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

CHAPTER 15Minimum Distribution Requirements: IRC § 4942

• § 15.1 Assets Used to Calculate Minimum Investment Return
  • (c) Exempt Function Assets
• § 15.2 Measuring Fair Market Value
  • (e) Cash and Other Assets
• § 15.4 Qualifying Distributions
  • (a) Direct Grants
  • (f) Direct Charitable Expenditures
  • (g) Set-Asides

§ 15.1 Assets Used to Calculate Minimum Investment Return

(c) Exempt Function Assets

p. 424. Add to list of assets used directly in projects:

• Conservation assets, including those subject to covenants and/or deed restrictions dedicating the property to conservation are treated as exempt-function assets. This title means to preserve and protect the property and its natural resources, which is usually accomplished with terms called easements. That portion of the property that is not subject to the easement would be counted as either an investment or an exempt function asset, dependent upon the use of the surface subject to the easement. Payments for maintaining and operating the property can be treated as qualifying distributions.¹

§ 15.2 Measuring Fair Market Value

(e) Cash and Other Assets

p. 433. Add italic title at the beginning of the third paragraph:

Mineral Interest.

p. 433. Add new paragraphs at the end of Real Estate section:

Animal and Bird Sanctuary. Purchase and maintenance of a large tract of land as a forest to be reserved as a sanctuary for wild birds and animals and to be open to the public for educational purposes was a charitable activity that qualified ...