Joint Ventures Involving Tax-Exempt Organizations, Fourth Edition examines the liability of, and consequences to, exempt organizations participating in joint ventures with for-profit and other tax-exempt entities. This authoritative guide provides unbridled access to relevant IRC provisions, Treasury regulations, IRS rulings, and pertinent judicial decisions and legislative developments that impact exempt organizations involved in joint ventures.
- Features in depth analysis of the IRS's requirements for structuring joint ventures to protect a nonprofit's exemption as well as to minimize UBIT
- Includes sample models, checklists, and numerous citations to Internal Revenue Code sections, Treasury Regulations, case law, and IRS rulings
- Presents models, guidelines, and suggestions for structuring joint ventures and minimizing the risk of audit
- Contains detailed coverage of: new Internal Revenue Code requirements impacting charitable hospitals including Section 501(r) and related provisions; university ventures, revised Form 990, with a focus on nonprofits engaged in joint ventures; the IRS's emphasis on good governance practices; international activities by nonprofits; and a comprehensive examination of the New Market Tax Credits and Low Income Housing Tax Credits arena
Written by a noted expert in the field, Joint Ventures Involving Tax-Exempt Organizations, Fourth Edition is the most in-depth discussion of this critical topic.
Table of Contents
Preface xi
Acknowledgments xv
Chapter 1: Introduction: Joint Ventures Involving Exempt Organizations 1
1.4 University Joint Ventures 1
1.5 Low- Income Housing and New Markets Tax Credit Joint Ventures 1
1.6 Conservation Joint Ventures 2
1.8 Rev. Rul. 98- 15 and Joint Venture Structure 2
1.10 Ancillary Joint Ventures: Rev. Rul. 2004- 51 2
1.14 The Exempt Organization as a Lender or Ground Lessor 2
1.15 Partnership Taxation 3
1.17 Use of a Subsidiary as a Participant in a Joint Venture 3
1.22 Limitation on Private Foundation’s Activities That Limit Excess Business Holdings 4
1.24 Other Developments 4
Chapter 2: Taxation of Charitable Organizations 9
2.1 Introduction 9
2.2 Categories of Exempt Organizations (Revised) 15
2.3 501(c) (3) Organizations: Statutory Requirements 19
2.4 Charitable Organizations: General Requirements 22
2.5 Categories of Charitable Organizations (New) 23
2.6 Application for Exemption 25
2.7 Governance 34
2.8 Form 990: Reporting and Disclosure Requirements (Revised) 35
2.9 Redesigned Form 990 (New) 37
2.10 The IRS Audit (Revised) 37
2.11 Charitable Contributions (Revised) 42
Chapter 3: Taxation of Partnerships and Joint Ventures 53
3.1 Scope of Chapter 53
3.3 Classification as a Partnership (Revised) 56
3.4 Alternatives to Partnerships 70
3.7 Formation of Partnership 70
3.8 Tax Basis in Partnership Interest 70
3.9 Partnership Operations 71
3.10 Partnership Distributions to Partners 72
3.11 Sale or Other Disposition of Assets or Interests 72
3.12 Other Tax Issues 73
Chapter 4: Overview: Joint Ventures Involving Exempt Organizations 79
4.1 Introduction 79
4.2 Exempt Organization as General Partner: A Historical Perspective 80
4.6 Revenue Ruling 2004- 51 and Ancillary Joint Ventures 82
4.9 Conversions from Exempt to For- Profit and from For- Profit to Exempt Entities 82
4.10 Analysis of a Virtual Joint Venture 82
Chapter 5: Private Benefit, Private Inurement, and Excess Benefit Transactions 85
5.1 What Are Private Inurement and Private Benefit? 85
