Content area
Full Text
A recent private letter ruling describes a strategically planned dissolution of a charitable organization, and consolidation of charitable activities with the activities of a business league, which, without careful planning, could have easily violated charitable organization restrictions. In PLR 200234071, the IRS concluded that the educational activities of a dissolving charitable organization (Corporation) could be assumed by a business league (Association). Certain assets were being transferred directly to the Association in payment of a debt, while other assets would be transferred to another charitable organization (Foundation) and licensed to the Association. Specifically, the Corporation could distribute assets to the Foundation and the Association, the Foundation could fund exempt activities assumed by the Association, and the Foundation could license certain assets to the Association, all without jeopardizing the tax-exempt status of the Corporation, the Foundation or the Association (and without generating unrelated business income).
The Foundation was a charitable organization exempt from federal income tax and classified as a public charity. It was organized to advance the science of jurisprudence, promote and improve the administration of justice, and facilitate understanding of and compliance with the law. In furtherance of its purposes, the Foundation published and distributed materials dealing with law-related subjects and the administration of justice.
The Association was a bar association exempt from federal income tax as a business league under (sec)501(c)(6). It was organized to improve the administration of justice, foster and maintain high standards of conduct, integrity, confidence, and public service of attorneys, safeguard and promote professional interests of members, and encourage continuing legal education.
The Corporation was a charitable organization exempt from federal income tax and classified as a public charity. For many years it had administered an educational program...