Rural Electrification Act of 1936 (as in ef-
fect on January 1, 1987). 
‘‘(D) For purposes of this paragraph, the 
term ‘qualified pole rental’ means any rental of 
a pole (or other structure used to support 
wires) if such pole (or other structure)— 
‘‘(i) is used by the telephone or elec-
tric company to support one or more wires 
which are used by such company in pro-
viding telephone or electric services to its 
members, and 
‘‘(ii) is used pursuant to the rental to 
support one or more wires (in addition to 
the wires described in clause (i)) for use in 
connection with the transmission by wire 
of electricity or of telephone or other com-
munications. 
For purposes of the preceding sentence, the 
term ‘rental’ includes any sale of the right to 
use the pole (or other structure). 
‘‘(13) 
NONPROFIT
CEMETERIES.—Cemetery 
companies owned and operated exclusively for the 
benefit of their members or which are not operated 
for profit; and any corporation chartered solely for 
the purpose of the disposal of bodies by burial or
352 
cremation which is not permitted by its charter to 
engage in any business not necessarily incident to 
that purpose and no part of the net earnings of 
which inures to the benefit of any private share-
holder or individual. 
‘‘(14) GRANDFATHERED
MUTUAL
FINANCIAL 
INSTITUTIONS.— 
‘‘(A) Credit unions without capital stock 
organized and operated for mutual purposes 
and without profit, but only if organized before 
July 1, 2006. 
‘‘(B) Certain corporations or associations 
organized before September 1, 1957, and de-
scribed in subparagraphs (B) or (C) of section 
501(c)(14) of the Internal Revenue Code of 
1986. 
‘‘(15) GRANDFATHERED
SMALL
INSURANCE 
COMPANIES.—Insurance companies organized before 
July 1, 2006, and described in section 501(c)(15) of 
the Internal Revenue Code of 1986. 
‘‘(16) CROP
FINANCING
ASSOCIATIONS.—Cor-
porations organized by an association subject to part 
IV of this subchapter or members thereof, for the 
purpose of financing the ordinary crop operations of 
such members or other producers, and operated in
353 
conjunction with such association. Exemption shall 
not be denied any such corporation because it has 
capital stock, if the dividend rate of such stock is 
fixed at not to exceed the legal rate of interest in the 
State of incorporation or 8 percent per annum, 
whichever is greater, on the value of the consider-
ation for which the stock was issued, and if substan-
tially all such stock (other than nonvoting preferred 
stock, the owners of which are not entitled or per-
mitted to participate, directly or indirectly, in the 
profits of the corporation, on dissolution or other-
wise, beyond the fixed dividends) is owned by such 
association, or members thereof; nor shall exemption 
be denied any such corporation because there is ac-
cumulated and maintained by it a reserve required 
by State law or a reasonable reserve for any nec-
essary purpose. 
‘‘(17) SUPPLEMENTAL EMPLOYMENT BENEFIT 
TRUST.— 
‘‘(A) A trust or trusts forming part of a 
plan providing for the payment of supplemental 
unemployment compensation benefits, if— 
‘‘(i) under the plan, it is impossible, 
at any time prior to the satisfaction of all 
liabilities, with respect to employees under
354 
the plan, for any part of the corpus or in-
come to be (within the taxable year or 
thereafter) used for, or diverted to, any 
purpose other than the providing of supple-
mental unemployment compensation bene-
fits, 
‘‘(ii) such benefits are payable to em-
ployees under a classification which is set 
forth in the plan and which is found by the 
Secretary not to be discriminatory in favor 
of employees who are highly compensated 
employees (within the meaning of section 
414(q)), and 
‘‘(iii) such benefits do not discrimi-
nate in favor of employees who are highly 
compensated employees (within the mean-
ing of section 414(q). A plan shall not be 
considered discriminatory within the mean-
ing of this clause merely because the bene-
fits received under the plan bear a uniform 
relationship to the total compensation, or 
the basic or regular rate of compensation, 
of the employees covered by the plan. 
‘‘(B) Rules similar to those contained in 
subparagraphs (B) through (E) of section
355 
501(c)(7) of the Internal Revenue Code of 1986 
shall apply to subparagraph (A). 
‘‘(18) GRANDFATHERED TRUSTS.—A trust or 
trusts created before June 25, 1959, and described 
in section 501(c)(18) of the Internal Revenue Code 
of 1986. 
‘‘(19) CERTAIN VETERANS’ ORGANIZATIONS.— 
A post or organization of past or present members 
of the Armed Forces of the United States, or an 
auxiliary unit or society of, or a trust or foundation 
for, any such post or organization— 
‘‘(A) organized in the United States or any 
of its possessions, 
‘‘(B) at least 75 percent of the members of 
which are past or present members of the 
Armed Forces of the United States and sub-
stantially all of the other members of which are 
individuals who are cadets or are spouses, wid-
ows, or widowers of past or present members of 
the Armed Forces of the United States or of 
cadets, and 
‘‘(C) no part of the net earnings of which 
inures to the benefit of any private shareholder 
or individual.
356 
‘‘(20) LEGAL SERVICE PLAN TRUSTS.—An or-
ganization or trust created or organized in the 
United States, the exclusive function of which is to 
form part of a qualified group legal services plan or 
plans. 
