Private Foundations Tax Law and Compliance

by Hopkins, Bruce R.; Blazek, Jody

• ISBN13: 9780470322420
• ISBN10: 047032242X
• Edition: 3rd
• Format: Hardcover
• Copyright: 2008-10-06
• Publisher: Wiley

Summary

With more than 50,000 private foundations in the United States and the increasing scrutiny of the IRS, this much-needed, annually updated manual provides you with a wide range of tax rules and regulations for these foundations. Coauthored by a lawyer and tax accountant, the revised and expanded Third Edition includes practical tax compliance suggestions and in-depth legal explanations. Capturing all-new developments in the private foundations arena, the new edition presents you with line-by-line instructions, sample-filled IRS forms, and complete citations.

Author Biography

BRUCE R. HOPKINS is a senior partner in the law firm of Polsinelli Shalton Flanigan Suelthaus PC, practicing in the firm's Kansas City, Missouri, and Washington, D.C., offices. He specializes in the representation of private foundations and other taxexempt organizations. His practice ranges over the entirety of law matters involving exempt organizations, with emphasis on the formation of nonprofit organizations, acquisition of recognition of tax-exempt status for them, the private inurement and private benefit doctrines, the intermediate sanctions rules, legislative and political campaign activities issues, public charity and private foundation rules, unrelated business planning, use of exempt and for-profit subsidiaries, joint venture planning, tax shelter involvement, review of annual information returns, Internet communications developments, the law of charitable giving (including planned giving), and fundraising law issues.

Mr. Hopkins served as Chair of the Committee on Exempt Organizations, Tax Section, American Bar Association; Chair, Section of Taxation, National Association of College and University Attorneys; and President, Planned Giving Study Group of Greater Washington, D.C.

Mr. Hopkins is the series editor of Wiley's Nonprofit Law, Finance, and Management Series. In addition to co-author of Private Foundations: Tax Law and Compliance,Third Edition, he is the author of The Law of Tax-Exempt Organizations, Ninth Edition;The Planning Guide for the Law of Tax-Exempt Organizations: Strategies and Commentaries;IRS Audits of Tax-Exempt Organizations: Policies, Practices, and Procedures; The Tax Lawof Charitable Giving, Third Edition; The Law of Fundraising, Third Edition; The Tax Law ofAssociations; The Tax Law of Unrelated Business for Nonprofit Organizations; The Nonprofits'Guide to Internet Communications Law; The Law of Intermediate Sanctions: A Guide forNonprofits; Starting and Managing a Nonprofit Organization: A Legal Guide, Fifth Edition;Nonprofit Law Made Easy; Charitable Giving Law Made Easy; Private Foundation Law MadeEasy; 650 Essential Nonprofit Law Questions Answered; The First Legal Answer Book forFund-Raisers; The Second Legal Answer Book for Fund-Raisers; The Legal Answer Book forNonprofit Organizations; The Second Legal Answer Book for Nonprofit Organizations; andThe Nonprofit Law Dictionary; and is the co-author, with Jody Blazek, of The Legal AnswerBook for Private Foundations; with Thomas K. Hyatt, of The Law of Tax-ExemptHealthcare Organizations, Third Edition; with David O. Middlebrook, of Nonprofit Lawfor Religious Organizations: Essential Questions & Answers; and with Douglas K. Anning, Virginia C. Gross, and Thomas J. Schenkelberg, of The New Form 990: Law, Policyand Preparation. He also writes Bruce R. Hopkins' Nonprofit Counsel, a monthly newsletter, published by John Wiley & Sons.

Mr. Hopkins received the 2007 Outstanding Nonprofit Lawyer Award (Vanguard Lifetime Achievement Award) from the American Bar Association, Section of Business Law, Committee on Nonprofit Corporations. He is listed in The Best Lawyers inAmerica, Nonprofit Organizations/Charities Law, 2007-2008.

Mr. Hopkins earned his J.D. and L.L.M. degrees at the George Washington University National Law Center and his B.A. at the University of Michigan. He is a member of the bars of the District of Columbia and the state of Missouri.

JODY BLAZEK is a partner in Blazek & Vetterling LLP, a Houston CPA firm focusing on tax and financial planning for exempt organizations and the individuals who create, fund, and work with them. BV serves over 400 nonprofit organizations providing financial reports and tax compliance and planning services.

Ms. Blazek's accounting career has concentrated on nonprofit organizations for over 38 years. This focus began with KPMG (then Peat Marwick) when she studied and interpreted the Tax Reform Act of 1969 as it related to charitable organizations and the creation of private foundations. From 1972 to 1981 she gained nonprofit management experience as treasurer of the Menil Interests, where she worked with John and Dominique de Menil to plan the Menil Collection, The Rothko Chapel, and other projects of the Menil Foundation. She reentered public practice in 1981 to found the firm she now serves.

