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Abstract: 

The Philanthropy Protection Act of 2006 changed many of the rules governing supporting organizations and made them, for some purposes, subject to evenmore severe limitations than private foundations. It stands to reason that many charitieswhich had operated happily for years as supporting organizations took these changes as an opportunity to reevaluate their status. In two recent companion rulings, PLR 201133012 and PLR 201133013, the IRS spelled out the consequences to both parties when a Type I supporting organization, controlled by its supported public charity, converted to a private foundation. In several recent rulings, the IRS held that grant procedures for foundationsmaking scholarship grants were sufficient to qualify under IRC §4945(g). In each case, the IRS ruled that grants awarded under the scholarship program will not constitute taxable expenditures and will be excludable from the gross income of the recipients. Transfer of Assets Approved: In PLR 201132027, a trust classified as a private operating foundation operated a life-care retirement facility. Logging Operation Is Not Excess Business Holding for Foundation: In PLR201127011, a foundation received as a bequest all of the stock of a corporation engaged in a diversified timber operation.

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