A Family Business That Is Still In The Family

Sometimes it is hard to get a family business past the first generation. A success story is L.L. Bean founded by Leon Leonwoood Bean. He began his business selling the "Maine Hunting Shoe" which is now called the "Bean Boot." The success of the business can be boiled down to staying true to the original business policy--quality outdoor products, especially good boots. In 1960, Leon Gorman, Mr. Bean's grandson, took the company from being a $4 million company to a $1 billion company. Mr. Gorman stepped down in 2001, but the business is still run by the family. L.L. Bean continues to be successful selling outdoor products, especially the "Bean Boot."

Read a fun article about Mr. Bean in the Wall Street Journal here.

Unintended Consequences

The Metro train car that slammed into another on the Red Line killing 9 and injuring 76, was two months past due for scheduled maintenance on its brakes, and the car was an older model that federal officials had recommended be replaced because of concerns about its safety in a crash, according to the Washington Post.

From Concurring Opinions, via Taxprof, Taxes incentives may be a cause of the crash. Taxes not only raise revenue they influence behavior, intentionally or not so much.

Here the Metro authorities knew that the aging trains posed safety concerns, one reason they weren't so quick to ask, according to Prof. Sarah Lawsky is they were received money for keeping them.

The Metro Transit Authority sold equipment, including train cars, to another party then leases it back. The other party gets various tax advantages associated with owning the equipment that the Metro as a tax-exempt organization can't take advantage of. In return the company gives a cut of those tax savings back in cash to the Metro.

IRS Ruling on Non Profits and Political Activism

The IRS ruled that the Niemoller Foundation funded by financial backers of Texax Gov. Rick Perry did not risk losing their tax-exempt status for engaging in political acts on behalf of issues such as traditional-values advocacy.

The Texas Freedom Network filed a complaint saying that the Niemoller Foundation brought together pastors and politicians to champion moral issues during Republican Gov. Rick Perry's 2006 re-election campaign.

Short of endorsing a particular candidate or spending substantial portions of their nonprofit budgets on legislative lobbying, ministers and their churches are free to engage in political acts on behalf of moral values, the IRS said.

From the Washington Times.

Nonprofits Must File or Lose Status

GuideStar, the leading provider of nonprofit information, reports that half a million nonprofits could find themselves stripped of tax-exempt status in May 2010.
According to IRS estimates, that's how many smaller organizations have failed to file a Form 990-N.

The Pension Protection Act of 2006 requires exempt organizations (nonprofits the IRS has designated as exempt from federal income taxes) that do not meet the income threshold for filing an annual return (IRS Form 990 or one of its variants) to provide certain information to the IRS each year. The IRS created Form 990-N for this purpose, and smaller nonprofits began filing it in 2008.

The Pension Protection Act also directs the IRS to revoke the tax-exempt status of any organization that fails to file an annual return, including the 990-N, for three consecutive years. Revocations will happen automatically beginning in May 2010.