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Tax
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Detailed Analysis
I. Introduction
A. Historical Background
B. Outline of Discussion
II. Overview of Special Rules for § 501(c)(3) Organizations
A. Private Foundation v. Public Charity
B. Presumption of Private Foundation Status
C. State Enforcement
III. Notification of § 501(c)(3) Status
A. New Organizations
1. Section 508(a) General Rule
2. Filing of Notice
a. Form 1023, Application for Recognition of Exemption
b. Requests for Extension of Filing Deadline
c. Expedited Processing of Applications
d. Contents of Form 1023
e. Incomplete Application
3. Date of Organization
4. Appeals from Adverse Determinations
a. Conference with Appeals Office
b. National Office Assistance
c. Declaratory Judgment
5. Nonexempt Trusts
6. Community Trusts
B. Foreign Organizations
IV. Section 508(b) Notification Concerning Private Foundation Status
A. Section 508(b) Contrasted with § 508(a)
B. Filing of Notice
1. In General
2. "Old" Organizations
3. "New" Organizations
a. Form 1023 Required
b. Advance Rulings
C. Effect of Filing Notice Under § 508(b)
1. Effect on Filing Organization
2. Effect on Grantors, Contributors, and Transferors
a. Pre-1976 Reliance
b. No Reliance for Controlling Persons
c. Post-1976 Reliance on Advance Rulings
d. Reliance by Terminating Private Foundations
e. Cumulative List of Organizations
D. Notice of Operating Foundation Status
E. Penalties
V. Exceptions to Notification Requirements
A. Excepted Organizations
1. In General
2. Churches
a. "Church" Undefined
b. Religious Purpose and "Associational Aspect" Requirements
c. Conventions or Associations of Churches
d. Integrated Auxiliary of a Church
3. Organizations with Gross Receipts of $5,000 or Less
4. Subordinate Organizations Covered by Group Exemption Letters
B. Voluntary Notifications
1. Voluntary § 508(a) Notice
2. Voluntary § 508(b) Notice
VI. Governing Instruments
A. General Rule
B. Nature of Governing Instrument
1. General Restrictions
2. Prohibited Distribution of Corpus
3. Savings Provisions
4. Excess Business Holdings
5. Revocation of Public Charity Status
6. Definition of Governing Instrument
7. Treatment of Foreign Organizations
C. State Law
1. In General
2. Presumption that State Laws Are Valid
3. Conflict Between a Governing Instrument and State Law
a. In General
b. Required Notice to IRS
(1) Conflicting State Law Expressly Inapplicable
(2) Conflicting State Law Allows Election from Coverage
c. Retroactive Effect of State Law
4. Transitional Rules for Existing Private Foundations
5. Extension of Time - In General
VII. Disqualified Persons
A. In General
B. Statutory Definition of Disqualified Person
C. The Substantial Contributor
1. In General
2. Special Rules for Public Charities
3. Subsidiaries of Public Charities
4. Contributions
5. Determination of Substantial Contributors
D. Foundation Manager
E. Members of the Family
F. Attribution Rules
1. Corporations
a. Section 4946(a)(1)(C)(i) Attribution
b. Section 4946(a)(1)(E) Attribution
2. Partnerships and Trusts
VIII. Statutory Scheme of Termination Provisions
IX. Voluntary Termination
A. Termination Under § 507(a)(1)
1. General Rule
2. Situations in which Voluntary Termination May Be Desirable
3. Status After Voluntary Termination
B. Non-Terminating Transfers
X. Involuntary Termination
A. General Rule
B. Willful, Repeated Acts
C. Willful and Flagrant Act
XI. Termination by Transfer of Assets to Certain Public Charities
A. General Rules
B. Permissible Distributees
C. Effect of Restrictions on Transfers
1. General Rule
2. Independent Governing Body
3. Permissible Restrictions and Conditions
4. Restrictions and Conditions Which May Jeopardize Termination
D. Sanctions Against Restricted Transfers
E. Special Rules Relating to § 4940 Tax
F. Filing Requirements
XII. Termination by Operation as a Public Charity
A. General Rules
B. Types of Organizations into which the Terminating Private Foundation May Convert
C. Notice of Intent to Terminate
D. Section 170(b)(1)(A)(i) Through (v) Organizations
E. Section 170(b)(1)(A)(vi): Determining Normal Sources of Support
F. Section 509(a)(2): Determining Normal Source of Support
1. The One-Third Support Test
2. The Not-More-Than-One-Third Support Test
G. Section 509(a)(3) Supporting Organizations
1. General Requirements
2. Importance of § 509(a)(3) Organization
H. Advance Ruling
I. Status After Termination
J. Effect of Failure to Successfully Complete Termination
K. Annual Return Filing Requirements for Terminating Organizations
L. Transitional Rules
XIII. Transfers of Assets to Private Foundations
Introductory Material
A. Situations in Which a § 507(b)(2) Transfer Might Be Appropriate
B. What Constitutes a § 507(b)(2) Transfer?
C. Inapplicability of § 507(a)
D. Transferee Organization
E. Changes in Form
F. Attributes Transferred to Transferee Organization
1. Carryover of Aggregate Tax Benefit
2. Treatment of Substantial Contributors
3. Chapter 42 Taxes
a. Section 4941 Self-Dealing
b. Section 4942 Income Distribution Requirements
c. Section 4943 Excess Business Holdings - Transfer of Holding Period
d. Section 4944 Jeopardizing Investments
e. Section 4945 Expenditure Responsibility
f. Carryover of Saving Provisions
G. Transfers to or from Certain Public Charities
H. Reporting Requirements
XIV. Termination Tax
A. Imposition of Tax
B. Time of Imposition of Termination Tax
C. Determination of Tax
1. Aggregate Tax Benefit
2. Value of Assets
D. Appellate Procedure
E. Comments
XV. Abatement
Introductory Material
A. Abatement by Distribution to Public Charities
B. Abatement by State Proceedings
1. In General
2. Corrective Action
XVI. Disallowance of Charitable Deductions
A. Disallowance of Deductions for Contributions to Certain Terminating Private Foundations
B. Disallowance of Deductions for Contributions to Certain Noncomplying Organizations
1. General Rule
2. Section 508(e) Requirements for Governing Instruments
3. Special Conditions for Split-Interest Trusts
a. Exceptions from Chapter 42 Restrictions
b. Split-Interest Trusts Not Subject to Some § 508(e) Requirements
4. Charitable Trusts
5. Transitional Rules
Working Papers
Table of Worksheets
Worksheet 1 Legislative History The Tax Reform Act of 1969 (P.L. 91-172)
Worksheet 2 Rev. Rul. 75-38, 1975-1 C.B. 161
Worksheet 3 Rev. Rul. 2002-28, 2002-20 C.B. 941
Worksheet 4 Rev. Rul. 2003-13, 2003-4, I.R.B. 305
Worksheet 5 Internal Revenue Manual Excerpts: Private Foundations Handbooks
Worksheet 6 Exempt Organizations Continuing Professional Educational Technical Instruction Program for 1989 [Excerpt]
Bibliography
OFFICIAL
Statutes:
Treasury Regulations:
Committee Reports/Legislative History:
Treasury Rulings:
Cases:
UNOFFICIAL
Treatises:
Tax Management Portfolios:
Periodicals:
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