Tax Planning and Compliance for Tax-Exempt Organizations : Rules, Checklists, Procedures

by Blazek, Jody; Adams, Amanda

• ISBN13: 9780470903445
• ISBN10: 0470903449
• Edition: 5th
• Format: Hardcover
• Copyright: 2012-02-07
• Publisher: Wiley

Summary

An essential, timesaving guide for accountants, lawyers, nonprofit executives and directors, consultants, and volunteers, the Tax Planning and Compliance for Tax-Exempt Organizations: Rules, Checklists, and Procedures, Fifth Edition is an indispensable guide to navigating the complex maze of nonprofit tax rules and regulations. Along with clear, concise instructions for filing Forms 990 and other important IRS forms and documents, this practical guide covers the significant issues facing nonprofit organizations, including unrelated business income, private inurement, affiliations, and employment taxes. It also provides practical guidance on obtaining the tax exemption; reporting to boards, auditors, and the IRS; testing ongoing tax compliance; and managing lobbying expenditure.

Author Biography

Jody Blazek is a partner in Blazek & Vetterling, a CPA firm focusing on tax and financial planning for exempt organizations and the individuals who create, fund, and work with them. She is the author of six books in the Wiley Nonprofit Series and served on the Panel on the Nonprofit Sector's Transparency and Financial Accountability Work Group. She is former chair and a member of Form 1023 and 990 Revision Task Forces for the American Institute of Certified Public Accountants (AICPA).

Amanda Adams is a partner in Blazek & Vetterling. She has coauthored (with Jody Blazek) Revised Form 990: A Line-by-Line Preparation Guide (Wiley). She is an associate member of the AICPA's Exempt Organizations Tax Technical Resource Panel. She has a wealth of knowledge about the impact of partnerships, hedge funds, and other alternative investments owned by nonprofits, private foundations, and supporting organizations.

