Tax Planning and Compliance for Tax-Exempt Organizations : Rules, Checklists, Procedures
by Blazek, Jody; Adams, AmandaEdition: 5th
Format: Hardcover
Pub. Date: 2012-02-07
Publisher(s): Wiley
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Summary
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 Exhibits | p. xiii |
| Preface | p. xvii |
| About the Authors | p. xxiii |
| Acknowledgments | p. xxv |
| Qualifications Of Tax-Exempt Organizations | p. 1 |
| Distinguishing Characteristics of Tax-Exempt Organizations | p. 3 |
| Differences between Exempt and Nonexempt Organizations | p. 10 |
| Nomenclature | p. 13 |
| Ownership and Control | p. 13 |
| Role of the Internal Revenue Service | p. 14 |
| Suitability as an Exempt Organization | p. 15 |
| Start-Up Tax and Financial Considerations | p. 18 |
| Choosing the Best Form of Organization | p. 22 |
| Qualifying Under IRC Â 501(c)(3) | p. 27 |
| Organizational Test | p. 29 |
| Operational Test | p. 35 |
| Religious Organizations | p. 59 |
| Types of Religious Organizations | p. 59 |
| Churches | p. 64 |
| Religious Orders | p. 72 |
| Religious and Apostolic Associations | p. 72 |
| Charitable Organizations | p. 75 |
| Relief of the Poor | p. 77 |
| Promotion of Social Welfare | p. 79 |
| Lessening the Burdens of Government | p. 88 |
| Advancement of Religion | p. 90 |
| Advancement of Education and Science | p. 90 |
| Promotion of Health | p. 91 |
| Cooperative Hospital Service Organizations | p. 110 |
| Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals | p. 111 |
| Educational Purposes | p. 111 |
| Literary Purposes | p. 126 |
| Scientific Purposes | p. 127 |
| Testing for Public Safety | p. 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 Animals | p. 134 |
| Civic Leagues and Local Associations of Employees: Â 501(c)(4) | p. 135 |
| Comparison of (c)(3) and (c)(4) Organizations | p. 137 |
| Qualifying and Nonqualifying Civic Organizations | p. 141 |
| Local Associations of Employees | p. 143 |
| Neighborhood and HomeownerâÇÖs Associations | p. 145 |
| Disclosures of Nondeductibility | p. 148 |
| Labor, Agricultural, and Horticultural Organizations: Â 501(c)(5) | p. 157 |
| Labor Unions | p. 158 |
| Agricultural Groups | p. 163 |
| Horticultural Groups | p. 166 |
| Disclosures of Nondeductibility | p. 166 |
| Business Leagues: Â 501(c)(6) | p. 169 |
| Basic Characteristics | p. 170 |
| Meaning of "Common Business Interest" | p. 170 |
| Line of Business | p. 172 |
| Rendering Services for Members | p. 174 |
| Sources of Revenue | p. 180 |
| Membership Categories | p. 180 |
| Member Inurement | p. 182 |
| Chambers of Commerce and Boards of Trade | p. 183 |
| Comparison to  501(c)(5) | p. 183 |
| Recognition of Exempt Status | p. 184 |
| Formation of a Related Charitable Organization | p. 185 |
| Disclosures for Lobbying and Nondeductibility | p. 186 |
| Social Clubs: Â 501(c)(7) | p. 189 |
| Organizational Requirements and Characteristics | p. 190 |
| Member Inurement Prohibited | p. 193 |
| Membership Requirements | p. 194 |
| Revenue Tests | p. 196 |
| Unrelated Business Income Tax | p. 198 |
| Filing and Disclosure Requirements | p. 203 |
| Instrumentalities of Government and Title-Holding Corporations | p. 205 |
| Â 501(c)(1) Instrumentalities of the United States | p. 205 |
| Governmental Units | p. 206 |
| Qualifying for  501(c)(3) Status | p. 210 |
| Â 501(c)(2) Title-Holding Corporations | p. 220 |
| Â 501(c)(25) Title-Holding Corporations | p. 225 |
| Public Charities | p. 227 |
| Distinctions between Public and Private Charities | p. 228 |
| "Inherently Public Activity" and Broad Public Support: Â 509(a)(1) | p. 232 |
| Community Foundations | p. 243 |
| Service-Providing Organizations: Â 509(a)(2) | p. 250 |
| Difference between  509(a)(1) and  509(a)(2) | p. 253 |
| Supporting Organizations: Â 509(a)(3) | p. 260 |
| Testing for Public Safety: Â 509(a)(4) | p. 271 |
| Standards For Private Foundations | p. 273 |
| Private Foundations—General Concepts | p. 275 |
| Why Private Foundations Are Special | p. 275 |
| Special Rules Pertaining to Private Foundations | p. 278 |
| Application of Taxes to Certain Nonexempt Trusts | p. 285 |
| Termination of Private Foundation Status | p. 286 |
| Excise Tax Based on Investment Income: IRC Â 4940 | p. 311 |
| Formula for Taxable Income | p. 312 |
| Capital Gains | p. 319 |
| Ponzi Scheme Losses | p. 324 |
| Deductions from Gross Investment Income | p. 325 |
| Tax-Planning Ideas | p. 330 |
