Reply to Amount of Endowment Tax Liability Expected for 25 Elite US Universities

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I don't understand how any of this is constitutional. We have one man making all these capricious decisions regarding various individual universities. There's no method or system. Just whims and enemies.

Very banana republic. [/quote]

Well this one is a tax on investment income passed by Congress so unfortunately it is very constitutional.

Ultimately I think Princeton and Dartmouth [b]will escape through the tuition-paying threshold,[/b] and MIT and Rice might too. For the dozen or so others that this applies to, they will manage their investment income to reduce the tax burden. But even then it isn’t large. For example, even before taking steps to optimize tax efficiency, these tax estimates are generally less than one percent of these schools’ total endowments (~0.5 percent in many cases). [/quote]

Sorry to repeat my question, but what is the definition of a tuition paying student for purposes of the excise tax on educational institutions endowment income ?

Are students who receive  financial aid of any type which covers at least 100% of tuition "tuition paying students" ? I would argue that they are since tuition is still paid on their behalf even though through a financial aid fund. Accordingly, schools cannot escape the 3,000 tuition  paying students threshold as easily as several posters have asserted. [/quote]

All of this is in the comments above. [b]A student whose entire tuition and fees are covered by scholarships or grants provided by the university or a federal, state, or local government is not tuition paying. Therefore they don’t count toward the 3,000 threshold[/b].[/quote]

Thank you, but I am still searching for the source. I have read & reread Sec 70415 of the One Big Beautiful Bill and am not finding any such definition. However, I did find [b]section (h) within Sec 70415 which authorizes the establishment of rules to prevent educational institutions from restructuring endowment funds to reduce or eliminate value of/and assets "subject to the tax imposed by this section".[/b] This leads me to question whether educational institutions can alter the student count for purposes of the 3,000 tuition paying students. A concise source could address my concern.

Thank you to all who reply.[/quote]

This may be a barrier to universities splitting endowment funds for multiple separate specialty schools.

In short, don't piss off the Big Guy.[/quote]

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