In this week's edition of Gift Planner's Digest, Denver attorney and CPA, Ken Ransford examines the effect that unrelated business income has on charitable organizations and split-interest gift planning vehicles. "When Paying Taxes Is Better Than The Alternative" also explores ways in which charities can operate in a for-profit world.
by Ken Ransford, Esq., CPA
Ken Ransford is a tax attorney and certified public accountant in private practice in Denver, Colorado. His practice emphasizes income and estate planning, transactional work, and real estate. He is a member of the Colorado Planned Giving Roundtable, NSFRE, and the planned giving committees of the Mile High United Way and the Denver Museum of Natural History. Ken Ransford graduated from the University of Colorado School of Law in 1984, and his bachelor's degree is in psychology, Phi Beta Kappa, from the University of California at Davis, 1978.
Charities across America receive an average of 31% of their revenue from the govemment,1 yet many are facing government cutbacks in social services that may be in the hundreds-of-billions of dollars. Aside from 1995, when individual gifts rose 11%, individual giving has barely kept pace with inflation since 1980.2 Independent Sector estimates that individual giving will have to increase 271% by 2002.3 charities prepare for this projected shortfall?
A survey of other state tax credit programs, prepared by The Beacon Hill Institute for Public Policy Research at Suffolk University can be found at http://204.166.149.213/sttables.html In the area of planned giving, Montana has taken yet another step. Taxpayers may claim a credit of 50% of the present value of qualifying "planned" gifts. Planned gifts are defined as irrevocable contributions to a permanent endowment held by or for a tax-exempt organization. The gifts must be in the form of a trust, annuity, paid life insurance policy, or a life estate agreement. A qualified endowment is a permanent, irrevocable fund held by a Montana incorporated organization that is tax exempt or a bank or trust company holding the fund on behalf of a tax exempt organization.
With careful planning, many charities can enter the world of profit and avoid income tax. But even if income tax is due on their profitable activity, it's better than the alternative of owing no income tax.
Into the tax maze: What is an unrelated trade or business?
An "unrelated trade or business" is a trade or business not substantially related to the organization's charitable purpose.6 Raising money is not, by itself, adequate to meet this definition--every charity needs money. But there's room for creativity here. Consider Fresh Start Farms where homeless workers grow 45 varieties of specialty lettuce for sale to San Francisco's trendy restaurants--since training and employing the homeless is the organization's mission, the profits from Fresh Start Farms are sufficiently related to avoid taxation.7
The IRS holds that a trade or business is related only if the conduct of the business activities has a causal relationship to the achievement of the organization's exempt purposes, and if that relationship is substantial.8 Museum gift shops illustrate this principle--sales of books, recordings, toys, games, reproductions, and collectible miniatures avoid taxation because they closely relate to the museum's mission. But sales of furniture, shot glasses, golf clothes, key rings, cigarettes, toothpaste, and fees for gift-wrapping services are not closely related, and hence are taxable.9 IRS further holds that engraving services rendered in front of visitors at the museum are closely related and hence nontaxable since they preserved an historical tradition, while engraving services rendered offsite and out of sight is unrelated and taxable. It is a "facts and circumstances" test.
What about the exceptions? Even if the business is unrelated, charities can still avoid tax by meeting one of the following exceptions.
How to structure transactions as nontaxable royalties.
A royalty is a payment for the use of a valuable right such as a trademark, trade name, or copyright.18 An example is Working Assets, a privately held long-distance, credit card, and travel services company which contributes 1% of its revenue (as opposed to profits) to charities.19 Whether a payment is a royalty depends on the facts and circumstances. Taxpayers regularly try to characterize transactions as royalties, with irregular success--what charities believe are nontaxable royalties, the IRS often recharacterizes as unrelated business taxable advertising income. An overriding issue is the extent of services rendered by the taxpayer--the more the taxpayer actively participates in, or controls the income-generating activity, the less likely the income will be treated as a royalty. Paula Cozzi Goedert, an attorney with Chicago's Jenner and Block, recommends that nonprofits follow these rates when signing royalty agreements:20
When is rent taxable?
As with royalties, detailed rules determine whether rent income will be taxable. Although the general rule is that rent is not unrelated business taxable income (UBTI),24 be careful if personal property is being rented, or if the property is encumbered with debt.
Sell the property.
