Joint Ventures Involving Tax-Exempt Organizations, Fourth Edition examines the liability of, and consequences to, exempt organizations participating in joint ventures with for-profit and other tax-exempt entities. This authoritative guide provides unbridled access to relevant IRC provisions, Treasury regulations, IRS rulings, and pertinent judicial decisions and legislative developments that impact exempt organizations involved in joint ventures.

• Features in depth analysis of the IRS's requirements for structuring joint ventures to protect a nonprofit's exemption as well as to minimize UBIT
• Includes sample models, checklists, and numerous citations to Internal Revenue Code sections, Treasury Regulations, case law, and IRS rulings
• Presents models, guidelines, and suggestions for structuring joint ventures and minimizing the risk of audit
• Contains detailed coverage of: new Internal Revenue Code requirements impacting charitable hospitals including Section 501(r) and related provisions; university ventures, revised Form 990, with a focus on nonprofits engaged in joint ventures; the IRS's emphasis on good governance practices; international activities by nonprofits; and a comprehensive examination of the New Market Tax Credits and Low Income Housing Tax Credits arena

Written by a noted expert in the field, Joint Ventures Involving Tax-Exempt Organizations, Fourth Edition is the most in-depth discussion of this critical topic.

MICHAEL I. SANDERS is the lead partner of Blank Rome's Washington office's tax group with a large practice in the area of exempt organizations involving healthcare and low-income housing, associations and joint ventures between for-profits and nonprofits, as well as structuring New Markets Tax Credit transactions. He is also an adjunct professor at The George Washington University Law School and Georgetown University Law Center. He was recently honored in 2010 by The George Washington University Law School for his 35 years of teaching.

Preface

Acknowledgments

About the Author

Chapter 1: Introduction: Joint Ventures Involving Exempt Organizations

1.1 INTRODUCTION

1.2 JOINT VENTURES IN GENERAL

1.3 HEALTHCARE JOINT VENTURES

1.4 UNIVERSITY JOINT VENTURES

1.5 LOW-INCOME HOUSING AND NEW MARKET TAX CREDIT JOINT VENTURES

1.6 CONSERVATION JOINT VENTURES

1.7 JOINT VENTURES AS ACCOMODATING PARTIES TO IMPERMISSIBLE TAX SHELTERS

1.8 REV. RUL 98-15 AND JOINT VENTURE STRUCTURE

1.9 FORM 990 AND GOOD GOVERNANCE

1.10 ANCILLARY JOINT VENTURES: REV. RUL. 2004–51

1.11 ENGAGING IN A JOINT VENTURE:  THE STRUCTURAL CHOICES AND ROLE OF THE CHARITY

1.12 PARTNERSHIPS WITH OTHER EXEMPT ORGANIZATIONS

1.13 TRANSFER OF CONTROL OF SUPPORTING ORGANIZATION TO ANOTHER TAX-EXEMPT ORGANIZATION

1.14 THE EXEMPT ORGANIZATION AS A LENDER OR GROUND LESSOR

1.15 PARTNERSHIP TAXATION

(a) Overview

(b) Bargain Sale Including “Like Kind” Exchange

1.16 UBIT IMPLICATIONS FROM PARTNERSHIP ACTIVITIES

1.17 USE OF A SUBSIDIARY AS PARTICIPANT IN A JOINT VENTURE

1.18 LIMITATION ON PREFERRED RETURNS

(a) Debt-Financed Property

(b) The Fractions Rule

(c) Tax-Exempt Entity Leasing Rules

1.19 SHARING STAFF AND/OR FACILITIES:  SHARED SERVICES AGREEMENT

1.20 “INTANGIBLES” LICENSED BY NONPROFIT TO FOR-PROFIT SUBSIDIARY OR JOINT VENTURE

1.21 PRIVATE INUREMENT AND PRIVATE BENEFIT

1.22 LIMITATION ON PRIVATE FOUNDATION’S ACTIVITIES THAT LIMIT EXCESS BUSINESS HOLDINGS

1.23 INTERNATIONAL JOINT VENTURES

1.24 OTHER DEVELOPMENTS

Chapter 2: Taxation Of Charitable Organizations

2.1 INTRODUCTION

2.2 CATEGORIES OF EXEMPT ORGANIZATIONS

2.3 §501(C)(3)ORGANIZATIONS: STATUTORY REQUIREMENTS

(a) Organizational Test

(i) Exclusively Organized for Exempt Purposes.

