A post or organization of past or present members of the Armed Forces of the United States may file Form 1024 to apply for recognition of exemption from federal income tax. You should follow the general procedures outlined in chapter 1. The organization must also meet the qualifications described in this section.

Examples of groups that would qualify for exemption are posts or auxiliaries of the American Legion, Veterans of Foreign Wars, and similar organizations.

To qualify for recognition of exemption, your application should show:

1. That the post or organization is organized in the United States or any of its possessions,
2. That at least 75% of the members are past or present members of the U.S. Armed Forces and that at least 97.5% of all members of the organization are past or present members of the U.S. Armed Forces, cadets (including only students in college or university ROTC programs or at armed services academies) or spouses, widows, or widowers of any of those listed here, and
3. That no part of the net earnings benefit any private shareholder or individual.

In addition to these requirements, a veterans' organization also must be operated exclusively for one or more of the following purposes.

1. To promote the social welfare of the community (that is, to promote in some way the common good and general welfare of the people of the community).
2. To assist disabled and needy war veterans and members of the U.S. Armed Forces and their dependents and the widows and orphans of deceased veterans.
3. To provide entertainment, care, and assistance to hospitalized veterans or members of the U.S. Armed Forces.
4. To carry on programs to perpetuate the memory of deceased veterans and members of the Armed Forces and to comfort their survivors.
5. To conduct programs for religious, charitable, scientific, literary, or educational purposes.
6. To sponsor or participate in activities of a patriotic nature.
7. To provide insurance benefits for its members or dependents of its members or both.
8. To provide social and recreational activities for its members.

Auxiliary unit. An auxiliary unit or society of a veterans' organization may apply for recognition of exemption provided that the veterans' organization (parent organization) meets the requirements explained earlier in this section. The auxiliary unit or society must also meet all the following additional requirements.

1. It is affiliated with, and organized in accordance with, the bylaws and regulations formulated by the parent organization.
2. At least 75% of its members are either past or present members of the U.S. Armed Forces, spouses of those members, or related to those members within two degrees of kinship (grandparent, brother, sister, and grandchild represent the most distant allowable relationship).
3. All of its members either are members of the parent organization, spouses of a member of the parent organization, or related to a member of such organization within two degrees of kinship.
4. No part of its net earnings benefit any private shareholder or individual.

Trusts or foundations. Trusts or foundations for a veterans' organization also may apply for recognition of exemption provided that the parent organization meets the requirements explained earlier. The trust or foundation must also meet all the following qualifications.

1. The trust or foundation is in existence under local law and, if it is organized for charitable purposes, has a dissolution provision similar to charitable organizations. (See Articles of Organization in chapter 3 of this publication.)
2. The corpus or income cannot be diverted or used other than for:
1. The funding of a veterans' organization, described in this section,
2. Religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals, or
3. An insurance set aside.
3. The trust income is not unreasonably accumulated and, if the trust or foundation is not an insurance set aside, a substantial portion of the income is in fact distributed to the parent organization or for the purposes described in item (2)(b).
4. It is organized exclusively for one or more of the purposes listed earlier in this section that are specifically applicable to the parent organization.

Tax treatment of donations. Donations to war veterans' organizations are deductible as charitable contributions on the donor's federal income tax return. At least 90% of the organization's membership must consist of war veterans. The term war veterans means persons, whether or not present members of the U.S. Armed Forces, who have served in the U.S. Armed Forces during a period of war (including the Korean and Vietnam conflicts, the Persian Gulf war, and later declared wars).

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