If the organization is paying tax, it can always avoid this tax by selling the property. Capital gains from the sale won't be taxable, even if the property that was sold was generating unrelated business taxable income from operations. Gain from the sale or expiration of options is also excluded from tax. However, gain from the sale of inventory is taxable.33
What if you have to pay the tax?
Paying taxes isn't necessarily bad--the best clients pay the most taxes! The playing field, however, should be level. Remember the rationale for the unrelated business income tax (UBIT)--charities should not get an unfair advantage over profit companies by avoiding income tax expense.34 Charities don't need to alienate taxpaying businesses. The Boulder Energy Conservation Center in Boulder, Colorado, plans to recycle construction materials from remodeled buildings, a project that fits their mission, which might compete with local taxpaying recycling companies. To increase the likelihood of success, and to smooth local relations, the Center is recruiting an owner of a taxpaying recycling center to join their board. If local businesses object on the grounds of unfair competition, can you spread the wealth and contract with them to do the work?
Competition can be healthy. A charity's concerns about competition may be unfounded--as competitors enter the field, marketing dollars increase, consumers buy more, and everybody can profit. This is happening today in the thrift shop industry. Thomas A. Ellison of TVI Inc., which operates 112 Savers and Value Villages in the U.S. and Canada, and generated $150 million sales in 1995, says "Initially, nonprofit thrifts have viewed us as a real scary threat. But what typically happens is when we enter a market, the nonprofit upgrades its store and they end up looking just as good as we do. Furthermore, market surveys show that the volume of sales does not change in areas in which nonprofits and for-profit thrifts are side by side."35
Most charities are already in business. Remember that over half of all charity revenue comes from fees-for-services.36 But, if your organization starts generating taxable income, a new set of rules apply.
How much is the tax, and how is it paid?
| Taxable income before taking into account the charitable contribution deduction | |||||||
| Entity | $25,000 | $50,000 | $75,000 | $100,000 | $150,000 | $500,000 | $1million |
| Individual | $1,875 | $3,750 | $5,625 | $8,930 | $15,930 | $74,923 | $173,689 |
| Trust | 4,083 | 9,033 | 13,983 | 18,933 | 28,833 | 98,133 | 197,133 |
| Corporation | 3,375 | 6,750 | 11,875 | 18,850 | 35,900 | 153,000 | 306,000 |
For example, a trust with $100,000 unrelated business taxable income would quality for a maximum charitable contribution deduction of 50%, and owe tax on the resulting taxable income of $50,000 for a total federal income tax liability of $18,933. A corporation with the same level of income would quality for a maximum charitable contribution deduction of 10%, and owes tax on the resulting taxable income of $90,000 for a total federal tax liability of $18,850.
This table indicates that for income below $100,000 (as computed before taking into account the charitable contribution income tax deduction), corporations pay less federal income tax than trusts. For income above $100,000, however, trusts pay lower tax.44 This is because trusts can deduct up to 50% of their taxable income from charitable contributions, while corporations are limited to a 10% deduction.45 The tax rates for married couples filing jointly are lowest, so that the overall income tax liability would be minimized if the taxes were paid at individual income tax brackets.
A partnership or S Corporation can save tax.
Suppose a donor proposes to give an operating business to charity that will generate unrelated business taxable income. The charity would normally pay income tax on this income. If the charity is willing to forego ownership, however, this tax can be avoided if an individual or a pass-through entity such as a partnership or S Corporation instead owns the business, and the owners personally distribute the annual cash flow in the form of charitable contributions to the charity. If the owners can claim charitable contribution deductions for the entire amount distributed to charity, all income tax would be avoided. Under this arrangement, the charity must be willing to forego control of the venture, and assume the risk that the cash flow might not be paid to the charity. If the charity controlled the entity, or the entity's governing document required the income to be paid to charity, substance would override form, and the income would likely be attributed to the charity as UBTI. Tax can be avoided by delaying receipt of the gift.
Can a donor use a charitable remainder trust to operate a business?
As stated above, any unrelated business taxable income will void a charitable remainder trust's tax exemption for that year. Any business operated by a charitable remainder trust may be unrelated to its charitable purpose, and therefore disqualify the trust, according to the IRS.50
The charitable remainder trust could own stock in a regular C Corporation or an interest in a partnership, limited liability company, or other pass-through entity, provided the pass-through does not distribute any unrelated business taxable income to the trust. Note that in this circumstance, the C Corporation or the pass-through entity is operating the business, not the charitable remainder trust.
