Private Foundations E-Book

Bruce R. Hopkins

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Nonprofit Authority
• Sprache: Englisch
• Veröffentlichungsjahr: 2014

Seitenzahl: 1635

Beschreibung

Stay updated on the latest tax regulations with this private foundation tax manual Knowledge of tax regulations surrounding Private Foundations isn't enough if you're an executive of such an organization or a professional supporting a tax-exempt foundation. Annual changes to IRS rules and increased scrutiny by regulators mean it's necessary for you to keep abreast of myriad changes that come into existence each year. From authors Bruce R. Hopkins and Jody Blazek comes the definitive guide for those responsible for guiding the financial and tax filing operations of Private Foundations. The complexity of tax regulations related to Private Foundations extends to a level that is out of proportion to the relatively small number of such entities. Nonetheless, recent statutory requirements that apply solely to Private Foundations can make untangling filing and reporting activities overly burdensome without a developed knowledge of the underlying theory and practice. To navigate this maze of add-on regulations, Hopkins and Blazek provide background knowledge, in-depth explanations of regulatory changes, and real-world examples to bring as much simplicity to the process as possible. * Receive guidance from the 2007 Outstanding Nonprofit Lawyer Award recipient * Learn about the details of private foundation taxes from leading experts in the field * Make use of checklists and sample documents to prepare organizational filings * Utilize line-by-line instructions for completing exemption applications and forms For professionals working closely with Private Foundations, including accountants, lawyers, and foundation executives, Private Foundations: Tax Law and Compliance, 4th Edition is a welcome resource for keeping your clients or your organization on the right track. * Brings clarity, real-world examples, and checklists to help professionals deal with the burdensome process of complying with IRS regulations governing Private Foundations * Clarifies the underlying logic behind statutory tax regulations governing Private Foundations and the practical implications of maintaining compliance * Supplemented annually online to keep subscribers up-to-date on relevant changes in IRS forms requirements, and related tax procedures * Includes easy-to-use checklists highlighting such critical concerns as tax-exempt eligibility and tax compliance * Offers line-by-line instructions for completing a variety of exemption applications and tax forms< * Features sample documents, letters of application, completed forms and practice aids summarizing the differences between public and private charitable organizations

Leseprobe

CONTENTS

Cover

Don't Miss Out on Must-Have and Timely New Information!

