Which of the following best defines a "nonprofit organization" in a tax context?

A nonprofit organization in a tax context is fundamentally characterized as an entity that operates for purposes other than generating profit. These organizations can be involved in a wide variety of activities, such as charitable, educational, religious, or scientific purposes, and their goal is not to generate profits for owners or shareholders. Instead, any surplus revenue generated is reinvested into the organization to further its mission and objectives.

The tax code provides specific benefits to nonprofit organizations, particularly those that qualify under section 501(c)(3) and similar categories, which allow them to be exempt from federal income tax. This structure distinguishes nonprofits from for-profit entities, which primarily aim to generate income for owners or shareholders. The designation as a nonprofit does not imply that these organizations do not generate revenue; rather, it emphasizes that they do so with a mission-driven focus rather than profit as the primary goal.