Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 1Distinguishing Characteristics of Tax-Exempt Organizations

• 1.1 Differences between Exempt and Nonexempt Organizations
  • (a) Choosing a Category
  • (b) Businesslike Behavior
• 1.2 Nomenclature
• 1.3 Ownership and Control
• 1.4 Role of the Internal Revenue Service
• 1.5 Suitability as an Exempt Organization
  • (a) Question 1: Is a new organization really necessary?
  • (b) Question 2: Which category of exemption is appropriate?
  • (c) Question 3: Do expected revenue sources indicate nonprofit character?
  • (d) Question 4: Are creators motivated by selfish goals?
• 1.6 Start-Up Tax and Financial Considerations
  • (a) Preliminary Planning
  • (b) Financial Management
• 1.7 Choosing the Best Form of Organization
  • (a) Corporation
  • (b) Trust
  • (c) Unincorporated Association
  • (d) Limited Liability Companies
  • (e) Conclusion

The world of tax-exempt (or simply exempt) organizations includes a broad range of nonprofit institutions: churches, schools, charities, business leagues, political parties, schools, country clubs, and united giving campaigns—all conducting a wide variety of pursuits intended to serve the public, or common, good. All exempt organizations (EOs) share the common attribute of being organized for the advancement of a group of persons, rather than particular individuals or businesses. Most EOs are afforded special tax and legal status precisely because of the selfless motivation behind their formation.

The common thread running through the various types of EOs is the lack of private ownership ...