Espinoza v. Montana.edited
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Espinoza v. Montana
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Case Caption: Espinoza v. Montana Department of Revenue, 591 U.S. ___ (2020)
Facts of the Case:
In 2015, the Montana legislature established a program that provided a tax credit for
donations to organizations that provided scholarships to private schools. Under the program, the
Montana Department of Revenue (MDOR) administered the tax credits, and families could use
the scholarships to pay tuition at private schools, including religious ones. However, in 2018, the
MDOR announced that it would no longer provide tax credits for donations to religious schools
based on the Montana Constitution's prohibition on public funds being used for religious
organizations (Espinoza v. Montana Department of Revenue, 2020).
In state court, Kendra Espinoza, with two other moms of pupils who went to a religious
school, contested the MDOR's judgment because it infringed on their First Amendment rights to
free exercise. Due to potential breaches of the Montana Constitution's ban on public funds for
religious groups, the Montana Supreme Court finally decided that the entire scholarship program,
including those for secular universities, was unlawful. The plaintiffs filed an appeal with the U.S.
Supreme Court, claiming that the lower Court's ruling had been biased against them because of
their religion.
Procedural History:
The U.S. Supreme Court granted the case certiorari. The plaintiffs asserted that Montana's
ban on using public funding for religious organizations infringed the First Amendment's Free
Exercise Clause and that the state could not disqualify religious institutions from the scholarship
fund based only on their affiliation with a particular religion.
Issue:
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The Court had to decide whether Montana's ban on using public money for religious
organizations infringed the First Amendment's guarantee of the right to free exercise of religion
and if the state may bar religious institutions from participating in its scholarship program.
Holdings:
The Supreme Court ruled that Montana's ban on using public monies for religious organizations
infringed the First Amendment's guarantee of the right to free exercise. Also, the Court ruled that
religious schools could not be disqualified from the scholarship program only because they
adhere to a particular religion (Espinoza v. Montana Department of Revenue, 2020).
Court's Rationale:
The majority judgment for the Court was authored by Chief Justice Roberts, who stated
that Montana's prohibition on using public funds for religious organizations amounted to bias
against religious schools and the parents who chose to have their kids participate in them. The
Supreme Court ruled that states must grant neutral, broadly applicable benefits from the
government to religious groups and persons on the same terms as benefits granted to secular
individuals and groups under the Free Exercise Clause. As religious institutions could receive
scholarships through Montana's scholarship fund, the government could only exclude them from
violating the right to free exercise (Espinoza v. Montana Department of Revenue, 2020).
Final Disposition:
The U.S. Supreme Court overruled the decision of the Montana Supreme Court, and the
case was remanded for additional hearings in conformity with the Court's decision.
Other viewpoints
Justices Kagan and Ginsburg each submitted a unique dissenting opinion. Justice
Ginsburg claimed that the majority's decision undermined the distinction between the state and
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the church and damaged public education. According to Justice Kagan, the majority's decision
overlooked the reality that the Montana Supreme Court had ruled the entire scholarship program
illegal for secular institutions. It would force states to fund religious education even though they
prefer not to.
Discussion
The Espinoza v. Montana Department of Revenue case clarified how states could exclude
religious organizations and individuals from government benefits and programs. It highlighted
the importance of the Free Exercise Clause in protecting religious liberty, and it will likely guide
and affect public policy regarding religious liberty and church and state and church separation. In
this case, the Supreme Court's decision is significant for several reasons. Secondly, it reiterates
the idea that the Free Exercise Article obliges states to grant religious organizations and persons
impartial and widely applicable government benefits on the same conditions as secular
individuals and groups. Second, it clarifies how states can exclude religious organizations and
individuals from government benefits and programs. Third, the decision can significantly impact
public policy and religious education funding.
Several states have already seen the effects of the Court's ruling in Espinoza v. Montana
Department of Revenue in real life. For instance, in response to the ruling, the New Hampshire
legislature approved a bill permitting tax deductions for contributions to charities supporting
religious schools. The governor had previously vetoed the bill, but the Espinoza decision
provided the legal basis for overriding the veto and enacting the law (Fisher, 2020). In addition,
the ruling affects the continuing discussions about financing for private schools and school
choice. Those who support school choice believe parents should be able to use public funds to
send their children to any school they choose, including religious institutions. School choice is
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criticized for undermining public education and transgressing the principle of church-state
separation.
In conclusion, the Espinoza v. Montana Department of Revenue case is a noteworthy
illustration of how case law influences and directs public administration and policy. The Court
clarified how states could exclude religious organizations and individuals from government
benefits and programs. It also highlighted the importance of the Free Exercise Clause in
protecting religious liberty. The decision will likely have practical effects in several states and
will continue to shape the debate over school choice and funding for private schools.
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References
Espinoza v. Montana Department of Revenue, 591 U.S. ___ (2020).
Fisher, D. (2020, June 30). Supreme Court rules states must include religious schools in private school
choice programs. Forbes.
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Related Questions
Required information
Problem 8-72 (LO 8-4) (Algo)
[The following information applies to the questions displayed below.]
In 2023, Elaine paid $2,600 of tuition and $1,320 for books for her dependent son to attend State University this past fall
as a freshman. Elaine files a joint return with her husband.
What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of
the following alternative situations?
Note: Leave no answer blank. Enter zero if applicable.
Problem 8-72 Part a (Algo)
a. Elaine's AGI is $92,000.
American opportunity tax credit
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1. A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs.
How does Goodwill Industries report this on its 2021 statement of activities?