(ii) Dedication of Assets.

(b) Operational Test

(i) Operating Exclusively for Exempt Purposes.

(ii) Prohibition Against Inurement.

(iii) The “Commensurate Test”.

(iv) An IRC §501(c)(3) Organization must not be an “Action” Organization.

(c) Proscription Against Legislative and Political Activities

(i) Legislative Activities.

(ii) Political Campaigns.

(iii) The Lobbying Disclosure Act of 1995.

(d) Feeder versus Integral Part

2.4 CHARITABLE ORGANIZATIONS: GENERAL REQUIREMENTS

(a) Organization Must Benefit a Charitable Class

(b) Organization Must Not Operate Contrary to Public Policy

2.5 CATEGORIES OF CHARITABLE ORGANIZATIONS

(a) Charitable

(i) Relief of the Poor.

(ii) Promotion of Health.

(b) IRS Theory Distinguishing Nonprofits from For-Profits

(c) Religious Organizations

(i) What is “Religion” Under IRC §501(c)(3)?

(ii) Definition of Church.

(d) Educational Organizations

(i) Schools.

(ii) Other Educational Organizations.

(iii) Public Cultural Organizations.

(e) Scientific Organizations

(i) Scientific Research.

(ii) Commercial or Industrial Operations.

(iii) Specific Public Interest.

(iv) General Public Interest.

2.6 APPLICATION FOR EXEMPTION

(a) Individual Organizations

(b) Group Exemption

2.7 GOVERNANCE

2.8 FORM 990: REPORTING AND DISCLOSURE REQUIREMENTS

(a) Who Must File

(b) Disclosure of Returns

2.9 REDESIGN FORM 990

(a) Overview of New Form 990 Joint Venture Reporting—Prior Reporting and Reasons for Change

(b) Major Reporting Considerations for Joint Ventures

(c) Key Questions with Formwide Implications

(i) Definition of Joint Venture.

(ii) Determining the Organization's Reportable Share of a Joint Venture's Activities.

(iii) Different Tax Years.

(d) Joint Ventures Reportable on Schedule R, Related Organizations and Unrelated Partnerships

(i) Joint Ventures as Related Organizations.

(ii) Transfers to and from Related Partnerships.

(iii) Conduct of Substantial Activities through Unrelated Partnerships: 5 Percent Test.

(e) Reporting Joint Venture Activities as Program Service Accomplishments (Part III)

(f) Reporting Joint Venture Activities in Form 990 Financial Statements

(i) Statement of Revenue and Statement of Functional Expenses.

(ii) Balance Sheet.

(iii) Schedule D, Supplemental Financial Statements.

(g) Governance Policies and Structure

(h) Compensation of Officers, Directors, Trustees, Key Employees, and Five Highest-Compensated Employees

(i) Overview of Compensation Reporting.

(ii) Compensation Paid by Related Partnerships.

(iii) Compensation Paid to Employees, Officers, Directors, or Trustees of a Related Partnership.

(iv) Compensation Paid by Disregarded Entities.

(v) Compensation Paid to Employees, Officers, Directors, or Trustees of the Organization by an Unrelated Organization.

(i) Reporting Special Types of Joint Venture Activities

(i) Political Campaign and Lobbying Activities.

(ii) Conservation Easements.

(iii) Activities Outside the United States.

(iv) Fund-Raising and Gaming.

(v) Grant Making.

(vi) Tax-Exempt Bonds.

