Special Situations

The Community Foundation realizes that each individual, each client has a different scenario; a different goal or motivation. We also understand that your job is to cater to these varying circumstances to provide the most effective results for both their financial and personal objectives.

This section outlines a few of the "special situations" a professional advisor may encounter to give you an idea of the ways that we can work with you to assist your client.

If you have any questions, or a circumstance that is not outlined in this section, please contact Larry Snipes at 803.254.5601 x. 322 or larry@yourfoundation.org to discuss how the Community Foundation can help you and your client.

When Your Client Owns a Closely Held Business
Owners of a closely held or family business are often very involved in the community and in charitable giving. A partnership with Central Carolina Community Foundation, a public charity, is a cost-effective method to maximize and target charitable involvement while maximizing tax benefits. The Community Foundation can be of particular assistance in the following circumstances:

• Passing ownership of the company to children or others;
• Selling the company and minimizing taxes;
• Getting equity out of the company to provide lifetime income for the donor and others;
• Creating a donor advised fund or a supporting organization with closely held stock; or
• Facing taxation on excess retained earnings.

Central Carolina Community Foundation, with the flexibility it offers to charitable donors, provides owners of closely held businesses with a variety of charitable giving opportunities.

• Gifting a portion of the stock of your client's corporation;
• Contributing a portion of the stock prior to the sale of your client's business;
• Capitalizing on charitable opportunities arising from corporate buyouts;
• Using a business to provide a life income for your client or someone else; and
• Planning now so that your client's children will inherit the family business.

Charitable Gifts of Stock of Subchapter's Corporations
Historically, only individuals have been permitted to hold shares in S corporations. With the Small Business Job Protection Act of 1996 (the "1996 Tax Act"), charities are able to hold S corporation stock. As of January 1, 1998, charities are able to hold S corporation stock.

Because a substantial number of small businesses elect to be taxed under Subchapter S, this change in law opens a new tax planning opportunity for charitable individuals whose S corporation stock may be their most significant asset. However, as with limited partnerships, gifts of S corporation shares may not be advantageous to the charity and will be carefully considered before they are accepted.

Unlike a regular or "C" corporation, an S corporation generally does not pay income tax; instead, the corporation's income is treated as if it were received directly by the shareholders. As in the case of partners in a partnership, the Subchapter S shareholders are taxed on their pro rata shares of items of income and deduction. It is for this reason that many businesses eligible for S status (generally, corporations with under 75 shareholders) have chosen to elect it.

New rules permitting charities to be S corporation shareholders present an opportunity for gifts and bequests of such stock to public charities. Central Carolina Community Foundation is skilled at evaluating these and other unusual assets and has the flexibility to accommodate them when suitable.

When Your Client is a Corporation
Businesses encounter an unexpected resource in the Community Foundation. There are a number of ways the Foundation can support your business client's charitable giving.

When Your Client is a Nonprofit Organization
Nonprofit organizations find many ways to use the Community Foundation's services. A full range of fund options offer important support to their charitable work and future. Nonprofits with a fund at the Community Foundation also have access to a variety of planned giving vehicles which can be marketed to the organization's donors and prospective donors. Community Foundation staff also provide technical assistance and back-up to a nonprofit's planned giving efforts.