She is the author of six books in the Wiley Nonprofit Series: Nonprofit FinancialPlanning Made Easy (2008); IRS Form 1023 Preparation Guide (2005); IRS Form 990 TaxPreparation Guide for Nonprofits (2004); Tax Planning and Compliance for Tax-Exempt Organizations,Fourth Edition (2004); Private Foundations: Tax Law and Compliance, ThirdEdition (2008); and The Legal Answer Book for Private Foundations (2002), the latter two volumes co-authored with Bruce R. Hopkins. Ms. Blazek serves on the Panel of the Nonprofit Sector, Transparency and Financial AccountabilityWork Group.

Ms. Blazek is past Chair of the Tax-Exempt Organizations Resource Panel and a member of Form 1023 and 999 Revision Task Forces for the American Institute of Certified Public Accountants; she serves on the national editorial board of Tax Analysts'The Exempt Organization Tax Review and the AICPA's The Tax Advisor; and is an advisor to the Volunteer Service Committee of the Houston Chapter of Certified Public Accountants. She is a founding director of Texas Accountants and Lawyers for the Arts and a member of the board of the Anchorage Foundations, Houston Artists Fund, and the River Pierce Foundation. Ms. Blazek is a frequent speaker at nonprofit symposia, including AICPA Not-for-Profit Industry Conference; University of Texas Law School Nonprofit Organizations Institute; Texas, New York, Arizona, and Washington State CPA Societies' Nonprofit Conferences; conference of Southwest Foundations and Association of Small Foundations; and Resource Center's Nonprofit Legal and Accounting Institute, among others.

Jody Blazek received her BBA from University of Texas at Austin in 1964 and took selected taxation courses at South Texas School of Law. She and her husband, David Crossley, nurture two sons, Austin and Jay Blazek Crossley.

Table of Contents

Preface

Introduction to Private Foundations

Private Foundations: Unique Organizations

Definition Of Private Foundation

History And Background

Foundations In Overall Exempt Organizations

Definition Of Charity

Operating For Charitable Purposes

Organizational Rules

Private Foundation Sanctions

Starting and Funding a Private Foundation

Choice Of Organizational Form

Funding A Foundation

Estate Planning Principles

Decedents' Estates

Estate and Gift Tax Considerations

Foundations And Planned Giving

Introduction to Planned Giving

Charitable Remainder Trusts

Other Planned Giving Vehicles

Interrelationships with Private Foundation Rules

Acquiring Tax-Exempt Status

Preparing Form 1023

The Substantially Completed Application

Recognition Application Procedure and Issuance of Determination Letters and Rulings

Application Processing Timeline

Issues Causing Applications to Be Routed to EO Technical

User Fees

Special Requirements For Charitable Organizations

When To Report Back To IRS

When Should a Ruling Be Requested?

Changes in Tax Methods

Amended Returns

Weathering an IRS Examination

Achieving Positive Results

Types of Private Foundations

Private Operating Foundations

Direct Charitable Distributions

Grants to Other Organizations

Individual Grant Programs

Income Test

Asset, Endowment, or Support Test

Compliance Period

Advantages and Disadvantages of Private Operating Foundations

Conversion to or from Private Operating Foundation Status

Exempt Operating Foundations

Conduit Foundations

Common Fund Foundations

Research And Experimentation Funds

Other Types Of Foundations

Nonexempt Charitable Trusts

Split-Interest Trusts

Foreign Private Foundations

Disqualified Persons

Substantial Contributors

Foundation Managers

Certain 20 Percent Owners

Family Members

Corporations Or Partnerships

Trusts Or Estates

Private Foundations

Governmental Officials

Self-Dealing

Private Inurement Doctrine

Private Benefit Doctrine

Definition Of Self-Dealing

Six Specific Acts

Statutory Exceptions

Exceptions Provided in Regulations

Sale, Exchange, Lease, Or Furnishing Of Property

Transactions by Agents

Exchanges

Leasing of Property

Furnishing of Goods, Services, or Facilities

Co-owned Property

Loans And Other Extensions Of Credit

Gifts of Indebted Property

Interest-Free Loans

Payment Of Compensation

Definition of Personal Services

Definition of Compensation

Definition of Reasonable

Finding Salary Statistics

Commissions or Management Fees

Expense Advances and Reimbursement

Bank Fees

IRS Executive Compensation Study

Indemnification And Insurance

Noncompensatory Indemnification and Insurance

Compensatory Indemnification and Insurance

Fringe Benefit Rules and Volun

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