What does the Certificate of Incorporation say about the Robertson Foundation’s ability to spend realized capital gains?
Article 11(c) of the Foundation’s Certificate of Incorporation imposes limitations on the disbursement of capital assets “which do not constitute income or accumulated income as defined in Treasury Department Regulation § 1.504-1(c), or its then equivalent” but it does not restrict the expenditure of income. [Document: Excerpt from the Foundation Certificate of Incorporation (.pdf)] In 1961, Treasury Regulation § 1.504-1(c) defined “income” as “gains, profits, and income determined under the principles applicable in determining the earnings and profits of a corporation.” [Document: Excerpt from Treasury Regulation § 1.504-1(c) (.pdf)] In 1961 (and today), “earnings and profits” included gains realized upon the sale of an asset. Thus, for purposes of Article 11(c), “income”—as defined in the Treasury Regulation expressly referenced in Article 11(c)—includes realized gains and does not restrict their expenditure in any respect. For an overview of a number of the key issues in this disput
