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OCTOBER 2013
FUNERAL HOME & CEMETERY NEWS
S ec t i on A
SMARTCHOICE DISTRIBUTION, INC.
CELLULAR (917) 862-0548 • TOLL FREE 888-900-2018
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BURIAL CRADLES
SM
Zerbel’s
By Atty. Harvey I. Lapin
Harvey I. Lapin, P.C., is a member of the Illinois Bar and Florida Bar. He
is a member of the faculty at the John Marshall Law School in Chicago
and is presently teaching the subject of Tax Exempt Organizations. He is
also associated with Florida-based law firm Sachs, Sax & Caplan, leading
the firm’s Funeral, Cemetery and Cremation Practice Group.
He has written numerous articles on the subject of taxation, funeral
and cemetery law.
The subject discussed in this article and future articles resulted from
the questions from readers. If you have any questions about the top-
ics covered in this column or in obtaining professional assistance, please
contact the author c/o Harvey I. Lapin, 2592 Chedworth Ct, Northbrook,
Illinois 60062. Phone (847)509-0501 or fax to (847)509-1027.
The author writes articles for CB Legal Publishing Corporation also
publishes the Release Form Kit, which was prepared by the author and
has been recently updated and revised. This Kit contains Release and
Hold Harmless forms for Funeral Homes, Cemeteries and Crematories to
use in situations where it has resolved a complaint with a customer, and
wants to be sure that there will be no further action by the customer or
their relatives. The forms can be purchased on a custom basis with your
business name and addressed preprinted at the top of each form. Call
Cheryl Lapin and she will send you an order form that contains the cur-
rent prices. See the number below.
The author also writes more extensive articles on subjects of inter-
est to the industry in the newsletter Cemetery & Funeral Business and
Legal Guide published by CB Legal Publishing Corporation. Anyone in-
terested in subscribing can contact Cheryl Lapin, at the address of CB
Legal Publishing Corporation, 2592 Chedworth Ct, Northbrook, Illinois
60062. Future Issues of the Cemetery & Funeral Business and Legal
Guide are only available in an electronic PDF version. The Subscription
price is $75.00 per year. Readers that wish to subscribe should send
a check in the amount of $75.00 payable to CB Legal Publishing
Corporation along with the name of the subscribing individual and the
email address to be used.
Legal
Speak
Taxation of Perpetual Care
Trust Funds
Over the years since the enactment of the tax laws
applicable to corporations in 1909 there have been
disputes between the IRS and taxpayers concerning
various issues involving the legal status of Perpetual
Cemetery Care Funds (“PC Funds”) under state laws
and the relationship with taxable and non taxable en-
tities. Most of these issues were discussed in a recent
court case between Michigan Memorial Park, Inc. v.
the United States, 2013 WL 93338 (E. D. Michigan,
S. D., January 8, 2013). This case is reviewed in detail
in a recent article by the author in the Cemetery & Fu-
neral Business and Legal Guide (”Guide”) that dealt
with the taxation of PC Funds and the treatment of
PC Funds under the Bankruptcy Laws. See subscrip-
tion information to the Guide below.
If a PC Fund is established by or is connected to a
taxable cemetery, the IRS and the courts have deter-
mined the PC Fund will also be taxable. See Rev. Rul.
64-217, 1964-2 C.B. 153. If a PC Fund is established
by or is connected to a tax-exempt cemetery, the PC
Fund will also be tax-exempt under Section 501 (c)
(13) of the Internal Revenue Code. See Revenue Rul-
ceived for the maintenance services to be provided
and is fully taxable. However, the cemetery corpo-
ration can deduct from this income the costs in-
volved in providing the maintenance services that
is typically for most cemeteries in excess of the in-
come received from the PC Fund.
This summary is for informational purposes and
readers that have specific issues or problems should
consult with their own professional advisors.
ing 58-90, C.B. 1958-1, 15. It is important in that situa-
tion that the PC Fund also obtains a tax-exempt determi-
nation letter from the IRS.
The Court during its discussion of the various issue
indicated the following tax rules are applicable to PC
Funds:
1. PC Funds are separate taxable entities and are taxed
as trusts under the applicable provisions of the Code.
Deposits made by the cemetery corporation to the
PC Fund required by state law or contract with a
space owner are deductible by the cemetery corpora-
tion, are not income to the PC Fund and become the
principal of the PC Fund.
2. A PC Fund should file a return on Form 1041 and pay
taxes on income that is not distributed to beneficia-
ries or to pay the legal obligations of the beneficiaries.
Accordingly if capital gain income is retained in the
PC Trust it will be taxable at the trust level. Income
distributed to beneficiaries has the same character as
the income received by the PC Fund. Accordingly, if a
beneficiary receives dividend income it will be consid-
ered as that type of income for tax purposes.
3. The distributions from a PC Fund to a cemetery cor-
poration for the maintenance of the cemetery are for
the services to be provided to space owners. Accord-
ingly, the cemetery corporation is not the beneficiary
of a PC Fund. Since this distribution is not to a ben-
eficiary or for the satisfaction of a legal obligation of
a beneficiary it would normally not be deductible by
the PC Fund. However, at the behest of the Industry,
Congress added Section 642 (i) to the Code to add a
limited deduction to the PC Fund of $5.00 per space
sold to alleviate this problem.
4. Since the distribution by the PC Fund to the cem-
etery corporation is not to the beneficiary or to pay a
legal obligation of the beneficiary, the character of the
income is not the same as received by the PC Fund.
Accordingly, the cemetery corporation cannot use the
dividend-received deduction to exclude any of the in-
come received from the PC Fund. Instead the income
received by the cemetery corporation is considered re-
tion at 1400 Eoff Street in
1922. From its small but
promising beginnings, the
Altmeyer Funeral Homes
& Crematory now oper-
ates 17 facilities bearing
their name in three states,
Ohio, West Virginia, and
Virginia.
In September of 2000,
the Altmeyer’s purchased
the
Bauknecht Funeral
Homes
in Bellaire, Shady-
side, and Powhatan, OH.
After merging with Alt-
meyer, Skip was appoint-
ed general manager of the
Bauknecht-Altmeyer Fu-
neral Homes in Bellaire,
Shadyside, and Powhatan
Point, and the
Beck-Alt-
meyer Funeral Home
in
St. Clairsville, OH.
Skip was born and
raised in Bellaire. He is
the son of the late
Wal-
ter C. Bauknecht Jr.
and
Janet Bauknecht
. As the
third generation to pur-
sue a career in the family
business, Skip has over 40
years of experience in the
funeral profession and is
also an accredited cre-
mation technician. For
more information on Alt-
meyer Funeral Homes
visi
Bauknecht-Altmeyer Funeral Home & Crematory
takes delivery of Two New Vehicles
BELLAIRE,OH—
Walter
C. (Skip) Bauknecht
with
Bauknecht-Altmeyer Fu-
neral Home & Crema-
tory
from Bellaire, OH,
takes possession of a new
2013 Cadillac Statesman
Hearse and a 2013 Mer-
cedes Sprinter from
Dick
Conaway
(in sport coat) of
Conaway Hearse & Lim-
ousine
of Uniontown, PA.
The first Altmeyer Fu-
neral Home was founded
in 1917 by
James P. Alt-
meyer
, at 1104 Chapline
St. in Wheeling, WV and
moved to its current loca-