5.2 Transactions in Which Private Benefit or Inurement May Occur 87
5.3 Profit- Making Activities as Indicia of Nonexempt Purpose 89
5.4 Intermediate Sanctions (Revised) 89
5.7 State Activity with Respect to Insider Transactions 99
Chapter 6: Engaging in a Joint Venture: The Choices 101
6.1 Introduction 101
6.2 LLCs 102
6.3 Use of a For- Profit Subsidiary as Participant in a Joint Venture (Revised) 103
6.5 Private Foundations and Program- Related Investments (Revised) 115
6.6 Nonprofits and Bonds 120
6.7 Exploring Alternative Structures (Revised) 122
6.8 Other Approaches 126
Chapter 7: Exempt Organizations as Accommodating Parties in Tax Shelter Transactions 135
7.2 Prevention of Abusive Tax Shelters 135
7.3 Excise Taxes and Penalties 136
Chapter 8: The Unrelated Business Income Tax 137
8.1 Introduction 137
8.3 General Rule 138
8.4 Statutory Exceptions to UBIT 139
8.5 Modifications to UBIT 140
8.7 Calculation of UBIT 140
Chapter 9: Debt- Financed Income 157
9.1 Introduction 157
9.2 Debt- Financed Property 157
9.3 The 514(c) (9) Exception (New) 158
9.6 The Final Regulations 158
Chapter 10: Limitation on Excess Business Holdings 161
10.1 Introduction 161
10.2 Excess Business Holdings: General Rules (Revised) 161
10.3 Tax Imposed 163
10.4 Exclusions (Revised) 164
Chapter 11: Impact on Taxable Joint Ventures: Tax- Exempt Entity Leasing Rules (New) 169
11.3 Internal Revenue Code 168(H) 169
Chapter 12: Healthcare Entities in Joint Ventures 171
12.1 Overview 171
12.2 Classifications of Joint Ventures 172
12.3 Tax Analysis 173
12.4 Other Healthcare Industry Issues 175
12.5 Preserving the 50/50 Joint Venture 176
12.9 Government Scrutiny 176
12.11 The Patient Protection and Affordable Care Act of 2010: 501(R) and Other Statutory Changes Impacting Nonprofit Hospitals 177
12.12 The Patient Protection and Affordable Care Act of 2010: ACOs and Co- Ops: New Joint Venture Healthcare Entities (Revised) 180
Chapter 13: Low- Income Housing, New Markets, Rehabilitation, and Other Tax Credit Programs 181
13.2 Nonprofit- Sponsored LIHTC Project 181
13.3 Low- Income Housing Tax Credit (Revised) 182
13.4 Historic Investment Tax Credit 186
13.6 New Markets Tax Credits (Revised) 196
13.10 The Energy Tax Credits 212
13.11 The Opportunity Zone Funds: New Section 1400Z- 1 and Section 1400Z- 2 (Revised) 213
Appendix 13B 275
Chapter 14: Joint Ventures with Universities 291
14.1 Introduction 291
14.3 Colleges and Universities IRS Compliance Initiative 297
14.5 Faculty Participation in Research Joint Ventures 298
14.6 Nonresearch Joint Venture Arrangements 301
14.7 Modes of Participation by Universities in Joint Ventures (Revised) 301
Chapter 15: Business Leagues Engaged in Joint Ventures 313
15.1 Overview 313
15.2 The Five- Prong Test (Revised) 314
15.3 Unrelated Business Income Tax 315
Chapter 16: Conservation Organizations in Joint Ventures 317
16.1 Overview 317
16.2 Conservation and Environmental Protection as a Charitable or Educational Purpose: Public and Private Benefit 317
16.3 Conservation Gifts and 170(h) Contributions (Revised) 318
16.7 Emerging Issues 344
Chapter 17: International Joint Ventures 345
17.5 General Grantmaking Rules 345
17.11 Application of Foreign Tax Treaties 347
Chapter 19: Debt Restructuring and Asset Protection Issues 351
19.1 Introduction 351
19.2 Overview of Bankruptcy 351
19.3 The Estate and the Automatic Stay 352
19.4 Case Administration 353
19.5 Chapter 11 Plan 354
19.6 Discharge 355
19.7 Special Issues: Consequences of Debt Reduction 355
Index 357
