Planning Guide for the Law of Tax-Exempt Organizations

Bruce R. Hopkins is the country's leading authority on tax-exempt organizations and is a senior partner with the firm Polsinelli Shalton Flanigan Suelthaus PC. He is also the author of nineteen books, including The Law of Tax-Exempt Organizations, Ninth Edition, Nonprofit Law Made Easy, 650 Essential Nonprofit Law Questions Answered, The Law of Fundraising, Third Edition, Private Foundations: Tax Law and Compliance, Second Edition, The Tax Law of Charitable Giving, Third Edition, The Law of Intermediate Sanctions, and The Law of Tax-Exempt Healthcare Organizations, Second Edition, as well as the newsletter Bruce R. Hopkins' Nonprofit Counsel, all published by Wiley.

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