-29-
abuse by threatening to rescind an exemption. The famed case of
Hawaii’s Bishop Estate shows how effectively the IRS can use the
threat of the loss of exempt status to curb breaches of fiduciary
duty. See Brody, “A Taxing Time for the Bishop Estate: What Is
the I.R.S. Role in Charity Governance?”, 21 U. Haw. L. Rev. 537
(1999). The IRS also has the power to impose intermediate
sanctions for breach of fiduciary duty or self-dealing. See sec.
4958.
We therefore hold that allowing an increase in the
charitable deduction to reflect the increase in the value of the
estate’s property going to the Foundation violates no public
policy and should be allowed.
Decision will be entered under
Rule 155.
Reviewed by the Court.
COLVIN, COHEN, WELLS, FOLEY, VASQUEZ, THORNTON, MARVEL,
HAINES, and GOEKE, JJ., agree with this majority opinion.
HALPERN, J., did not participate in the consideration of
this opinion.
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