Monthly Archives: August 2010

Accepting Gifts… Should You?
Charitable organizations receive all types of donations, including cash, personal property, and even business interests. Often times, the charity is so excited about a potential gift that no diligence is completed prior to acceptance, and failure to complete diligence on gifts can turn out to be costly. Take gifts of real property – these are very common and can be financially beneficial to a charity. However, without completing diligence, the charity may find that it now owns a superfund site. Another not-so-obvious example is a donation of stock. Although most donated stock is marketable, certain types of stock, including stock in an S corporation (usually small, family owned corporations), are not. This post explores the implications of a charity accepting gifts of S corporation stock.
Subchapter S corporations can only have certain types of shareholders. Generally, these “permissible shareholders” include individuals (who are not nonresident aliens), estates, certain trusts, and certain exempt organizations. We will focus on the permissible exempt organization shareholder.