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Private Foundations: Tax Law and Compliance, Fourth Edition 2017 Cumulative Supplement

ISBN: 978-1-119-39252-1
256 pages
October 2017
Private Foundations: Tax Law and Compliance, Fourth Edition 2017 Cumulative Supplement (1119392527) cover image

Description

The must-have tax law reference for private foundations, updated for 2017

Private Foundations provides an authoritative reference and extensive analysis of tax law and compliance in the private foundations arena, with a wealth of practical tools to streamline applications, filing, and reporting. This 2017 Cumulative Supplement captures the latest regulatory developments for easy reference, with coverage of tax-exempt status, the self-dealing rules, mandatory distribution, jeaopardizing investments, taxable expnditures, annual reporting to the IRS, winding up a foundation's affairs, and much more. Comprehensive line-by-line instructions are included for a variety of exemption applications and tax forms, and easy-to-use checklists highlight areas of critical concern to help you avoid oversights. Sample documents are provided to guide the composition of organizational bylaws and various letters, and completed IRS forms provide practical reference for side-by-side comparison. With comprehensive, up-to-date coverage of the private foundations space alongside helpful tools and visual reference, this book is a resource every foundation's needs.  

Written by two of the nation's leading authorities on private foundations, this supplement provides essential guidance you can trust. Clear, concise instructions focused on real-world use makes this reference a critical companion for those tasked with the responsibility of maintaining a foundation's tax-exempt status and staying out of regulatory difficulties.

  • Learn the latest guidelines for compliance, reporting, and eligibility
  • Access the latest regulatory changes quickly and easily
  • Organize reporting and applications with checklists and sample forms
  • Find valuable tools and reference for all aspects of private foundation compliance

Increasing IRS scrutiny makes compliance a more critical issue than ever before. An organization's tax-exempt status is generally vital to its continued operation, and a single oversight can put the future in jeopardy and staying out of regulatory difficulties. Private Foundations provides detailed instructions, examples, and much-needed answers on all aspects of private foundation tax law and compliance. 

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Table of Contents

Preface ix

Book Citations xi

Chapter 1: Introduction to Private Foundations 1

1.6 Foundations in Overall Exempt Organizations Context 1

1.10 Private Foundations Sanctions 1

Chapter 2: Starting and Funding a Private Foundation 3

2.5 Acquiring Recognition of Tax-Exempt Status 3

2.7 When to Report Back to the IRS 18

Chapter 3: Types of Private Foundations 19

3.1 Private Operating Foundations 19

3.1A Exempt Operating Foundations 19

Chapter 4: Disqualified Persons 21

4.4 Family Members 21

Chapter 5: Self-Dealing 23

5.1 Private Inurement Doctrine 23

5.3 Definition of Self-Dealing 24

5.4 Sale, Exchange, Lease, or Furnishing of Property 24

5.6 Payment of Compensation 26

5.8 Uses of Income or Assets by Disqualified Persons 26

5.10 Payments to Government Officials 27

5.11 Indirect Self-Dealing 28

5.12 Property Held by Fiduciary 29

5.15 Issues Once Self-Dealing Occurs 29

Chapter 6: Mandatory Distributions 31

6.2 Assets Used to Calculate Minimum Investment Return 31

6.5 Qualifying Distributions 31

6.7 Satisfying the Distribution Test 33

Chapter 7: Excess Business Holdings 35

7.1 General Rules 35

7.2 Permitted and Excess Holdings 36

7.3 Functionally Related Businesses 36

7.4 Rules Applicable to Certain Supporting Organizations 37

7.6 Excise Taxes on Excess Holdings 37

Chapter 8: Jeopardizing Investments 39

8.1 General Rules 39

8.2 Prudent Investments 39

8.3 Program-Related Investments 40

Chapter 9: Taxable Expenditures 43

9.1 Legislative Activities 43

9.2 Political Campaign Activities 44

9.3 Grants to Individuals 44

9.4 Grants to Public Charities 44

9.4A Grants to Exempt Operating Foundations 45

9.5 Grants to Foreign Organizations 46

9.6 Expenditure Responsibility 47

9.9 Distributions to Certain Supporting Organizations 47

9.10 Excise Tax for Taxable Expenditures 47

Chapter 10: Tax on Investment Income 49

10.3 Formula for Taxable Income 49

Chapter 11: Unrelated Business Income 51

11.1 General Rules 51

11.2 Exceptions 51

11.3 Rules Specifically Applicable to Private Foundations 51

11.5 Calculating and Reporting the Tax 52

Chapter 12: Tax Compliance and Administrative Issues 53

12.1 Successful Preparation of Form 990-PF 53

12.2 Reports Unique to Private Foundations 57

12.3 Compliance Issues 57

Chapter 13: Termination of Foundation Status 63

13.4 Operation as a Public Charity 63

13.5 Mergers, Split-Ups, and Transfers between Foundations 63

Chapter 15: Private Foundations and Public Charities 67

15.4 Publicly Supported Organizations Donative Entities 67

15.5 Service Provider Organizations 67

15.7 Supporting Organizations 68

15.8 Change Of Public Charity Category 79

Chapter 17: Corporate Foundations 81

17.3 Private Inurement Doctrine 81

17.5 Self-Dealing Rules 81

Chapter 18: Nonprofit Governance and Private Foundations (New) 83

18.1 State Law Overview 84

18.2 Board of Directors Basics 88

18.3 Principles of Fiduciary Responsibility 91

18.4 Duties of Directors 92

18.5 Board Composition and Federal Tax Law 93

18.6 Sources of Nonprofit Governance Principles 95

18.7 Relevant Nonprofit Governance Issues 122

18.8 Nonprofit Governance Policies 145

18.9 Role of IRS in Nonprofit Governance 146

18.10 Governance Principles and Private Foundations 156

Cumulative Table of Cases 163

Cumulative Table of IRS Revenue Rulings and Revenue Procedures 167

Cumulative Table of IRS Private Determinations Cited in Text 171

Cumulative Table of IRS Private Determinations Discussed in Bruce R. Hopkins’ Nonprofit Counsel 179

Cumulative Table of IRS Private Letter Rulings, Technical Advice

Memoranda, and General Counsel Memoranda 183

Table of Private Foundation Law Tax Reform Proposals 201

About the Authors 211

About the Online Resources 213

Cumulative Index 215

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