(vii) Disposition of 25 Percent or More of Assets.

(viii) Transactions with Interested Persons.

(ix) Schedule O, Supplemental Information to Form 990.

(j) Reporting by Hospitals on Schedule H

(i) Hospitals Operated by a Joint Venture.

(ii) Reporting Proportionate Share of Joint Venture's Activities.

(iii) Management Companies and Joint Ventures.

(iv) Sections 501(r), 6033(b)(15), and 4959.

(k) Tax Compliance Considerations

(i) Statements Regarding Other IRS Filings and Tax Compliance.

(ii) Reporting Exemption and Other Income Tax Issues Relating to a Joint Venture.

(l) Going Forward with Revised Form 990

2.10 THE IRS AUDIT

(a) Minimizing Audit Issues—Advance Planning

(i) Conduct Periodic Reviews.

(ii) Have Important Documents Reviewed by Counsel.

(iii) Consistently Document Charitable Nature of Organization’s Activities.

(iv) Adopt and regularly review policies regarding:

(b) Surviving an Audit

2.11 CHARITABLE CONTRIBUTIONS

(a) Contributions of Cash, Ordinary Income Property, and Short-Term Capital Gain Property

(b) Contributions of Capital Gain Property

(c) Contributions of Conservation Easements

(d) Charitable Contributions by Joint Venture

(e) Charitable Contributions to SMLLCs

(f) Charitable Contribution Substantiation and Disclosure Requirements

(i) Written Substantiation for Gifts of $250 or More.

(ii) Disclosure Relating to Quid Pro Quo Contributions.

(g) Registration for Charitable Solicitation

2.12 STATE LAWS

Chapter 3: Taxation of Partnerships and Joint Ventures

3.1 SCOPE OF CHAPTER

3.2 QUALIFYING AS A PARTNERSHIP

(a) Focus on Parties’ Intent

(b) Limited Partnerships

3.3 CLASSIFICATION AS A PARTNERSHIP

(a) Introduction

(b) Overview of the Check-the-Box Regulations

(i) Election Process in General.

(ii) Mechanical Requirements.

(iii) Restrictions on Changing Classification.

(iv) Consequences of Electing to Change Classification.

(c) Classification of Exempt Organizations

(d) Single-Owner Organizations Generally

(e) Impact on Joint Ventures

(f) IRS ANALYSIS: THE DOUBLE-PRONG TEST AND REV. RUL. 98-15

(i) Elements of the Analysis

(ii) Exposure of Charitable Assets to Liability and Private Benefit Issues

(iii) Exposure to Personal Liability.

(iv) Revenue Ruling 98-15

(v) Private Letter Ruling 9736039

(vi) United Cancer Council

(vii) Conflict with Fiduciary Duties

3.4 ALTERNATIVES TO PARTNERSHIPS

(a) Limited Liability Companies

(b) Title-Holding Companies

(i) IRC §501(c)(2) Title-Holding Companies.

(ii) IRC §501(c)(25) Title-Holding Companies.

3.5 PASS-THROUGH REGIME: THE CONDUIT CONCEPT

3.6 ALLOCATION OF PROFITS, LOSSES, AND CREDITS

(a) Substantial Economic Effect Test, in General

(i) Economic Effect Test.

(ii) Substantiality Test.

(b) Special Rules for Allocations of Nonrecourse Deductions

(c) Reallocations in Accordance with the Partners’ Interests in the Partnership

(d) Distributive Share of Management Fees

3.7 FORMATION OF PARTNERSHIP

(a) Contribution of Property in Exchange for Partnership Interest

(b) Partnership Interest in Exchange for Services

3.8 TAX BASIS IN PARTNERSHIP INTERESTS

(a) Loss Limitation

(b) Basis

(i) Partner’s Basis in Partnership Interest (Outside Basis).

(ii) Partnership’s Basis in its Assets (Inside Basis).

(iii) Exempt Organization’s Basis.

