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News and Analysis Special Reports Focus on the IRS Court Opinions (C) Tax Analysts 2016. All rights reserved. does not claim copyright in any public domain or third party content. Volume 77, Number 4 ■ April 2016 News and Analysis TE/GE to Revise Document Request Approach During Exams ........................ 247 No Material Form 990 Changes in 2015; Some for 2016 ............................. 248 Exam Agents Cannot Reclassify EOs ............................................. 249 501(c)(4) Notification Regs in the Works ......................................... 249 Whistleblowers Should Be Specific, IRS Official Says ............................... 250 No Stopping Political Nonprofits Now, Some Say ................................... 250 Hearing Looks at Use of Tax Code to Stifle Campus Speech .......................... 253 Watchdog Renews Call for IRS Probe of NRA ..................................... 253 Ways and Means Tax Counsel Sees Window for Tax Reform in 2017 .................... 254 IRS Political Subdivision Proposal Could Be Controversial ........................... 254 Political Subdivision Proposal Gets Frosty Reception ............................... 255 As Staff Levels Fall, IRS Bonds Team Streamlines ................................. 256 CREW Still Wants Investigation Despite Trump Group’s Admission .................... 257 Special Reports The 21st Century Fight Over Who Sets the Terms of the Charity Property Tax Exemption, by Evelyn Brody ............................................................ 259 Why Your Organization Should Care About the Final Allocation and Accounting Regulations for Bond-Financed Facilities, by Vicky Tsilas and Lauren K. Mack ............................................ 279 The Missing Tax Benefit of Donor-Advised Funds, by John R. Brooks .......................................................... 283 Focus on the IRS REG-129067-15; 2016-10 IRB 421, IRS Publishes Proposed Regs Defining Political Subdivision ............................................................... 299 IRS Amends Applicability Dates of Political Subdivision Regs ........................ 304 Court Opinions IRS Must Comply With Discovery Orders in Exempt Org Suit ........................ 310 For more Exempt Organization Tax Review content, please visit www.taxnotes.com. Table of Contents (C) Tax Analysts 2016. All rights reserved. does not claim copyright in any public domain or third party content. April 2016 The Exempt Organization Tax Review FROM THE EDITOR .......................243 The Missing Tax Benefit of Donor-Advised Funds, by John R. Brooks ..................... 283 CALENDAR OF UPCOMING EVENTS ...........245 IRS CHIEF COUNSEL ADVICE NEWS AND ANALYSIS IRS Letter Rulings ..................... 295 IRS E-Mail Chief Counsel Advice .......... 296 TE/GE to Revise Document Request Approach During Exams ....................... 247 FOCUS ON THE IRS IRS News ........................... 297 No Material Form 990 Changes in 2015; Some for 2016 ....................... 248 IRS Tax Correspondence ................. 297 Internal Revenue Bulletin ................ 297 Exam Agents Cannot Reclassify EOs .......... 249 IRS Publications ....................... 298 501(c)(4) Notification Regs in the Works ....... 249 Other IRS Documents ................... 298 Whistleblowers Should Be Specific, IRS News Releases ..................... 299 IRS Official Says ..................... 250 Treasury Tax Correspondence ............. 299 No Stopping Political Nonprofits Now, Some Say . 250 Full Text Guidance REG-129067-15; 2016-10 IRB 421, Hearing Looks at Use of Tax Code to IRS Publishes Proposed Regs Defining Stifle Campus Speech .................. 253 Political Subdivision ................ 299 Watchdog Renews Call for IRS Probe of NRA . 253 IRS Amends Applicability Dates of Political Ways and Means Tax Counsel Sees Window Subdivision Regs ................... 304 for Tax Reform in 2017 ................. 254 FOCUS ON CONGRESS IRS Political Subdivision Proposal Could Be Summaries ...........................307 Controversial ....................... 254 Congressional News Releases .............. 307 Political Subdivision Proposal Gets Frosty Congressional Tax Correspondence .......... 307 Reception .......................... 255 Testimony Other Than IRS and Treasury ...... 308 Washington Roundup ................... 308 As Staff Levels Fall, IRS Bonds Team Streamlines . 256 COURT OPINIONS CREW Still Wants Investigation Despite Trump Group’s Admission .............. 