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

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Exemption Impact of 50/50 <strong>Ventures</strong> • Concerns are exemption, TBOR2, UBI (and bonds) • Non-issue if insubstantial part of total activities and partners are not insiders • Is control over charitable assets is a substantial private benefit? (See Rev. Rul. 98-15/Redlands) • If yes, how is providing that same benefit to insiders not inurement per se and only a UBI issue?
Exemption Impact of 50/50 <strong>Ventures</strong> • Possible alternatives for a change in IRS interpretation: – change/clarify definition of who is an insider – clarify insubstantial inurement is only TBOR2 – if it is not the nonprofit’s sole activity, control of joint venture is not tantamount to control of the entity and not a substantial private benefit, so veto rights are enough if eliminate some “bad facts” of Rev. Rul. 98-15/Redlands (e.g., charity care/Medicaid standards, unrelated Mgr.) • Caution: The IRS has not clarified which, if any, alternative applies or how many bad facts must go
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 and 12: Ancillary Joint Ventures •Two-pro
Page 13 and 14: Typical Whole Hospital Joint Ventur
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: Community Benefit •New services
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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