So if IRS approves next year in 2014 but I already made contribution to my private foundation, can I amend my tax return for 2013 to retroactively claim tax write off, or I can just write off my donation in 2013 tax return before IRS approves my 501(c)(3) private foundation status?
IRS guidance is in publication 527, page 24, found here: http://www.irs.gov/pub/irs-pdf/p557.pdf (See, Effective date of Exemption). Generally speaking, the IRS will “backdate” the recognition to when Form 1023 was filed (i.e., received by the IRS). If Form 1023 was filed within 27 months of the date of organization, the IRS backdates recognition to the date the foundation was organized.
It is probably best to extend your return until you receive the recognition, then file accordingly.
Best of luck to you.
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My colleagues have answered your question superbly! You should follow their advice and hire one of them, as needed.
The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is licensed to practiced law ONLY in the State of California. Answers to questions from users in other jurisdictions or states are meant to provide only general information. Users should contact a local attorney in their jurisdiction or state to address their specific tax issue.
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Corporate / Incorporation Lawyer
You are correct that the IRS is taking an extremely long time to issue determination letters in many cases. In my experience, the more thorough and complete your application for exemption is (Form 1023), the more quickly it is processed. If you have not already engaged an attorney to assist you in completing and filing the application, I would highly recommend you do so immediately.
The attorneys above are correct that after you submit the application and while it is pending, you are able to take deductions for your charitable contributions, and that if granted your exempt status will be retroactive to the formation of your Foundation. It is important to note, however, that in the case of an examination, this would be scrutinized, and if for some reason your exemption is not ultimately granted, you would need to amend these returns to remove the deductions.
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