Can Your Non-Profit Foundation Pay $10,000 For Your Self-Portrait, Like Trump?

In September, one of Donald Trump’s advisers offered an explanation regarding a portrait of Trump which was placed on display at a Florida golf resort owned by Trump. The Donald purchased the painting at a charity auction for $10,000 in 2014. The painting was paid for with a check from the Donald J. Trump Foundation, the tax records of which show no personal donations from Trump since 2008.

Trump adviser’s Boris Epshteyn stated, “there are IRS rules which specifically state that when a foundation has an item, an individual can store those items, on behalf of the foundation, in order to help it with storage costs.” Further, Epshteyn said, “he’s doing a good thing for his foundation.” This was the first time any explanation had been offered by Trump for the placement of the portrait, which was discovered by Univision’s Enrique Acevedo.

However, important to note about Trump’s charity is that he neither owns the Foundation nor its property as its president. The money and other assets of a nonprofit organization must be used for charitable purposes that benefit the public. More than a few tax experts have commented that after purchasing the painting, Trump was required to find a charitable use for it. Otherwise, Trump would be guilty of “self-dealing,” since he is prohibited from using his foundation’s’ money to purchase items for his own personal or business use.

Rules against “self-dealing” apply to both major donors and foundation officers, like Trump. These same tax experts find it difficult to accept the explanation that Trump was storing the portrait to benefit the charitable foundation. The penalties for violating self-dealing rules may include penalty taxes on the wrongdoer, as well as revocation of the charity’s tax-exempt status.

At the end of September, The New York attorney general sent a “notice of violation” to the Donald J. Trump Foundation ordering it to immediately cease fundraising after determining that the foundation was violating state law by soliciting donations without proper authorization. Further, the IRS could pursue criminal charges against Trump for intentional violations of a known legal duty and thus charge him with tax evasion or making false statements on a tax return.

Individuals involved in non-profit organizations must be careful to avoid self-dealing. If you live in the Tri-State area and have any tax-related question, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.Can Your Non-Profit Foundation Pay $10,000 For Your Self-Portrait, Like Trump?

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