On November 4, 2016, the IRS updated its Conservation Easement Audit Techniques Guide (CE Audit Guide) for the first time since March 15, 2012.

According to the IRS’s introduction on its Audit Techniques Guide website, Audit Techniques Guides (ATGs) are developed to help IRS examiners during audits by explaining issues and accounting methods within specific industries. ATGs are also meant to provide guidance to small business owners and tax professionals for tax planning purposes within those industries. However, each ATG contains a disclaimer that it is not “an official pronouncement of the law or position of the Service and cannot be used, cited, or relied upon as such.” This article will not explain the CE Audit Guide in depth, but rather discuss the specific updates made in November.


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The case of Salus Mundi Foundation et al v. Commissioner

Transferee LiabilityOn August 15, 2016, the Tax Court decided in Salus Mundi Foundation et al v. Commissioner, T.C. Memo. 2016-154, that two foundations were liable as transferees for a corporation’s unpaid federal tax liability after another foundation distributed to the foundations the proceeds of the sale of the corporation’s stock.

The history in this case involves a marital trust that initially owned all of the stock in a C corporation called Double-D Ranch.  Later, a portion of the stock was transferred to the Diebold Foundation in New York.  Subsequent to that, the Diebold Foundation in New York sold the stock and distributed the proceeds from the sale of Double-D Ranch stock to three foundations formed by the Diebold children, pursuant to a New York state-approved plan of dissolution.


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photo-1446482972539-0ed52b3e9520We have all been told at one point or another that we simply “can’t have it all.”  But for owners of recreational or agricultural land who desire to preserve the land, pass it down to their descendants as a legacy property, and achieve substantial tax savings, “(almost) having it all” is a possibility.  Enter, the conservation easement – a valuable tool that can bridge the divide between these often competing interests.
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photo-1460925895917-afdab827c52fIn recent years, private foundations increasingly have sought to incorporate socially responsible investing (“SRI”) mandates.  Some SRI mandates take the form of negative screens—e.g., screening out tobacco stocks.  Other SRI approaches are more proactive—e.g., a foundation focusing on disease eradication might invest in companies that develop vaccines.  However, there has been a view—accurate or not—that some socially responsible investments yield lower risk-adjusted financial returns than traditional investments (such investments are sometimes referred to as “concessionary”).

Accordingly, when a foundation engages in an SRI program, several legal issues arise.


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A promise to give is not a guaranteed charitable gift.

smartphone-586903_1920In an open letter to their newborn daughter last December, Facebook CEO Mark Zuckerberg and wife Priscilla Chan announced they will eventually give 99 percent of their Facebook shares during their lives to a variety of important social causes.  Over the past several months, commentators have expressed both enthusiasm and concern with the manner in which the couple chose to commit their wealth to advancing these causes. 
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tax-468440_1920In July of 2014, the Internal Revenue Service (IRS) introduced a shorter application form to help small charities apply for 501(c)(3) tax-exempt status more easily.  At that time, the Form 1023-EZ required a $400 user fee to be submitted with the application.

Effective July 1, 2016, the cost will drop to $275 for Form 1023-EZ filers, pursuant to recently issued Revenue Procedure 2016-32.


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