Nonprofits and Exempt Organizations After Tax Reform: Preparing for Massive Changes

Planning for New UBTI Calculations, Excise Tax on Excess Compensation, Individual and Business Changes Impacting NFP Entities

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, February 15, 2018

Recorded event now available

Program Materials

This webinar will provide advisers to tax exempt organizations with a critical first look at the significant impact of the new tax reform law on nonprofit entities. The panel will outline key changes to UBTI/UBIT calculations and reporting, describe new compensation rules, and offer guidance on strategies to deal with changes to individual and business tax treatment that will have significant impact on exempt org operations.

Description

The tax bill enacted in Dec. 2017 represents the most sweeping set of changes to the U.S. income tax code in over 30 years. The impact on tax-exempt organizations is particularly far-reaching, with several provisions in the law that will have serious operational and tax reporting impacts on nonprofit entities. For tax advisers and executives serving exempt organizations, the new law creates significant challenges.

Over and above the impact on donations that will follow the increased standard deduction (which will remove incentives from individuals to contribute by lessening the need for many taxpayers to itemize), the law makes two critical changes that will have negative impact on nonprofits.

The most significant change is to UBTI/UBIT calculation and reporting: current law allows exempt orgs to net UBTI gains and losses across multiple business/investments, which has the impact of lowering UBIT cost. The new law requires separate tax calculations, which will punish exempt orgs that have multiple business lines where one may be a current tax loss. This will change both calculations and investment strategies.

The law also changes compensation practices for executives and other highly compensated employees. The law creates a class of “covered employees,” including the principal executive officer, principal financial officer, and the three other most highly compensated employees, and imposes a 21% excise tax on “excessive compensation” in excess of $1 million, as well as on excess “parachute payments” paid to these covered employees.

Listen as our experienced panel provides a critical first look at the implications of tax reform on nonprofit entities, enabling tax advisers to get a grasp on the impact of the new law on exempt organization clients.

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Outline

  1. Provisions in 2017 tax reform law pertaining directly to tax-exempt organizations
  2. Changes to UBTI/UBIT calculations and reporting
  3. Compensation of “covered employees”
  4. Business and individual provisions which will impact tax-exempt organizations
    1. Increase in standard deduction amount for individuals
    2. Changes in AGI limitation for donation to public charities

Benefits

The panel will discuss these and other important topics:

  • How UBTI and UBIT calculations are changed under the new law
  • Additional tax reporting requirements under the 2017 Act
  • Strategies for minimizing UBIT and excise taxes on compensation
  • Assessing the likely impact of reduced incentives for individual taxpayers to itemize on exempt orgs reliant on deductible contributions

Faculty

McKinnon, Michele
Michele A. W. McKinnon

Partner
McGuireWoods

With more than 25 years of experience, Ms. McKinnon routinely represents many public charities, major colleges and...  |  Read More

Fosse, J. Marc
J. Marc Fosse

Director
Trucker Huss

Mr. Fosse focuses on all the tax, securities, corporate and accounting issues related to executive and equity...  |  Read More

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$182