{"product_id":"the-tax-law-of-private-foundations","title":"The Tax Law of Private Foundations","description":"\u003cp\u003ePreface ix\u003c\/p\u003e \u003cp\u003eBook Citations xi\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Introduction to Private Foundations 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 1.1 Private Foundations: Unique Organizations 1\u003c\/p\u003e \u003cp\u003e§ 1.2 Definition of Private Foundation 2\u003c\/p\u003e \u003cp\u003e§ 1.4 Private Foundation Law Primer 2\u003c\/p\u003e \u003cp\u003e§ 1.5 Foundations in Overall Exempt Organizations Context 2\u003c\/p\u003e \u003cp\u003e§ 1.6 Definition of Charity 2\u003c\/p\u003e \u003cp\u003e§ 1.7 Operating for Charitable Purposes 3\u003c\/p\u003e \u003cp\u003e§ 1.9 Private Foundation Sanctions 3\u003c\/p\u003e \u003cp\u003e§ 1.10 Statistical Profile 12\u003c\/p\u003e \u003cp\u003e§ 1.11 Private Foundations and Law 50 Years Later 12\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 Starting, Funding, and Governing a Private Foundation 17\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 2.1 Choice of Organizational Form 17\u003c\/p\u003e \u003cp\u003e§ 2.3 Estate Planning Principles 17\u003c\/p\u003e \u003cp\u003e§ 2.4 Foundations and Planned Giving 17\u003c\/p\u003e \u003cp\u003e§ 2.5 Acquiring Recognition of Tax-Exempt Status 18\u003c\/p\u003e \u003cp\u003e§ 2.6 Special Requirements for Charitable Organizations 19\u003c\/p\u003e \u003cp\u003e§ 2.7 When to Report Back to the IRS 19\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Types of Private Foundations 21\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 3.1 Private Operating Foundations 21\u003c\/p\u003e \u003cp\u003e§ 3.3 Conduit Foundations 22\u003c\/p\u003e \u003cp\u003e§ 3.4 Common Fund Foundations 23\u003c\/p\u003e \u003cp\u003e§ 3.8 Split-Interest Trusts 23\u003c\/p\u003e \u003cp\u003e§ 3.9 Foreign Private Foundations 23\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Disqualified Persons 25\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 4.1 Substantial Contributors 25\u003c\/p\u003e \u003cp\u003e§ 4.2 Foundation Managers 25\u003c\/p\u003e \u003cp\u003e§ 4.3 Certain 20 Percent Owners 25\u003c\/p\u003e \u003cp\u003e§ 4.4 Family Members 26\u003c\/p\u003e \u003cp\u003e§ 4.5 Corporations or Partnerships 26\u003c\/p\u003e \u003cp\u003e§ 4.6 Trusts or Estates 26\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Self-Dealing 27\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 5.1 Private Inurement Doctrine 27\u003c\/p\u003e \u003cp\u003e§ 5.2 Private Benefit Doctrine 28\u003c\/p\u003e \u003cp\u003e§ 5.3 Definition of Self-Dealing 31\u003c\/p\u003e \u003cp\u003e§ 5.3a Excess Compensation Tax 31\u003c\/p\u003e \u003cp\u003e§ 5.4 Sale, Exchange, Lease, or Furnishing of Property 37\u003c\/p\u003e \u003cp\u003e§ 5.5 Loans and Other Extensions of Credit 37\u003c\/p\u003e \u003cp\u003e§ 5.6 Payment of Compensation 38\u003c\/p\u003e \u003cp\u003e§ 5.8 Uses of Income or Assets by Disqualified Persons 39\u003c\/p\u003e \u003cp\u003e§ 5.11 Indirect Self-Dealing 42\u003c\/p\u003e \u003cp\u003e§ 5.12 Property Held by Fiduciaries 50\u003c\/p\u003e \u003cp\u003e§ 5.14 Additional Exceptions 58\u003c\/p\u003e \u003cp\u003e§ 5.15 Issues Once Self-Dealing Occurs 59\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Mandatory Distributions 65\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 6.1 Distribution Requirements—in General 65\u003c\/p\u003e \u003cp\u003e§ 6.2 Assets Used to Calculate Minimum Investment Return 66\u003c\/p\u003e \u003cp\u003e§ 6.3 Determining Fair Market Value 66\u003c\/p\u003e \u003cp\u003e§ 6.4 Distributable Amount 69\u003c\/p\u003e \u003cp\u003e§ 6.5 Qualifying Distributions 70\u003c\/p\u003e \u003cp\u003e§ 6.7 Satisfying the Distribution Test 75\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Excess Business Holdings 77\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 7.1 General Rules 77\u003c\/p\u003e \u003cp\u003e§ 7.2 Permitted and Excess Holdings 79\u003c\/p\u003e \u003cp\u003e§ 7.3 Functionally Related Businesses 80\u003c\/p\u003e \u003cp\u003e§ 7.7 Excise Taxes on Excess Holdings 80\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Jeopardizing Investments 81\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 8.2 Prudent Investments 81\u003c\/p\u003e \u003cp\u003e§ 8.3 Program-Related Investments 81\u003c\/p\u003e \u003cp\u003e§ 8.4 Investment Frauds 82\u003c\/p\u003e \u003cp\u003e§ 8.5 Excise Tax for Jeopardizing Investments 82\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Taxable Expenditures 83\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 9.1 Legislative Activities 83\u003c\/p\u003e \u003cp\u003e§ 9.2 Political Campaign Activities 84\u003c\/p\u003e \u003cp\u003e§ 9.3 Grants to Individuals 84\u003c\/p\u003e \u003cp\u003e§ 9.4 Grants to Public Charities 97\u003c\/p\u003e \u003cp\u003e§ 9.6 Grants to Foreign Organizations 97\u003c\/p\u003e \u003cp\u003e§ 9.7 Expenditure Responsibility 99\u003c\/p\u003e \u003cp\u003e§ 9.8 Internet and Private Foundations 100\u003c\/p\u003e \u003cp\u003e§ 9.9 Spending for Noncharitable Purposes 100\u003c\/p\u003e \u003cp\u003e§ 9.10 Distributions to Certain Supporting Organizations 102\u003c\/p\u003e \u003cp\u003e§ 9.10a Distributions to Group Exemption Organizations 102\u003c\/p\u003e \u003cp\u003e§ 9.11 Excise Tax for Taxable Expenditures 104\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Tax on Investment Income 107\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 10.1 Rate of Tax 107\u003c\/p\u003e \u003cp\u003e§ 10.1A Payment of Tax 107\u003c\/p\u003e \u003cp\u003e§ 10.2 Reducing Excise Tax 108\u003c\/p\u003e \u003cp\u003e§ 10.3 Formula for Taxable Income 109\u003c\/p\u003e \u003cp\u003e§ 10.4 Reductions to Gross Investment Income 109\u003c\/p\u003e \u003cp\u003e§ 10.5 Foreign Foundations 109\u003c\/p\u003e \u003cp\u003e§ 10.6 Exemption from Tax on Investment Income 110\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Unrelated Business Activity 111\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 11.1 General Rules 111\u003c\/p\u003e \u003cp\u003e§ 11.2 Exceptions 111\u003c\/p\u003e \u003cp\u003e§ 11.3 Rules Specifically Applicable to Private Foundations 112\u003c\/p\u003e \u003cp\u003e§ 11.4 Unrelated Debt-Financed Income Rules 113\u003c\/p\u003e \u003cp\u003e§ 11.5 Calculating and Reporting the Tax 114\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Tax Compliance and Administrative Issues 121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 12.1 Form 990-PF 121\u003c\/p\u003e \u003cp\u003e§ 12.2 Form 990-PF Penalties 124\u003c\/p\u003e \u003cp\u003e§ 12.3 Automatic Revocation for Non-Filing 128\u003c\/p\u003e \u003cp\u003e§ 12.4 Public Disclosure and Inspection of Returns 129\u003c\/p\u003e \u003cp\u003e§ 12.5 Reporting and Payment of Excise Taxes 132\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13 Termination of Foundation Status 145\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 13.1 Voluntary Termination 145\u003c\/p\u003e \u003cp\u003e§ 13.3 Transfer of Assets to a Public Charity 146\u003c\/p\u003e \u003cp\u003e§ 13.4 Operation as a Public Charity 147\u003c\/p\u003e \u003cp\u003e§ 13.5 Mergers, Split-Ups, and Transfers