A Letter to the Reader xv About the Authors xvii Preface xix About the Online Resources xxi Book Citations xxiii Part One: Introduction to the Law of Tax-exempt Organizations 1 Definition of and Rationales for Tax- Exempt Organizations 3 § 1.1 Definition of Nonprofit Organization 3 (a) Nonprofit Organization Defined 3 § 1.2 Definition of Tax- Exempt Organization 4 § 1.4 Political Philosophy Rationale 4 2 Overview of Nonprofit Sector and Tax- Exempt Organizations 5 § 2.1 Profile of Nonprofit Sector 5 § 2.2 Organization of IRS 7 (a) IRS in General 7 (a- 1) Prospective Restructuring of IRS 7 (b) Tax Exempt and Government Entities Division 8 Part Two: Fundamentals of the Law of Tax-exempt Organizations 3 Tax Exemption: Source and Recognition 11 § 3.2 Recognition of Tax Exemption 11 (a) General Rules 11 § 3.3 Recognition of Public Charity, Private Foundation Status 11 4 Organizational, Operational, and Related Tests and Doctrines 13 § 4.

1 Forms of Tax- Exempt Organizations 13 (a) General Rules 13 § 4.3 Organizational Test 13 (e) Rules for Limited Liability Companies 14 § 4.4 Primary Purpose Test 16 § 4.5 Operational Test 16 (a) Basic Rules 16 § 4.7 Commensurate Test 16 § 4.8 State Action Doctrine 16 (d) Statutory Law 16 § 4.9 Commerciality Doctrine 16 (e) Other Applications of Doctrine 16 (f) Elements of Commerciality 17 (g) IRS Ruling Policy 17 (h) Contemporary Perspective on Doctrine 18 5 Nonprofit Governance 19 § 5.3 Board Duties and Responsibilities 19 (a) Duty of Care 19 (b) Duty of Loyalty 20 (c) Duty of Obedience 20 § 5.

7 IRS and Governance 20 (c) IRS Ruling Policy 20 Part Three: Tax-exempt Charitable Organizations 6 Concept of Charitable 25 § 6.2 Public Policy Doctrine 25 (a) General Principles 25 (b) Race- Based Discrimination 25 § 6.3 Collateral Concepts 26 (a) Requirement of Charitable Class 26 (i) Illegal Activities 26 7 Charitable Organizations 29 § 7.2 Relief of Distressed 29 (b) Disaster Relief Programs 29 § 7.4 Provision of Housing 34 § 7.6 Promotion of Health 34 (a) Hospital Law in General 35 (b) Additional Statutory Requirements for Hospitals 36 (m) Accountable Care Organizations 36 § 7.7 Lessening Burdens of Government 36 § 7.8 Advancement of Education 37 § 7.

11 Promotion of Social Welfare 38 § 7.14 Fundraising Organizations 38 (c) Other Exemption Issues 38 § 7.15 Instrumentalities of Government 38 § 7.16 Other Categories of Charity 38 (a) Environmental Protection 38 (e) Local Economic Development 39 § 7.17 Qualified Opportunity Zones 39 8 Educational Organizations 41 § 8.3 Educational Institutions 41 (a) Schools, Colleges, and Universities 41 § 8.4 Instruction of Individuals 42 § 8.5 Instruction of Public 42 9 Scientific Organizations 45 § 9.

2 Concept of Research 45 10 Religious Organizations 47 § 10.1 Constitutional Law Framework 47 (a) General Constitutional Law Principles 47 (c) Internal Revenue Code Provisions 48 § 10.2 Federal Tax Law Definition of Religion 48 (c) Abuse of Tax Exemption 48 § 10.3 Churches and Similar Institutions 48 (b) Associational Test 48 (c) Principle of Respect for Autonomy 48 § 10.5 Integrated Auxiliaries of Churches 49 § 10.7 Religious Orders 49 11 Other Types of Charitable Organizations 51 § 11.2 Amateur Sports Organizations 51 § 11.8 Donor- Advised Funds 51 (b) Statutory Criteria 51 (c) Portrait of Donor- Advised Fund Universe 51 (d) Litigation 53 § 11.

9 Endowment Funds 54 (b) College and University Endowment Tax 54 12 Public Charities and Private Foundations 59 § 12.1 Federal Tax Law Definition of Private Foundation 59 (a) Private Foundation Defined 59 (b) Private Operating Foundations 59 (d) Conduit Foundations 59 § 12.3 Categories of Public Charities 59 (b) Publicly Supported Charities 59 (c) Supporting Organizations 61 § 12.4 Private Foundation Rules 62 (f) Other Provisions 62 Part Four: other Tax-exempt Organizations 13 Social Welfare Organizations 65 § 13.1 Concept of Social Welfare 65 (a) General Rules 65 (b) Benefits to Members 65 § 13.3 Conduct of Business 66 14 Business Leagues and Similar Organizations 67 § 14.1 Concept of Business League 67 (a) General Principles 67 (g) Certification Programs 67 § 14.2 Disqualifying Activities 68 (a) Line- of- Business Requirement 68 (b) For- Profit Business Activities 68 (c) Performance of Particular Services 68 (d) Private Inurement and Private Benefit 69 15 Social Clubs 71 § 15.