Table of Contents

List of Exhibits	p. xiii
Preface	p. xvii
About the Authors	p. xxiii
Acknowledgments	p. xxv
Qualifications Of Tax-Exempt Organizations	p. 1
Distinguishing Characteristics of Tax-Exempt Organizations	p. 3
Differences between Exempt and Nonexempt Organizations	p. 10
Nomenclature	p. 13
Ownership and Control	p. 13
Role of the Internal Revenue Service	p. 14
Suitability as an Exempt Organization	p. 15
Start-Up Tax and Financial Considerations	p. 18
Choosing the Best Form of Organization	p. 22
Qualifying Under IRC  501(c)(3)	p. 27
Organizational Test	p. 29
Operational Test	p. 35
Religious Organizations	p. 59
Types of Religious Organizations	p. 59
Churches	p. 64
Religious Orders	p. 72
Religious and Apostolic Associations	p. 72
Charitable Organizations	p. 75
Relief of the Poor	p. 77
Promotion of Social Welfare	p. 79
Lessening the Burdens of Government	p. 88
Advancement of Religion	p. 90
Advancement of Education and Science	p. 90
Promotion of Health	p. 91
Cooperative Hospital Service Organizations	p. 110
Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals	p. 111
Educational Purposes	p. 111
Literary Purposes	p. 126
Scientific Purposes	p. 127
Testing for Public Safety	p. 132
Fostering National or International Amateur Sports Competition (But Only If No Part of Its Activities Involves the Provision of Athletic Facilities or Equipment)	p. 133
Prevention of Cruelty to Children or Animals	p. 134
Civic Leagues and Local Associations of Employees:  501(c)(4)	p. 135
Comparison of (c)(3) and (c)(4) Organizations	p. 137
Qualifying and Nonqualifying Civic Organizations	p. 141
Local Associations of Employees	p. 143
Neighborhood and HomeownerâÇÖs Associations	p. 145
Disclosures of Nondeductibility	p. 148
Labor, Agricultural, and Horticultural Organizations:  501(c)(5)	p. 157
Labor Unions	p. 158
Agricultural Groups	p. 163
Horticultural Groups	p. 166
Disclosures of Nondeductibility	p. 166
Business Leagues:  501(c)(6)	p. 169
Basic Characteristics	p. 170
Meaning of "Common Business Interest"	p. 170
Line of Business	p. 172
Rendering Services for Members	p. 174
Sources of Revenue	p. 180
Membership Categories	p. 180
Member Inurement	p. 182
Chambers of Commerce and Boards of Trade	p. 183
Comparison to  501(c)(5)	p. 183
Recognition of Exempt Status	p. 184
Formation of a Related Charitable Organization	p. 185
Disclosures for Lobbying and Nondeductibility	p. 186
Social Clubs:  501(c)(7)	p. 189
Organizational Requirements and Characteristics	p. 190
Member Inurement Prohibited	p. 193
Membership Requirements	p. 194
Revenue Tests	p. 196
Unrelated Business Income Tax	p. 198
Filing and Disclosure Requirements	p. 203
Instrumentalities of Government and Title-Holding Corporations	p. 205
 501(c)(1) Instrumentalities of the United States	p. 205
Governmental Units	p. 206
Qualifying for  501(c)(3) Status	p. 210
 501(c)(2) Title-Holding Corporations	p. 220
 501(c)(25) Title-Holding Corporations	p. 225
Public Charities	p. 227
Distinctions between Public and Private Charities	p. 228
"Inherently Public Activity" and Broad Public Support:  509(a)(1)	p. 232
Community Foundations	p. 243
Service-Providing Organizations:  509(a)(2)	p. 250
Difference between  509(a)(1) and  509(a)(2)	p. 253
Supporting Organizations:  509(a)(3)	p. 260
Testing for Public Safety:  509(a)(4)	p. 271
Standards For Private Foundations	p. 273
Private Foundations—General Concepts	p. 275
Why Private Foundations Are Special	p. 275
Special Rules Pertaining to Private Foundations	p. 278
Application of Taxes to Certain Nonexempt Trusts	p. 285
Termination of Private Foundation Status	p. 286
Excise Tax Based on Investment Income: IRC  4940	p. 311
Formula for Taxable Income	p. 312
Capital Gains	p. 319
Ponzi Scheme Losses	p. 324
Deductions from Gross Investment Income	p. 325
Tax-Planning Ideas	p. 330
Foreign Foundations	p. 334
Timely Payment of Excise Tax	p. 336
Exempt Operating Foundations	p. 337
Self-Dealing: IRC  4941	p. 339
Definition of Self-Dealing	p. 340
Sale, Exchange, or Lease of Property	p. 343
Loans	p. 350
Compensation	p. 352
Transactions That Benefit Disqualified Persons	p. 363
Payments to Government Officials	p. 369
Sharing Space, People, and Expenses	p. 370
Indirect Deals	p. 374
Property Held by Fiduciaries	p. 375
Issues Once Self-Dealing Occurs	p. 379
Minimum Distribution Requirements: IRC  4942	p. 385
Assets Used to Calculate Minimum Investment Return	p. 386
Measuring Fair Market Value	p. 393
Distributable Amount	p. 398
Qualifying Distributions	p. 401
Private Operating Foundations	p. 413
Satisfying the Distribution Test	p. 422
Excess Business Holdings and Jeopardizing Investments: IRC   4943 and 4944	p. 427
Excess Business Holdings	p. 427
Jeopardizing Investments	p. 435
Program-Related Investments	p. 440
Penalty Taxes	p. 444
Taxable Expenditures: IRC  4945	p. 449
Lobbying	p. 451
Voter Registration Drives	p. 456
Grants to Individuals	p. 457
Grants to Public Charities	p. 470
Grants to Foreign Organizations	p. 482
Expenditure Responsibility Grants	p. 487
Noncharitable Expenditures	p. 500
Excise Taxes Payable	p. 501
Obtaining And Maintaining Tax-Exempt Status	p. 531
IRS Filings, Procedures, and Policies	p. 533
IRS Determination Process	p. 535
Annual Filing of Forms 990	p. 543
Reporting Organizational Changes to the IRS	p. 553
Weathering an IRS Examination	p. 559
When Organization Loses Its Tax-Exempt Status	p. 564
Maintaining Exempt Status	p. 565
Checklists	p. 565
Private Inurement and Intermediate Sanctions	p. 587
Defining Inurement	p. 589
Salaries and Other Compensation	p. 591
Finding Salary Statistics	p. 593
Housing and Meals	p. 597
Purchase, Lease, or Sale of Property or Services	p. 598
Loans and Guarantees	p. 600
For-Profit to Nonprofit and Vice Versa	p. 601
Services Rendered for Individuals	p. 602
Joint Ventures	p. 604
Intermediate Sanctions	p. 605
Unrelated Business Income	p. 621
IRS Scrutiny of Unrelated Business Income	p. 623
History of the Unrelated Business Income Tax	p. 624
Consequences of Receiving UBI	p. 625
Definition of Trade or Business	p. 627
What Is Unrelated Business Income?	p. 629
"Regularly Carried On"	p. 630
"Substantially Related"	p. 632
Unrelated Activities	p. 637
The Exceptions	p. 655
Income Modifications	p. 662
Calculating and Minimizing Taxable Income	p. 672
Debt-Financed Property	p. 676
Museums	p. 682
Travel Tours	p. 684
Publishing	p. 685
Relationships with Other Organizations and Businesses	p. 689
Creation of (c)(3) by (c)(4), (5), or (6)	p. 690
Alliances with Investors	p. 694
Creation of a For-Profit Corporate Subsidiary	p. 700
Active Business Relationships	p. 703
Electioneering and Lobbying	p. 707
Election Campaign Involvement	p. 708
Voter Education versus Candidate Promotion	p. 714
Tax on Political Expenditures	p. 719
Lobbying Activity of  501(c)(3) Organizations	p. 732
Permissible Amounts of Lobbying	p. 739
Lobbying Limits for  501(c)(4), (5), (6), and Other Exempt Organizations	p. 742
Advocacy and Nonpartisan Analysis	p. 743
Deductibility and Disclosures	p. 747
Overview of Deductibility	p. 747
The Substantiation and Quid Pro Quo Rules	p. 759
Valuing Donor Benefits	p. 769
Unrelated Business Income Aspects of Fund-Raising	p. 773
State and Local Regulations	p. 774
Employment Taxes	p. 777
Distinctions Between Employees and Independent Contractors	p. 778
Ministers	p. 786
Reporting Requirements	p. 790
Mergers, Bankruptcies, and Terminations	p. 795
Mergers and Other Combinations	p. 795
Bankruptcy	p. 800
Terminations	p. 803
Table of Cases	p. 805
Table of IRS Revenue Rulings	p. 817
Table of IRS Revenue Procedures	p. 823
Index	p. 825
Table of Contents provided by Publisher. All Rights Reserved.