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The Tax Cuts and Jobs Act passed late last year and became effective as of January 1, 2018.  The Act includes a new provision that subjects certain “excess compensation” paid by exempt organizations (organizations exempt from income tax under section 501(a) of the Internal Revenue Code (the Code)) to the corporate income tax.…
The Protecting Americans from Tax Hikes Act, passed in December 2015, extended an often overlooked provision of the tax code with the potential to provide significant savings to small business owners and non-corporate investors.  Section 1202 of the Internal Revenue Code permits the seller of a “qualified small business” to exclude up to 100% of the gain attributable to the sale or exchange of qualified small business stock from taxation.…
In April, the IRS released a private letter ruling denying section 501(c)(3) status to an accountable care organization (“ACO”) that contracted with third-party payers outside of the Medicare Shared Savings Program (“MSSP”). I.R.S. Priv. Ltr. Rul. 2016-15-022 (Jan. 15, 2016). The ACO was formed by a non-profit, tax-exempt health system to coordinate a clinically integrated network of health care providers, including physicians employed by the health care system and independent physicians. ACOs have become…
Cause-related marketing is frequently used by businesses to bolster sales, improve brand reputation, and improve public relations. Under the laws of a number of states, when a business advertises that it will make a charitable contribution to a charity when a consumer purchases a product, the business becomes a commercial co-venturer with the charity. Successful commercial co-ventures include Bono’s Red campaign, which has generated more than $300 million to fight HIV and AIDS through…
The question of whether to pay the directors of a tax-exempt organization is hotly contested. Although this practice is legal, there can be drawbacks with providing compensation. Despite the perceived hesitancy to compensate directors, a 2010 study found that out of the ten largest nonprofit healthcare organizations, seven compensated their directors. Mark S. Blodgett et al., Evolving Corporate Governance Standards for Healthcare Nonprofits: Is Board of Director Compensation a Breach of Fiduciary Duty?, 7 Brook. J.…