Other Developments

Date01 January 2021
Published date01 January 2021
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
Harvard University prevailed in its affirmative action
case on November 12, when the US Court of Appeals for
the First Circuit ruled that its admissions process, which
takes race into account, is permissible under civil rights
law (Students for Fair Admissions v. Harvard University).
This appellate court seemed to observe that the univer-
sity has nearly maxed out on the goals of its admissions
program, writing (in the course of 104 pages) that it
“has already reached, or at least very nearly reached,
the maximum returns in increased socioeconomic and
racial diversity that can reasonably be achieved through
outreach and reducing the cost of a Harvard education.”
Another higher education affirmative action case
was propelled on November 9, when a trial commenced
in federal district court in North Carolina (Students for
Fair Admissions v. University of North Carolina). Accord-
ing to an account in the November 10 New York Times,
the lawyer for the plaintiff asserted that the university
“considered race in a heavy-handed, formulaic way that
had given a large boost to Black, Hispanic and Native
American students, while discriminating against white
and Asian-American applicants.” The university’s lawyer
was said to counter that “admissions was [sic] highly
individualized, as required by Supreme Court precedent,
and that the judgment of admissions officers was at the
core of the process.” Because this plaintiff is a private
party, this case will proceed despite the change in presi-
dential administrations. [6.2(e)]
The trial in the Fidelity Charitable Gift Fund case
occurred on October 19–28. The essence of this case is
discussed in the May 2020 issue. Additional briefs were
submitted around November 18, with closing arguments
held on December 4. A summary of the trial proceedings
is included in the October 29 issue of Bloomberg Law’s
Daily Tax Report. [11.8(b)]
On November 9, a petition was filed with the US
Supreme Court seeking a finding that the federal tax law
provision denying the business expense deduction (IRC
§ 162) to medical marijuana dispensaries in connection
with their cannabis-sales activity (IRC § 280E) violates
the US Constitution’s Sixteenth Amendment by taxing
more than constitutional income, and that a state’s
legal sales of cannabis does not violate the Controlled
Substances Act by reason of application of the Constitu-
tion’s Supremacy Clause (Standing Akimbo, LLC v. United
States). This law concerns whether an organization is
operating more than one trade or business (see the
opinions summarized in the February 2019 issue), with
implications impacting the bucketing rule. [25.5]
The Treasury Department and the IRS intend to issue
proposed regulations to clarify that state and local
income taxes imposed on and paid by a partnership or S
corporation on its income are allowed as a deduction by
the entity in computing its non-separately taxed income
or loss for the year involved (Notice 2020-75). That is,
the SALT deduction limitation (see, e.g., the September
2019 issue) does not apply to the partners and share-
holders who itemize deductions. [3.1]
The New York Times reported on November 16 that
more than 82,000 individuals have filed sex-abuse claims
against the Boy Scouts of America, “describing a dec-
ades-long accumulation of assaults at the hands of scout
leaders across the country.” These claims are said to have
“far eclipsed” the number of abuse accusations filed in
Catholic Church cases. The claims are being lodged in a
bankruptcy court in Delaware.
The IRS set November 19 as the publication date for
the final regulations concerning qualified ABLE programs
(summarized in the December 2020 issue). [19.20]
Each article in the newsletter on a tax-exempt organizations law topic ends with a citation to the appropriate chapter(s) or
subchapter(s) in Hopkins, The Law of Tax-Exempt Organizations, Twelfth Edition (Wiley, 2019, 2020 supplement). This is done to
provide ready access to additional and background information concerning these articles. For example, underlying information
concerning the first article in this issue is available in Chapter 2 § 3 of the book; thus, the citation is referenced as [2.3]. Likewise,
each article in the newsletter on a charitable giving law topic ends with a citation to the appropriate chapter(s) or subchapter(s) in
Hopkins, The Tax Law of Charitable Giving, Fifth Edition (Wiley, 2014, 2020 cumulative supplement). For example, underlying infor-
mation concerning the second article in this issue is available in Chapter 9 § 7 of the book; thus, the citation is referenced as [9.7].
This newsletter is a stand-alone publication. An inventory of articles in the newsletter since its inception in 1983, and a subject
matter index, as well as an index of the court opinions, IRS revenue rulings and procedures, IRS technical advice memoranda, and
IRS private letter rulings discussed in the newsletter, are available at www.brucerhopkinslaw.com. For those who have the books,
the newsletter also provides monthly updates. Both books are annually supplemented. Questions concerning nonprofit law devel-
opments in general may be sent to brucerhopkins@brucerhopkinslaw.com. Also, a comprehensive summary of nonprofit law is
available in the Bruce R. Hopkins Nonprofit Law Library, an e-book published by Wiley. Other law resources are referenced at www.
brucerhopkinsbooks.com. Follow BRHopkins_NPLaw on Twitter.
The newsletter has a dedicated website. Please visit wileyonlinelibrary.com/journal/npc.
Quote of the Month: “I think it’s hard for you to argue
that Congress intended the entire act to fall if the man-
date were struck down when the same Congress that
lowered the penalty to zero did not even try to repeal the
rest of the act.” This from Chief Justice John Roberts dur-
ing arguments in the Affordable Care Act case (see p. 7).

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