IRS Rules on Foundation Dispute

After a three-year legal battle, the Internal Revenue Service has approved a $55-million transfer of funds from a Mississippi foundation to Tennessee, The Tennessean reports.

Under the transfer, approximately $2-million will eventually be distributed to Tennessee charities each year. The money comes from proceeds of the Maddox Foundation, a charity started by the late Nashville businessman, Dan Maddox, and his wife, Margaret. The foundation’s endowment is worth $100-million.

Robin Costa Grindstaff, a foundation trustee, relocated the organization to Mississippi in 1999, one year after the group’s founders died in a boating accident. The move sparked a contentious legal battle to bring the charity back to Tennessee where it was first established.

In May, both sides agreed to settle the case by splitting the foundation in two, so that Tennessee would get $55-million and Mississippi would keep the rest. The IRS had to rule on the agreement before the split could be made final.

Still, the foundation remains under investigation by the tax agency, The New York Times reports. Under privacy rules, the IRS is not allowed to say what it is examining, but the Times noted that legal experts have raised many questions about the spending of foundation assets by Ms. Grindstaff. She has denied wrongdoing.

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