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May 2016 Archives

What's the Difference Between a Public Charity and Private Foundation?

Every nonprofit organization that qualifies for a tax exemption under Internal Revenue Code Section 501(c)(4) is a private foundation, unless it falls into an excluded category. According to I.R.C. Section 509(a), the following organizations are considered "public charities":

How Do I Serve a "Dissolved" Corporation?

From time to time, civil litigation requires that a litigant sue a dissolved corporation. At common law, a corporation ceased to exist and could not sue or be sued once it had dissolved, but the California legislature abandoned these common law rules in 1929. See Penasquitos, Inc. v. Superior Court (1991) 53 Cal. 3d 1180, 1184-85.

What is an "s-corporation"? How do I make an "s-election"?

Many small businesses regularly use the term "S-Corporation", but we've found that only a handful of people actually understand what this means. In general, when a corporation is formed, it will be treated as a "C-Corporation," which means that the entity will be treated as a separate taxpaying entity from its shareholders. Therefore, the profit of the corporation is taxed as the corporate level and taxed again when it is distributed to the shareholders via dividend. This results in "double taxation." For this reason, many small business owners are interested in forming an s-corporation.

Proper Estate Planning Includes Funding Your Revocable Trust

Funding your revocable trust is vital to proper estate planning. Failure to do so may result in a rocky road in the years to come. For example, in one recent appellate case, Carne v. Worthington, the court considered whether the trustor had transferred real property from trust he created in 1985 into a newer trust that he created in 2009.

Restriction of Political Campaign Intervention by Section 501(c)(3)

Tax-exempt nonprofit corporations in this controversial election cycle need to be mindful of the restrictions related to political activity.  A reminder to 501(c)(3) tax-exempt organizations regarding specifically the absolute prohibition against support or opposition to political candidates is appropriate.

3 Steps to Successfully Start and Operate a Nonprofit

  1. Forming a Nonprofit Organization: Before an entity may quality for tax-exempt status with the IRS, it must be created as a corporation, a trust, or an unincorporated association (note: partnerships generally do not qualify). In California, the nonprofit formation process includes filing articles of incorporation, adopting bylaws, obtaining an employer identification number, and documenting formation activities at the first meeting of the board of directors. Several of these formation documents will be included with the entity's tax-exempt application to the IRS and must contain specific provisions. This is one important reason that you should utilize an attorney that is familiar with tax-exempt nonprofit organizations.
  2. Complete the Tax-Exempt Application: Once the nonprofit is formed under California law, the organization must submit an application to be recognized as exempt under section 501(c)(3) of the Internal Revenue Code. The Form 1023 and required worksheets need to be completed and submitted, as incomplete applications will not be processed by the IRS. While a simple application seems straightforward, many people will soon realize that the Form 1023, like most IRS documents, is anything but simple.
  3. Continued Compliance: After the organization has obtained tax-exempt status, it must be sure to comply with ongoing federal and state compliance regulations. Specifically, it's very important that the nonprofit organization remains focused on the exempt purpose of the organization. If the organization ceases to further that exempt purpose in a substantial way, it may risk its exempt status. As experienced nonprofit attorneys, we help guide our clients to avoid these potentially debilitating issues before they ever arise.

If you are a member of the Board of Directors on a nonprofit or if you're considering forming a nonprofit for the first time, we'd love to speak with you.

"Glamour, Glitz, Hats & Heels" Returns May 20

In just ten (10) days, "Glitz, Glamour, Hats & Heels, an afternoon tea and social" returns to the City of Carlsbad. On Friday, May 20th at the Sheraton Carlsbad Resort & Spa, The Loftin Firm, P.C., the Carlsbad Chamber of Commerce, and Savvy Women Wealth Management are proud to present this second annual afternoon tea and business social, which celebrates women-owned businesses and professionals. We hope we'll see you there!

Carson Mobilehome Rent Control Case: A Loss for the City

A federal jury found that the City of Carson, through its Mobilehome Park Rent Control Ordinance, violated the Park Owner's (Jim Goldstein) Fifth Amendment rights by denying a fair return on his property, Colony Cove Mobilehome Park.  

Prince Died Without a Will - So What?

In the wake of the death of famed musician Prince, you may have seen media reports discussing his lack of estate planning. According to a recent probate court filing, Prince's sister, Tyka Nelson, requested that a special estate trustee be appointed to oversee the distribution of her late brother's assets in light of Prince having no will or other estate planning instrument. You may think that estate plans are for the ultra-wealthy, but that is simply not the case.

How Are You Celebrating National Small Business Week?

On April 29th, President Obama declared May 1st-7th as National Small Business Week. In recognizing the impact of small businesses, the President noted that small businesses are "responsible for creating nearly two-thirds of net new jobs in the United States each year and employing more than half of all Americans, small businesses have always been a vital part of our country's economy." As small business attorneys (and a small business ourselves), we understand the impact that small businesses have on the local community.

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The Loftin Firm, P.C.

The Loftin Firm, P.C.
5760 Fleet Street
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Carlsbad, California 92008-4713

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Phone: 760-814-9649
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