A charitable remainder trust could play a role in a donor's plan to establish an employee stock ownership plan (ESOP). If the ESOP purchases at least 30% of the company stock from the owner, the owner can reinvest the proceeds in publicly traded securities, in effect creating a tax-free diversification of the closely-held stock.51 The donor can also obtain tax-free diversification without having to sell 30% to the ESOP by instead transferring the closely-held stock to a charitable remainder trust. The charitable remainder trust can later transfer the closely-held stock to the ESOP provided it is not legally bound to do so--and invest the proceeds in publicly traded securities, again obtaining a tax-free diversification of closely-held stock.52
Can a donor contribute an operating business to a charitable lead trust?
Unlike charitable remainder trusts, whose tax-exempt status depends upon the trust's avoidance of unrelated business taxable income, a charitable lead trust can have unrelated business taxable income. This is because charitable lead trusts are not tax exempt. Even if 100% of the charitable lead trust's unrelated business taxable income is paid to charity, IRS holds that, at most, only 50% of the unrelated business taxable income will be eligible to be offset by the charitable contribution income tax deduction. 53
If the value of the charitable lead annuity interest exceeds 60% of the initial value of the trust assets, however, the trust governing instrument must prohibit excess building holdings54 and jeopardy investments.55 These requirements can be violated if the sole or major asset in trust is a closely-held business interest--lead trusts must generally liquidate this interest within five years or,56 in the alternative, the donor should limit the charitable interest to 60% or less of the initial value of the trust assets.
Beware of pre-arranged sales.
Should a charity receive a gift of a business interest even though the charity plans to liquidate it? If a donor plans to give your charity an operating business, the charity isn't required to continue operating the business. If the charity is legally bound to sell the donated property to a third party before receiving it from the donor, however, IRS taxes the donor on the capital gains from the sale. But, if there is merely an expectation that the stock be redeemed or sold, IRS has respected the transaction without subjecting the donor to capital gains taxation.57
Assignments of income.
Can a donor make a gift of a partial interest in a property? As discussed above, a charity can be a part owner by becoming a shareholder in a regular C Corporation, a partner in a partnership, or other pass-through entity. The assignment of income doctrine prevents a taxpayer from giving away only the income from a property so that it will be taxed to another taxpayer, and presumably taxed at a lower marginal tax rate. To repeat the overused metaphor, the donor cannot give away just the fruit, but must also give away the tree that bears the fruit in order to get the income off the donor's tax return. As long as the charity receives an undivided portion of the donor's entire interest in the property--or the donor's partial interest in a property, provided the partial interest is the donor's entire interest in the property--the donor can claim a charitable contribution tax deduction, and the income will be attributed and taxed to the charity. But beware--gifts of undivided interests in tangible personal property are extremely technical.58
When charities receive partial interests, they may essentially be entering into joint ventures with other business owners. Don't forget to pay attention to the self-dealing rules.59
Conclusion.
As Bill Shore writes, charities that operate on shoestring budgets are unlikely to fulfill their missions. One way to cover budget shortfalls is to either enter into a profit-making business, or to ally with an existing one. It's unnecessary to reinvent the wheel--investigate mergers and strategic partnerships with other profit and nonprofit companies.60 Start with a strategic plan and a board with business knowledge gleaned from prior business failures, because the success rate for new ventures isn't high.
Envision a business partnership as a corporate matching gift program. As Timothy Gill, president of Quark, Inc., explained, "We like matching gift programs because our name gets out there over and over again whenever the charity broadcasts our matching gift." Successful charities will learn to meet their donor needs--what can your organization bring to the table to help sell your business partner's products or services? Successful fundraising programs involve donors' personally.61 As business partners become involved, they also become donors and, eventually, planned giving prospects.
