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Garage Sale Christmas

Garage Sale Christmas

December 26, 2011

Authored by: Nathan Boyce

As a consumer and parent, I love garage sale-ing–you never knew what you will find. Garage sales are especially helpful for Christmas shopping for young children. In my opinion, there is no reason to buy a new present for anyone under the age of 5. And for anyone under the age of 18 months, there is no reason to get any presents at all. (In my experience, no matter what you wrap up,

Keep the change, ya filthy animal!

Keep the change, ya filthy animal!

December 1, 2011

Authored by: Nathan Boyce

In Home Alone 2, the villains from the first movie have inexplicably broken out of jail and end up in New York. Daniel Stern’s character, Marv, wraps his glove in tape, dips it in a holiday donation receptacle manned by a Santa Claus, and pulls it out covered with coins. 

Harry: That’s very smart, Marv. You bust outta jail to rob 14 cents from a Santa Claus?

Marv: Every little bit helps. Besides, now we’ve got our new nicknames: We’re the Sticky Bandits!

At this point in the movie, only the most prescient

Revised 990 Regulations

Revised 990 Regulations

November 5, 2011

Authored by: Nathan Boyce

Until recently, when an organization sought public charity status on its Form 1023 and received a favorable determination letter from the Internal Revenue Service recognizing it as exempt under Section 501(c)(3) of the Code, its public charity status (if granted) would be for a five-year “advance ruling period”. After this advance ruling period, the organization would make a separate filing to the IRS to establish public charity status based on satisfaction of one of the Support Tests. On September 7, 2011, final regulations were issued that change the timing and process of determining public charity status.  A brief description of the changes can be read here.

Economic Development, Right and Wrong

October 6, 2011

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Economic development organizations may be exempt if the assistance they provide is “targeted (1) to aid an economically depressed or blighted area; (2) to benefit a disadvantaged group, such as minorities, the unemployed or underemployed; and (3) to aid businesses that have actually experienced difficulty in obtaining conventional financing (a) because of the deteriorated nature of the area in which they were or would be located or (b) because of their minority composition, or to aid businesses that would locate or remain in the economically depressed or blighted area and provide jobs and training to the unemployed or underemployed from such area only if the economic development corporation’s assistance was available.” 1992 EO CPE Text G. Economic Development Corporations.

This basis for exemption seems to be often misunderstood–many organizations seek

Charitable Vendors

September 9, 2011

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Charitable Vendors

September 9, 2011

Authored by: Nathan Boyce

 

One commonly held misconception regarding charities is that an organization can qualify under section 501(c)(3) on the grounds that it provides needed services to other 501(c)(3) organizations. In a seminal case in Rev. Rul. 72-369, an organization sought 501(c)(3) status on the grounds that it provided consulting services to 501(c)(3)s for a fee set at cost. The IRS ruled that paid consulting services is a commercial activity carried on for profit and the fact that the fee was set at cost was not sufficient to remove the commercial aspects. In GCM 37257, the general counsel declared that such service-providing organizations will only qualify themselves under section 501(c)(3) if the services they provide to the other 501(c)(3)s are “substantially below cost.”

 Recently, in PLR 201131025, the IRS examined an organization the provided classroom supplies to school teachers. The organization operated

Solicitation Disclosure

September 2, 2011

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Solicitation Disclosure

September 2, 2011

Authored by: Nathan Boyce

There are consequences to improperly representing that a donation is deductible. Generally, Section 6113 requires non-501(c)(3)s that are seeking donations to conspicuously disclose “that contributions or gifts to such organization are not deductible as charitable contributions for Federal income tax purposes.’” A $1,000 fine is imposed up to $10,000 for the year for failure to include such language. For intentional failure, the daily fine is the greater of $1,000 or 50 percent of the aggregate cost of the offending solicitations–with no maximum for the year. To be clear, this is not advice for pending 501(c)(3)s–that’s another blog topic–but for others. For example, if my (c)(7) social club asked for donations for my kids’ psychological rehabilitation,

Never Pay Taxes Again

Never Pay Taxes Again

August 18, 2011

Authored by: Nathan Boyce

Imagine you are talking to a friend of a friend at a party, who says that you can avoid ever paying income taxes by taking six simple steps:

(1) form a corporation with the word “church” in the title; (2) appoint yourself president/minister of the church; (3) transfer your home, car, weekly income and other assets to the church; (4) transfer your debt (mortage), car loans, etc. to the church; (5) continue to spend your time and money as you did before; (6) have the church pay you for your services as president/minister and pay your expenses (home, car, credit cards, kid’s tuition, etc.)

What would you do?

Defining Church

July 26, 2011

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Defining Church

July 26, 2011

Authored by: Nathan Boyce

In a previous blog , I described the revocation of church status of the Foundation for Human Understanding.  In that case, the Federal Circuit Court of Appeals  discussed three different tests to determine church status.  These tests (naturally) intrigued me so gave up playing angry birds for three days to dedicate myself to researching all of the cases I could find that determine church status.  I determined that all of the different approaches that have been used to determined if an organization is a church (and there are more than 3) could all fit under one of the tests–the approach set forth in the 1980 District Court case: American Guidance Foundation, Inc. v. U.S.  In short, the test requires examining 14 Factors established by the IRS and requires at a minimum that the organization have “a body of believers

The Private Benefit of Social Networking

The so-called “private benefit doctrine” prohibits 501(c)(3) organizations from providing a “substantial” benefit to private parties. Much has been said and written about what constitutes a substantial benefit; for purposes of this blog, I will simply provide an example to illustrate the point. An organization that presents musical performances, for example, may generally qualify under 501(c)(3). But if it (i) pays its performers twice fair market value, (ii) arranges for all performers to sign a subsequent contract with a for-profit arts company or (iii) if it only performs for one wealthy family, then it would violate the private benefit doctrine by providing a prohibited substantial benefit to (i) the actors, (ii) the for-profit company or (iii) the wealthy family.

In PLR 201125045, the organization’s mission was to “foster intercultural understanding to the world through cultural exchange” and it sought 501(c)(3) status on the basis that it furthers an educational purpose through

Dogs or Diamonds?

May 20, 2011

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Dogs or Diamonds?

May 20, 2011

Authored by: Nathan Boyce

I think men are getting the short end of the best friend stick. After all, if girls get diamonds as Marilyn Monroe claims, it doesn’t seem fair for men to get dogs. I know what girls will say: (use condescending tone) “but men are like dogs in so many ways–both are smelly, easily distracted by simple games and can’t put the toilet seat down.” But my complaint is about the genre: if it is an animal for men–dog may be fine–then it should be an animal for girls. I vote for cats–like girls they are proud, self-absorbed and mean (my wife punched me after reading that). If the genre is showy, expensive things that you don’t really need (like diamonds), then I think men should get HD TVs. Regardless of whether you agree with me or agree with Marilyn,