(c) Liabilities and Economic Risk of Loss

(d) Loss Deferral Provision

3.9 PARTNERSHIP OPERATIONS

(a) Overview

(b) Partnership Organizational Expenses

(c) Cost Recovery: Modified Accelerated Cost Recovery System

(d) Transactions Between Partner and Partnership

(i) Payments to Partner Acting in Capacity as Nonpartner.

(ii) Sale of Property Between Partnership and Related Party.

(iii) Guaranteed Payments.

(e) Disguised Sales of Partnership Interests

3.10 PARTNERSHIP DISTRIBUTIONS TO PARTNERS

3.11 SALE OR OTHER DISPOSITION OF ASSETS OR INTERESTS

(a) Sale or Other Disposition of Assets

(b) Sale or Other Disposition of Partnership Interests

(c) Termination of the Partnership

(d) Liquidating Distributions

(e) Consequences of Charitable Contribution: Bargain Sales

(f) Application of Bargain Sale Technique to “Burned-Out” Shelters

(g) Partnership Mergers and Divisions

3.12 OTHER TAX ISSUES

(a) Profit Motive Test

(b) Ownership of the Properties

(c) Passive Activity Loss Rules

(d) “At-Risk” Limitations

(e) Tax Shelter Registration and Other Reporting Requirements

(f) Unified Audits and Adjustments

(g) Anti-Abuse Regulations

(i) Intent of Subchapter K.

(ii) Requirement to Accord with Intent of Subchapter K.

(iii) Facts and Circumstances.

(iv) Examples.

(v) Application by Revenue Agents.

(h) Foreign Partnerships

3.13 GUARANTEES, PENALTIES, AND CAPITAL CALLS

(a) Minimum Investment Return

(b) Return of Capital

(c) Indemnification for Environmental Liability

(d) Other Guarantees

(e) The IRS’s Position

(i) IRS Field Directive.

(ii) Private Letter Ruling 9731038.

(iii) IRS Analysis of the First Prong: Charitable Purpose.

(iv) IRS Analysis of the Second Prong: Insulation of the Exempt Organization’s Assets.

(v) Impact of the Ruling.

Chapter 4: Overview: Joint Ventures Involving Exempt Organizations

4.1 INTRODUCTION

4.2 EXEMPT ORGANIZATION AS GENERAL PARTNER: A HISTORICAL PERSPECTIVE

(a) Introduction

(b) Per Se Prohibition

(c) Plumstead Theatre Society Doctrine

(d) The Two-Prong Test: IRS Adopts Plumstead Theatre Doctrine

(i) Adopting Plumstead.

(ii) Application of the Two-Prong Analysis

(iii) A Case Study of the Second-Prong Analysis: Housing Pioneers

(e) The Second Prong Comes to the Forefront: Revenue Ruling 98-15

(i) Lessons for Joint Ventures Involving Tax-Exempt Organizations.

(ii) ABA Health Law Section Proposed Ancillary Joint Venture Fact Patterns Submitted to the IRS.

(f) Redlands Surgical Services v. Commissioner and St. David’s HealthCare System v. U.S.

(g) John Gabriel Ryan Association v. Commissioner of Internal Revenue: The IRS Approves a 50–50 Joint Venture

(h) A Road Map

(i) Favorable Factors.

(ii) Unfavorable Factors.

(i) The Healthcare Arena: Community Benefit and Charitable Care

(i) Whole Hospital Joint Ventures and Ancillary Ventures.

(ii) “Insiders” and Inurement.

(j) Colleges and Universities: Special Issues

(i) Audit Guidelines.

(ii) Corporate Sponsorship.

(iii) Colleges and Universities Compliance Project.

