Articles From Lumsden McCormick

A federated nonprofit organization is a network of independent entities that operate under a common mission and brand, allowing for both autonomy and collaboration. This structure offers benefits such as scalability, increased fundraising potential, and enhanced advocacy, making it an attractive option for nonprofits looking to expand their reach and impact.

Section 1231 of the Internal Revenue Code governs the tax treatment of gains and losses from the sale of specific business properties. Gains from Section 1231 assets can be treated as long-term capital gains, while losses can be treated as ordinary losses, providing favorable tax outcomes. However, the nonrecaptured Section 1231 loss rule can affect the timing and treatment of these gains and losses.

The IRS in the past year has continued to ramp up its scrutiny of partnerships’ tax positions, including several pieces of new guidance taking a multiprong approach to partnership “basis shifting” transactions that the agency views as having the potential for abuse. At the same time, IRS is dedicating new funding and resources to examining partnerships. 

Choosing a guardian for your child involves designating someone in a legally valid legal document who can take on the responsibility if you pass away or become incapacitated. It's important to select a trustworthy person with the necessary time and resources, and to consider the child's best interests, including their living arrangements and relationship with the guardian.

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from targeted groups facing significant barriers to employment. The credit can be as much as $2,400 per eligible employee. To qualify, employers must complete a pre-screening notice and file Form 8850.

An advance health care directive allows you to outline your medical care preferences in case you become incapacitated. This document is a crucial part of your estate plan, ensuring that your health care decisions are respected and followed. It includes directives like a health care power of attorney, living will, and DNR/DNI orders, which can be tailored to your specific needs and state laws.

Exit agreements are essential for nonprofit organizations to manage leadership transitions smoothly and fairly. These agreements, developed by the board of directors, outline the terms of a leader's departure, focusing on compensation and the ongoing relationship with the organization.

Operating as a C corporation offers benefits such as limited liability protection and the ability to raise capital through multiple classes of stock. However, it also comes with drawbacks like double taxation and the need to comply with various state-mandated formalities. Overall, it's important to weigh these pros and cons to determine if a C corporation is the right choice for your business.

When starting a new 501(c)(3) nonprofit organization, you have two options for applying for tax-exempt status with the IRS: the traditional Form 1023 and the streamlined Form 1023-EZ. The traditional Form 1023 is more comprehensive and available to all organizations, but it is time-consuming and costly. In contrast, Form 1023-EZ is shorter, cheaper, and designed for smaller nonprofits, but it has strict eligibility requirements.

Manufacturing companies must create comprehensive and realistic budgets in 2025. Key considerations for creating budgets include avoiding reliance solely on past results, seeking input from all departments, setting attainable goals, managing cash flows, and treating budgeting as an ongoing process.