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Nonprofit Law/Scholarship distribution

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QUESTION: I have received 501(c)(3) status and - in filling out the 1023, filled out Schedule H - which was seemingly approved.

In reading 4945(g) (and 4945(g)(1)) and looking at referenced codes 117 and 170, I am left with the following questions:

1) By granting 501(c)(3) status, is the "procedure approved in advance by the Secretary" assumed by the award of the 501(c)(3) status since Schedule H was filled out?
2) For 117, can qualified tuition and related expenses include room and board (or rent if lower than the room and board costs for living on campus)?
3) As a 501(c)(3), can I use a 529 Scholarshare program to distribute my scholarships and make the legal assumption that their oversight of the distribution of funds is sufficient for my purposes - meaning, if I can tell the IRS that I put the money into a 529 - will that satisfy requirements of ensuring that scholarship money was appropriately spent - or, do I need to do more thorough oversight to satisfy IRS requirements?

Thank you SO much for this help!!!

Bob

ANSWER: You used "I have received" and "my scholarships".  Did your organization receive public charity status (or, in the alternative, private foundation status). After you give me that information I will reply further.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    



---------- FOLLOW-UP ----------

QUESTION: Sorry for the ambiguity.  My corporation received "public charity" status.

To provide more context - my company runs a Tutor Training Program where the goal is to provide three-fold support to our tutors (financially in-need college students) in the form of:
1) A scholarship
2) Training via a pedagogy course
3) Experience via free tutoring that they provide to financially in-need students.

I guess a 4th question to add to the above is a complicated one - but, it has to do with the distinction between a scholarship and a compensatory scholarship.  My understanding is that for a compensatory scholarship - any market-value payment should be taxed and the excess could be given as a tax-exempt scholarship.  For a standard scholarship (not compensatory) there are not to be any 'requirements' that benefit the grantor.  In this case, the requirement that I'd like to couple to the scholarship benefits a third party (the financially in-need students) and the tutors themselves as they leave the program with training that will help them in their futures.  My company gets nothing from it except satisfying the mission of providing that three-fold support to the selected students...

Anyway, to me it seems logical - however, it'd be nice to have a legal perspective as logic does not always match (as I've found).  

Thank you SO much for the quick reply and I look forward to reading your response!!!

Bob

Answer
Did your organization receive public charity status (or, in the alternative, private foundation status).  It will be on the determination letter from the IRS that the organization is exempt under section 501(c)(3).  After you give me that information I will reply further.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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