Charity Governance

“THERE’S JUST NO POINT IN DOING IT:” CALLS TO PERVERT THE LAW SHOULD BE IGNORED

DATELINE: July 24, 2008, Chicago

"There's just no point in doing it," claims Jon Shirley, who together with his wife, has donated major works of art to the Seattle Art Museum. In A Portrait of Art as a Tax Deduction, Wall Street Journal reporter Mike Spector explains why. Prior to the enactment of the Pension Protection Act (PPA) in 2006, rich art lovers could give their works to art museums in what were highly tax-favored transactions. To illustrate, assume Tom Collector owns a Jackson Pollock valued at $10 million. He paid $2 million for it. The tax law said that if Tom gave it to the Art Institute of Chicago, he could claim a $10 million deduction for it, even though he paid $2 million for the painting. That means his $8 million gain escaped tax, but he received credit for the gain in calculating the amount of his tax deduction.

Now, let's consider a plumber who has bills at $150 per hour. He donates 20 hours of his time to the Art Institute of Chicago to...

FAMILY FOUNDATIONS MAY BE THE BENEFICIARIES AS WELL AS THE VICTIMS OF INSIDER TRADING

DATELINE: March 4, 2008, Chicago

The securities laws prevent insiders from profiting from non-public information. These laws take two forms. The first is the rule against short-swing profits, with its focus on sales by insiders at a profit within six months of acquiring the stock. The second is the anti-fraud rule found in Section 10b-5 of the Securities and Exchange Act of 1934. These laws prevent insiders from profiting through sales and purchases of stock when they are deemed to or actually possess inside information, but a professor at New York University's Stern School of Business has just published a study suggesting that some chairmen and CEO's of publicly-traded companies may be maximizing the value of their contributions...

UNITED WAY, PART II: TRANSPARENCY GIVES WAY TO EXPEDIENCY, OR 'YES' WE HAVE NO BANANAS

DATELINE: December 13, 2007, Chicago

What a coincidence. Yesterday we railed against the United Way's Pennies for Change program, and today our very own Jack B. Siegel is quoted in the New York Times railing against another embedded gifting/cause-related marketing program, this one sponsored by Whole Foods.  Stephanie Strom, Concerns Over Charitable Shopping.

Now back to the United Way. We took a look late last night at the United Way press release announcing the program. There is a slight...

JACK SIEGEL CONTACTS RUSH LIMBAUGH ABOUT TAX CONSEQENCES OF RECENT E-BAY AUCTION

DATELINE: October 23, 2007, Chicago

Much ado has been made about the tax consequences associated with the recent auction of a letter by Rush Limbaugh of a letter penned by Senator Harry Reid and signed by Democratic lawmakers.  Limbaugh raised over $2.1 million for the Marine Corp--Law Enforcement Foundation.  He then matched that amount with his own contribution to the charity.  We'd like to analyze the tax consequences of this transaction, but can't do so without the facts.  Given that fact, our very Jack Siegel wrote Mr. Limbaugh to request critical facts.  Here is the text of that e-mail.

Dear Mr. Limbaugh:

There has been discussion in the tax community whether the E-Bay auction of the Harry Reid letter might carry adverse tax consequences to you or the Casey Foundation.  I would like to clarify that discussion, but need two facts.  First, did Clear Channel give you the letter or just let you read it?  Second, did you or Clear Channel give the letter to the Marine Corps—Law Enforcement Foundation to auction, or did you or Clear Channel auction the letter as its owner and then donate the proceeds to the Marine Corps—Law Enforcement Foundation?  I am also curious as to whether you or Clear Channel sought tax counsel in structuring the transaction.

As a noted blogger on nonprofit and philanthropic legal issues, I would like to a post on the tax issues associated with the transaction, but rather than speculating, I’d like to know the facts.  You could really help me by providing a copy of the agreement with e-Bay. 

At the end of the day, I’d like to know whether the drive-by tax lawyers are correct in their speculation. I suspect that you and this transaction may show up on many law school tax exams this semester.

Thank you.

Jack B. Siegel

Charity Governance Consulting LLC