JURIST - Paper Chase: IRS says trusts benefiting Harvard Endowment can profit tax-exempt

In Friday's tax law news, the New York Times reports today that Harvard University's private endowment fund received an IRS private letter ruling, published in December of 2003, allowing charitable remainder trusts benefiting the fund to invest in the same stock and bond indexes as the fund (note that when the IRS publicly publishes rulings it replaces the petitioner's name with a letter, in this case "M"). The ruling holds that the trusts may generate unrelated business taxable income - essentially, profits from the Endowment - without losing tax-exempt status. According to the Times, the ruling will enable Harvard's endowment fund to increase its already profitable revenue stream by providing a proven high rate of return with tax-exempt status. Because IRS letter rulings are not legal precedent, Harvard has a unique advantage until other endowment funds obtain similar rulings. The Times has more here.... In state tax law news, Arizona Court of Appeals Judge Lawrence Winthrop has ruled that a former executive for Dell Computer, Joel Kocher, is liable to the state of Arizona for taxes he failed to pay when he exercised Dell stock options worth $5.6 million in 1995. Winthop said that Kocher exercised the options after evidencing his intent to reside in Arizona by obtaining an Arizona drivers license, registering his cars in Arizona, buying a home in Tucson and enrolling his wife's children in Arizona public schools. Such an intent to reside is all Arizona state tax law requires in order to tax a person's income from wherever derived. Read the opinion here. The Daily Star has more here.