Overview

Insightful analysis and explanations of private foundation tax law along with hands-on practice tools that make compliance easier Now in its seventh edition, The Tax Law of Private Foundations by Bruce Hopkins and Shane Hamilton serves as the gold-standard reference for navigating the complex regulations governing private foundations. This comprehensive book is regularly updated to incorporate the latest changes in tax law, providing executives and professionals with valuable clarification, expert insights, and practical instruction. With every edition supplemented annually, the book remains current and relevant. It offers a clear and concise summary of the regulations governing private foundations, explaining the logic underpinning the rules. The authors provide a range of helpful tools, including checklists, sample documents, and practice forms, to simplify the filing process and ensure compliance with the latest legislation. Readers will also find: Critical analyses and considerations of existing laws and regulations, avoiding potential confusion arising from future legislation A collection of practical tools that make it simpler to comply with the regulations governing private foundations Expert guidance on obtaining or maintaining your foundation's tax-exempt status An indispensable resource, this latest edition caters to individuals with personal or professional interests in private foundations, offering authoritative guidance and complete explanations in an intricate and sometimes confusing area of the law. Whether navigating the complexities of compliance or seeking deep insights, this book remains the go-to reference for understanding and managing this difficult area of taxation.

Full Product Details

Author:   Shane T. Hamilton ,  Bruce R. Hopkins (Member, District of Columbia Bar)
Publisher:   John Wiley & Sons Inc
Imprint:   John Wiley & Sons Inc
Edition:   6th Edition
Dimensions:   Width: 17.80cm , Height: 3.10cm , Length: 24.90cm
Weight:   0.499kg
ISBN:  

9781394309320

ISBN 10:   1394309325
Pages:   320
Publication Date:   16 December 2025
Audience:   Professional and scholarly ,  Professional & Vocational
Format:   Paperback
Publisher's Status:   Forthcoming
Availability:   Awaiting stock  

