Nonprofits Often Worry About UBIT
Income generating activity is "unrelated" if it does not "contribute substantially" to the exempt purpose
Articles
Group Exemption Can Ease Burden on Affiliates
A “central organization” can add or subtract subordinates annually from the group of organizations it certifies to the IRS as qualified for exempt status
IRS Muses on Internet Issues for Nonprofits
Continuing education text says most current rules will be extended but offers little specific guidance on emerging issues
Title Holding Companies Have Limited Uses
Entities must be formed for the exclusive purpose of acquiring property, collecting income, and remitting it to exempt organizations.
New Form 1023 Adds Many Questions Focusing on Currently Hot Issues
IRS says answers will reduce need for follow-up and speed decisions on applications for exemption
Should Your Organization Elect Under 501(h)?
The "pros" outweigh the "cons" in most cases where a charity engages in significant advocacy.
How to Figure Lobbying Limits Under 501(h)
Public charities may spend up to $1 million on lobbying activity if it does not exceed the percentage limits established by the law
Charities May Not Participate in Elections
Although the Tax Code permits insubstantial lobbying activity, it provides an absolute prohibition on participation in election campaigns
IRS Gives Guidance on Advertisements That Constitute Section 527 Political Activity
Certain nonprofits must either report or pay tax if they go beyond issue advocacy to electioneering
Here's the Background on §527 Political Funds
Congress considers legislation to curb the secrecy that results when nonprofit funds avoid federal election campaign laws
Outflanking Foundations’ Public Charity Defense
Private foundations may make grants to groups which are not public charities if they exercise "expenditure responsibility" in approving, monitoring grants
Foundations Avoid Excess Business Holdings
Private foundations may be subject to tax if they and their disqualified persons hold too much stock in a business functionally unrelated to the purpose of the foundation
Private Operating Foundations Are Hybrids
Organizations which are not publicly supported but use most of their assets and income in the active conduct of their charitable activities avoid some private foundation limitations.
Terminating Private Foundations May be Tricky
If foundations are going out of business, they may distribute their assets to certain public charities; if they want to continue, they might become publicly supported themselves
Calculating Public Support Percentage
Section 509(a) sets the rules for qualification as public charities; the rules are significantly different for 509(a)(1) and 509(a)(2)
Conversion Foundations Face Key Issues Early
The process of thinking through the preliminary questions is critical for obtaining legal and public approval and benefiting the community after the sale of charitable assets.
Donor Advised Funds Still Compare Well with Private Foundations
Pension Protection Act imposed new limitations but absolute control of foundations has costs and other limits
New “Core Form” 990 Presents Revised Look for Nonprofit Finances
Form Requires substantial additional disclosures Still retains numerous traps for the unwary
New Form 990 Will Greatly Expand Reporting Requirements for Nonprofits
It still offers an important public relations opportunity, but many Boards will have to adopt new policies to look good
Small Nonprofits Must File E-Postcard to Retain Exemption
IRS issues Regs for new requirements; groups with revenue up to $50,000 may file Form 990-N