Bruce R. Hopkins - The Law of Tax-Exempt Organizations, 2021 Cumulative Supplement

p. 365, carryover paragraph. Insert as last sentences:

As still other examples, a membership organization of football officials functioning in public school districts was denied recognition of tax exemption in part because of lack of “social commingling or fellowship” among its members; the only gatherings were training sessions, which were not mandatory. 15.1 The same held for a membership entity whose members met weekly to make decisions and take advantage of opportunities within its local business region. 15.2

p. 366, note 31. Insert following existing text:

A nonprofit organization that merely leases property to a tax‐exempt fraternity or sorority cannot qualify for exemption (e.g., Priv. Ltr. Rul. 201927023).

p. 372, second complete paragraph. Insert as last sentence:

In another instance, the IRS ruled that income from the sale of emission credits will not disturb a social club's tax exemption because the sale will be a new source of income for the club and the sale activity will be a nonrecurring event. 93.1

p. 376, second complete paragraph, second and third sentences. Delete and insert:

This decision was affirmed; as to the factual issue of whether the club demonstrated a profit motive, the court of appeals conceded that “demonstrating profit motive without profitability proves difficult.” 120.1 Entities in this position, the appellate court continued, “generally must show that their intent to profit was thwarted somehow.” 120.2 It added: “When an organization is consistentlyunprofitable, even tougher.” 120.3 The court then stated this telltale observation: “Although courts review holistically all relevant facts and circumstances when deciding whether an activity is a business or hobby, a long history of consistent and unexplained losses can overwhelm all other factors.” 120.4 This club, the appellate court concluded, “never adduced any evidence that it attempted to stem its flood of losses, or that it expected to eventually profit.” 120.5

1 15.1 Priv. Ltr. Rul. 201845030.

2 15.2 Priv. Ltr. Rul. 201848017.

3 93.1 Priv. Ltr. Rul. 202019027.

4 120.1 Losantiville Country Club v. Comm'r, 906 F.3d 468, 474 (6th Cir. 2018).

5 120.2 Id.

6 120.3 Id.

7 120.4 Id.

8 120.5 Id.

§ 16.2 Agricultural Organizations

p. 386, first paragraph, last line. Insert footnote at end of line:

56.1Applying this definition of the term agricultural, the IRS denied recognition of exemption to an organization that educates the public as to the values and benefits of the horse and greyhound racing industries to its state's economy and the benefits of permitting electronic gaming alongside pari‐mutuel betting at racing facilities (Priv. Ltr. Rul. 201905005).

p. 388, carryover paragraph. Insert as last sentence:

By reason of this rationale, organizations operating farmers' markets cannot qualify as tax‐exempt agricultural entities. 76.1

1 76.1 E.g., Priv. Ltr. Rul. 201824014.

§ 17.4 Public Policy Advocacy Activities

p. 394, note 50, first line. Delete procedure and insert ruling.

p. 394, note 50, last line. Delete 2349 and insert 234957.

p. 394, note 50. Insert following existing text:

On appeal, however, the organization lacked standing to bring the action in that it did not make a sufficient claim of chilled speech but, even if it did, its injury (denial of recognition of exemption) was not traceable to the allegedly vague ruling (Freedom Path, Inc. v. Internal Revenue Service, 913 F.3d 503 (5th Cir. 2019)).

§ 18.3 Voluntary Employees' Beneficiary Associations

p. 407, note 28. Insert following existing text:

In the case of an employee‐funded association, the provision of group whole life insurance to its members is a permissible life benefit (Priv. Ltr. Rul. 202039003).

pp. 408–409. Delete last two paragraphs on p. 408 and carryover paragraph on p. 409, including footnotes.

§ 19.12 Farmers' Cooperatives

§ 19.18 Qualified Health Insurance Issuers

§ 19.20 ABLE Programs

§ 19.22 Governmental and Quasi‐Governmental Entities(a) Intergovernmental Immunity (b) Income Exclusion Rule (c) Integral Parts of States

p. 444, note 244. Insert following existing text:

Thus, the IRS denied recognition of exemption as a farmers' cooperative in the case of an entity with a membership of a mixture of farmers, community members, businesses, and anyone else interested in the selling and purchasing of fresh food (Priv. Ltr. Rul. 201835010).

p. 454, note 364. Insert following existing text:

See § 7.6(c), note 153.

p. 458, last paragraph, second line. Delete ABLE Program and insert qualified ABLE program.

p. 458, note 402. Delete IRC § 529A and insert:

IRC § 529A(a); Reg. §§ 1.529A‐1(a), 1.511‐2(e), 1.529A‐2.

p. 459, carryover paragraph, last line. Delete used and insert pledged.

p. 459, carryover paragraph. Insert as first complete sentence:

The term ABLE account means an account established by an eligible individual, owned by the individual, and maintained under a qualified ABLE program. 403.1

p. 459, first complete paragraph seventh line. Insert qualified following term.

p. 459, second complete paragraph, first line. Insert generally following account.

p. 459, note 411. Delete sentence.

p. 459, note 414, first line. Delete second (1) and insert (i); insert before first period:

; Reg. § 1.529A‐3.

p. 459, note 414. Delete the last three sentences.

p. 459, note 415. Insert before period:

; Reg. § 1.529A‐6.

p. 460, note 416. Delete the last two sentences.

p. 460, fourth complete paragraph, second sentence. Delete the like and insert other integral parts.

p. 460. Insert as fifth complete paragraph:

These entities are sometimes referred to as governmental units . 419.1 The IRS recognizes this general principle, 419.2 albeit with the caveat that it may be superseded by a specific statutory authorization of taxation. 419.3

p. 461, note 425. Delete 115(a)(1) and insert 115(1).

p. 461, second complete paragraph. Starting with fourth sentence, begin new paragraph.