Joint Ventures Involving Tax-exempt Organizations: 2022 Cumulative Plement

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

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Contents

▪ viii ▪

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

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Contents

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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

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Contents

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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 000