The Tax Law of Private Foundations: 2022 Cumulative Supplement PDF
Preview The Tax Law of Private Foundations: 2022 Cumulative Supplement
(cid:2) TrimSize:7inx10in Hamilton930266 ffirs.tex V1-09/30/2022 2:42pm Pagei + website The Tax Law of Private Foundations (cid:2) (cid:2) 2022 Cumulative Supplement Fifth Edition (cid:2) (cid:2) TrimSize:7inx10in Hamilton930266 ffirs.tex V1-09/30/2022 2:42pm Pageii Update Service BECOME A SUBSCRIBER! Did you purchase this product from a bookstore? If you did, it’s important for you to become a subscriber. John Wiley & Sons, Inc. may publish, on a periodic basis, supplements and new editions to reflect the latest changes in the subject matter that you need to know in order to stay competitive in this ever-changing industry. By contacting the Wiley office nearest you, you’ll receive any current update at no additional charge. In addition, you’ll receive future updates and revised or related volumes on a 30-day examination review. If you purchased this product directly from John Wiley & Sons, Inc., we have already recorded your subscription for this update service. 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LibraryofCongressCataloging-in-PublicationDataisAvailable: ISBN9781119930266(Paperback) ISBN9781119985365(ePDF) ISBN9781119985358(ePub) ISBN9781119512585(mainbook) CoverImage:StuccoSpira©MassimoRavera/GettyImages CoverDesign:Wiley (cid:2) (cid:2) TrimSize:7inx10in Hamilton930266 ftoc.tex V1-09/24/2022 7:44pm Pagev Contents Preface ix BookCitations xi 1 IntroductiontoPrivateFoundations 1 §1.1 PrivateFoundations:UniqueOrganizations 1 §1.2 DefinitionofPrivateFoundation 2 §1.4 PrivateFoundationLawPrimer 2 §1.5 FoundationsinOverallExemptOrganizationsContext 2 §1.6 DefinitionofCharity 2 §1.7 OperatingforCharitablePurposes 3 §1.9 PrivateFoundationSanctions 3 §1.10 StatisticalProfile 12 §1.11 PrivateFoundationsandLaw50YearsLater 12 2 Starting,Funding,andGoverningaPrivateFoundation 17 §2.1 ChoiceofOrganizationalForm 17 (cid:2) (cid:2) §2.3 EstatePlanningPrinciples 17 §2.4 FoundationsandPlannedGiving 17 §2.5 AcquiringRecognitionofTax-ExemptStatus 18 §2.6 SpecialRequirementsforCharitableOrganizations 19 §2.7 WhentoReportBacktotheIRS 19 3 TypesofPrivateFoundations 21 §3.1 PrivateOperatingFoundations 21 §3.3 ConduitFoundations 22 §3.4 CommonFundFoundations 23 §3.8 Split-InterestTrusts 23 §3.9 ForeignPrivateFoundations 23 4 DisqualifiedPersons 25 §4.1 SubstantialContributors 25 §4.2 FoundationManagers 25 §4.3 Certain20PercentOwners 25 §4.4 FamilyMembers 26 §4.5 CorporationsorPartnerships 26 §4.6 TrustsorEstates 26 v (cid:2) (cid:2) TrimSize:7inx10in Hamilton930266 ftoc.tex V1-09/24/2022 7:44pm Pagevi CONTENTS 5 Self-Dealing 27 §5.1 PrivateInurementDoctrine 27 §5.2 PrivateBenefitDoctrine 28 §5.3 DefinitionofSelf-Dealing 31 §5.3A ExcessCompensationTax 31 §5.4 Sale,Exchange,Lease,orFurnishingofProperty 37 §5.5 LoansandOtherExtensionsofCredit 37 §5.6 PaymentofCompensation 38 §5.8 UsesofIncomeorAssetsbyDisqualifiedPersons 39 §5.11 IndirectSelf-Dealing 42 §5.12 PropertyHeldbyFiduciaries 50 §5.14 AdditionalExceptions 58 §5.15 IssuesOnceSelf-DealingOccurs 59 6 MandatoryDistributions 65 §6.1 DistributionRequirements—inGeneral 65 §6.2 AssetsUsedtoCalculateMinimumInvestmentReturn 66 §6.3 DeterminingFairMarketValue 66 §6.4 DistributableAmount 69 §6.5 QualifyingDistributions 70 §6.7 SatisfyingtheDistributionTest 75 7 ExcessBusinessHoldings 77 (cid:2) (cid:2) §7.1 GeneralRules 77 §7.2 PermittedandExcessHoldings 79 §7.3 FunctionallyRelatedBusinesses 80 §7.7 ExciseTaxesonExcessHoldings 80 8 JeopardizingInvestments 81 §8.2 