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Nonprofits and Exempt Organizations One Year After Tax Reform

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

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Conducted on Wednesday, February 13, 2019

Recorded event now available

or call 1-800-926-7926

This course will provide advisers to tax-exempt organizations with a recap of the practical impact of the tax reform law on nonprofit entities. The panel will outline fundamental 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 a significant impact on exempt org operations.

Description

The 2017 tax reform law represented 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 that adversely impact operational and tax reporting for nonprofit entities. Tax advisers and executives serving exempt organizations are still working to implement all of the changes.

In addition to reducing an incentive for individuals to make charitable contributions, the law makes two critical changes that have a negative impact on nonprofits.

The most significant change is to UBTI/UBIT calculation and reporting: prior law allowed exempt organizations 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 organizations with multiple business lines where one may be a current tax loss. This will change both calculations and investment strategies.

The law also changed 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 practical recap of the implications of tax reform on nonprofit entities, enabling tax advisers to determine the impact of the new law on exempt organization clients one year after its enactment.

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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. 2018 IRS guidance interpreting the impact of certain provisions on exempt organizations
  5. 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 relevant topics:

  • Changes to UBTI and UBIT calculations 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 organizations reliant on deductible contributions
  • IRS guidance issued during 2018 addressing key areas of uncertainty in the 2017 Act

Faculty

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

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

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