The following is an excerpt from Ice Miller's Business Transition Strategies to Preserve Wealth Guide, which provides insights on a variety of topics to help ensure a smooth business transition.
Generally, no. Most states provide procedures for forming a private foundation and receiving exemption from state income taxes. More importantly, the federal tax benefits (e.g., the tax-exemption for the foundation and the charitable deduction) apply no matter where the private foundation is formed. Therefore, a private foundation can be formed in any state and can continue to do business, plan events and operate in any other state.
In sum, a donor and his or her advisors need to understand and comply with the state laws where the private foundation forms and operates. Ice Miller represents clients nationally and worldwide. In addition, we routinely apply the federal tax-exempt rules to private foundations in various states. Therefore, we are prepared to assist donors with charitable giving strategies, irrespective of the state where the donor lives or works.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
