20210517: Tax Court Rules in an "Interesting" Disqualified Persons and Excess Benefits Case
When practitioners think about Disqualified Persons and Excess Benefits we often think in terms of Officers, Directors, Key Personnel, and Major Donors. The Tax Court ruling in Vincent Fumo vs. Commissioner reminds us that you don't need to have a title, get paid, or donate a dime to be considered a Disqualified Person... It is the ability to exercise control, not the title that counts. It is sufficient to exercise control over the people who hold the titles.
So, by the way, what Excess Benefit did Fumo receive??? How about - he stole or misappropriated a bit over $1.1 million dollars from the charity.
The case is definitely an illustration of Marc Anthony's principle: "The evil that men do lives after them." (Shakespeare, Julius Caesar)
The embezzlements and misappropriations took place over periods extending back as far as 1991 - Fumo was indicted for them in 2007, and convicted in 2009. The tax consequences followed from the felony conviction (and are subject to no statute of limitations because of the size and nature of the nefarious activity).
"Above the Line Charitable Deductions"
Congress, belatedly, extended the relaxed AGI and/or taxable income limits and the limited "above the line" deduction for Charitable Deductions (created by the CARES Act) through the end of 2021.
For more information about this opportunity, see our Short Narrative. (As revised in December 2020, it now includes links to guidance targeted to practitioners).
Our Commitment to Exempt Organizations
Steven Roy Management enjoys a history of activism and consultation with Exempt Organizations. Our strengths lie in entity formation and exempt-qualification, governance, operations and financial administration, endowment and sequestered funds, tax compliance, and donor relations. (Please note the absence of "grant writing and fundraising" from this list - we know a whole lot of people who do it better than we do. Ask, and we'll refer you.)
Our commitment to Exempt Organizations began when our COO, Steven Roy, established his first business entity (in 1971) - the Center for Southern African Studies, an economic research, development, and education 501(c)(3) dedicated to studying and disseminating socio- and politico-economic studies of the emerging nations in post-Colonial Africa, and furthering development in the region.
Over the next 45 years, Steven - and by extension, Steven Roy Management - provided advisory services to over sixty not-for-profit charitable (501(c)) groups, and served on the Board of Directors or as an Officer of more than thirty of them. About half of those charities are-were active in the arts (music, theatre, dance, and arts administration). The remainder concern themselves with human rights, social welfare, poverty and housing issues. We have also served as advisers to municipal (mostly police and fire related) and national commissions (Including the IRS Technology Task Force, in one of its early incarnations).
Our Current Affiliations
Advanced Heliophysics is a scientific research and education organization focused on solar plasma physics and solar magnetic activity. Advanced Heliophysics' research focuses on studying and predicting phenomena on the Sun and discerning how these phenomena affect military and commercial hardware on Earth and in near-Earth orbit. Advanced Heliophysics maintains an educational program that reaches out to aspiring high school and university science students to stimulate their interest in heliophysics.
Graphic: From, Panasenco, Olga; Velli, Marco; Panasenco, Aram; Large-scale Magnetic Funnels in the Solar Corona; The Astrophysical Journal, Volume 873, Issue 1, article id. 25, 14 pp. (2019) Research performed by Advanced Heliophysics.
Steven has served as Treasurer and Board member for Advanced Heliophysics since its inception in October 2013.
Hermes is an interdisciplinary NASA Science Center. The HERMES DRIVE Center provides a unifying framework for characterizing the basic mechanisms of energy storage and release in the natural plasmas of the heliosphere, incorporating the lessons learned within individual specialized subfields (e.g. computational plasma physics, observational solar physics, magnetospheric and solar wind physics, and laboratory plasma) and providing a unifying theme to further our understanding of nonlinear plasma dynamics underlying the energy transformations that define the Heliosphere
Image and Photo: Hermes Logo and Solar Flare Closeup. Logo hand drawn by Olga Panasenco. Photo, NASA Images.
Steven joined Hermes' International Advisory Board in February 2021. He is currently assisting in the development of Hermes' Strategic Plan.
Los Angeles Mounted Platoon Foundation (LAMP)
With the help of local, community and business organizations the Foundation provides essential funds for the Los Angeles Police Department Mounted Platoon. These funds are used to acquire new horses, maintain the equestrian facility and support youth programs such as the Mini-Mounties program. The Los Angeles Mounted Platoon Foundation is a vital link between the Los Angeles community and the Mounted Platoon.
Image: Rollcall at LAMP Headquarters, The Ahmanson Equestrian Facility
Steven has served as a LAMP board member since June 2007.
Lilly's Fostering Hearts
Lilly's Fostering Hearts' vision is to create a community where families expand their hearts to include a foster or adopted child, where displaced children have the support and resources to fully nurture and sustain them, and where youth who age out of the foster system receive the education, training and services necessary to make an effective transition to adulthood so that every child has a home that provides them the opportunity to reach their full potential.
Steven has served as Lilly's Board member and Treasurer since 2007.
The New Festival produces NewFest: The New York Lesbian, Gay, Bisexual, & Transgender Film Festival. NewFest is one of the most comprehensive forums of national and international LGBT film/video in the world.
2020 marked the 32nd year the Festival has been produced. NewFest transitioned to streaming mode in 2020. The transition expanded NewFest's program offer to a worldwide audience and paved the way for future expansion. The program featured over thirty full-length screenings, discussions with film-makers, opening and closing receptions, legacy showings, documentaries, and comedic and dramatic episodic presentations.
Steven has acted as a business advisor to NewFest since January 2019.
Future XO is devoted to advancing cutting edge literature, education and the sciences (physical, biological, and social) by providing conferences and information resources regarding innovations and advances that affect our planet's future. It is our intent to make these resources accessible to the public in a framework that encourages participation and the resultant expansion of our supporter’s world view.
Future XO held its inaugural conference; LONGEVITY, IMMORTALITY, The Good. The Bad. The Probability in September 2019.
Steven has served as a member of FutureXO's Board of director and as its CFO since its inception in June 2019.
Visit our Archive-Library
As part of our commitment to client and tax-practitioner awareness and education we write extensively on topics related to our practice service-matrix (and occasionally on topics that are far-afield from it). Rather than clutter our service pages with things very few people ever read (OK, we acknowledge - a lot of this stuff is just plain boring to other people), we collect the most current of those writings in our Archive - Library.
There, you will find NFP and Donor articles, checklists, and worksheets:
Checklists: "An SOP for Conceptualizing and Forming an NFP"
And an Occasional IRS Flow Diagram: "A Taxonomy of 501(c)(3) Organizations."
Our Archive-Library materials range from "readily understandable by anyone who can read" to "you'll probably need professional credentials and experience to assimilate this one." You can usually determine which you are looking at by reviewing the footnotes and end-notes. The more referenced articles are designed for our colleagues - in the spirit of cooperation, and in the hope that we can contribute something to our profession.
Note to our fellows and colleagues: Feel free to use any of our library materials in your own practice - just give us credit (and don't re-publish them without our permission and acknowledgement - that could get nasty). We welcome your feedback, constructive comments, and questions... we sometimes miss the obvious and your feedback helps remedy that. We view our colleagues as collaborators - not competition. There is plenty of work out there for all of us.
Apropos that last paragraph: Let us know what you do well - especially if it is a service we don't offer. We generate a "steady trickle" of referrals for other services and would be happy to add you to our referral list (after we've vetted you and gotten to know you a bit). Contact us by email or phone to start the relationship.