In addition to complying with the basic rules of §501(c)(3), private foundations have an additional layer of regulatory compliance. Many of these rules were enacted over 50 years ago and have remained unchanged since then, despite the ever-evolving world we live in. Non-compliance with these private foundation rules can have steep monetary penalties for the foundation, and in some cases, the individuals involved in the transaction. Join us for an overview and discussion on common traps for private foundations and learn strategies to avoid them going forward.
Publication Date: September 2021
Designed For
CPAs, CFOs, auditors, bookkeepers, staff accountants, board members, and others working with not-for-profit entities.
Topics Covered
- History and Governance of Private Foundations
- Identifying the Disqualified Persons
- Self”Dealing: Rules, Exceptions, and Planning Opportunities
- Annual Private Foundation Payout Requirements
- Taxable Expenditure Traps
- Lobbying vs. Political vs. Advocacy
- Grantmaking to Individuals and Non”Public Charities
Investment Restrictions for Private FoundationsForm 4720 Filing Tips
Learning Objectives
- Identify all disqualified persons of the foundation and put measures in place to prevent self-dealing transactions
- Recognize when an investment or expenditure may trigger unfavorable tax consequences for a private foundation
- Describe what actions are involved for correction when a pitfall transaction occurs
- Recognize which form should be used to notify the IRS if a foundation makes significant changes
- Differentiate IRC Code Sections and how they relate to excess business holdings for private foundations
- Identify the first-tier tax percent on a disqualified person
- Recognize a type of nonqualifying distribution has certain exceptions
- Describe correct statements regarding grantmaking to individuals
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructors
Clark Nuber
Located in the Seattle metro area, Clark Nuber PS is home to one of the largest single-office Not-for-Profit practices in the United States. This nationally recognized group is composed of over 80 professionals who specialize in serving more than 750 not-for-profits. These professionals take a broad, holistic view of the entire financial and regulatory ecosystem in which not-for-profits function.
Our involvement and investment in the industry extends beyond providing professional services to charitable organizations. Our shareholders and principals also present regularly at conferences and seminars tailored to the not-for-profit community. And, several leaders serve on national-level boards and committees that establish guidance and best-practices for the sector, including the Financial Accounting Standards Board (FASB) Not-for-Profit Advisory Committee, the TE/GE EO Council’s TIC-TAQ Forum, and the AICPA Exempt Organization Technical Resource Panel.
Additionally, Clark Nuber is the author of the Form 990 Compliance Guide and the Private Foundation Handbook and Compliance Guide.
Sarah Huang
Sarah is a tax principal at Clark Nuber P.S., based in the Seattle metro area. She focuses her practice on tax compliance and consulting for public charities and private foundations. During her time at Clark Nuber, she has provided extensive consulting services to our tax-exempt organizations on matters such as tax law changes, unrelated business income, alternative investments, foreign filing requirements, state tax filings, payroll taxes, organizational structuring, and donor acknowledgement requirements.
Sarah is a contributing writer and editor of the Form 990 Compliance Guide, published by CCH, and has written several articles for various publications, including a five-part series on donor acknowledgement for CCH. She is an associate member of the AICPA Exempt Organization Technical Resources Panel and is a member of the AICPA and Washington Society of CPAs.
Celia Davis
Celia is a senior manager in the tax services group at Clark Nuber P.S., and has been with the firm for 10 years. Her practice focuses on serving private foundations, public charities, and charitably inclined individuals. She provides tax compliance and consulting on matters such as charitable gift planning, federal and state tax filings, payout modeling, unrelated business taxable income, alternative investments, and foreign reporting.
Celia is a graduate of the University of Washington and is licensed in Washington State. She is a contributing writer and editor for the Form 990 Compliance Guide published by CCH and is a member of the Washington Society of CPAs and the AICPA.