The Law of Tax-Exempt Healthcare Organizations. Bruce R. Hopkins

href="#ulink_cb58ee8e-98dc-562c-ad91-202b26aeb416">¹⁴³ with respect to the individual is filed with the IRS.¹⁴⁴ A designated beneficiary in connection with an ABLE account established under a qualified ABLE program is the eligible individual who established an ABLE account and is the owner of the account.¹⁴⁵ The term disability expenses means expenses related to the eligible individual's blindness or disability that are made for the benefit of an eligible individual who is the designated beneficiary, including expenses for education, housing, transportation, health, financial management services, and legal fees.¹⁴⁶

Contributions to an ABLE account must be in the form of money.¹⁴⁷ There is an annual per‐account funding limit equal to the annual gift tax exclusion.¹⁴⁸ A qualified ABLE program must provide a separate accounting for each designated beneficiary.¹⁴⁹ A beneficiary may, directly or indirectly, direct the investment of contributions to the program, and earnings thereon, no more than two times in any calendar year.¹⁵⁰ Distributions from a qualified program are not includable in the beneficiary's gross income to the extent they do not exceed the amount of qualified disability expenses.¹⁵¹

Each officer or employee having control of the qualified ABLE program or their designee must make reports regarding the program to the IRS and to designated beneficiaries with respect to matters such as contributions, distributions, and the return of excess contributions.¹⁵² For research purposes, the IRS must make available to the public reports containing aggregate information, by diagnosis and other relevant characteristics, on contributions and distributions from qualified ABLE programs.¹⁵³

NOTES

      1 23.1 Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 585 (1987).

      2 23.2 Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2768‐2772 (2014); Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter‐Day Saints v. Amos, 483 U.S. 327, 344–346 (1987) (concurring opinion).

      3 23.3 E.g., George v. Commissioner, 110 T.C.M. 190 (2015) (where the court concluded that, for tax exemption purposes, an organization was not formed).

      4 118.1 Priv. Ltr. Rul. 201835012.

      5 137 IRC § 529. See Tax‐Exempt Organizations § 19.19(a).

      6 138 IRC § 529A (effective January 1, 2015). This acronym is in reference to the Achieving a Better Life Experience Act of 2014, Pub. L. 113‐295, div. B, 128 Stat. 4056.

      7 139 IRC § 529A(b)(1)(A).

      8 140 IRC § 529A(b)(1)(B). This type of account is defined in IRC § 529A(e)(6).

      9 141 IRC § 529A(b)(1)(C).

      10 142 IRC § 529A(b)(5).

      11 143 IRC § 529A(e)(2).

      12 144 IRC § 529A(e)(1).

      13 145 IRC § 529A(e)(3).

      14 146 IRC § 529A(e)(5).

      15 147 IRC § 529A(b)(2)(A).

      16 148 IRC § 529A(b)(2)(B). That exclusion amount currently is $14,000 (IRC § 2503(b)(2)). See Charitable Giving § 8.2(h).

      17 149 IRC § 529A(b)(3).

      18 150 IRC § 529A(b)(4).

      19 151 IRC § 529A(c)(1)(B)(1).

      20 152 IRC § 529A(d)(1).

      21 153 IRC § 529A(d)(2). The Department of the Treasury promulgated proposed regulations to accompany IRC§ 529A (REG‐102837‐15). An IRS hearing on this proposal was held on October 14, 2015.

CHAPTER THREE Public Charities and Private Foundations (New)

      1  § 3.3 Commerciality Doctrine (c) Contemporary View *(d) Commerciality Doctrine and Healthcare Organizations

§ 3.3 COMMERCIALITY DOCTRINE

      (c) Contemporary View

       p. 65. Insert as third complete paragraph:

The IRS summed up its view as to the “factors indicative of commercial operations,” which include “regular and ongoing…sales [to the public], competition with other [organizations], common retail pricing structures, marketing and advertising, and the reliance on sales and fees versus contributions.”^107.1 Earlier, the IRS asserted that the provision of Wi‐Fi, maintenance of a website, and making power outlets available for patrons' use is additional evidence of commerciality.^107.2

(d) Commerciality Doctrine and Healthcare Organizations

       p. 66, second paragraph, fifth line. Delete and.

       p. 66, second paragraph, last line. Delete period and insert comma; insert following footnote number:

and that a nonprofit pharmacy was not entitled to tax exemption as a charitable entity because it is operating a business, selling pharmaceutical products to the public in a manner indistinguishable from a commercial pharmacy.^109.1