Sound tax planning does more than minimize taxes. It permits the saving of current income and the accumulation of capital, thereby conserving the fruits of labor for future use. Taxpayers in the higher brackets consider control more important than ownership. This control plus the ability to accumulate more dollars can be accomplished by the use of a foundation. A foundation is a non-profit institution established to accumulate and use funds for the purpose or purposes that the founder or founders deem worthy. Congress, after careful review of this type of organization, deemed it sufficiently valuable and important to the general welfare of the nation to merit tax exemption.

I. Reasons for Congressional Approval

II. Benefits for the Creator of the Foundation

III. Possible Foundation Forms

IV. Qualifications to Become Tax Exempt … A. Foundation Must Be Organized Exclusively for Religious, Charitable, Scientific, Literary, or Educational Purposes … B. Net Earnings of the Foundation Shall Not Inure to the Benefit of the Individual … C. The Foundation Can Not Spend a Substantial Part of Its Activities Carrying on Propaganda

V. Procedure to Become Tax Exempt

VI. Limitations on Charitable Foundations … A. Prohibited Transactions … B. Restrictions on Accumulations of Income … C. Taxation of Unrelated Income