Note to the Reader: Sections not in the main bound volume are indicated by "(New)" after the title. Material new to this supplement is indicated by an asterisk () in the left margin in the contents and throughout the supplement. PART ONE: QUALIFYING FOR EXEMPTION. 1 Distinguishing Characteristics of Tax-Exempt Organizations. 2 Qualifying under IRC 501(c)(3). 2.1 Organizational Test. 2.2 Operational Test. 3 Religious Organizations. 3.2 Churches. 4 Charitable Organizations. 4.3 Lessening the Burdens of Government. 4.6 Promotion of Health. 5 Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals. 5.1 Educational Purposes. 5.5 Fostering Amateur Sports Competition. 6 Civic Leagues and Local Associations of Employees: 501(c)(4). 6.1 Comparison of (c)(3) and (c)(4) Organizations. 6.2 Qualifying and Nonqualifying Civic Organizations. 6.4 Disclosures of Nondeductibility. 7 Labor, Agricultural, and Horticultural Organizations: 501(c)(5). 7.1 Labor Unions. 7.2 Agricultural Groups. 8 Business Leagues: 501(c)(6). 8.2 Meaning of "Common Business Interest". 8.4 Rendering Services for Members. 8.6 Membership Categories. 9 Social Clubs: 501(c)(7). 9.1 Organizational Requirements. 9.5 Unrelated Business Income Tax. 10 Instrumentalities of Government and Title-Holding Corporations. 10.2 Governmental Units. 10.3 501(c)(2) Title-Holding Corporations. 11 Public Charities. 11.2 "Inherently Public Activity" and Broad Public Support: 509(a)(1). 11.3 Community Foundations. 11.4 Service-Providing Organizations: 509(a)(2). 11.5 Difference between 509(a)(1) and 509(a)(2). 11.6 Supporting Organizations: 509(a)(3). PART TWO: PRIVATE FOUNDATIONS. 12 Private Foundations-General Concepts. 12.2 Special Rules Pertaining to Private Foundations. 12.4 Termination of Private Foundation Status. 13 Excise Tax Based on Investment Income: IRC 4940 71. 13.1 Formula for Taxable Income. 13.2 Capital Gains. 13.5 Foreign Foundations. 14 Self-Dealing: IRC 4941. 14.1 Definition of Self-Dealing. 14.2 Sale, Exchange, or Lease of Property. 14.4 Compensation. 14.5 Transactions That Benefit Disqualified Persons. 14.7 Sharing Space, People, and Expenses. 14.9 Property Held by Fiduciaries. 15 Minimum Distribution Requirements: IRC 4942. 15.1 Assets Used to Calculate Minimum Investment Return. 15.2 Measuring Fair Market Value. 15.3 Distributable Amount. 15.4 Qualifying Distributions. 15.5 Private Operating Foundations. 15.6 Excise Tax Satisfying the Distribution Test. 16 Excess Business Holdings and Jeopardizing Investments: IRC 4943 and 4944. 16.1 Excess Business Holdings. 16.2 Jeopardizing Investments. 17 Taxable Expenditures: IRC 4945. 17.1 Lobbying. 17.3 Grants to Individuals. 17.4 Grants to Public Charities. 17.5 Expenditure Responsibility Grants. 17.6 Noncharitable Expenditures. PART THREE: IRS RECOGNITION. 18 Obtaining Recognition of Exempt Status. 18.1 Form 1023: Exemption under IRC 501(c)(3). 18.3 Form 1024: Exemptions Other than IRC 501(c)(3). 18.4 Getting a Positive IRS Determination. 18.5 Advance versus Definitive Rulings. 18.7 State Tax Exemptions. PART FOUR: MAINTAINING EXEMPT STATUS. 19 Maintaining Exempt Status. 20 Private Inurement and Intermediate Sanctions. 20.1 Defining Inurement. 20.2 Salaries and Other Compensation. 20.4 Purchase, Lease, or Sale of Property or Services. 20.9 Intermediate Sanctions. 21 Unrelated Business Income. 21.2 History of the Unrelated Business Income Tax. 21.3 Consequences of Receiving UBI. 21.4 Definition of Trade or Business. 21.6 "Regularly Carried On". 21.7 "Substantially Related". 21.8 Unrelated Activities. 21.9 The Exceptions. 21.10 Income Modifications. 21.11 Calculating and Minimizing Taxable Income. 21.12 Debt-Financed Income. 21.13 Museums. 21.14 Travel Tours. 22 Relationships with Other Organizations and Businesses. 22.2 Creation of (c)(3) by (c)(4), (5), or (6). 22.3 Alliances with Investors. 22.4 Creation of a For-Profit Corporate Subsidiary. 23 Electioneering and Lobbying. 23.1 Election Campaign Involvement. 23.2 Voter Education versus Candidate Promotion. 23.3 Tax on Political Expenditures. 23.4 Lobbying Activities of 501(c)(3) Organizations. 23.5 Permissible Amounts of Lobbying. 24 Deductibility and Disclosures. 24.1 Overview of Deductibility. 24.2 The Substantiation and Quid Pro Quo Rules. 24.5 State and Local Regulations. 25 Employment Taxes. 25.1 Distinctions between Employees and Independent Contractors. 25.2 Ministers. 25.3 Reporting Requirements. 26 Mergers, Bankruptcies, and Terminations. 26.1 Mergers and Other Combinations. PART FIVE: COMMUNICATING WITH THE IRS. 27 Successful Preparation of Forms 990, 990-EZ, 990-T, and 990-PF. 27.1 Filing Forms 990. 27.2 Public Inspection of Forms 990 and 1023. 27.3 Accounting Issues. 27.5 Form 990, Part I, Income and Expense. 27.6 Part II, Statement of Functional Expenses. 27.9 Part V, List of Officers, Directors, and Trustees. 27.12 Schedule A: For 501(c)(3) Organizations Only. 27.13 Special Considerations for Form 990-PF. 27.14 Form 990-T: Exempt Organization Business Income Tax Return. 28 Communicating with the Internal Revenue Service. 28.1 Reorganization of IRS Exempt Organization Division. 28.2 How to Report Changes to the IRS. 28.3 Weathering an IRS Examination. 28.4 When an Organization Loses Its Tax-Exempt Status. Table of Cases. Table of IRS Revenue Rulings and Revenue Procedures. Index.