Select one:
A. $3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions.
B. $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.
C. $3,000 investment income increases net assets without donor restrictions;…
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ku.1
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14) When examining revenue transactions, which of the following transactions is classified as an exchange transaction?
A) When a homeowner pays property taxes
B) When a university receives a federal grant that mandates a certain type of research activity
C) When an aquatic center receives cash for a group swim
D) When an employer deducts money for state tax withholding
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Exercise 2 (LO 4, 6) Contributions, statement of activities. Early in 2018, a not-for-
profit organization received a $4,000,000 gift from a wealthy benefactor. This benefactor speci-
fied that the gift be invested in perpetuity with income restricted to provide speaker fees for a
lecture series named for the benefactor. The not-for-profit is permitted to choose suitable
investments and is responsible for all other costs associated with initiating and administering
this series. Neither the donor's stipulation nor the law addresses gains and losses on this permanent
endowment. In 2018, the investments purchased with the gift earned $100,000 in dividend
income. The fair value of the investments increased by $300,000. The not-for-profiť's accounting
policy is to record increases in net assets, for which a donor-imposed restriction is met in the same
accounting period as gains and investment income are recognized, as increases in unrestricted net
assets.
Five presentations in the lecture…
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2
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E13.1 Reporting Various Contributions
The Castile County Rescue Mission receives the following donations:
1. A donor contributes cash, with no restrictions or conditions.
2. An accountant provides services in completing and filing Form 990.
3. Volunteers provide services in staffing the local soup kitchen.
4. A donor signs an agreement promising to contribute cash in two years.
5. A donor contributes land with no restrictions as to use.
6. A donor contributes cash, specifying that it be used to support a program to teach life skills to battered women.
Required
Identify how each contribution is reported on the Mission’s statement of activities. The contribution either (a) increases or decreases net assets without donor restrictions, (b) increases or decreases net assets with donor restrictions, or (c) is not reported as a change in net assets.
Transaction
Affects on net assets
1
2
3
4
5
6
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!
Required information
Problem 8-72 (LO 8-4) (Algo)
[The following information applies to the questions displayed below.]
In 2021, Elaine paid $2,760 of tuition and $1,060 for books for her dependent son to attend State University this past fall
as a freshman. Elaine files a joint return with her husband.
What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of
the following alternative situations? (Leave no answer blank. Enter zero if applicable.)
Problem 8-72 Part-a (Algo)
a. Elaine's AGI is $92,750.
American opportunity tax credit
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N23.
Account
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mn.3
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Problem 8-72 (LO 8-4) (Algo)
[The following information applies to the questions displayed below.]
In 2023, Elaine paid $2,520 of tuition and $1,380 for books for her dependent son to attend State University this past fall
as a freshman. Elaine files a joint return with her husband.
What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of
the following alternative situations?
Note: Leave no answer blank. Enter zero if applicable.
Problem 8-72 Part b (Algo)
b. Elaine's AGI is $168,500.
Note: Round your intermediate calculations to the nearest whole dollar amount.
American opportunity tax credit
_
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During the year, Private College received the following: An unrestricted $10,000 pledge to be paid the following year. A $70,000 cash gift restricted for scholarships. A notice from a recent graduate that the college is named as a beneficiary of $25,000 in that graduate's will. What amount of contribution revenue should Private College report in its statement of activities?
A.) $10,000
B.) $70,000
C.) $105,000
D.) $80,000
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Etling Center for State Government Policy, a nonprofit organization, receives a cash
contribution with donor restrictions of $100,000 in fiscal year ended December 31,
2021. Of this amount, $40,000 of restrictions are satisfied in fiscal year ended
December 31, 2022. What journal entry would be recorded in 2022 to recognize the
satisfaction of the restrictions?
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Ray Ray made the following contributions in 2021.
Charity
Property
Cost
FMV
$ 5,200
5,250
15,150
16,300
$ 5,200
5,250
75,750
24,450
Athens Academy School
United Way
Cash
Cash
American Heart Association
Antique painting
First Methodist Church
Coca-Cola stock
Determine the maximum amount of charitable deduction for each of these contributions ignoring the AGI ceiling on charitable
contributions and assuming that the American Heart Association plans to sell the antique painting to fund its operations. Ray Ray has
owned the painting and Coca-Cola stock since 1990.
Maximum Amount
Cash contributions
Property donations
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Subject:
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Explain when donated materials should be recognized as a contribution and as an expense by a not-for-profit organization.
Why do states and the federal government exercise oversight responsibility over not-for-profit, tax-exempt corporations?
A generous benefactor pledges $1 million to The Smith Foundation, a NPO that promotes the arts. The gift is to be used to provide scholarships for talented musicians at a music camp operated by the Foundation. The gift was given in August 2006 to support the Summer 2007 music program. The Foundation Director argues that the gift is a conditional restricted gift and therefore cannot be recognized as revenue in 2006. The accountant argues that the gift is an unconditional restricted gift and must be recognized in the current year. What is the basis for the Director’s argument? What is the basis for the accountant’s argument? In your answer provide an explanation of the terms conditional, unconditional, restricted and unrestricted.…
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In July 2022, a donor promises to donate $100,000 in cash to an NFP organization if the local NFP can raise the same amount ($100,000) from other donors by December 2022. How much revenue (if any) should the NFP recognize in July 2022? (do not use $ signs, commas or decimals in your answer)
In July 2022, a donor promises to donate $100,000 in cash to an NFP organization on December 1, 2022. How much revenue (if any) should the NFP recognize in July 2022? (do not use $ signs, commas or decimals in your answer)
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