Footnotes:
The Independent Sector, Government Relations Update, Vol. XVIII, May 22, 1995, No.6, Page 2. Of the remaining revenue, 17% comes from individual gifts, and the balance (52%) comes from fees for services.back
"A Modest Rise in Donations," The Chronicle of Philanthropy, Murawski, John, June 1, 1995, page 19. Charitable giving by individuals rose 3.6% from 1993 to 1994, while charities' costs increased 3.1%. In constant dollars, total individual giving rose from $86 billion in 1980 to $105 billion in 1994, an average annual increase of 1.4% per year.back
Melendez, Sara, president, Independent Sector, speech given at Colorado Nonprofit Day, Denver, Colorado, March 28, 1996.back
The Chronicle of Philanthropy, June 27, 1996.back
The Chronicle of Philanthropy, Shore, Bill, December 4, 1995, page 9. For more information, see his book, Revolution of the Heart (Riverhead Books), November 1995.back
Internal Revenue Code (IRC) § 513(a).back
"Homeless Growers are Feeding Diners at Some Top Restaurants," The NonProfit Times, Swarden, Carlotta G., April 1996, page 1. Even if the income was unrelated so that income tax is due, the charity would avoid most of this tax in any event by paying out the income in the form of salaries to the homeless or to program administrators. The employees would pay income tax on the salaries, of course, but that is true in any event.back
Treasury Regulation § l.513-l(d)(2); Technical Advice Memorandum (TAM) 9128003, December10, 1990.back
Private Letter Ruling 9550003, September 8, 1995.back
IRC § 513(a)(1); Treasury Regulation (Treas. Reg.) § 1.513-1(e)(1); TAM 9234002, February 19, 1992. See also Rev. Rul. 75-201, 1975-1 C.B. 164, where a charity avoided taxable income from advertising revenue by using volunteer labor.back
Hairick, Jeanne G., assistant director of communications, Goodwill Industries International, Inc., as reported in The NonProfit Times, May 1996, page 1.back
IRC § 513(a)(2).back
Rev. Rul. 74-399, 1974-2 C.B. 172 holds that an art museum's snack bar is related because it "allows visitors to devote more time to the museum's educational exhibits and enhances the efficient operation of the museum."back
IRC § 513(a)(3). This was applied in PLR 9141053, July 19, 1991, where IRS held that artists' gifts of art could be sold tax-free by a 50l(c)(3) charity that provides arts training for handicapped artists. Sales of reproductions of handicapped artists' own work also qualify for tax exemption because they are substantially related to the charity's exempt purpose. See also Rev. Rul. 73-104, 1973-1 C.B. 263, which holds that art museums can sell greeting card reproductions of their artwork without incurring tax.back
IRC § 5l2(a)(l).back
NCAA v. Commissioner, 914 F.2d 1417 (10th Cir. 1990), reversing 92 T.C. 456(1989).back
IRC § 5l2(b).back
Rev. Rul. 81-178, 1981-2 C.B. 135. Payments for the use of a professional athlete's name, photograph, likeness, or facsimile signature are ordinarily characterized as royalties. On the other hand, payments for personal services, such as appearance fees or speeches by the athletes, are not royalties.back
Revolution of the Heart, Shore, Bill, Riverhead Books, 1995, page 92.back
"Royalty Deals are Very Safe, With Guidelines," The NonProfit Times, April 1996, page 17.back
In Oregon State University Alumni Association, Inc. v. Commissioner, January 30, 1996, T.C. Memo. 1996-34, CCH Standard Federal Tax Reporter, ¶47,855, income from an affinity credit card program was not taxable. The services rendered by the alumni association--soliciting members for the card program and referring applications to the bank were minor and did not create the type of unfair competition between taxable businesses and tax exempt organizations that the UBIT was intended to address.back
Oil and gas royalties that are based on the property's production, gross, or taxable income are excluded from income, while income from a working interest, in which the recipient is charged with a percentage of the operating and development costs, is taxable as unrelated business taxable income. Treas. Reg. § 1.512(b)-1(b).back
This worked: See PLR 9220054, February 20, 1992, in which an IRC § 501(c)(6) organization (a chamber of commerce) contracted with an insurance provider to sell insurance to its members. The chamber received 2.5% of the gross premiums from renting its name, letterhead, and logo. The insurance company prepared all mailings, advertisements, and promotional materials. In its original ruling request, the nonprofit stated it planned to periodically sell updated mailing lists to the insurance provider for a nominal fee of $100, which would be reported as UBTI. In the published ruling, however, the nonprofit stated it had only sold the mailing list once, and wouldn't sell updates in the future. IRS held that the nonprofit's "involvement in (the) insurance activity is extremely limited. Your only responsibility will be to endorse the insurance services by permitting the use of your logo. Also, you state that a mailing list will not be provided as part of the agreement, and hence, none of the payments from (the insurance provider) can be attributed to the mailing list."
