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

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  • Edition: 5th
  • Format: Hardcover
  • Copyright: 2012-02-07
  • Publisher: Wiley

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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 Exhibitsp. xiii
Prefacep. xvii
About the Authorsp. xxiii
Acknowledgmentsp. xxv
Qualifications Of Tax-Exempt Organizationsp. 1
Distinguishing Characteristics of Tax-Exempt Organizationsp. 3
Differences between Exempt and Nonexempt Organizationsp. 10
Nomenclaturep. 13
Ownership and Controlp. 13
Role of the Internal Revenue Servicep. 14
Suitability as an Exempt Organizationp. 15
Start-Up Tax and Financial Considerationsp. 18
Choosing the Best Form of Organizationp. 22
Qualifying Under IRC  501(c)(3)p. 27
Organizational Testp. 29
Operational Testp. 35
Religious Organizationsp. 59
Types of Religious Organizationsp. 59
Churchesp. 64
Religious Ordersp. 72
Religious and Apostolic Associationsp. 72
Charitable Organizationsp. 75
Relief of the Poorp. 77
Promotion of Social Welfarep. 79
Lessening the Burdens of Governmentp. 88
Advancement of Religionp. 90
Advancement of Education and Sciencep. 90
Promotion of Healthp. 91
Cooperative Hospital Service Organizationsp. 110
Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animalsp. 111
Educational Purposesp. 111
Literary Purposesp. 126
Scientific Purposesp. 127
Testing for Public Safetyp. 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 Animalsp. 134
Civic Leagues and Local Associations of Employees:  501(c)(4)p. 135
Comparison of (c)(3) and (c)(4) Organizationsp. 137
Qualifying and Nonqualifying Civic Organizationsp. 141
Local Associations of Employeesp. 143
Neighborhood and Homeowners Associationsp. 145
Disclosures of Nondeductibilityp. 148
Labor, Agricultural, and Horticultural Organizations:  501(c)(5)p. 157
Labor Unionsp. 158
Agricultural Groupsp. 163
Horticultural Groupsp. 166
Disclosures of Nondeductibilityp. 166
Business Leagues:  501(c)(6)p. 169
Basic Characteristicsp. 170
Meaning of "Common Business Interest"p. 170
Line of Businessp. 172
Rendering Services for Membersp. 174
Sources of Revenuep. 180
Membership Categoriesp. 180
Member Inurementp. 182
Chambers of Commerce and Boards of Tradep. 183
Comparison to  501(c)(5)p. 183
Recognition of Exempt Statusp. 184
Formation of a Related Charitable Organizationp. 185
Disclosures for Lobbying and Nondeductibilityp. 186
Social Clubs:  501(c)(7)p. 189
Organizational Requirements and Characteristicsp. 190
Member Inurement Prohibitedp. 193
Membership Requirementsp. 194
Revenue Testsp. 196
Unrelated Business Income Taxp. 198
Filing and Disclosure Requirementsp. 203
Instrumentalities of Government and Title-Holding Corporationsp. 205
 501(c)(1) Instrumentalities of the United Statesp. 205
Governmental Unitsp. 206
Qualifying for  501(c)(3) Statusp. 210
 501(c)(2) Title-Holding Corporationsp. 220
 501(c)(25) Title-Holding Corporationsp. 225
Public Charitiesp. 227
Distinctions between Public and Private Charitiesp. 228
"Inherently Public Activity" and Broad Public Support:  509(a)(1)p. 232
Community Foundationsp. 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 Foundationsp. 273
Private Foundations—General Conceptsp. 275
Why Private Foundations Are Specialp. 275
Special Rules Pertaining to Private Foundationsp. 278
Application of Taxes to Certain Nonexempt Trustsp. 285
Termination of Private Foundation Statusp. 286
Excise Tax Based on Investment Income: IRC  4940p. 311
Formula for Taxable Incomep. 312
Capital Gainsp. 319
Ponzi Scheme Lossesp. 324
Deductions from Gross Investment Incomep. 325
Tax-Planning Ideasp. 330
Foreign Foundationsp. 334