1 Social Clubs in General 71 (b) Club Functions 71 § 15.3 Investment Income Limitation 72 § 15.4 Exceptions to Limitations 72 § 15.5 Taxation of Social Clubs 72 16 Labor, Agricultural, and Horticultural Organizations 73 § 16.1 Labor Organizations 73 § 16.2 Agricultural Organizations 73 17 Political Organizations 75 § 17.4 Public Policy Advocacy Activities 75 § 17.5 Taxation of Political Organizations 75 18 Employee Benefit Funds 77 § 18.

3 Voluntary Employees'' Beneficiary Associations 77 19 Other Categories of Tax- Exempt Organizations 79 § 19.4 Fraternal Organizations 79 (a) Fraternal Beneficiary Societies 79 (b) Domestic Fraternal Societies 79 § 19.6 Cemetery Companies 80 § 19.9 Insurance Companies and Associations 80 § 19.11 Veterans'' Organizations 80 (a) General Rules 80 § 19.12 Farmers'' Cooperatives 80 § 19.14 Homeowners'' Associations 80 § 19.18 Qualified Health Insurance Issuers 80 § 19.

20 ABLE Programs 80 § 19.21 Professional Sports Leagues 81 § 19.22 Governmental and Quasi- Governmental Entities 81 (a) Intergovernmental Immunity 81 (b) Income Exclusion Rule 82 (c) Integral Parts of States 82 § 19.24 Other Categories of Tax- Exempt Organizations 82 Part Five: Principal Exempt Organization Laws 20 Private Inurement and Private Benefit Doctrines 85 § 20.4 Compensation Issues 85 (b) Determining Reasonableness of Compensation 85 § 20.5 Executive Compensation Tax 86 (a) Statutory Law 86 (b) Perspectives 86 (c) Regulations 87 (d) TIGTA Examination 91 § 20.6 Other Forms of Private Inurement 91 (a) Rental Arrangements 91 (b) Lending Arrangements 92 (c) Sales of Assets 92 (e) Equity Distributions 92 (h) Tax Avoidance Schemes 92 (i) Services Rendered 92 (j) Business Referral Operations 93 (l) Retained Interests 93 (m- 1) Successors to For- Profit Companies 93 § 20.10 Private Inurement and Business Leagues 94 § 20.

12 Private Inurement and Other Categories of Exempt Organizations 94 § 20.13 Private Benefit Doctrine 95 (a) General Rules 95 (c) Joint Venture Law 96 (d) Perspective 97 21 Intermediate Sanctions 99 § 21.3 Disqualified Persons 99 § 21.4 Transactions Involved 100 (c) Automatic Excess Benefit Transactions in General 100 § 21.14 Return for Payment of Excise Taxes 100 § 21.16 Interrelationship with Private Inurement Doctrine 100 22 Legislative Activities by Tax- Exempt Organizations 101 § 22.3 Lobbying by Charitable Organizations 101 (b) Concept of Lobbying 101 (c) Substantial Part Test 101 (d) Expenditure Test 101 § 22.6 Legislative Activities of Business Leagues 102 (a) Business Expense Deduction Disallowance Rules 102 (c) Proxy Tax Rules 102 23 Political Campaign Activities by Tax- Exempt Organizations 103 § 23.

2 Prohibition on Charitable Organizations 103 (b) Participation or Intervention 103 § 23.3 Political Campaign Expenditures and Tax Sanctions 103 § 23.6 Political Activities of Social Welfare Organizations 104 (a) Allowable Campaign Activity 104 24 Unrelated Business: Basic Rules 105 § 24.1 Introduction to Unrelated Business Rules 105 § 24.2 Definition of Trade or Business 105 (e) Charging of Fees 105 (j) Concept of Investment Plus 105 § 24.3 Definition of Regularly Carried On 106 (a) General Principles 106 (b) Determining Regularity 106 § 24.4a Deemed Unrelated Business Income 106 § 24.5 Contemporary Applications of Unrelated Business Rules 106 (e) Business Leagues 106 (i) Fundraising 107 (q) Other Organizations'' Exempt Functions 107 § 24.

9 Unrelated Debt- Financed Income 107 (b) Debt- Financed Property 107 (c) Acquisition Indebtedness 107 (d) Exempt Function Borrowing 108 (e) Administrative Needs Borrowing 108 25 Unrelated Business: Modifications, Exceptions, Special Rules, and Taxation 111 § 25.1 Modifications 111 (g) Royalties 111 (h) Rent 112 (i- 1) Income from Controlled Entities 112 (n- 1) Global Intangible Low- Taxed Income 113 § 25.2 Exceptions 113 (a) Volunteer- Conducte.