Question

The Let's Read organization is a public charity under IRC Sec. 501(c)(3). It had total support of the following:

United Way support	$	10,200
Grant from the state		25,100
Grant from the city		10,100
Contributions from individuals		261,200
Investment income		1,200
Revenue from the sale of books		12,100
	$	319,900

Of the $261,200 received from contributors, $240,300 came from four contributors, each of whom gave $60,075; the other $20,900 came from small individual contributions.

1. c-1. If the organization had received $201,000 from one individual, and the remaining $60,200 from many small individual contributions, calculate the total amount of support that qualifies as “public support” in meeting the public support test to escape private foundation status.

Answer 1

The total value of public support is arrived as below:

United Way Support	10,200
Grant from the State	25,100
Grant from the City	10,100
Contributions:
Small Contributions	60,200
Large Contributions (319,900*2%)	6,398
Public Support	$111,998

Answer is $111,998.

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Notes:

1) In the given case, 2% (of total support) limitation rule will apply because the contribution of $201,000 made by one individual is from sources other than governmental entities and public supported charities. Therefore, 2% of the total support (which is $319,900) will be taken as the amount of large contributions.