| Foreign Foundations | p. 334 |
| Timely Payment of Excise Tax | p. 336 |
| Exempt Operating Foundations | p. 337 |
| Self-Dealing: IRC Â 4941 | p. 339 |
| Definition of Self-Dealing | p. 340 |
| Sale, Exchange, or Lease of Property | p. 343 |
| Loans | p. 350 |
| Compensation | p. 352 |
| Transactions That Benefit Disqualified Persons | p. 363 |
| Payments to Government Officials | p. 369 |
| Sharing Space, People, and Expenses | p. 370 |
| Indirect Deals | p. 374 |
| Property Held by Fiduciaries | p. 375 |
| Issues Once Self-Dealing Occurs | p. 379 |
| Minimum Distribution Requirements: IRC Â 4942 | p. 385 |
| Assets Used to Calculate Minimum Investment Return | p. 386 |
| Measuring Fair Market Value | p. 393 |
| Distributable Amount | p. 398 |
| Qualifying Distributions | p. 401 |
| Private Operating Foundations | p. 413 |
| Satisfying the Distribution Test | p. 422 |
| Excess Business Holdings and Jeopardizing Investments: IRC Â Â 4943 and 4944 | p. 427 |
| Excess Business Holdings | p. 427 |
| Jeopardizing Investments | p. 435 |
| Program-Related Investments | p. 440 |
| Penalty Taxes | p. 444 |
| Taxable Expenditures: IRC Â 4945 | p. 449 |
| Lobbying | p. 451 |
| Voter Registration Drives | p. 456 |
| Grants to Individuals | p. 457 |
| Grants to Public Charities | p. 470 |
| Grants to Foreign Organizations | p. 482 |
| Expenditure Responsibility Grants | p. 487 |
| Noncharitable Expenditures | p. 500 |
| Excise Taxes Payable | p. 501 |
| Obtaining And Maintaining Tax-Exempt Status | p. 531 |
| IRS Filings, Procedures, and Policies | p. 533 |
| IRS Determination Process | p. 535 |
| Annual Filing of Forms 990 | p. 543 |
| Reporting Organizational Changes to the IRS | p. 553 |
| Weathering an IRS Examination | p. 559 |
| When Organization Loses Its Tax-Exempt Status | p. 564 |
| Maintaining Exempt Status | p. 565 |
| Checklists | p. 565 |
| Private Inurement and Intermediate Sanctions | p. 587 |
| Defining Inurement | p. 589 |
| Salaries and Other Compensation | p. 591 |
| Finding Salary Statistics | p. 593 |
| Housing and Meals | p. 597 |
| Purchase, Lease, or Sale of Property or Services | p. 598 |
| Loans and Guarantees | p. 600 |
| For-Profit to Nonprofit and Vice Versa | p. 601 |
| Services Rendered for Individuals | p. 602 |
| Joint Ventures | p. 604 |
| Intermediate Sanctions | p. 605 |
| Unrelated Business Income | p. 621 |
| IRS Scrutiny of Unrelated Business Income | p. 623 |
| History of the Unrelated Business Income Tax | p. 624 |
| Consequences of Receiving UBI | p. 625 |
| Definition of Trade or Business | p. 627 |
| What Is Unrelated Business Income? | p. 629 |
| "Regularly Carried On" | p. 630 |
| "Substantially Related" | p. 632 |
| Unrelated Activities | p. 637 |
| The Exceptions | p. 655 |
| Income Modifications | p. 662 |
| Calculating and Minimizing Taxable Income | p. 672 |
| Debt-Financed Property | p. 676 |
| Museums | p. 682 |
| Travel Tours | p. 684 |
| Publishing | p. 685 |
| Relationships with Other Organizations and Businesses | p. 689 |
| Creation of (c)(3) by (c)(4), (5), or (6) | p. 690 |
| Alliances with Investors | p. 694 |
| Creation of a For-Profit Corporate Subsidiary | p. 700 |
| Active Business Relationships | p. 703 |
| Electioneering and Lobbying | p. 707 |
| Election Campaign Involvement | p. 708 |
| Voter Education versus Candidate Promotion | p. 714 |
| Tax on Political Expenditures | p. 719 |
| Lobbying Activity of  501(c)(3) Organizations | p. 732 |
| Permissible Amounts of Lobbying | p. 739 |
| Lobbying Limits for  501(c)(4), (5), (6), and Other Exempt Organizations | p. 742 |
| Advocacy and Nonpartisan Analysis | p. 743 |
| Deductibility and Disclosures | p. 747 |
| Overview of Deductibility | p. 747 |
| The Substantiation and Quid Pro Quo Rules | p. 759 |
| Valuing Donor Benefits | p. 769 |
| Unrelated Business Income Aspects of Fund-Raising | p. 773 |
| State and Local Regulations | p. 774 |
| Employment Taxes | p. 777 |
| Distinctions Between Employees and Independent Contractors | p. 778 |
| Ministers | p. 786 |
| Reporting Requirements | p. 790 |
| Mergers, Bankruptcies, and Terminations | p. 795 |
| Mergers and Other Combinations | p. 795 |
| Bankruptcy | p. 800 |
| Terminations | p. 803 |
| Table of Cases | p. 805 |
| Table of IRS Revenue Rulings | p. 817 |
| Table of IRS Revenue Procedures | p. 823 |
| Index | p. 825 |
| Table of Contents provided by Publisher. All Rights Reserved. |
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