Revenue Ruling 74-450
Internal Revenue Service
1974-2 C.B. 388 (1974)
- Written by Daniel Clark, JD
Facts
A private foundation was organized to protect wildlife. The foundation was exempt from federal income tax under § 501(c)(3) of the Internal Revenue Code (code). The foundation owned land on which it maintained a wildlife sanctuary. The foundation received a substantial bequest of real estate, doubling the foundation’s land holdings. The foundation planned to use some of the land to expand its wildlife sanctuary and the rest to convert into a public park. Under the project contract, the conversion was projected to take four years to complete and to cost an amount equal to several times the foundation’s annual income, although the contract provided that most of the amount would not be due and payable until the third year. The foundation submitted an application to the Internal Revenue Service (IRS) for approval to use the set-aside of funds without incurring excise taxes for failure to make qualifying distributions under § 4942 of the code. The IRS issued a revenue ruling to clarify the IRS’s position as to how the code would apply to the foundation’s situation.
Rule of Law
Issue
Holding and Reasoning ()
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