The Dr Rustom and Mary Khouri Foundation

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IN 2013, THE FEDERAL DEPARTMENT OF HOUSING & URBAN DEVELOPMENT GIFTED THE HOME LOCATED AT 1509 WAGER AVE., LAKEWOOD, OH 44107 TO AN INDIGENT FAMILY. THE RECIPENT BENEFICIAL OWNER WAS A VICTIM OF VIOLENT CRIME. IN ORDER TO PROTECT THE IDENTITY OF THE INDIVIDUAL AND PROVIDE FINANCIAL OVERSIGHT ON THE OWNESHIP OF THE HOME, HUD TRANSFERRED LEGAL TITLE OF THE REAL ESTATE TO THE THIS FOUNDATION WITH THE UNDERSTANDING THAT THE HOME IN FACT BELONGED TO THE BENEFICAL OWNER AND THAT ANY FUTURE TRANSFER OF THE PROPERTY BY THE FOUNDATION TO THE BENEFICIAL OWNER WOULD BE FOR CONSIDERATIOIN OF NO MORE THAN $1. THE CLEVELAND METROPOLITAN HOUSING AUTHORITY ALSO AGREED TO PROVIDE FUNDS ON BEHALF OF THE BENEFICIAL OWNER ON AN ANNUAL BASIS TO COVER REAL ESTATE TAXES, INSURANCE, AND OTHER OUT OF POCKET EXPENSES OF THE FOUNDATION GIVEN THAT IT HELD LEGAL TITLE AND WOULD BE REPONSIBLE FOR PAYING SUCH EXPENSES. THE FOUNDATION WAS EFFECTIVELY ACTING AS AN AGENT OF A GOVERNMENT AGENCY IN FACILITATING THE OWNERSHIP OF THIS HOME ON BEHALF OF THE TRUE RECIPIENT OF THE HOME. OVER THE YEARS, VARIOUS TAX PREPARERS NEVER FULLY UNDERSTOOD THIS ARRANGEMENT AND TREATED THE PROPERTY AS A RENTAL PROPERTY ON FORM 990-PF FROM 2013 - 2022, INCLUDING CAPITALIZING THE VALUE OF THE HOME ON THE BALANCE SHEET AND DEPRECIATING IT OVER TIME. AS SUCH THE BALANCE SHEET IN THE 2022 990-PF FILING REPORTED A NET ASSET VALUE OF $141,526 FOR THE VALUE OF THE HOME, WHEN IN FACT THE FOUNDATION WAS NOT REALLY THE TRUE OWNER OF THE ASSET. WE NOW BELIEVE THAT THERE SHOULD HAVE BEEN AN OFFSETTING LIABLITY EQUAL TO THE VALUE OF THE HOME REPORTED ON THE BALANCE SHEET BEGINNING WITH THE 2013 FILING SUCH THAT THE NET EQUITY IN THE HOME REPORTED BY THE FOUNDATION WOULD HAVE BEEN $0 AT ALL TIMES. WE HAVE REFLECTED THE 2022 ENDING BALANCE OF $141,526 ON THE BEGINNING BALANCE SHEET OF THIS RETURN, BUT HAVE THEN MADE AN ADJUSTMENT TO THE FOUNDATION CAPITAL TO EFFECTIVELY RECORD THE UNRECORDED LIABLITY OFFSET THAT SHOULD HAVE BEEN BOOKED IN 2013. THIS RESULTS IN THE LARGE REDUCTION IN THE ASSET VALUE OF THE FOUNDATION THAT WOULD MEET THE DEFINIATION OF A SUBSTANTIAL CONTRACTION, ALTHOUGH IN REALITY THERE WAS ONLY A MINIMAL CHANGE IN THE TRUE NET WORTH OF THE FOUNDATION. ALSO NOTE THAT IN 2023, THE HOME WAS SOLD BY THE FOUNDATION ON BEHALF OF THE BENEFICIARL OWNER FOR $425,000, THE NET PROCEEDS FROM THE SALE WERE HELD IN ESCROW FOR THE BENEFIT OF THE BENEFICIAL OWNER UNTIL THEY WERE ABLE TO CLOSE ON A NEW HOME, AT WHICH TIME THE EXCROWED PROCEEDS WERE TRANSFERRED AS PART OF THE CLOSING PROCESS. AS SUCH, THE FOUNDATION NO LONGER HOLDS LEGAL TITLE TO THE PROPERTY AT THE END OF 2023, AND THE BENEFICIAL OWNER HAS RECEIVED 100% OF THE PROCEEDS FROM THE SALE OF THE HOME AS ORIGINALLY AGREED WITH HUD AT THE TIME OF THE TRANSFER OF THE HOME IN 2013. THE FOUNDATION DID RECEIVE A 1099-S REPORTING THE SALES PROCEEDS FROM THE HOME, BUT SINCE IT WAS THE OWNER IN NAME ONLY, WE HAVE OFFSET THE GROSS INCOME TO SHOW A NET GAIN ON THE SALE OF $0 AND HAVE REFLECTED THE NAME OF THE BENEFICIAL OWNER AS A NOMINEE RECIPIENT OF THE 1099-S PROCEEDS IN PART IV OF THE RETURN. NOTE THAT THERE WAS NO FORMAL WRITTEN PLAN, RESOLUTION OR AMENDMENT INVOLVED IN THIS CASE. AS SUCH NO ELECTRONIC DOCUMENTS HAVE BEEN ATTACHED.

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Based on 44 grants on record

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Grants Awarded (44 total)