Between Foundations 150\u003c\/p\u003e \u003cp\u003e§ 13.5A Termination of Trusts Treated as Private Foundations 150\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14 Charitable Giving Rules 153\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 14.1 Concept of Gift 153\u003c\/p\u003e \u003cp\u003e§ 14.2 Basic Rules 154\u003c\/p\u003e \u003cp\u003e§ 14.3 Gifts of Appreciated Property 155\u003c\/p\u003e \u003cp\u003e§ 14.4 Deductibility of Gifts to Foundations 155\u003c\/p\u003e \u003cp\u003e§ 14.5 Qualified Appreciated Stock Rule 155\u003c\/p\u003e \u003cp\u003e§ 14.6 Deduction Reduction Rules 155\u003c\/p\u003e \u003cp\u003e§ 14.7 Special Gift Situations 156\u003c\/p\u003e \u003cp\u003e§ 14.8 Planned Giving Revisited 156\u003c\/p\u003e \u003cp\u003e§ 14.9 Administrative Considerations 156\u003c\/p\u003e \u003cp\u003e\u003cb\u003e15 Private Foundations and Public Charities 163\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 15.1 Distinctions Between Public and Private Charities 163\u003c\/p\u003e \u003cp\u003e§ 15.2 Evolution of Law of Private Foundations 164\u003c\/p\u003e \u003cp\u003e§ 15.3 Organizations with Inherently Public Attributes 164\u003c\/p\u003e \u003cp\u003e§ 15.4 Publicly Supported Organizations—Donative Entities 166\u003c\/p\u003e \u003cp\u003e§ 15.5 Service Provider Organizations 167\u003c\/p\u003e \u003cp\u003e§ 15.7 Supporting Organizations 169\u003c\/p\u003e \u003cp\u003e§ 15.8 Change of Public Charity Category 169\u003c\/p\u003e \u003cp\u003e§ 15.9 Noncharitable Supported Organizations 171\u003c\/p\u003e \u003cp\u003e§ 15.14 Termination of Public Charity Status 172\u003c\/p\u003e \u003cp\u003e\u003cb\u003e16 Donor-Advised Funds 173\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 16.1 Basic Definitions 173\u003c\/p\u003e \u003cp\u003e§ 16.3 Types of Donor Funds 173\u003c\/p\u003e \u003cp\u003e§ 16.7 Public Charity Status of Funds 173\u003c\/p\u003e \u003cp\u003e§ 16.8 Interrelationship of Private Foundation Rules 173\u003c\/p\u003e \u003cp\u003e§ 16.9 Statutory Criteria 173\u003c\/p\u003e \u003cp\u003e§ 16.9A Litigation 174\u003c\/p\u003e \u003cp\u003e§ 16.12 Tax Regulations 176\u003c\/p\u003e \u003cp\u003e§ 16.13 DAF Statistical Portrait 176\u003c\/p\u003e \u003cp\u003e§ 16.14 Criticisms and Commentary 178\u003c\/p\u003e \u003cp\u003e§ 16.15 Proposed Legislation 185\u003c\/p\u003e \u003cp\u003e\u003cb\u003e17 Corporate Foundations 189\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e§ 17.2 Reasons for Establishment of a Corporate Foundation 189\u003c\/p\u003e \u003cp\u003e§ 17.3 Private Inurement Doctrine 189\u003c\/p\u003e \u003cp\u003e§ 17.3A Private Benefit Doctrine 189\u003c\/p\u003e \u003cp\u003e§ 17.5 Self-Dealing Rules 190\u003c\/p\u003e \u003cp\u003e§ 17.6 Other Private Foundations Rules 191\u003c\/p\u003e \u003cp\u003e§ 17.7 Tax on Excess Compensation: Potentially Applicable Exceptions Illustrated 191\u003c\/p\u003e \u003cp\u003eAppendix A—Sources of the Law 197\u003c\/p\u003e \u003cp\u003eAppendix B—Internal Revenue Code Sections 223\u003c\/p\u003e \u003cp\u003eTable of Cases 227\u003c\/p\u003e \u003cp\u003eTable of IRS Revenue Rulings and Revenue Procedures 233\u003c\/p\u003e \u003cp\u003eTable of IRS Private Determinations Cited in Text 237\u003c\/p\u003e \u003cp\u003eTable of IRS Private Letter Rulings, Technical Advice Memoranda, and General Counsel Memoranda 245\u003c\/p\u003e \u003cp\u003eAbout the Authors 263\u003c\/p\u003e \u003cp\u003eAbout the Online Resources 265\u003c\/p\u003e \u003cp\u003eCumulative Index 267\u003c\/p\u003e","brand":"Shane T. 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