4.3 EXEMPT ORGANIZATIONS AS LIMITED PARTNER OR LLC NON-MANAGING MEMBER

(a) Joint Venture That Engages in Exempt Activities

(b) Joint Venture Engaged in an Unrelated Trade or Business

4.4 JOINT VENTURES WITH OTHER EXEMPT ORGANIZATIONS

4.5 NEW SCHEME FOR ANALYZING JOINT VENTURES

(a) Exempt-Only Ventures

(b) Investment-Type Ventures

(c) Ancillary Joint Ventures

(d) Disposition-Type Ventures

4.6 REVENUE RULING 2004-51 AND ANCILLARY JOINT VENTURES

(a) Issue 1: Exemption Under §501(c)(3)

(b) Issue 2: Unrelated Business Income

(c) Factual Scenarios 1-4: Joint Venture Is a “Substantially Related” Charitable Activity (See Exhibit 4.1)

(d) Factual Scenarios 5-8: Joint Venture Is an Unrelated Business Activity (see Exhibit 4.2)

(e) General Legal Analysis of Rev. Rul. 2004-51

(f) Structural Guidance

4.7 UBIT IMPLICATIONS FROM JOINT VENTURE ACTIVITIES

(a) Definition of Unrelated Business Income

(b) UBIT Applied to Income from a Partnership

(c) General Exclusions from UBIT

(i) Interest Exclusion.

(ii) Rent Exclusion.

(d) Calculation of UBIT

4.8 GOOD GOVERNANCE AND THE IRS AUDIT

(a) Introduction

(b) Good Governance

(c) Joint Ventures and an IRS Audit

(d) Minimize Audit Issues—Advance Planning

4.9 CONVERSIONS FROM EXEMPT TO FOR-PROFIT AND FROM FOR-PROFIT TO EXEMPT ENTITIES

Appendix 4A: A Joint Venture Checklist

In General

Board Involvement/Governance

Healthcare Ventures

Affordable Housing Ventures

Day-to-Day Management

Appendix 4B: Model Joint Venture Participation Policy

Model Joint Venture Participation Policy

Chapter 5: Private Benefit, Private Inurement, and Excess Benefit Transactions

5.1 WHAT ARE PRIVATE INUREMENT AND PRIVATE BENEFIT?

(a) Introduction

(b) Private Inurement and “Insiders”

(c) Distinction Between Private Benefit and Private Inurement

5.2 TRANSACTIONS IN WHICH PRIVATE BENEFIT OR INUREMENT MAY OCCUR

(a) Compensation for Services

(i) Introduction.

(ii) Reasonableness Requirement

 (iii) Special Limitations on Incentive Compensation Arrangements

 (b) Loans

(c) Joint Ventures with Commercial Entities

(d) Private Inurement Per Se

(e) Asset Sales to Insiders

(f) Valuation of New-Economy and Internet Companies

(i) Preliminary Considerations in Conducting a Valuation.

(ii) Income-Based Approaches

(iii) Other Earnings-Based Valuation Methods.

(iv) Other Nontraditional Valuation Methods and Metrics.

(v) Asset-Based Valuation Issues.

(vi) Market Value-Based Approach.

(vii) Stock Options and Stock Compensation.

(g) IRC §501(c)(3) Bonds

5.3 PROFIT-MAKING ACTIVITIES AS INDICIA OF NONEXEMPT PURPOSE

(a) Operations for Profit

(b) Fees for Services

5.4 INTERMEDIATE SANCTIONS

(a) Disqualified Person

(i) Substantial Influence.

(ii) Per se Disqualified.

(iii) Per se not Disqualified.

(iv) Facts and Circumstances.

(v) Organization Managers.

(b) Excess Benefit Transactions

(i) Exclusions from Excess Benefits.

(ii) Initial Contract Exception.

(iii) Excise Penalty Taxes.

(iv) Pension Protection Act of 2006.

(c) Compensation

(i) Establishing Intent to Treat Economic Benefit as Payment for Service.

(ii) Rebuttable Presumption of Reasonableness.