‘‘(21) BLACK LUNG ACT TRUSTS.—A trust or 
trusts established in writing, created or organized in 
the United States, and contributed to by any person 
(except an insurance company) if— 
‘‘(A) the purpose of such trust or trusts is 
exclusively— 
‘‘(i) to satisfy, in whole or in part, the 
liability of such person for, or with respect 
to, claims for compensation for disability 
or death due to pneumoconiosis under 
Black Lung Acts, 
‘‘(ii) to pay premiums for insurance 
exclusively covering such liability, 
‘‘(iii) to pay administrative and other 
incidental expenses of such trust in connec-
tion with the operation of the trust and the 
processing of claims against such person 
under Black Lung Acts, and 
‘‘(iv) to pay accident or health bene-
fits for retired miners and their spouses
357 
and dependents (including administrative 
and other incidental expenses of such trust 
in connection therewith) or premiums for 
insurance exclusively covering such bene-
fits; and 
‘‘(B) such trusts meets requirements simi-
lar to those contained in section 501(c)(21) of 
the Internal Revenue Code of 1986. 
‘‘(22) MULTIEMPLOYER ERISA TRUST.—A trust 
created or organized in the United States and estab-
lished in writing by the plan sponsors of multiem-
ployer plans if— 
‘‘(A) the purpose of such trust is exclu-
sively— 
‘‘(i) to pay any amount described in 
section 4223(c) or (h) of the Employee Re-
tirement Income Security Act of 1974, and 
‘‘(ii) to pay reasonable and necessary 
administrative expenses in connection with 
the establishment and operation of the 
trust and the processing of claims against 
the trust, 
‘‘(B) no part of the assets of the trust may 
be used for, or diverted to, any purpose other 
than—
358 
‘‘(i) the purposes described in sub-
paragraph (A), or 
‘‘(ii) prudent investment in securities, 
obligations, or time or demand deposits, 
‘‘(C) such trust meets the requirements of 
paragraphs (2), (3), and (4) of section 4223(b), 
4223(h), or, if applicable, section 4223(c) of the 
Employee Retirement Income Security Act of 
1974, and 
‘‘(D) the trust instrument provides that, 
on dissolution of the trust, assets of the trust 
may not be paid other than to plans which have 
participated in the plan or, in the case of a 
trust established under section 4223(h) of such 
Act, to plans with respect to which employers 
have participated in the fund. 
‘‘(23) GRANDFATHERED VETERANS’ INSURANCE 
ORGANIZATION.—Any association organized before 
1880 more than 75 percent of the members of which 
are present or past members of the Armed Forces 
and a principal purpose of which is to provide insur-
ance and other benefits to veterans or their depend-
ents. 
‘‘(24) ERISA TRUST.—A trust described in sec-
tion 4049 of the Employee Retirement Income Secu-
359 
rity Act of 1974 (as in effect on the date of the en-
actment of the Single-Employer Pension Plan 
Amendments Act of 1986). 
‘‘(25) REAL TITLE HOLDING CORPORATION OR 
TRUST.— 
‘‘(A) Any corporation or trust which— 
‘‘(i) has no more than 35 shareholders 
or beneficiaries, 
‘‘(ii) has only 1 class of stock or bene-
ficial interest, and 
‘‘(iii) is organized for the exclusive 
purposes of— 
‘‘(I) acquiring real property and 
holding title to, and collecting income 
from, such property, and 
‘‘(II) remitting the entire amount 
of income from such property (less ex-
penses) to 1 or more organizations de-
scribed in subparagraph (C) which are 
shareholders of such corporation or 
beneficiaries of such trust. 
For purposes of clause (iii), the term ‘real prop-
erty’ shall not include any interest as a tenant 
in common (or similar interest) and shall not 
include any indirect interest.
360 
‘‘(B) A corporation or trust shall be de-
scribed in subparagraph (A) without regard to 
whether the corporation or trust is organized by 
1 or more organizations described in subpara-
graph (C). 
‘‘(C) An organization is described in this 
subparagraph if such organization is— 
‘‘(i) a qualified pension, profit shar-
ing, or stock bonus plan that meets the re-
quirements of section 401(a), 
‘‘(ii) a governmental plan (within the 
meaning of section 414(d)), 
‘‘(iii) the United States, any State or 
political subdivision thereof, or any agency 
or instrumentality of any of the foregoing, 
or 
‘‘(iv) any organization described in 
paragraph (3). 
‘‘(D) A corporation or trust shall in no 
event be treated as described in subparagraph 
(A) unless such corporation or trust permits its 
shareholders or beneficiaries— 
‘‘(i) to dismiss the corporation’s or 
trust’s investment adviser, following rea-
sonable notice, upon a vote of the share-
361 
holders or beneficiaries holding a majority 
of interest in the corporation or trust, and 
‘‘(ii) to terminate their interest in the 
corporation or trust by either, or both, of 
the following alternatives, as determined by 
the corporation or trust: 
‘‘(I) by selling or exchanging 
their stock in the corporation or inter-
est in the trust (subject to any Fed-
eral or State securities law) to any or-
ganization described in subparagraph 
(C) so long as the sale or exchange 
does not increase the number of 
shareholders or beneficiaries in such 
corporation or trust above 35, or 
‘‘(II) by having their stock or in-
terest redeemed by the corporation or 
trust after the shareholder or bene-
ficiary has provided 90 days notice to 
such corporation or trust. 
‘‘(E)(i) For purposes of this paragraph— 
‘‘(I) a corporation which is a qualified 
subsidiary shall not be treated as a sepa-
rate corporation, and