Title Page

Copyright

Dedication

Preface

Book Citations

Chapter One: Introduction to Private Foundations

§ 1.1 Private Foundations: Unique Organizations

§ 1.2 Definition of Private Foundation

§ 1.3 History and Background

§ 1.4 Private Foundation Law Primer

§ 1.5 Statistical Profile

§ 1.6 Foundations in Overall Exempt Organizations Context

§ 1.7 Definition of Charity

§ 1.8 Operating for Charitable Purposes

§ 1.9 Organizational Rules

§ 1.10 Private Foundation Sanctions

Chapter Two: Starting and Funding a Private Foundation

§ 2.1 Choice of Organizational Form

§ 2.2 Funding a Foundation

§ 2.3 Estate Planning Principles

§ 2.4 Foundations and Planned Giving

§ 2.5 Acquiring Recognition of Tax-Exempt Status

§ 2.6 Special Requirements for Charitable Organizations

§ 2.7 When to Report Back to the IRS

Chapter Three: Types of Private Foundations

§ 3.1 Private Operating Foundations

§ 3.2 Conduit Foundations

§ 3.3 Common Fund Foundations

§ 3.4 Research and Experimentation Funds

§ 3.5 Other Types of Foundations

§ 3.6 Nonexempt Charitable Trusts

§ 3.7 Split-Interest Trusts

§ 3.8 Foreign Private Foundations

Chapter Four: Disqualified Persons

§ 4.1 Substantial Contributors

§ 4.2 Foundation Managers

§ 4.3 Certain 20 Percent Owners

§ 4.4 Family Members

§ 4.5 Corporations or Partnerships

§ 4.6 Trusts or Estates

§ 4.7 Private Foundations

§ 4.8 Governmental Officials

§ 4.9 Terminating Disqualified Person Status

Chapter Five: Self-Dealing

§ 5.1 Private Inurement Doctrine

§ 5.2 Private Benefit Doctrine

§ 5.3 Definition of Self-Dealing

§ 5.4 Sale, Exchange, Lease, or Furnishing of Property

§ 5.5 Loans and Other Extensions of Credit

§ 5.6 Payment of Compensation

§ 5.7 Indemnification and Insurance

§ 5.8 Uses of Income or Assets by Disqualified Persons

§ 5.9 Sharing Space, People, and Expenses

§ 5.10 Payments to Government Officials

§ 5.11 Indirect Self-Dealing

§ 5.12 Property Held by Fiduciaries

§ 5.13 Early Terminations of Charitable Remainder Trusts

§ 5.14 Additional Exceptions

§ 5.15 Issues Once Self-Dealing Occurs

Chapter Six: Mandatory Distributions

§ 6.1 Distribution Requirements—In General

§ 6.2 Assets Used to Calculate Minimum Investment Return

§ 6.3 Measuring Fair Market Value

§ 6.4 Distributable Amount

§ 6.5 Qualifying Distributions

§ 6.6 Distributions to Certain Supporting Organizations

§ 6.7 Satisfying the Distribution Test

§ 6.8 History of the Mandatory Distribution Requirement

Chapter Seven: Excess Business Holdings

§ 7.1 General Rules

§ 7.2 Permitted and Excess Holdings

§ 7.3 Functionally Related Businesses

§ 7.4 Rules Applicable to Certain Supporting Organizations

§ 7.5 Rules Applicable to Donor-Advised Funds

§ 7.6 Excise Taxes on Excess Holdings

Chapter Eight: Jeopardizing Investments

§ 8.1 General Rules

§ 8.2 Prudent Investments

§ 8.3 Program-Related Investments

§ 8.4 Investment Frauds

§ 8.5 Excise Taxes for Jeopardizing Investments

Chapter Nine: Taxable Expenditures

§ 9.1 Legislative Activities

§ 9.2 Political Campaign Activities

§ 9.3 Grants to Individuals

§ 9.4 Grants to Public Charities

§ 9.5 Grants to Foreign Organizations

§ 9.6 Expenditure Responsibility

§ 9.7 Internet and Private Foundations

§ 9.8 Spending for Noncharitable Purposes

§ 9.9 Distributions to Certain Supporting Organizations

§ 9.10 Excise Tax for Taxable Expenditures

Chapter Ten: Tax on Investment Income

§ 10.1 Rate of Tax

§ 10.2 Reducing the Excise Tax

§ 10.3 Formula for Taxable Income

§ 10.4 Reductions to Gross Investment Income

§ 10.5 Foreign Foundations

§ 10.6 Exemption from Tax on Investment Income

§ 10.7 Legislative Proposal

Chapter Eleven: Unrelated Business Income

§ 11.1 General Rules

§ 11.2 Exceptions

§ 11.3 Rules Specifically Applicable to Private Foundations

§ 11.4 Unrelated Debt-Financed Income

§ 11.5 Calculating and Reporting the Tax

Chapter Twelve: Tax Compliance and Administrative Issues

§ 12.1 Successful Preparation of form 990-PF

§ 12.2 Reports Unique to Private Foundations

§ 12.3 Compliance Issues

Chapter Thirteen: Termination of Foundation Status

§ 13.1 Voluntary Termination

§ 13.2 Involuntary Termination

§ 13.3 Transfer of Assets to A Public Charity

§ 13.4 Operation as a Public Charity

§ 13.5 Mergers, Split-Ups, and Transfers Between Foundations

§ 13.6 Termination Tax

§ 13.7 Abatement

Chapter Fourteen: Charitable Giving Rules

§ 14.1 General Rules

§ 14.2 Gifts of Appreciated Property

§ 14.3 Deductibility of Gifts to Foundations

§ 14.4 Deduction Reduction Rules

§ 14.5 Planned Giving Revisited60

§ 14.6 Administrative Considerations

Chapter Fifteen: Private Foundations and Public Charities

§ 15.1 Distinctions Between Public and Private Charities

§ 15.2 Evolution of Law of Private Foundations

§ 15.3 Organizations with Inherently Public Activity

§ 15.4 Publicly Supported Organizations—Donative Entities

§ 15.5 Service Provider Organizations

§ 15.6 Comparative Analysis of the two Categories of Publicly Supported Charities