This didn't: See TAM 9151001, March 20, 1991, in which another 501(c)(6) organization contracted with an agent to publish their annual magazine. The nonprofit provided a member mailing list, and retained complete control over the contents of the magazine, including rough and finished layouts, editorial, photographic selection and content, and advertisements. The agent solicited advertisements, prepared the layouts, provided the nonprofit with 10,000 free copies, paid the nonprofit a signing bonus of $3,000, and agreed to pay 10% of all advertising revenue, which was collected by the agent. IRS held, based on F.0.P. Illinois State Troopers Lodge v. Commissioner, 833 F.2d 717 (7th Cir. 1987) that the nonprofit's role was not passive, and attributed the advertising solicitor's activities to the nonprofit under agency principles.back
IRC § 512(b)(3).back
IRC § 512(b)(3)(A)(ii); Treas. Reg. § l.512(b)-l(c)(2)(ii)(b).back
IRC § 513(h)(1)(13)(ii). Only membership list sales to other 501(c)(3) organizations to which gifts are deductible under IRC § 170(c)(2) or (3) fit within this exception. See TAM 9502009, January 14, 1994, in which a 501(c)(4) organization sought to avoid recognizing taxable income from the exchange of mailing lists with other nonprofit organizations. The nonprofit queried whether the sale would be exempt under IRC § 512(b)(5) as the sale of a capital asset, or whether the sale would qualify as a tax-free exchange under IRC § 1031. IRS held against the taxpayer on both grounds, holding that the nonprofit never sold its mailing list. The indicia needed to document a sale--that the seller delivered legal title, a deed, an equity interest, and relinquished the benefits of future ownership, and that the buyer assumed property taxes and other burdens of ownership--simply weren't present in this situation. Therefore, neither IRC § 512(b)(5) nor 1031 applied to the transaction, and since the taxpayers weren't 501(c)(3) organizations, IRC § 513(h) would not exempt the transaction from UBIT.back
IRC § 514(c)(4); § 514(b)(l)(A)(l).back
IRC § 514(c)(1). IRS applies avoided cost principles here, and considers debt incurred both before and after the building was acquired or improved. That means that if the debt would not have been incurred if the property hadn't been acquired or improved, then the debt will be deemed to be related to the property, and the rent may be taxable. Debt incurred for the charity's normal exempt purpose is specifically exempted by IRC § 514(c)(4), and won't cause rent from the property to be taxable.back
IRC § 514(c)(2)(B).back
IRC § 514 (b)(3).back
IRC § 1011(b).back
IRC § 1031.back
IRC § 512(b)(5).back
Treas. Reg. § 1.513-1(b); PLR 9552019, September 27, 1995; 9147007, November 30, 1990.back
"Nonprofit and For-Profit Thrift Shops Battle For Customers, Merchandise," The NonProfit Times, Swarden, Carlotta G., May 1996, Page 1.back
Independent Sector. See supra note 1.back
Treas. Reg. § 1.501(c)(3)-1(e); PLR 6311032, December 21, 1992.back
Powers, Pyles, Sutter & Verville, P.C, Hopkins, Bruce R., Esq., speech titled "Leading Not-for-Profit Organizations Through the Labyrinth of Legal Liability," National Society of Fund Raising Executives 1996 International Conference, Los Angeles, California, March 20, 1996.back
In PLR 9311032, December 21, 1992, a 501(c)(3) nonprofit established a taxpaying subsidiary corporation with IRS approval to develop commercial applications for technology developed by the nonprofit. Four percent of the subsidiary was given to a local business owner in order to give him "an incentive to maximize commercial exploitation of the technology." The anticipated income from the subsidiary will be paid as dividends, tax-free under IRC § 512(b)(1), to the nonprofit parent. IRS held that as long as the subsidiary "is organized with the bona fide intention that it will have some real and substantial business function, its existence may not generally be disregarded for tax purposes. However, where the parent corporation so controls the affairs of the subsidiary that it is merely an instrumentality of the parent, the corporate entity of the subsidiary may be disregarded."back
IRC § 512(b)(13) provides that interest, royalties, and rents--but not dividends--passed up from a subsidiary are taxable to the charity parent as unrelated business taxable income. A parent charity controls a subsidiary if it owns at least 50% of the subsidiary. Since dividends have already been taxed to the subsidiary corporation that issued them, IRC § 512(b)(l3) prevents them from being subject to double taxation when received by the parent charity. Interest, royalties, and rents, on the other hand, are deductible when paid by the subsidiary corporation, and hence would escape taxation when received by the parent corporation but for IRC § 512(b)(13).back
IRC § 512(a)(l).back
