Private Foundations: Tax Law and Compliance, 4th Edition

Preface

Private foundations, although constituting a relatively small portion of the charitable community, are burdened with extensive federal tax law requirements that belie their numbers, and that substantially regulate and circumscribe their operations. This body of law has steadily grown since its inception as a considerable portion of the Tax Reform Act of 1969. This book came about in reflection of this expanding and expansive aspect of the law pertaining to these unique forms of tax-exempt organizations. We have attempted to both capture and summarize this law, and to provide guidance as to compliance with it.

As noted, a private foundation is a charitable entity for tax purposes. Technically, this means it is an organization described in section 501(c)(3) of the Internal Revenue Code. This in turn means, of course, that nearly all of the considerable law embodied in and around that section is applicable to private foundations. The law in this area, however, stimulated by a variety of abuses, perceived and otherwise, includes an overlay collection of statutory requirements, in the form of rules applicable only to private foundations. These rules are the principal subject of this book.

Many lawyers and accountants who practice in the exempt organizations field have little or no involvement with private foundations. With their exempt clients being public charities or other types of nonprofit organizations, this is understandable; these practitioners have no reason to master ...