EXTENSION DENIEDEXTENSION DENIED
From David T. Leibell and Daniel L. Daniels of Cummings & Lockwood LLC, in Stamford, Conn., we have this update: IRS denies private foundation's request for five-year extension to dispose of excess business holdings. In Private Letter Ruling 200552018 (released Dec. 30, 2005), the Internal Revenue Service rejected the request of a private foundation seeking an additional five years to dispose of excess
February 1, 2006
Rorie M. Sherman Editor in Chief
From David T. Leibell and Daniel L. Daniels of Cummings & Lockwood LLC, in Stamford, Conn., we have this update:
IRS denies private foundation's request for five-year extension to dispose of excess business holdings. In Private Letter Ruling 200552018 (released Dec. 30, 2005), the Internal Revenue Service rejected the request of a private foundation seeking an additional five years to dispose of excess business holdings as defined in Internal Revenue Code Section 4943. The reason: the foundation had failed to provide a plan of disposition that could reasonably be expected to succeed by the end of any five-year extension period, as required by IRC Section 4943(c)(7).
Section 4943 imposes an excise tax on a private foundation's excess business holdings. A foundation has excess business holdings when its holdings, together with those of “disqualified persons” (for example, substantial contributors, certain family members and entities controlled by these categories of people), exceed 20 percent of the voting control of a business. Business holdings do not include interests in a business that is substantially related to the foundation's exempt purposes, or interests in a business in which at least 95 percent of the gross income is derived from passive sources. P...
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