Chapter 10- Coverage and Nondiscrimination
Page 10-1
Coverage and nondiscrimination
Chapter 10
Coverage and Nondiscrimination – Demo 6
By Terry Bates (Atlanta)
And
John Almquist (Pacific Coast) and Al Reich Reviewers
INTERNAL REVENUE SERVICE
TAX EXEMPT AND GOVERNMENT ENTITIES
Introduction
Purpose of
chapter
Coverage and Nondiscrimination has been the subject of major CPE Chapters
in 1997 (Chapter 1 – Guide to Coverage and Discrimination Issues), 2002
(Chapter 7 – Coverage and nondiscrimination with Emphasis on
determinations processing) and 2003 (Chapter 1 – Nondiscrimination –
detailed review of demonstrations). The understanding of Coverage and
Nondiscrimination is vital. This chapter contains traditional coverage rules,
current updates and an emphasis on Demonstration 6 – “New Comparability”,
including the Gateways, and Cross-Testing.
This chapter contains republished material from the CPE 2002 and 2003 texts
on coverage and nondiscrimination. The information and rules
comprehensively covered in the CPE 2002 and 2003 chapters remain the
same and are still relevant when processing determination letter applications.
Chapter 10- Coverage and Nondiscrimination
Page 10-2
Coverage and nondiscrimination
Overview
In This
Chapter
This chapter contains the following topics:
INTRODUCTION -----------------------------------------------------------------------------------------------------------------1
OVERVIEW ------------------------------------------------------------------------------------------------------------------------2
FOCUS OF CHAPTER-----------------------------------------------------------------------------------------------------------4
OVERVIEW OF COVERAGE RULES – IRC 410(B) ---------------------------------------------------------------------4
THE RATIO PERCENTAGE TEST-------------------------------------------------------------------------------------------6
THE AVERAGE BENEFITS TEST -------------------------------------------------------