How do Investments by Tax Exempts Fall Into Trouble?

Time and again the IRS and Congress have expressed concern over the potential for abuse in the area of Tax-Exempt Organizations (TEOs). IRS enforcement and congressional activity have been constant when it comes to seeking out ways taxpayers are using TEOs to lower their tax bills. And yet, TEOs remain a popular tax-planning tool in some instances, requiring tax practitioners to be aware of both the potential opportunities as well as the pitfalls of using TEOs to reduce taxable income in select circumstances. Patrick C. Gallagher takes a close look at the tensions, hotspots and pitfalls of TEOs in the recently published University of Chicago special issue of TAXES—The Tax Magazine. His in-depth article looks at how investments by TEOs are examined by the IRS as well as what exactly are the rules for making such investments remain tax-exempt.

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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.

Read this article from CCH’s Journal of Taxation of Financial Products.

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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