Lead Stories

We regularly feature answers to questions from readers in our “To the Point” column. The full list can be viewed here. Here are a few questions recently received from readers.

Must board fire president?

A 501(c)(4) community association is subject to unrelated business income tax on revenue from the parking lot at a members-only beach club owned by the Association, the Tax Court has held.  (Ocean Pines Association v. Commissioner, T.C. 5127-08, 8/30/10.)

The nonprofit Louisiana Horsemen’s Benevolent and Protective Association has been ordered to produce the envelopes containing election ballots for inspection by a member contesting the validity of the election of officers.  A Court of Appeals in Louisiana has affirmed the trial court’s decision.  (Seelig v. Louisiana Horsemen’s Benevolent and Protective Association, Ct. of App., LA, Fourth Cir., No. 2010-CA-0281, 9/9/10.)

The founders of a nonprofit credit repair agency determined to be a front for their for-profit businesses and for them personally have been found personally liable for $256 million in service fees paid by their clients over a several year period.  The First Circuit Court of Appeals has affirmed a trial court decision piercing the corporate veil and imposing the liability.  (Zimmerman v. Puccio, No. 09-1416, 7/27/10.)

When Tulane University in New Orleans sought to reorganize after Hurricane Katrina, its “Renewal Plan” called for the merger of the all-women H. Sophie Newcomb Memorial College and other separate colleges into one undergraduate college called Newcomb-Tulane College.  Descendants of Josephine Newcomb, who left more than $2.6 million to fund the college named after daughter more than a century ago, have fought for many years to keep the all women’s school separate.  The Louisiana Court of Appeals has recently said the University may proceed with its plan.

An interest in a deferred charitable gift annuity is excluded from a bankrupt’s estate and cannot be recovered for the benefit of creditors, a bankruptcy court in Missouri has held.  The Court said the annuity qualifies as a spendthrift trust under the Uniform Trust Code and is excluded by state law.  (In Re: Spector, E.D. MO. Bkrptcy Ct., No. 10-45397-399, 10/26/10.)

Donna Sue Spector worked for a family and its business for many years and expected to be “taken care of” by the family during her retirement.  Her employer had transferred $505,055 to Washington University in 2004 in return for a commitment to provide Spector with monthly payments of $4,166.71 (or $50,000 annually) for life beginning in 2015 when she turned 60.  The amount could not be changed and was “not assignable.”  It was to be governed by Missouri law.