The answer to this q-bank question basically says a PM’s statement that a foundation is a non-taxable entity was incorrect, due to the reason below. Anyone familiar w/ this tax? Pretty sure a foundation is still considered non-taxable, no? Foundations are subject to excise taxes between1-2% on net investment income. Any unrelated business income is exposed to regular corporate tax rates. In addition to grant-making, foundations can be primary sources of ongoing funding for charitable programs. (Study Session 5, LOS 21.i)
I don’t think you can say foundations are non-taxable, though they are very close. Perhaps you should seek tax council, ng?
Yeah, I think foundations are taxed at 2% on [Dividends + Interest income] less operating expenses. If they spend more than the 5% requirement, the tax is only 1%. Don’t have my notes so I’m not sure if that Div + Int income formula is correct…
Agree with the 1 or 2% tax issue, but I recall a discussion with Schweser on that at the Windsor seminar and they made it very clear that this tax issue is beyond the scope of the CFA program.
The why the heck do they put in a question on it? Not directed to you ptm…more to schweser.
thanks guys. I also recall the prof at the 3-day class saying it was beyond the scope…
good point mwvt. Beats me! But I was happy to clear that brain cell which held this little piece of info. scare resource!
Zero sum brain. I think I have that two. Somebody described last year as trying to pick up a couple of socks with a huge load of laundry already in your hands. Each time you pick up a sock something else falls of the pile.
^^ lol!