One-Fourth of Nonprofits Are to Lose Tax Breaks

Some nonprofits' tax breaks to end May 15

At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities, trade associations and membership groups will lose their tax exemptions, thanks to a provision buried in the Pension Protection Act of 2006. An I.R.S spokeswoman said that while groups would lose their exemptions effective May 16, the I.R.S. would probably not send out notices until January to give nonprofits a chance to bring themselves into compliance with the law.

Learn more from The New York Times:
http://www.nytimes.com/2010/04/23/us/23exempt.html

Court reviews whether certain transactions were loans in order to determine whether defendants were responsible as alter egos of a defunct nonprofit corporation

CHRISTINA ALTICE v. NATS, INC. ET AL. (Tenn. Ct. App. February 26, 2010)

Judgment creditor sued defendants to collect a judgment against a defunct nonprofit corporation, claiming defendants were the alter egos of the defunct corporation. In a prior appeal, this court instructed the parties to focus on whether certain transactions were or were not loans. If they were loans, then the plaintiff could not prove her case to make the defendants responsible for the judgment against the defunct corporation. The trial court found that the transactions were loans. We affirm.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2010/alticec_022610.pdf

Court reviews whether trial court properly disbursed funds for a constructive trust

LAFOLLETTE MEDICAL CENTER, et al., v. CITY OF LAFOLLETTE, et al. (Tenn. Ct. App. October 2, 2009)

In this second appeal of this case, the Trial Court had entered an Agreed Order for disbursement of the funds which stated the parties had determined that the purpose of the constructive trust would best be shared out by transferring the funds to a newly created non-profit corporation known as the Lafollette Medical Foundation (the funds had been held by the Clerk of the Court). The Court directed that the trust fund would be placed in the foundation with the monies retained for potential liabilities, and the charter of the LaFollette Medical Foundation, Inc., was filed with the Court, as well as its by-laws.

The City of LaFollette filed a Motion to Set Aside the Order pursuant to Rule 60, Tenn. R. Civ. P., along with affidavits. The Court conducted a hearing and filed a Memorandum Opinion finding that its order was not void because the City had been found to have no interest in the fund and the City had actual knowledge of the Foundation and its rules, and transferring the money to the Foundation best served the interest of the public rather than the money being held by the Court. The City of LaFollette appealed to this Court. We affirm the Judgment of the Trial Court.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2009/lafollette_100209.pdf