Overview
IRS Releases Notice Regarding Donor Advised Funds
Today, Treasury and the IRS issued Notice 2017-73, which describes approaches they are considering on several issues involving donor advised funds (DAFs) held by sponsoring organizations and requests comments on those approaches.
The notice indicates the intent to issue regulations that would:
- Provide that a distribution from a DAF that subsidizes a donor/advisor’s attendance or participation in a charity-sponsored event confers more than incidental benefit under § 4967, resulting in penalties
- Provide that a distribution from a DAF to a charity to which the donor/advisor has made a charitable pledge will not be considered a more than incidental benefit to a donor/advisor under certain circumstances
- Prevent the use of DAFs to circumvent the private foundation rules by using a DAF to pass through contributions as public support to a charity
Comments are requested by March 5, 2018.
Senate Tax Reform Amendments Affect Exempt Organizations
Although the final text of the legislation, as passed by the Senate, still has not been released, it appears from the manager’s amendment released by the Senate Finance Committee that a number of changes were made to the Senate bill that would affect exempt organizations, including:
- Striking the proposed exception to the private foundation excess business holding rules for certain wholly-owned and independently operated businesses where all net operating income promptly is distributed for use in the foundation’s charitable purposes
- Striking the proposed changes to the excess benefit transaction rules in section 4958 (also known as intermediate sanctions rules)
- Striking the proposal to treat income from sale or licensing of names and logos as unrelated business taxable income
- Increasing the proposed threshold for imposing an excise tax on private college and university endowments from $250,000 to $500,000 per student
- Striking the proposed repeal of the tax-exempt status for professional football leagues (and other professional sports leagues) as section 501(c)(6) organizations
The Senate bill continues to include the repeal of the Affordable Care Act’s individual mandate. It also appears that mandatory sequestration, including cuts to Medicare, would still be triggered by the Senate bill, unless waived. For a discussion of the distributional effects of a prior version of the Senate bill, click here.