Tax Planning and Compliance for Tax-Exempt Organizations, Fifth Edition 2014 Cumulative Supplement

CHAPTER 11

Public Charities

§ 11.2 “Inherently Public Activity” and Broad Public Support: § 509(a)(1)

§ 11.6 Supporting Organizations

§ 11.2 “Inherently Public Activity” and Broad Public Support: § 509(a)(1)

p. 240. Add at end of Two Percent Gifts paragraph:

All contributions made by a donor and by any person or persons standing in a relationship to the donor that is described in the code definition of disqualified persons¹ must be combined and treated as if made by a single person.² IRC § 4946 stipulates combination under § 4946(a)(1)(E) of “a corporation of which persons described in subparagraph (A)(B)(C), or (D) own more than 35 percent of the total combined voting power.” An unanswered question in this regard is whether a donation from a private foundation must be combined with donations of that foundation's disqualified persons for this purpose. The regulations don't follow the same alpha labels but indicate:

§ 53.4946-1(a)(5) For purposes of subparagraph (1)(iii)(a) and (v) of this paragraph, the term “combined voting power” includes voting power represented by holdings of voting stock, actual or constructive (under section 4946(a)(3)), but does not include voting rights held only as a director or trustee.

IRC § 4946(a)(1)(H) says, “only for purposes of section 4943, a private foundation which is (i) effectively controlled directly or indirectly by the same person or persons … or (ii) substantially all of the contributions to which were made by the same person, or members ...