Table of Contents

Preface xiii Book Citations xvii 1 Introduction to Private Foundations 1 1.1 Private Foundations: Unique Organizations 1 1.2 Definition of Private Foundation 2 1.4 Private Foundation Law Primer 2 (c) Disqualified Persons 2 (f) Excess Business Holdings Rules 2 (l) Unrelated Business Rules 2 1.7 Organizational Rules 2 1.8 Private Foundation Law Sanctions 3 (b) Self- Dealing Sanctions as Pigouvian Taxes 3 (c) Self- Dealing Sanctions: Taxes or Penalties? 4 (e) Potential of Overlapping Taxes 5  1.9 Statistical Profile 5  1.10 Private Foundations and Law 50 Years Later 5 2 Starting, Funding, and Governing a Private Foundation 7 2.3 Choice of Organizational Form 7 2.4 Funding a Foundation 7 2.6 Foundations and Planned Giving 8 (b) Charitable Remainder Trusts 8 (d) Interrelationships with Private Foundation Rules 8 2.7 Acquiring Recognition of Tax- Exempt Status 9 (a) Form 1023 9 (b) 27- Month Rule 9 (c) IRS Determination Letters Recognizing Exempt Status 10 (d) Administrative Procedures When Recognition Denied 10 (e) Declaratory Judgment Procedures When Recognition Denied 11 (f) Recognition of Foreign Organizations 11 3 Types of Private Foundations 13 3.1 Private Operating Foundations 13 (d) Income Test 13 (h) Conversion to or from Private Operating Foundation Status 13 3.2 Exempt Operating Foundations 14 3.3 Conduit Foundations 15 3.6 Nonexempt Charitable Trusts 16 3.7 Split- Interest Trusts 17 3.8 Foreign Private Foundations 19 (a) Gross Investment Income Tax 19 (b) Withholding Tax 20 (c) 85 Percent Support Test 21 (d) Return Filing Obligations 21 (e) Establishing Public Charity Status 21 (f) Loss of Exemption (Prohibited Transactions) 22 4 Disqualified Persons 23 4.5 Corporations or Partnerships 23 4.7 Private Foundations 23 4.8 Governmental Officials 24 4.9 Termination of Disqualified Person Status 24 5 Self- Dealing 25 5.1 Private Inurement Doctrine 26 5.2 Private Benefit Doctrine 26 5.3 General Definition of Self- Dealing 28 5.4 Sale, Exchange, Lease, or Furnishing of Property 28 (d) Leasing of Property 28 (e) Furnishing of Goods, Services, or Facilities 29 (g) Coinvestments 31 5.5 Loans and Other Extensions of Credit 32 (a) Gifts of Indebted Property 32 5.6 Payment of Compensation 32 (a) Definition of Personal Services 32 (e) Excess Executive Compensation Tax 33 (i) Reporting of Compensation 34 5.8 Uses of Income or Assets by Disqualified Persons 35 (c) Payment of Charitable Pledges 35 (e) Incidental or Tenuous Benefits 35 5.9 Sharing Space, Personnel, and Expenses 36 (b) Office Space and Personnel 36 5.10 Payments to Governmental Officials 36 5.11 Indirect Self- Dealing 36 (b) Concept of Control 36 (d) Exceptions 36 5.12 Estate Administration Exception 37 (a) Concept of the Expectancy 37 (b) Estate Administration Exception— General Rules 37 5.13 Early Terminations of Split- Interest Trusts 38 5.14 Additional Exceptions 38 (a) Certain Corporate Organizations and Reorganizations 38 (b) Transitional Rules (Savings Provisions) 39  5.15 Excise Taxes on Self- Dealing 39 (a) Self- Dealing Excise Taxes 39 (d) Correcting the Transaction 41 6 Mandatory Distributions 43 6.1 Mandatory Distribution Requirement 43 (a) Purpose and Policy 43 6.2 Minimum Investment Return 43 (c) Future Interest or Expectancy 43 (d) Exempt Function Assets 44 6.3 Determining Fair Market Value 44 (c) Other Assets 44 6.4 Qualifying Distributions 44 (a) General Definitions and Rules 44 (b) Charitable Grants in General 45 (c) Grants to Controlled Organizations and Other Foundations 45 (d) Grantor Reliance Standards 46 (f) Direct Charitable Expenditures 46 (g) Set- Asides 46 6.5 Excise Taxes on Failure to Distribute Income 50 (b) Ordering Rule for Qualifying Distributions 50 (d) Excise Taxes on Undistributed Income 50 (e) Valuation Mistakes 50 7 Excess Business Holdings 51 7.1 Overview 51 7.2 Definitions and Limitations on Business Holdings 52 (a) Definition of Business Enterprise 52 (b) Passive Income Businesses 54 (c) Percentage Limitations 57 (d) Permitted and Excess Holdings 62 (e) Constructive Ownership 62 (f) Disposition Periods 67 (g) History of Excess Business Holdings Rules 72 7.3 Functionally Related Businesses 73 (a) Substantially Related Businesses 73 (b) Activities within a Larger Aggregate 75 7.5 Rules Applicable to Certain Supporting Organizations 78 7.7 Excise Tax on Excess Holdings 79 8 Jeopardizing Investments 81 8.1 Definition and General Rules 81 (a) Applicable Standards in Defining Jeopardy 81 (b) Timing of Determination 82 (c) Illustrations and Examples 82 (d) Contributed Assets 84 8.2 Prudent Investments 84 (g) Mission- Related Investments 85 8.3 Program- Related Investments 86 8.5 Excise Taxes on Jeopardizing Investments 88 (a) Initial Taxes 88 (b) Tax on Managers 89 9 Taxable Expenditures 91 9.2 Political Campaign Activities 92 (c) Voter Registration Drives 92 9.3 Grants to Individuals 92 (b) Individual Grants for Charitable or Other Permitted Purposes 92 (c) Disaster Relief and Other Assistance Grants 93 (d) Individual Grants for Travel, Study, or Other Similar Purposes 93 (f) IRS Approval of Grant Procedures 95 (g) Individual Grant Intermediaries and Earmarking 102 9.4 Grants to Public Charities 102 (a) Types of Public Charity Grantees 102 (b) Grantor Reliance Standards 102 (c) Intermediary and Secondary Grantees 102 9.5 Grants to Exempt Operating Foundations 103 9.6 Grants to Foreign Organizations 103 (b) Good Faith (Equivalency) Determinations 103 (d) Anti- Terrorist Financing Guidelines 103 9.7 Expenditure Responsibility 103 (c) Grant Terms 103 9.8 Spending for Noncharitable Purposes 103 9.9 Excise Tax on Taxable Expenditures 104 (a) Initial and Additional Excise Taxes 104 (b) Tax on Managers 104 (c) Paying the Tax 105 10 Tax on Investment Income 107 10.1 Rate of Tax 107 10.3 Planning Opportunities to Reduce Tax 107 10.4 Calculating Taxable Net Investment Income 107 (b) Capital Gains and Losses 107 (h) Partnership and S Corporation Income 108 10.5 Reductions to Gross Investment Income 108 (a) Deductions Allowed 108 (b) Deductions Not Allowed 108 10.6 Foreign Private Foundations 108 10.7 Exemption from Tax on Investment Income 108 11 Unrelated Business Activity 109 11.1 General Rules 109 (e) Real Estate Activities 109 11.2 Exceptions 110 (a) Royalties 111 11.3 Business Activities of Private Foundations 111 (a) Direct Conduct of Unrelated Activities 112 (b) Ownership Interests in Unrelated Businesses 112 (c) Partnerships and S Corporations 113 (c- 1) Specified Payments from Controlled Entities 113 (d) Community Foundations’ Grant- Making Services 114 (e) Provision of Technical Assistance 115 11.4 Unrelated Debt- Financed Income Rules 115 (a) Acquisition Indebtedness 115 11.5 Calculating and Reporting the Tax 115 (b) Bucketing Rule 115 (d) Tax Computation and Reporting Rules 115 12 Tax Reporting and Administrative Issues 117 12.1 Form 990- PF 117 (a) Annual Form 990- PF Filing Requirement 117 (c) Reporting Changes on Form 990- PF 118 (d) Other Changes 118 12.2 Form 990- PF Penalties 118 (a) Daily Delinquency Penalty 118 (c) Reasonable Cause 119 12.3 Public Disclosure and Inspection of Returns and Applications 119 (a) Disclosure Obligations of Private Foundations 119 (c) IRS’s Disclosure Obligations 120 12.4 Reporting and Payment of Excise Taxes 120 (b) Additions to Tax and Penalties 120 (d) Form 4720 Statute of Limitations 121 12.5 Determination Letters and Letter Rulings 121 (a) Form 8940 Miscellaneous Determination Requests 121 (b) Letter Rulings 122 (c) Reliance on Determinations and Rulings 123 12.6 IRS Examinations of Private Foundations 123 (a) Types of Examinations 123 (b) General IRS EO Examination Practices and Procedures 123 12.7 Revocation of Tax- Exempt Status 124 (a) Automatic Revocation for Non- Filing 124 (b) Retroactive Revocation 125 (c) IRS Administrative Appeal Procedures 125 (d) Contesting Revocation in Court 125 13 Termination of Foundation Status 127 13.1 Voluntary Termination 127 13.3 Transfer of Assets to a Public Charity 128 (a) General Rules 128 (b) Restrictions and Conditions on Transfer 128 13.4 Operation as a Public Charity 129 (b) Initial Notice 129 (c) Advance Ruling Requests 129 (d) Final Notice 129 13.5 Mergers, Split- Ups, and Transfers Between Foundations 130 (a) General Rules 130 (b) Complete Asset Transfers to Controlled Foundations 130 14 Charitable Giving Rules 131 14.1 Concept of Gift 131 14.2 Basic Rules 132 (a) Percentage Limitations 132 14.4 Deduction Reduction Rules 133 (a) Capital Gain Property Deduction Rule 133 (b) Other Deduction Reduction Rules 133 (c) Corporate Gifts of Inventory 134 14.6 Special Gift Situations 142 (g) Conservation Property 142 14.7 Administrative Considerations 142 (b) Substantiation Rules 142 (c) Quid Pro Quo Disclosure Rules 142 15 Public Charities 143 15.3 Public Institution Charities 143 (b) Educational Institutions 143 15.4 Donative Publicly Supported Charities 144 (b) 2 Percent Limitation 144 15.5 Service Provider Publicly Supported Charities 144 (c) Unusual Grants 144 15.6 Supporting Organizations 145 (b) Operational Test 145 (g) Operated in Connection with (Type III) 145 (h) Contributions from Controlling Donors 154 (i) Excess Benefit Transaction Rules 155 (j) Limitation on Control 155 (l) Noncharitable Supported Organizations 156 (n) Applications and Illustrations 156 (o) Loss of Supporting Organization Status 158 15.7 Change of Public Charity Category 159 (b) From 509(a)(3) to 509(a)(1) or 509(a)(2) 159 (d) IRS Recognition of Change in Status 159 15.8 Termination of Public Charity Status 160 16 Donor- Advised Funds 161 16.1 Basic Definitions 162 16.2 General Concept of a Gift 162 16.3 Types of Donor Funds 162 16.5 Public Charity Status of Sponsoring Organizations 163 16.7 Statutory Criteria 163 (a) Definition of Donor- Advised Fund 163 (b) Taxes on Taxable Distributions 172 (c) Taxes on Prohibited Benefits 176 (d) Application of Excess Benefit Rules 176 (e) Application of Excess Business Holdings Rules 177 (f) Limitations on Deductibility of Contributions 177 (g) Reporting and Disclosure Requirements 177 16.8 Studies 177 (a) Treasury Study 177 (b) Congressional Research Service Study 178 16.9 Tax Regulations 178 (a) The Ever- Pending Regulations Project 178 (c) Comments on IRS Notice 178 16.10 Proposed Legislation 179 17 Company Foundations 181 17.2 Reasons to Establish a Company Foundation 181 17.4 Private Benefit Doctrine 183 17.5 Disqualified Persons Rules 183 17.6 Self- Dealing Rules 184 (a- 1) Satisfying Company Charitable Commitments 184 (b) Furnishing of Goods, Services, and Facilities 184 (c) Charity Benefit and Event Tickets 185 (d) Programs Benefiting Employees 185 (e) Incidental and Tenuous Benefits 189 (f) Corporate Reorganizations 191 17.7 Other Private Foundations Rules 191 (b) Excess Business Holdings Rules 191 (e) Net Investment Income Tax 191 17.8 Excess Executive Compensation Tax Exceptions 192 (a) Limited Hours Exception 192 (b) Nonexempt Funds Exception 192 About the Authors 193 About the Online Resources 195 Appendix A: Sources of Tax-Exempt Organizations Law 197 Appendix B: Internal Revenue Code Sections 223 Table of Cases 229 Table of IRS Revenue Rulings, Revenue Procedures, and Notices 241 Table of IRS Private Determinations Cited in Text 249 Table of Other IRS Private Determinations 265 Index 281

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