In a summary opinion, the U.S. Tax Court has sustained the IRS's determination that a taxpayer's charitable contributions for two consecutive tax years are not deductible due to a lack of any substantiation by the taxpayer.  MORE »

In this article from The Journal of Gift Planning, Los Angeles attorney Reynolds Cafferata explores both the harm and benefit that may arise from enforceable pledge agreements, and reviews the many issues that should be considered in drafting an enforceable agreement that serves both the donor and the charity. He proposes alternatives to enforceable pledges, including the statement of intent to make a gift and the revocable enforceable pledge.  MORE »

In response to Sen. Max Baucus' inquiry regarding an abusive noncash donation transaction that involves the overvaluation of gifts and circumvention of normal reporting, Deputy Commissioner for Services and Enforcement Kevin Brown states the IRS has identified 48 entities participating in transactions involving deductions of approximately $271 million, is working to determine the appropriate tax treatment and promptly address the transaction, and will work with the Office of Tax Policy to evaluate legislative proposals that may include limiting deductions for certain noncash gifts to the donor's basis to address issues raised by the transaction.  MORE »

On April 13, 2007, Senate Finance Committee Chair Max Baucus, D-MT, sent a letter to Treasury Secretary Henry Paulson inquiring as to Treasury's knowledge of an abusive transaction involving the contribution of non-cash property to charity and the claiming of a charitable deduction in an amount that substantially exceeds the true fair market value of the property in violation of established tax law.  MORE »

In response to the recent blitz of tax planning patents approved by the USPTO, Rep. Rick Boucher, D-Va., has introduced a bill that would eliminate the remedies and damages to which a patentee would otherwise be entitled for infringement. These include civil action, injunction, monetary damages, and attorney fees.  MORE »

For purposes of determining the present value of an annuity, an interest for life or a term of years, or a remainder or a reversionary interest, Revenue Ruling 2007-36 indicates the charitable federal midterm rate under section 7520 for June 2007 is 5.6%; unchanged from the rates for May and April rates.  MORE »

The self-dealing rules of section 4941 generally prohibit sales of assets between a private foundation and a disqualified person. In this ruling, however, the Service approved a redemption of stock from a charitable remainder trust by a corporation that is a disqualified person based on an exception that permits such transactions provided the offer is made to all shareholders of the same class of stock, on the same terms, and for fair market value. In effect, by utilizing a CRT, the shareholder was able to effect a partial redemption on a partially deductible basis.  MORE »

In a letter to Treasury Tax Legislative Counsel Susan Brown, attorney Ruth Madrigal of Caplan & Drysdale discusses how any forthcoming guidance regarding Type III SOs that support governmental entities should take into consideration the special circumstances that affect such organizations' abilities to meet the new "functionally integrated" requirements imposed by the Pension Protection Act of 2006.  MORE »

The Service has ruled privately that a transfer of a portion of a private operating foundation's assets to a public charity will not result in the termination of private foundation status, cause a termination tax under section 507(c), or otherwise adversely affect the exempt status of the foundation.  MORE »

The annual May 15 filing deadline is here for many nonprofits, and the IRS urges any of these organizations that paid the three percent telephone tax to be sure to request this special refund. The telephone tax refund is also available to churches and small tax-exempt organizations that don?t normally file annual returns with the IRS.  MORE »

The IRS has issued Notice 2007-45 that provides interim guidance on section 6104(d)(1)(A)(ii) of the Internal Revenue Code, added by the Pension Protection Act of 2006. Imposed is a new requirement on all organizations exempt under section 501(a) and described in section 501(c)(3) to make available for public inspection a copy of their Form 990-T filed with the IRS.  MORE »

The IRS has revoked an organization's tax-exempt status because it failed to operate exclusively for its exempt purpose of education. Rather, the Service found the organization's activities consisted primarily of fund-raising and could not verify any charitable activities. Although fundraising is an important component of many organizations, it is not itself a charitable activity.  MORE »

In CRSO v. Commissioner, the Tax Court has upheld the IRS's determination that an organization whose sole activity involves renting out debt-financed real property and distributing the profits to a qualified charity is not operated exclusively for charitable or other exempt purposes within the meaning of sec. 501(c)(3).  MORE »

The Service has denied tax-exempt status to an organization that provides downpayment assistance to individuals purchasing real estate based on the fact the organization does not operate exclusively for an exempt purpose under section 501(c)(3). For example, the organization's program does not serve exclusively low-income persons, combat community deterioration, lessen racial tensions, or otherwise meet the public support test. Rather, the Service concluded the primary purpose was to maximize fees derived from facilitating sales of real property.  MORE »

The Service has ruled privately that interest and rents produced by a medical office building and received by a supporting organization from a tax-exempt entity it controls are not unrelated business income even though the income is debt-financed because substantially all (i.e., more than 85%) of the use of the property producing the income is substantially related to the tax exempt purposes of the supporting organization.  MORE »

The IRS announced in its online EO Newsletter that a clarification has been made regarding use of Form 8868, Application for Extension of Time To File an Exempt Organization Return, stating all corporations filing Form 990-T must use Form 8868 to request the six-month extension, not only those exempt under 501(c)(3).  MORE »

In a letter to an individual, Treasury Benefits Tax Counsel W. Thomas Reeder has clarified the proper completion of Form 1099-R by an IRA custodian for qualified charitable distributions from an IRA and corresponding completion of Form 1040 by the plan owner/donor.  MORE »