Timely Payment of Excise Taxp. 336
Exempt Operating Foundationsp. 337
Self-Dealing: IRC  4941p. 339
Definition of Self-Dealingp. 340
Sale, Exchange, or Lease of Propertyp. 343
Loansp. 350
Compensationp. 352
Transactions That Benefit Disqualified Personsp. 363
Payments to Government Officialsp. 369
Sharing Space, People, and Expensesp. 370
Indirect Dealsp. 374
Property Held by Fiduciariesp. 375
Issues Once Self-Dealing Occursp. 379
Minimum Distribution Requirements: IRC  4942p. 385
Assets Used to Calculate Minimum Investment Returnp. 386
Measuring Fair Market Valuep. 393
Distributable Amountp. 398
Qualifying Distributionsp. 401
Private Operating Foundationsp. 413
Satisfying the Distribution Testp. 422
Excess Business Holdings and Jeopardizing Investments: IRC   4943 and 4944p. 427
Excess Business Holdingsp. 427
Jeopardizing Investmentsp. 435
Program-Related Investmentsp. 440
Penalty Taxesp. 444
Taxable Expenditures: IRC  4945p. 449
Lobbyingp. 451
Voter Registration Drivesp. 456
Grants to Individualsp. 457
Grants to Public Charitiesp. 470
Grants to Foreign Organizationsp. 482
Expenditure Responsibility Grantsp. 487
Noncharitable Expendituresp. 500
Excise Taxes Payablep. 501
Obtaining And Maintaining Tax-Exempt Statusp. 531
IRS Filings, Procedures, and Policiesp. 533
IRS Determination Processp. 535
Annual Filing of Forms 990p. 543
Reporting Organizational Changes to the IRSp. 553
Weathering an IRS Examinationp. 559
When Organization Loses Its Tax-Exempt Statusp. 564
Maintaining Exempt Statusp. 565
Checklistsp. 565
Private Inurement and Intermediate Sanctionsp. 587
Defining Inurementp. 589
Salaries and Other Compensationp. 591
Finding Salary Statisticsp. 593
Housing and Mealsp. 597
Purchase, Lease, or Sale of Property or Servicesp. 598
Loans and Guaranteesp. 600
For-Profit to Nonprofit and Vice Versap. 601
Services Rendered for Individualsp. 602
Joint Venturesp. 604
Intermediate Sanctionsp. 605
Unrelated Business Incomep. 621
IRS Scrutiny of Unrelated Business Incomep. 623
History of the Unrelated Business Income Taxp. 624
Consequences of Receiving UBIp. 625
Definition of Trade or Businessp. 627
What Is Unrelated Business Income?p. 629
"Regularly Carried On"p. 630
"Substantially Related"p. 632
Unrelated Activitiesp. 637
The Exceptionsp. 655
Income Modificationsp. 662
Calculating and Minimizing Taxable Incomep. 672
Debt-Financed Propertyp. 676
Museumsp. 682
Travel Toursp. 684
Publishingp. 685
Relationships with Other Organizations and Businessesp. 689
Creation of (c)(3) by (c)(4), (5), or (6)p. 690
Alliances with Investorsp. 694
Creation of a For-Profit Corporate Subsidiaryp. 700
Active Business Relationshipsp. 703
Electioneering and Lobbyingp. 707
Election Campaign Involvementp. 708
Voter Education versus Candidate Promotionp. 714
Tax on Political Expendituresp. 719
Lobbying Activity of  501(c)(3) Organizationsp. 732
Permissible Amounts of Lobbyingp. 739
Lobbying Limits for  501(c)(4), (5), (6), and Other Exempt Organizationsp. 742
Advocacy and Nonpartisan Analysisp. 743
Deductibility and Disclosuresp. 747
Overview of Deductibilityp. 747
The Substantiation and Quid Pro Quo Rulesp. 759
Valuing Donor Benefitsp. 769
Unrelated Business Income Aspects of Fund-Raisingp. 773
State and Local Regulationsp. 774
Employment Taxesp. 777
Distinctions Between Employees and Independent Contractorsp. 778
Ministersp. 786
Reporting Requirementsp. 790
Mergers, Bankruptcies, and Terminationsp. 795
Mergers and Other Combinationsp. 795
Bankruptcyp. 800
Terminationsp. 803
Table of Casesp. 805
Table of IRS Revenue Rulingsp. 817
Table of IRS Revenue Proceduresp. 823
Indexp. 825
Table of Contents provided by Publisher. All Rights Reserved.

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