(d) Reporting Requirements

(e) Indemnification Agreements

5.5 CASE LAW

5.6 PLANNING

5.7 STATE ACTIVITY WITH RESPECT TO INSIDER TRANSACTIONS

(a) State Activity

(b) Conclusion

Chapter 6: Engaging in a Joint Venture: The Choices

6.1 INTRODUCTION

6.2 LLCs

(a) Background and Development of LLCs

(i) Historical Development

(b) Comparison With Other Business Entities

(i) LLCs Versus Limited Partnerships

(ii) LLCs Versus C Corporations

(iii) LLCs Versus S Corporations

(iv) Disadvantages

(iv) LLCs versus L3Cs

(c) Exempt Organizations Wholly Owning Other Entities

(i) Wholly Owned C Corporation

(ii) Wholly Owned S Corporation

(iii) Single-Member LLC

(iv) Conversions between Partnerships and Disregarded Entities

(d) Private Foundations As Members of LLCs

6.3 USE OF A FOR-PROFIT SUBSIDIARY AS PARTICIPANT IN A JOINT VENTURE

(a) Reasons for Use of a Subsidiary

(i) Protects Parent’s Exempt Status and Insulates Parent’s Assets.

(ii) Sources of Capital are Expanded.

(iii) Provides Flexibility in Operations.

(b) Requirement for Subsidiary to Be a Separate Legal Entity

(i) Bona Fide Function.

(ii) Not a Mere “Arm” of Parent.

(iii) National Geographic Ruling: Use of a For-Profit Subsidiary

(c) Single-Member Nonprofit LLCs

(d) UBIT Implications Applicable to the Use of a Subsidiary

(i) General Rule.

(ii) Exception for Controlled Subsidiaries.

 (iii) Use of Holding Company Intermediary.

(e) Spin-Off of Existing Activity or Venture Interest

6.4 SUPPORTING ORGANIZATIONS

6.5 PRIVATE FOUNDATIONS AND PROGRAM RELATED INVESTMENTS

(a) Program-Related Investments

(b) Proposed Regulations: Additional Examples of PRIs

(i) Acquisition of Stock in a For-Profit Entity: Example 11.

(ii) Receipt of Stock in Exchange for an Investment in a For-Profit Entity in a Foreign Country: Example 12

(iii) Receipt of Stock in Exchange for a Loan to a For-Profit Entity in a Foreign Country: Example 13

(iv) Loan to For-Profit Entity in a U.S. Natural Disaster Scenario: Example 14

(v) Loan to Individuals in a Natural Disaster Scenario in a Foreign Country: Example 15

(vi) Loan to Intermediary LLC: Example 16

(vii) Loan to a §501(c)(4) Social Welfare Organization: Example 17

(viii) Use of a Deposit Agreement with Third -Party Intermediary: Example 18

(ix) Use of a Guaranty/Reimbursement Agreement and a Third- Party Intermediary: Example 19

(c) Conclusion

6.6 NONPROFITS AND BONDS

(a) Tax-Exempt Bonds

(b) The Social Impact Bond:  Impact Investing

6.7 EXPLORING ALTERNATIVE STRUCTURES

(a) Introduction

(b) A New Legal Entity—the L3C—a Low-Profit LLC

(c) Benefit and Flexible Purpose Corporations—A Legislative Approach

(d) Certified B Corporations

6.8 OTHER “JOINT VENTURE” APPROACHES

(a) Introduction: A Variety of Approaches

(b) Creating a Philanthropic Brand

(c) Foregoing Tax Exemption

(d) Hybrid Structures

(e) For-Profits with Triple-Bottom Lines

(f) Cause Related Marketing

(g) Impact Investing

(h) Implications and Consequences

Chapter 7: Exempt Organizations as Accommodating Parties in Tax Shelter Transactions

7.1 INTRODUCTION

7.2 PREVENTION OF ABUSIVE TAX SHELTERS

(a) Judicial Doctrines

(i) Sham Transaction Doctrine.

(ii) Economic Substance Doctrine.

