Nonprofit Basics: Set-Asides As Qualifying Distributions EO Radio Show

Welcome to EO Radio Show – Your Nonprofit Legal Resource. In this episode, I expand on an important concept that often comes up for private foundations when addressing the rules that require use of a minimum amount each year for charitable purposes. This is known in the industry as the minimum distribution requirement.
In the last episode, I talked about the general rules for computing a foundation’s distributable amount for the year, which is equal to the foundation’s minimum investment return with a number of adjustments. Today, we take a closer look at how to satisfy the minimum distribution rules by setting aside funds for a future purpose, and I’ll tell you a true story of a private foundation’s amazing resilience in using the set-aside rules in the face of regulatory roadblocks.
Resources:
IRS Form 8940 and Instructions (for requesting a set-aside ruling)
Compliance Guide for 501(c)(3) Private Foundations
 IRS Summary of Minimum Distribution Rules
EO Radio Show #30: Nonprofit Basics: Private Foundation Minimum Distribution Requirements
EO Radio Show EP #18: Nonprofit Basics: Operating Foundation Rules
Private Letter Ruling 202302014
Taxes on Failure to Distribute Income - Private Foundations
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DISCLAIMER: This podcast is for general informational purposes only. It is not intended to be, nor should it be interpreted as, legal advice or opinion.