Federal Law Update: Ancillary Joint Ventures After ... - Honigman

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Two-prong Test • Derived from Plumstead Theatre and GCM 39005; same for partnerships and LLCs electing partnership treatment • (1): does participation further an exempt purpose of the nonprofit? • (2): does the nonprofit have duties to its proprietary partners (e.g., maximize profits) that would prevent the nonprofit from acting exclusively in furtherance of its exempt purposes? (Historically: 50% control and other GPs) • Corollary: protection against the nonprofit’s assets being used for partnership liabilities (e.g., no unlimited capitals calls and adequate insurance)
Typical Whole Hospital <strong>Joint</strong> Venture Nonprofit Foundation For-profit Hospital Co. 50/50 split of profits and board seats Wholly owned subsidiary LLC Operating Hospital Management Contract For-profit Management Co.
Page 1 and 2: Federal Law Update: Ancillary Joint
Page 3 and 4: Areas not addressed • Non-tax con
Page 5 and 6: Audit Activity • Ongoing joint ve
Page 7 and 8: Defining “Insiders” • No Free
Page 9 and 10: TBOR2 Basics • Two-tier tax on di
Page 11: Ancillary Joint Ventures •Two-pro
Page 15 and 16: Ancillary Services Joint Venture (H
Page 17 and 18: Redlands Community Hospital Foundat
Page 19 and 20: Redlands: Why Not Exempt? • Sole
Page 21 and 22: Redlands: Why Not Exempt? • RSS w
Page 23 and 24: Expanded Control Test • Initiatio
Page 25 and 26: Community Benefit •New services
Page 27 and 28: Exemption Impact of 50/50 Ventures
Page 29 and 30: Other Structuring Options • Taxab
Page 31: Non-tax Considerations • Antifrau

Federal Law Update: Ancillary Joint Ventures After ... - Honigman

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