§ 15.7 Supporting Organizations

§ 15.8 Change of Public Charity Category

§ 15.9 Noncharitable Supported Organizations

§ 15.10 Relationships Created for Avoidance Purposes

§ 15.11 Reliance by Grantors and Contributors

§ 15.12 Other Rules

§ 15.13 Public Safety Organizations

§ 15.14 Termination of Public Charity Status

Chapter Sixteen: Donor-Advised Funds

§ 16.1 Basic Definitions

§ 16.2 General Concept of a Gift

§ 16.3 Types of Donor Funds

§ 16.4 IRS Challenges to Donor Funds

§ 16.5 Prohibited Material Restrictions

§ 16.6 Department of Justice Position

§ 16.7 Public Charity Status of Funds

§ 16.8 Interrelationship of Private Foundation Rules

§ 16.9 Statutory Criteria

§ 16.10 Department of Treasury Study

§ 16.11 Congressional Research Service Study

Chapter Seventeen: Corporate Foundations

§ 17.1 Corporate Foundation Overview

§ 17.2 Reasons for Establishment of a Corporate Foundation

§ 17.3 Private Inurement Doctrine

§ 17.4 Disqualified Persons Rules

§ 17.5 Self-Dealing Rules

§ 17.6 Other Private Foundations Rules

About the Authors

About the Online Resources

Index

End User License Agreement

List of Illustrations

Exhibit 1.1

Exhibit 1.2

Exhibit 2.1

Exhibit 2.2

Exhibit 2.3

Exhibit 4.1

Exhibit 4.2

Exhibit 5.1

Exhibit 5.2

Exhibit 6.1

Exhibit 6.2

Exhibit 6.3

Exhibit 8.1

Exhibit 8.2

Exhibit 8.3

Exhibit 9.1

Exhibit 9.2

Exhibit 9.3

Exhibit 9.4

Exhibit 9.5

Exhibit 9.6

Exhibit 9.7

Exhibit 9.8

Exhibit 9.9

Exhibit 9.10

Exhibit 9.11

Exhibit 9.12

Exhibit 9.13

Exhibit 9.14

Exhibit 9.15

Exhibit 10.1

Exhibit 10.2

Exhibit 11.1

Exhibit 11.2

Exhibit 11.3

Exhibit 11.4

Exhibit 12.1

Exhibit 12.2

Exhibit 12.3

Exhibit 12.4

Exhibit 12.5

Exhibit 12.6

Exhibit 12.7

Exhibit 12.8

Exhibit 13.1

Exhibit 15.1

Exhibit 15.2

Exhibit 15.3

Exhibit 15.4

Guide

Cover

Table of Contents

Preface

Chapter 1

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Don't Miss Out on Must-Have and Timely New Information!

Keep up-to-date on relevant changes in IRS forms, requirements, and related tax procedures.

Learn about new federal, state, and local laws covering tax regulations surrounding private foundations.

Stay abreast of complicated legal and tax issues.

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Private Foundations

Tax Law and Compliance

Fourth Edition

Bruce R. Hopkins

Jody Blazek

Cover image: ©iStock.com/phleum

Cover design: Wiley

Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Hopkins, Bruce R., author.

Private foundations : tax law and compliance / Bruce R. Hopkins, Jody Blazek. — Fourth Edition.

pages cm. — (Wiley nonprofit authority)

Includes index.

ISBN 978-1-118-53247-8 (cloth); ISBN 978-1-118-53249-2 (ebk); ISBN 978-1-118-53250-8 (ebk)

1. Nonprofit organizations—Taxation—Law and legislation—United States. 2. Charitable uses, trusts, and foundations—Taxation—United States. I. Blazek, Jody, author. II. Title.

KF6449.H63 2014

343.7306′68–dc23

2013046694

Dedication

This book is dedicated to my private foundation clients, and my friends and colleagues at Polsinelli Shalton Flanigan Suelthaus PC who help me serve them.

BRH

And also to Blazek & Vetterling clients and colleagues, seminar and conference participants, and fellow CPAs and lawyers who serve private foundations, for asking the questions that provide fuel for new editions of the book.

JB

Preface

Private foundations, although constituting a relatively small portion of the charitable community, are burdened with extensive federal tax law requirements that belie their numbers, and that substantially regulate and circumscribe their operations. This body of law has steadily grown since its inception as a considerable portion of the Tax Reform Act of 1969. This book came about in reflection of this expanding and expansive aspect of the law pertaining to these unique forms of tax-exempt organizations. We have attempted to both capture and summarize this law, and to provide guidance as to compliance with it.

As noted, a private foundation is a charitable entity for tax purposes. Technically, this means it is an organization described in section 501(c)(3) of the Internal Revenue Code. This in turn means, of course, that nearly all of the considerable law embodied in and around that section is applicable to private foundations. The law in this area, however, stimulated by a variety of abuses, perceived and otherwise, includes an overlay collection of statutory requirements, in the form of rules applicable only to private foundations. These rules are the principal subject of this book.