BCLP Charity Law

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Investment Funds Maintained by Charitable Organizations

Section 3(c)(10)(A)(ii) of the Investment Company Act of 1940 generally exempts a private investment fund from registering as an investment company if it is maintained by a charitable organization and is organized and operated exclusively for religious, education, benevolent, fraternal, chartable or reformatory purposes (“Permitted Purposes”) for the collective investment and reinvestment of certain assets.  Recently, the SEC provided new guidance to alleviate concerns related to the use of this exemption.

The SEC’s Division of Investment Management clarified that a private investment fund that is a legal entity distinct from the charitable organization[1] maintaining the fund and that is organized and operated for the purpose of earning investment returns for charitable organizations will be able to use the exclusion under Section 3(c)(10)(A)(ii).  A fund must still conform to the other conditions Section 3(c)(10) and the staff’s corresponding existing no-action positions.

The staff recognized that a fund technically might

IRD, IRD, IRD is the Word: IRD Consequences of IRA Distribution to Charities

October 16, 2013

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From TrustBryanCave.com

Once again, the Internal Revenue Service reminds us in PLR 201330011 that a distribution from an IRA to a residuary beneficiary will not result in recognition of IRD (also known as income in respect of a decedent) to the estate or trust, as only the residuary beneficiary will recognize the IRD.

Here the Decedent’s Estate was the beneficiary of the Decedent’s IRA. Under the provisions of the Decedent’s Will, his Estate poured over to his Revocable Trust on his death. His Revocable Trust provided that each of two Charities were to receive a percentage of the residue of his Trust, and further provided that the Trustee could satisfy this percentage gift in cash or in kind and also could allocate different assets to different residuary beneficiaries in satisfaction of their percentage interest in the trust residue.

Of course, the IRA constitutes income in respect of a decedent

Nonprofit Management & Leadership Program

The following is a program that may be of interest to your organization and its leadership

What’s a Bylaw? Why Does My Organization Need Them and How do I Draft Them?

May 29 | 2-5 p.m. | $25

Instructors: Dan Sise, Nonprofit Management & Leadership Program | Laurie Hauber, Legal Services of Eastern Missouri Are you trying to draft bylaws for a nonprofit corporation? Does your nonprofit already have a set of bylaws that could use a review or overhaul? Do you want to learn more about how a well-crafted set of bylaws can lead to good governance and management of your nonprofit? If you answered yes to any of these questions, then you should attend this class. Samples and examples will be provided during class as will a list of helpful sources of information that will guide your organization towards an effective and well-crafted set of bylaws.

Register

A Positive View on the Impact of the Fiscal Cliff Tax Act

January 16, 2013

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In our January 4 post, we summarized an article where the author presented the viewpoint that the American Taxpayer Relief Act of 2012 could have a negative impact on charitable giving in light of the reinstatement of a limitation on itemized deductions.   The Urban Institute Center on Nonprofits and Philanthropy has released an article “What Does the Fiscal Cliff Deal Mean for Nonprofits” (January 2013), where the authors (Joseph Rosenberg, C. Eugene Steurle, and Katherine Toran) take a different view, providing “[t]he major individual income tax provisions are estimated to increase giving by $3.3 billion or 1.3 percent, relative to 2012 law, mainly because of the increase in the top marginal tax rate.”  The article goes on to explain that the impact of the limitation on itemized deductions “has negligible effects on the tax incentive for charitable giving.”  The full article may be obtained by clicking

IRS Updates Retirement Plan Correction Program (Including Plans for Charities)

From BenefitsBryanCave.com

After a long wait, an updated Revenue Procedure for the Employee Plans Compliance Resolution System (EPCRS) was released in the form of Rev. Proc. 2013-12.  The new Revenue Procedure makes some important changes to the EPCRS.

As many plan sponsors know, the EPCRS includes the self-correction program (SCP), which requires prescribed corrections but does not require submission to the IRS; the voluntary correction program (VCP), which requires both prescribed corrections and submission to and approval by the IRS; and correction of problems discovered on audit (Audit CAP).

The purpose of the updated Revenue Procedure is to improve some features of the EPCRS and clarify others, based in large part on comments from the employee benefits community.  The IRS expects to make more changes of this type in the future, also based on comments from the employee benefits community.  Generally speaking, the IRS was responsive to

Could theTax Relief Act Hurt Charitable Giving?

January 3, 2013

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Effective December 31, 2012, Congress passed The American Tax Relief Act of 2012 (the “Act”) to avoid the fiscal cliff and President Obama is expected to sign the bill into law.  The full text may be obtained by clicking here.  In a Chronicle of Philanthropy article (which may be obtained by clicking here), Doug Donovan writes that the Act may hurt charitable giving in light of the fact the Act “reinstates a provision eliminated in 2010 that reduces itemized deductions by 3 percent of the amount that household income exceeds $300,000.”  Mr. Donovan goes on to explain that “[w]rite-offs grow more limited the more taxable income a person has and could reduce the value of deductions by up to 80 percent for the highest-income taxpayers, according to the Tax Policy Center.”

Although it is too soon to gauge the actual impact of the Act, on its

IRS Offers Tax Tips for “The Season of Giving”

December 11, 2012

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December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year.  In its Special Edition Tax Tips, a copy of which may be obtained by clicking here, the IRS offers tips regarding charity donations before year end.

Call Me Ishmael

Call Me Ishmael

March 12, 2012

Authored by: Nathan Boyce

I have heard it said by boat owners that the second best day in your life is the day you buy your boat.  The best day is the day you sell your boat.  Having never owned a boat, my boat experience consists of falling when trying to ski, falling when trying to wakeboard and reading Moby Dick. I asked my wife what she thought about boats and I (literally) got these responses:

(1) Sailor hats look dorky. (2) Why can’t they just say “right” and “left”?

Donor Advised Funds Scrutinized by the Treasury Department

February 21, 2012

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At the request of Congress, the Department of Treasury recently issued a report on donor advised funds. Among other things, Congress had asked the Department of Treasury whether donations to a donor advised fund should be tax-deductible, whether such donations should be treated as donations to a public charity, and whether donor-advised funds should have a minimum distribution requirement. The Department of Treasury answered “yes” to the first two questions and “no” to the third, maintaining the status quo.

The full report can be read here: http://www.treasury.gov/resource-center/tax-policy/documents/supporting-organizations-and-donor-advised-funds-12-5-11.pdf.

LLCs and the Charitable Deduction

LLCs and the Charitable Deduction

February 7, 2012

Authored by: Keith Kehrer

Under the so-called “check the box regulations” a single member limited liability company (“SMLLC”) is disregarded for federal income tax purposes unless it elects to be taxed as a corporation.  Therefore, where a Section 501(c)(3) organization establishes a SMLLC that does not seek Section 501(c)(3) status or otherwise elect to be taxed as a corporation, the SMLLC is treated as a division of the 501(c)(3) organization for federal income tax purposes.   Strangely, the IRS has declined to rule whether a donation to a SMLLC qualifies as a deductible charitable contribution made to or for the use of a Section 501(c)(3) organization for purposes of Section 170.  The New York State Bar Association recently sent a report to the Treasury and the IRS in support of the position that contributions to such SMLLCs should be eligible for the charitable deduction.   I also believe that this is the appropriate treatment for federal income tax purposes and hope