PrudentInvestments 81 §8.3 Program-RelatedInvestments 81 §8.4 InvestmentFrauds 82 §8.5 ExciseTaxforJeopardizingInvestments 82 9 TaxableExpenditures 83 §9.1 LegislativeActivities 83 §9.2 PoliticalCampaignActivities 84 §9.3 GrantstoIndividuals 84 §9.4 GrantstoPublicCharities 97 §9.6 GrantstoForeignOrganizations 97 §9.7 ExpenditureResponsibility 99 §9.8 InternetandPrivateFoundations 100 §9.9 SpendingforNoncharitablePurposes 100 §9.10 DistributionstoCertainSupportingOrganizations 102 §9.10A DistributionstoGroupExemptionOrganizations 102 §9.11 ExciseTaxforTaxableExpenditures 104 vi (cid:2) (cid:2) TrimSize:7inx10in Hamilton930266 ftoc.tex V1-09/24/2022 7:44pm Pagevii CONTENTS 10 TaxonInvestmentIncome 107 §10.1 RateofTax 107 §10.1A PaymentofTax 107 §10.2 ReducingExciseTax 108 §10.3 FormulaforTaxableIncome 109 §10.4 ReductionstoGrossInvestmentIncome 109 §10.5 ForeignFoundations 109 §10.6 ExemptionfromTaxonInvestmentIncome 110 11 UnrelatedBusinessActivity 111 §11.1 GeneralRules 111 §11.2 Exceptions 111 §11.3 RulesSpecificallyApplicabletoPrivateFoundations 112 §11.4 UnrelatedDebt-FinancedIncomeRules 113 §11.5 CalculatingandReportingtheTax 114 12 TaxComplianceandAdministrativeIssues 121 §12.1 Form990-PF 121 §12.2 Form990-PFPenalties 124 §12.3 AutomaticRevocationforNon-Filing 128 §12.4 PublicDisclosureandInspectionofReturns 129 §12.5 ReportingandPaymentofExciseTaxes 132 (cid:2) (cid:2) 13 TerminationofFoundationStatus 145 §13.1 VoluntaryTermination 145 §13.3 TransferofAssetstoaPublicCharity 146 §13.4 OperationasaPublicCharity 147 §13.5 Mergers,Split-Ups,andTransfersBetweenFoundations 150 §13.5A TerminationofTrustsTreatedasPrivateFoundations 150 14 CharitableGivingRules 153 §14.1 ConceptofGift 153 §14.2 BasicRules 154 §14.3 GiftsofAppreciatedProperty 155 §14.4 DeductibilityofGiftstoFoundations 155 §14.5 QualifiedAppreciatedStockRule 155 §14.6 DeductionReductionRules 155 §14.7 SpecialGiftSituations 156 §14.8 PlannedGivingRevisited 156 §14.9 AdministrativeConsiderations 156 15 PrivateFoundationsandPublicCharities 163 §15.1 DistinctionsBetweenPublicandPrivateCharities 163 §15.2 EvolutionofLawofPrivateFoundations 164 §15.3 OrganizationswithInherentlyPublicAttributes 164 §15.4 PubliclySupportedOrganizations—DonativeEntities 166 vii (cid:2) (cid:2) TrimSize:7inx10in Hamilton930266 ftoc.tex V1-09/24/2022 7:44pm Pageviii CONTENTS §15.5 ServiceProviderOrganizations 167 §15.7 SupportingOrganizations 169 §15.8 ChangeofPublicCharityCategory 169 §15.9 NoncharitableSupportedOrganizations 171 §15.14 TerminationofPublicCharityStatus 172 16 Donor-AdvisedFunds 173 §16.1 BasicDefinitions 173 §16.3 TypesofDonorFunds 173 §16.7 PublicCharityStatusofFunds 173 §16.8 InterrelationshipofPrivateFoundationRules 173 §16.9 StatutoryCriteria 173 §16.9A Litigation 174 §16.12 TaxRegulations 176 §16.13 DAFStatisticalPortrait 176 §16.14 CriticismsandCommentary 178 §16.15 ProposedLegislation 185 17 CorporateFoundations 189 §17.2 ReasonsforEstablishmentofaCorporateFoundation 189 §17.3 PrivateInurementDoctrine 189 §17.3A PrivateBenefitDoctrine 189 (cid:2) §17.5 Self-DealingRules 190 (cid:2) §17.6 OtherPrivateFoundationsRules 191 §17.7 TaxonExcessCompensation:PotentiallyApplicableExceptions Illustrated 191 AppendixA—SourcesoftheLaw 197 AppendixB—InternalRevenueCodeSections 223 TableofCases 227 TableofIRSRevenueRulingsandRevenueProcedures 233 TableofIRSPrivateDeterminationsCitedinText 237 TableofIRSPrivateLetterRulings,TechnicalAdvice Memoranda,andGeneralCounselMemoranda 245 AbouttheAuthors 263 AbouttheOnlineResources 265 CumulativeIndex 267 viii (cid:2)
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