Planning Guide for the Law of Tax–Exempt Organizations

<p>Chapter 1 Form of Organization and Governance Principles 1</p>
<p>Basic Decision: Nonprofit or For–Profit 1</p>
<p>Location 2</p>
<p>Form of Organization 4</p>
<p>Name 8</p>
<p>Governing Board 9</p>
<p>Officers 14</p>
<p>Key Employees 17</p>
<p>Management Companies 17</p>
<p>Minutes 17</p>
<p>Other Documents 19</p>
<p>Corporate Governance Principles 20</p>
<p>Board Member Responsibilities and Duties 21</p>
<p>Protections against Personal Liability 24</p>
<p>Minimizing Board Member Liability 25</p>
<p>Watchdog Agencies 29</p>
<p>Chapter 2 Acquisition and Maintenance of Tax–Exempt Status 37</p>
<p>Nonprofit Organizations 37</p>
<p>Concept of Tax Exemption 37</p>
<p>Eligibility for Tax–Exempt Status 38</p>
<p>Categories of Tax–Exempt Organizations 38</p>
<p>Determining Appropriate Category of Tax Exemption 39</p>
<p>Concept of Recognition of Tax Exemption 41</p>
<p>Applying for Recognition of Tax Exemption 41</p>
<p>Legal Aspects of Form 1023 42</p>
<p>Bizarre Positions Taken by the IRS 48</p>
<p>Legal Aspects of Form 1024 50</p>
<p>Preparation of Applications 52</p>
<p>Reliance on Determination 53</p>
<p>Maintenance of Exempt Status 53</p>
<p>Material Changes 53</p>
<p>Changes in Form 54</p>
<p>Group Exemption 54</p>
<p>Chapter 3 Private Benefit 59</p>
<p>Overview of Private Benefit Law 59</p>
<p>Actions by Exempt Organizations 63</p>
<p>Issues, Strategies, and Commentaries 65</p>
<p>Conclusions (Reiterations) 78</p>
<p>Chapter 4 Public Charity and Private Foundation Classification 83</p>
<p>Law Basics 83</p>
<p>Glossary 84</p>
<p>Qualifying for and Maintaining Public Charity Status 86</p>
<p>Focus on Supporting Organizations 91</p>
<p>Terminations 99</p>
<p>Private Foundation Rules 102</p>
<p>Charitable Giving Rules 103</p>
<p>Donor–Advised Funds 104</p>
<p>Chapter 5 Advocacy Activities 107</p>
<p>Concept of Advocacy 107</p>
<p>Attempts to Influence Legislation 107</p>
<p>Participation in Political Campaign Activities 118</p>
<p>Political Organizations 119</p>
<p>Internet Activities 124</p>
<p>Other Forms of Advocacy 127</p>
<p>Chapter 6 Subsidiaries 131</p>
<p>Definition of Subsidiary 131</p>
<p>Determining Need for Subsidiary 132</p>
<p>Legal Form of Subsidiary 134</p>
<p>Bifurcation Basics 134</p>
<p>Tax–Exempt Subsidiaries 136</p>
<p>Taxable Subsidiaries 137</p>
<p>Subsidiaries in Partnerships 139</p>
<p>Tax Treatment of Revenue from Subsidiary 139</p>
<p>For–Profit Subsidiaries and Public Charity Status 141</p>
<p>Social Enterprise 142</p>
<p>Practical Operational Considerations 144</p>
<p>Chapter 7 Partnerships and Other Joint Ventures 149</p>
<p>Partnerships and Joint Venture Basics 149</p>
<p>Flow–Through Entities 150</p>
<p>Partnerships Details 151</p>
<p>Limited Liability Companies Details 154</p>
<p>Other Joint Ventures 158</p>
<p>Whole Entity Joint Ventures Commentary 158</p>
<p>Ancillary Joint Ventures 161</p>
<p>Law–Imposed Joint Ventures 164</p>
<p>Look–Through Rule Details 165</p>
<p>Chapter 8 Unrelated Business Rules 169</p>
<p>Law Basics 169</p>
<p>Perspectives 169</p>
<p>Unrelated Business Evaluation Steps 171</p>
<p>Commerciality Doctrine 181</p>
<p>Chapter 9 Annual Information Returns 187</p>
<p>Law Basics 187</p>
<p>Forms 188</p>
<p>Glossary 189</p>
<p>Review of Form 990 A Law Perspective 193</p>
<p>Preparation of Form 990 A Law Perspective 195</p>
<p>State Law Filing Requirements 220</p>
<p>Internet Resources 222</p>
<p>Penalties 222</p>
<p>Commentaries 222</p>
<p>Chapter 10 Disclosure Requirements 235</p>
<p>Applications for Recognition of Tax Exemption 235</p>
<p>Annual Information Returns 236</p>
<p>Gift Substantiation Requirements 237</p>
<p>Quid Pro Quo Contributions 239</p>
<p>Disclosure by Noncharitable Organizations 240</p>
<p>Disclosure of Gifts of Property 243</p>
<p>Dispositions of Contributed Property 245</p>
<p>Appraisal Requirements 246</p>
<p>Offering of Information or Services 250</p>
<p>Personal Benefit Contracts 251</p>
<p>Tax Shelters 252</p>
<p>Prospective (Possible) Disclosure Requirements 254</p>
<p>Chapter 11 Planning in the Face of Difficult Court Opinions 261</p>
<p>Introduction: Evaluation of Court Opinions 261</p>
<p>Positive Court Opinion 263</p>
<p>Erroneous Court Opinions 265</p>
<p>Other Difficult Court Opinions 294</p>
<p>Chapter 12 The Legal Audit 327</p>
<p>Inventory of Basics 327</p>
<p>Corporate Governance 329</p>
<p>External Relationships 330</p>
<p>Tax–Exempt Status 330</p>
<p>Private Inurement Doctrine 331</p>
<p>Private Benefit Doctrine 332</p>
<p>Excess Benefit Transactions 333</p>
<p>Self–Dealing Rules 335</p>
<p>Actions by Organization 336</p>
<p>Public Charity Classification 336</p>
<p>Legislative Activities 339</p>
<p>Political Campaign Activities 341</p>
<p>Other Forms of Advocacy 342</p>
<p>Subsidiaries in General 343</p>
<p>Bifurcation Basics 343</p>
<p>Tax–Exempt Subsidiaries 343</p>
<p>Taxable Subsidiaries 344</p>
<p>Revenue from Subsidiary 344</p>
<p>Joint Ventures Basics 344</p>
<p>Joint Ventures Other Elements 345</p>
<p>Unrelated Business Analysis 345</p>
<p>Commerciality Doctrine 346</p>
<p>Annual Information Returns 347</p>
<p>Disclosure Requirements 348</p>
<p>Court Opinions 350</p>
<p>Appendices</p>
<p>A Form 1023 351</p>
<p>B Form 1024 378</p>
<p>C Form 990 397</p>
<p>D Form 990–T 418</p>
<p>E Inventory of IRS Forms 423</p>
<p>F Inventory of Tax Penalties 424</p>
<p>G Other Bodies of Law 426</p>
<p>Table of Cases 428</p>
<p>Table of IRS Revenue Rulings 430</p>
<p>Table of IRS Private Determinations 431</p>
<p>Index 433</p>