257 Summaries ...........................309 Washington Roundup ................... 309 SPECIAL REPORTS Full Text Court Opinions IRS Must Comply With Discovery Orders in The 21st Century Fight Over Who Sets the Terms of the Exempt Org Suit ...................310 Charity Property Tax Exemption, by Evelyn Brody ...................... 259 CURRENT LITIGATION STATUS REPORT ....... 317 Why Your Organization Should Care About the Final STATE TAX NEWS ........................319 Allocation and Accounting Regulations for EO TAX LAW WORLDWIDE ..................323 Bond-Financed Facilities, by Vicky Tsilas and Lauren K. Mack ......... 279 EO TAX BIBLIOGRAPHY .................. 325 For more Exempt Organization Tax Review content, please visit www.taxnotes.com. (C) Tax Analysts 2016. All rights reserved. does not claim copyright in any public domain or third party content. The Exempt Organization Tax Review™ Copyright, Tax Analysts, 2016 ISSN 0899-3831 Editor Legal Editor Reporter Frederick Stokeld Patrice Gay David van den Berg (703) 533-4670 (703) 531-4851 (703) 533-4426 [email protected] [email protected] [email protected] Editorial & Production Staff Letters to the Editor ZacharyAbate, MonicaAnderson, GaryAquino, Letters to the editor and manuscripts should be addressed Joe Aquino, Paul Barton, Amanda Chan, Isabel to: Church,PaulDoster,NikkiEbert,AliceHaar,Eben Halberstam, Mick Heller, Andrew Hellerstein, Frederick Stokeld, Editor Sarah Karney, Jenny Nguyen, Jessica Pritchett, The Exempt Organization Tax Review Kristen Rethy, Tom Rowe, Bill Rozday, Mary-Elise 400 S. Maple Ave., Suite 400 Sheets, Betsy Sherman, Faith Smalls, Aimee Falls Church, VA 22046 Smith, Tara Taghizadeh, Kindra Thomas, Steve Torregrossa, Tiffany Volonakis, Shannon Yen. Frequency The Exempt Organization Tax Review is published Production Manager every month of the year by Tax Analysts. Michelle Smith Production Director Refund Policy: All Tax Analysts products and Stephanie Wynn services are subject to a full money back guarantee within the first 30 days after each initial purchase. Editor in Chief Jeremy Scott Customer Service Editor in Chief (800) 955-2444 (800) 955-3444 Cara Griffith (703) 533-4600 Deputy Editor in Chief Chuck O’Toole Fax Deputy Publisher (703) 533-4484 David Brunori Copyright Notice President and Publisher © Tax Analysts 2016. All rights reserved. Users are Christopher Bergin permitted to reproduce small portions of this work for purposes of criticism, comment, news reporting, Founder teaching, scholarship, and research only. Any use of Thomas F. Field these materials shall contain this copyright notice. We provide our publications for informational pur- Subscriptions, Address Changes poses, and not as legal advice. Although we believe Change of address notices, subscriptions, and that our information is accurate, each user must ex- all other correspondence should be sent to Tax ercise professional judgment, or involve a profes- Analysts, 400 S. Maple Ave., Suite 400, Falls sional to provide such judgment, when using these Church, VA 22046. materials and assumes the responsibility and risk of use. As an objective, nonpartisan publisher of tax Correspondence information, analysis, and commentary, we use both Correspondence regarding editorial matters our own and outside authors, and the views of such should be sent to the attention of the Editor, The writers do not necessarily reflect our opinion on vari- Exempt Organization Tax Review, 400 S. Maple ous topics. Ave., Suite 400, Falls Church, VA 22046. For more Exempt Organization Tax Review content, please visit www.taxnotes.com. (C) Tax Analysts 2016. All rights reserved. does not claim copyright in any public domain or third party content. The Exempt Organization Tax Review Advisory Board Ellen P. Aprill Richard S. Gallagher Michael W. Peregrine Los Angeles, Calif. Milwaukee, Wis. Chicago, Ill. Michael E. Batts Joseph Greif Gary C. Pokrant Orlando, Fla. Washington, D.C. Bethesda, Md. Harvey Berger Peter C. Guthery John Pomeranz Washington, D.C. Denver, Colo. Washington, D.C. Jody Blazek Bertrand M. Harding Jr. Ward S. Pynn Houston, Texas Washington, D.C. Walnut Creek, Calif. Bonnie S. Brier Sarah C. Harlan Celia Roady Philadelphia, Pa. Portland, Ore. Washington, D.C. Bernadette M. Broccolo Gail M. Harmon Frederick H. Rothman Chicago, Ill. Washington, D.C. New York, N.Y. James K. Hasson Jr. Phillip G. Royalty Evelyn J. Brody Atlanta, Ga. Washington, D.C. Chicago, Ill. Frances R. Hill Ralph S. Rumsey Thomas J. 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