'Schools had been looking for help on this issue, and they got it in the form of Internal Revenue Service guidance issued Friday. A college trade group had asked Treasury Department officials last month to use a “stepped-up” basis for calculating the tax. Using appreciated prices means the tax will only apply to income earned since the end of 2017, which in turn would mean a lower bill than using the original cost basis."
https://www.bloomberg.com/news/articles/2018-06-08/colleges-get-tax-reprieve-in-push-to-value-endowment-assets
This is good news.
“Schools may increase enrollment – or give the appearance of doing so by changing the way they measure it – to reduce their endowment-per-student ratio to miss the tax threshold set by Congress, wrote economist Peter Hinrichs. Those colleges with low enrollment may reduce it in order to stay below 500 students to avoid the tax.”
https://www.bloomberg.com/news/articles/2018-05-17/schools-may-try-to-dodge-endowment-tax-cleveland-fed-study-says
An analysis right out of Captain Obvious’ handbook…