Exempt Organizations and S Corp Stock: Resolving Complex Tax Challenges

Leveraging Entity Structure, Navigating the IRS Supporting Organization and Excess Business Holdings Rules

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Wednesday, November 19, 2014

Recorded event now available

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Program Materials

This CLE/CPE webinar will educate tax counsel and advisors on resolving the complex tax burdens with the ownership of S corporation stock by exempt organizations. Our distinguished panelists will discuss issues such as choice of entity, supporting organizations, excess business holdings tax and alternatives.

Description

Although tax exempt organizations may own S corporation stock, the laws that govern charities are not coordinated with the laws that govern S corps. Tax counsel and advisors are therefore challenged with reconciling divergent areas of the law in order to ensure that S corp stock serves as a benefit to charitable organizations.

Unrelated business taxable income (UBTI) is one of the major challenges for tax advisors and counsel. There are specific techniques that operate to reduce UBTI liability. Often, the structure of the exempt organization itself can affect UBTI liability and counsel and advisors must tread carefully in making the appropriate choice.   

Counsel and advisors must also overcome challenges related to the excess business holdings tax. The solution involves the complex integration of supporting organizations which can also operate to reduce UBTI liabilities.

Listen as our experienced panel carefully reviews the complex interaction of tax-exempt organization and S corporation laws. Our panel will offer their perspectives and strategies for reducing UBTI liabilities, incorporation of supporting organizations, overcoming excess benefit holdings tax issues, and alternatives to consider.

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Outline

  1. Structure of charitable organizations
    1. Corporation
    2. Trust
    3. UBTI analysis
  2. Supporting organizations
  3. Excess business holdings tax
  4. Alternatives

Benefits

The panel will review these and other key issues:

  • What are the differences in relevant tax laws on the S corporation and tax-exempt organization? How can they be reconciled?
  • What are best practices to ensure that ownership of S corporation stock provides a benefit to tax-exempt organizations?
  • What are the techniques to reduce the UBTI tax? How are supporting organizations integrated?
  • How does the use of S corporation stock compare to available alternatives, such as planned giving programs?
  • How would converting to a C corporation help with some of these issues?
  • How would this compare to an ESOP structure?

Faculty

Joseph C. Mandarino
Joseph C. Mandarino
Atty
Cohen Pollock Merlin & Small

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of...  |  Read More

Elizabeth M. Mills
Elizabeth M. Mills

Senior Counsel
Proskauer Rose

Ms. Mills assists tax-exempt organizations in addressing tax compliance and governance issues such as Form 990...  |  Read More

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