IRC § 681(a) provides that the deduction allowed to trusts under IRC § 642(c) for income distributed to charity does not apply to unrelated business taxable income. Therefore, UBTI generated by a trust is subject to tax, although the trust can deduct up to 50% of the income if it is distributed to qualified charities, pursuant to IRC § 512(b)(11).back
IRC § 512(b)(10) allows any charitable corporation subject to UBIT the standard 10% charitable contribution deduction allowed to corporations under IRC § 170(b)(2). IRC § 512(b)(11) allows any charitable trust subject to UBIT the maximum contribution deduction allowed to individuals under IRC § 170(b)(1)(A) and (B). The rationale for this, again, is to level the playing field--since a profit corporation or trust would be allowed these deductions, a charity generating UBTI should also quality for these deductions.back
See PLR 9547004, August 9, 1995, which suggests that if an entity has both associates and a business purpose it cannot be classified as a trust for federal income tax purposes. This ruling's suggestion that a trust cannot have a business purpose contradicts Treas. Reg. § 1.681(a)-2(a) and the Instructions for Form 990-T, both of which clearly contemplate that a charity could report unrelated business taxable income on form 990-T as a trust.back
IRC § 170(b)(2).back
IRC § 512(b)(12).back
IRC § 512(b)(6).back
In Portland Golf Club v. Commissioner, 110 S.Ct. 2780 (1990), the U.S. Supreme Court held that an organization may use losses incurred in an unrelated trade or business to offset investment income only if those sales were motivated by an intent to generate a profit. See also TAM 9309002, October 23, 1992, and National Water Well Association, Inc. v Commissioner, 92 T.C. 75, 1989.back
IRC § 664(c). Whether partnership income is unrelated business taxable income depends upon the character of the income. See PLR 9114025, January 7, 1991, which suggests that rental income from property that is not debt-financed will avoid characterization as UBTI, and preserve the charitable remainder trust's tax-exempt status. If a charity is a partner in a partnership with unrelated business taxable income, practitioners should investigate whether the partnership can specially allocate the unrelated business taxable income to the non-charity partners under IRC § 704(b).back
IRS held in PLR 9547004, August 9, 1995, that a taxpayer couple and their six grandchildren could not establish a charitable remainder trust because it would have functioned primarily as a business enterprise. The family members planned to each contribute their own money, pool it for investment purposes, and share in the investment profits. The trust was a net-income-with-makeup 11% charitable remainder unitrust. IRS held that, pursuant to Treas. Reg. § 301.7701-2(a), "If an entity has both associates and a business purpose, it cannot be classified as a trust for federal income tax purposes."back
IRC § 1042(b)(2).back
This use of a charitable remainder trust can also allow other family members to participate in the ESOP without violating family attribution rules. See, "Charitable Gifts, ESOPs, and Business Continuity in Closely-Held Companies," The Journal of Employee Ownership Law and Finance, Coffey, Michael A., Winter 1996, page 89.back
Treas. Reg. § 681(a)-2(a) provides that a trust with unrelated business taxable income is limited in the amount it may claim as a charitable contribution deduction for amounts paid to charity by IRC § 512(b)(11). This section provides that the trust's deduction is subject to the same percentage limits that are available for individuals outlined in IRC § 170(b)(l)(A) or (B)--i.e., 50% deduction limit for cash contributions, 30% for gifts of appreciated property, etc. Taxpayers who have prepared trusts that create payout schemes to circumvent these rules have met IRS resistance. See General Counsel Memorandum (GCM) 39161; PLR 8727072.back
IRC § 4943(b).back
IRC§ 4944.back
IRC § 4943(c)(6).back
Rev. Rul. 78-197,1978-I C.B. 83; Palmer v. Commissioner, 62 T.C. 684 (1974); Blake v. Commissioner, 697 F.2d 473 (2d Cir. 1982). Also see Emanual J. Kallina's presentation from the 1995 National Conference on Planned Giving Proceedings, National Committee on Planned Giving.back
Treas. Reg. § 1.170A-7(a)(2)(I). See also IRC § 170(f)(3)--except for the specific gifts set forth in this section, donors will be denied income tax deductions for gifts of remainder interests in tangible personal property when there is an intervening income interest. See IRC § 170(a)(3).back
IRC § 4941(d).back
For two articles on mergers between charities from The Chronicle of Philanthropy, see "When Two Donors Become One," page 8, February 8, 1996; "United They Stand," January 25, 1996, page 1.back
"Motivating the Nonprofit CEO to Give: Some Techniques Just Won't Work," The NonProfit Times, Clolery, Paul, March 1996, page 35.back