Joint Ventures Involving Tax-Exempt Organizations (Portfolio 478)

Description

The Bloomberg Tax Portfolio, Joint Ventures Involving Tax-Exempt Organizations, No. 478, analyzes the unique federal income tax issues affecting tax-exempt organizations involved in joint venture arrangements. In particular, this Portfolio examines various types of joint venture arrangements from the more traditional partnership and the ever popular limited liability company, to more complex structures such as joint operating agreements. This Portfolio begins with a discussion of the criteria for tax exemption and a description of the various types of joint venture enterprises.

Joint ventures are particularly employed by nonprofit healthcare organizations, many of which the IRS has commented or ruled on, and the Portfolio includes many of these more creative structures. The issues addressed by the IRS in its rulings and guidance in connection with healthcare organizations should not necessarily be interpreted as applying only to tax-exempt healthcare organizations. The principles articulated by the IRS in its healthcare rulings and published memoranda and guidelines should be referred to whenever structuring joint ventures with other types of tax-exempt organizations. Joint ventures involving tax-exempt healthcare organizations also raise special “non-tax” issues under the federal fraud and abuse laws under the Medicare and Medicaid programs, which, if implicated, may not only result in significant sanctions, but also result in adverse tax consequences. This Portfolio generally discusses the federal fraud and abuse laws and their potential impact when structuring joint ventures with tax-exempt healthcare organizations.

Joint ventures between tax-exempt organizations and for-profit investors create special issues under the federal income tax laws and these issues are examined and analyzed throughout the discussion of various joint venture arrangements highlighted in this Portfolio.

This Portfolio also examines specific issues raised in connection with tax-exempt partners participating in real estate joint ventures, including low-income housing projects. Other joint ventures examined by this Portfolio include research arrangements and the commercialization of intellectual property.

Collateral issues related to the joint ventures discussed in this Portfolio include unrelated business income, private inurement/private benefit, intermediate sanctions, exempt financing, and the consequences created when a joint venture or agency relationship is created unintentionally. Finally, special issues when unwinding joint ventures are examined at the end of this Portfolio.

The Worksheets contain selected IRS rulings and other guidance related to current tax issues involving joint venture arrangements with tax-exempt organizations.

Some issues relating to joint ventures involving tax-exempt organizations are covered in greater detail in other Portfolios, to which reference has been made where appropriate.

This Portfolio may be cited as Washlick, 478 T.M., Joint Ventures Involving Tax-Exempt Organizations

Table of Contents

I. Introduction
II. Fundamental Principles: Participation of Exempt Organizations in Joint Ventures
III. Choice of Entity: Types of Joint Ventures
IV. Agency Relationships
V. Joint Ventures Between Tax-Exempt Organizations and For-Profit Investors
VI. Unrelated Business Income Tax
VII. Joint Operating Agreements
VIII. Low-Income Housing Partnerships
IX. Real Estate Joint Ventures
X. Healthcare Joint Ventures
XI. Research and Commercialization of Intellectual Property
XII. Special Issues When Unwinding Joint Ventures