Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

IRS Issues Interim Guidance for Type III Supporting Organizations

On December 23, 2013, the IRS issued Notice 2014-4 providing interim guidance for certain “Type III” Supporting Organizations. Supporting Organizations are generally granted tax-exempt status under Section 501(c)(3) because of their close relationships with other publically supported charities. Because donations to Supporting Organizations qualify for a higher percentage limitation than donations to private foundations (e.g., a 50% of adjusted gross income limitation rather than the 30% limitation applied to most gifts to private foundations) some families historically opted to create and fund what are known as Type III Supporting Organizations rather than Private Foundations. Prior to the Pension Protection Act of 2006 (“PPA”), the Type III Supporting Organizations offered a great deal of flexibility to donors and the fewest ties and least oversight by supported public charities of all Supporting Organization types. However, because of Type III Supporting Organization abuses, the PPA placed more stringent requirements on these organizations and, in turn, their donors. Since the PPA was enacted, periodic guidance has been issued to help taxpayers and other charities understand when an organization qualifies as a Type III Supporting Organization and when it does not.

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Considering Charitable Giving

Josie M. Faix, Esq.

Co-creator of the long-running television show The Simpsons, Sam Simon, was diagnosed with terminal colorectal cancer in 2012. Mr. Simon has used his grim news as a catalyst to increase his own charitable giving, and to encourage others to do so. He started the Sam Simpson Foundation in 2002 to benefit and protect stray-dogs from being euthanized. Since then he has given to countless organizations that care for animals, people, and the environment. Realizing he has a short time left, he has spoken publicly about his desire to give his estate to charity and the good his fortune will do for the causes he cares about. To read an interview with Sam Simon about his charitable works, visit Sam Simon.

You don’t have to be dying or extremely wealthy to give more thought to your own charitable intent. There are tax-wise ways to give to your favorite causes and programs, including use of appreciated stock, retirement accounts, donor advised funds and private foundations. Give us a call to discuss charitable giving generally, and its coordination with your estate plan.

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