Litigating the Tax-Exempt Status of Private Foundation- An Overview of the Declaratory Judgment Process
By Anthony Diosdi This article has two subsections. The first part of this article discusses the penalties associated with incorrectly operating a private foundation. The second part of this article provides an overview of the declaratory judgment process involved in the litigation of the tax-exemption status of a private foundation. Promoters of private foundations make private foundations sound like the perfect tax planning option. Here is how one promoter describes private foundations-“Private Foundation or Family Foundation (PF) can let you control your legacy, reduce your income taxes and impact your values to future generations. Family foundations provide living donors with flexibility as to the trimming of gifts. For instance, a donor may in one year have particularly high income and wish to take full advantage of the income tax deduction…