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Make sense of the new regulatory requirements with expert clarification and practical tools for compliance

Private Foundations: Tax Law and Compliance, 5th Edition provides clarification, expert insight, and helpful instruction for executives and supporting professionals navigating extensive federal tax law requirements. Despite their relatively low numbers, private foundations are subject to complex, burdensome regulations that continue to expand; the recent tax overhaul has compounded this issue, bringing massive changes beyond the usual annual adjustments, and throwing a wrench into the status quo of compliance-as-usual. This book summarizes and clarifies the statutory regulations governing private foundations, offers expert insight into the underlying logic, and provides a host of practical tools that ease the filing process and help ensure compliance with the latest laws.

Detailed explanations are bolstered by checklists, sample documents and letters, practice forms, and real-world examples in order to provide both conceptual and practical guidance for maintaining tax-exempt eligibility and tax compliance. By untangling the complex maze of constantly-evolving requirements, this book offers a much-needed resource to those tasked with ensuring compliance amidst regulatory changes year after year.
Learn how the recent changes to tax laws affect private foundations and related organizations
Understand the practical implications of maintaining compliance
Access critical tools that help streamline the filing process
Avoid mistakes and oversights with line-by-line instruction

This book is updated annually to provide guidance based on the most recent iteration of the law, but this year's edition is unusually critical; federal law has undergone sweeping changes that will substantially alter filings across the board, and the complex nature of the regulations governing private foundations promises additional confusion as the new laws are applied. Private Foundations: Tax Law and Compliance, 5th Edition provides insight, clarification, and explanation from the nation's leading authority on tax-exempt organizations to help private foundations maintain compliance amidst the changes.

The Tax Law of Private Foundations, m. 1 Buch, m. 1 Online-Zugang, 2 Teile

Preface xiii

Book Citations xix

1 Introduction to Private Foundations 1

1.1 Private Foundations: Unique Organizations 1

1.2 Definition of Private Foundation 4

1.3 Background 5

1.4 Private Foundation Law Primer 8

1.5 Foundations in Overall Exempt Organizations Context 15

1.6 Definition of Charity 16

1.7 Operating for Charitable Purposes 17

1.8 Organizational Rules 21

1.9 Private Foundation Sanctions 24

1.10 Statistical Profile 28

2 Starting, Funding, and Governing a Private Foundation 29

2.1 Choice of Organizational Form 30

2.2 Funding a Foundation 31

2.3 Estate Planning Principles 33

2.4 Foundations and Planned Giving 34

2.5 Acquiring Recognition of Tax-Exempt Status 39

2.6 Special Requirements for Charitable Organizations 61

2.7 When to Report Back to the IRS 63

2.8 Governance 71

3 Types of Private Foundations 85

3.1 Private Operating Foundations 85

3.2 Exempt Operating Foundations 107

3.3 Conduit Foundations 107

3.4 Common Fund Foundations 109

3.5 Research and Experimentation Funds 110

3.6 Other Types of Foundations 111

3.7 Nonexempt Charitable Trusts 112

3.8 Split-Interest Trusts 115

3.9 Foreign Private Foundations 117

4 Disqualified Persons 121

4.1 Substantial Contributors 121

4.2 Foundation Managers 124

4.3 Certain 20 Percent Owners 124

4.4 Family Members 127

4.5 Corporations or Partnerships 128

4.6 Trusts or Estates 128

4.7 Private Foundations 129

4.8 Governmental Officials 129

4.9 Termination of Disqualified Person Status 131

5 Self-Dealing 135

5.1 Private Inurement Doctrine 137

5.2 Private Benefit Doctrine 140

5.3 Definition of Self-Dealing 146

5.4 Sale, Exchange, Lease, or Furnishing of Property 150

5.5 Loans and Other Extensions of Credit 163

5.6 Payment of Compensation 167

5.7 Indemnification and Insurance 182

5.8 Uses of Income or Assets by Disqualified Persons 188

5.9 Sharing Space, People, and Expenses 200

5.10 Payments to Government Officials 204

5.11 Indirect Self-Dealing 206

5.12 Property Held by Fiduciaries 212

5.13 Early Terminations of Charitable Remainder Trusts 218

5.14 Additional Exceptions 219

5.15 Issues Once Self-Dealing Occurs 221

6 Mandatory Distributions 235

6.1 Distribution Requirements--In General 235

6.2 Assets Used to Calculate Minimum Investment Return 237

6.3 Measuring Fair Market Value 247

6.4 Distributable Amount 255

6.5 Qualifying Distributions 257

6.6 Distributions to Certain Supporting Organizations 279

6.7 Satisfying the Distribution Test 281

6.8 History of the Mandatory Distribution Requirement 288

7 Excess Business Holdings 293

7.1 General Rules 293

7.2 Permitted and Excess Holdings 300

7.3 Functionally Related Businesses 306

7.4 Philanthropic Businesses 310

7.5 Rules Applicable to Certain Supporting Organizations 310

7.6 Rules Applicable to Donor-Advised Funds 311

7.7 Excise Taxes on Excess Holdings 311

8 Jeopardizing Investments 315

8.1 General Rules 316

8.2 Prudent Investments 321

8.3 Program-Related Investments 331

8.4 Investment Frauds 336

8.5 Excise Taxes for Jeopardizing Investments 340

9 Taxable Expenditures 345

9.1 Legislative Activities 347

9.2 Political Campaign Activities 356

9.3 Grants to Individuals 359

9.4 Grants to Public Charities 380

9.5 Grants to Exempt Operating Foundations 384

9.6 Grants to Foreign Organizations 385

9.7 Expenditure Responsibility 388

9.8 Internet and Private Foundations 399

9.9 Spending for Noncharitable Purposes 404

9.10 Distributions to Certain Supporting Organizations 408

9.11 Excise Tax for Taxable Expenditures 408

10 Tax on Investment Income 415

10.1 Rate of Tax 416

10.2 Reducing Excise Tax 417

10.3 Formula for Taxable Income 422

10.4 Reductions to Gross Investment Income 432

10.5 Foreign Foundations 438

10.6 Exemption from Tax on Investment Income 44