(iii) Business Purpose Doctrine.

(iv) Substance Over-Form Doctrine.

(v) Step-Transaction Doctrine.

(b) Reportable Transactions

(i) Listed Transactions.

(ii) Confidential Transactions.

(iii) Transactions with Contractual Protections.

(iv) Loss Transactions.

(v) Transactions with a Significant Book-Tax Difference.

(vi) Nature and Timing of Disclosure.

(vii) Reporting Requirements.

7.3 EXCISE TAXES AND PENALTIES

(a) Applicable Transactions

(b) Tax Imposed

(c) Disclosure Requirements

(d) Final Regulations—§4965

7.4 SETTLEMENT INITIATIVES

7.5 ABUSIVE SHELTERS AND TAX CREDIT PROGRAMS

Chapter 8: The Unrelated Business Income Tax

8.1 INTRODUCTION

(a) The Rising Tide of Commercialism

(b) Impact of UBIT and Reporting Trends

8.2 HISTORICAL AND LEGISLATIVE BACKGROUND OF UBIT

(a) The “Destination of Income” Test

(b) The Revenue Act of 1950

8.3 GENERAL RULE

(a) Organizations Subject to UBIT

(b) The Definition of “Unrelated Trade or Business”

(i) Trade or Business.

(ii) “Regularly Carried On”

(iii) “Substantially Related”

8.4 STATUTORY EXCEPTIONS TO UBIT

(a) Volunteer Activities

(b) Activities for the Convenience of Members

(c) Donated Merchandise

(d) Qualified Public Entertainment Activity

(e) Qualified Trade Show and Convention Activities

(f) Certain Hospital Services

(g) Certain Bingo Games

(h) Corporate Sponsorship

(i) Corporate Sponsorship Rules

(j) Associate Member Dues

8.5 MODIFICATIONS TO UBIT

(a) Exclusion of Interest

(b) Exclusion of Dividends and the Use of Blocker Entities

(c) Exclusion of Rents

(d) Royalties

(i) Insurance.

(ii) Payments for Mailing Lists, Affinity Cards, Names, and Logos.

 (e) Travel Tours

(i) Tours with no Educational Purpose.

(ii) Tours with an Educational Purpose.

(iii) Tours that Further Social Welfare Purposes.

(iv) Instructional Tours that Further Exempt Purposes Versus Recreational Tours Offered by the Same Organization.

(v) Scientific Research Trips Offered to Nonscientists.

(vi) Archaeological Trips.

(vii) Performing Arts Travel Tour.

(f) Application of the UBIT

(i) Reproductions or Adaptations.

(ii) Educational and Interpretive Toys and Games, Books, Videos, and CDs.

(iii) Souvenirs or Items Displaying Logo of Exempt Organization.

(iv) Convenience Items.

(g) Income from Internet Activities

(h) Branding Issues

(i) Applicable Law

(i) Corporate Separation

(ii) Use of the Internet

 (iii) Corporate Separation

(iv) Advertising

8.6 INCOME FROM PARTNERSHIPS

8.7 CALCULATION OF UBIT

(a) General Rules

(b) Expenses

(i) General Rule.

(ii) Exploited Activity Rule.

8.8 GOVERNMENTAL SCRUTINY

(a) Payments to Controlling Exempt Organizations.

(b) Public Disclosure of Unrelated Business Income Tax Returns.

(c) UBIT-Related Certification—A Sign of Things to Come?

(d) FIN 48

(e) Interim Report for IRS Compliance Project for Colleges and Universities – Focus on UBIT.

Chapter 9: Debt-Financed Income

9.1 INTRODUCTION

9.2 DEBT-FINANCED PROPERTY

(a) Overview

(b) Calculation of Debt-Financed Income

(c) Acquisition Indebtedness

9.3 THE §514(c)(9) EXCEPTION

9.4 PARTNERSHIP RULES

9.5 THE FRACTIONS RULE

9.6 THE FINAL REGULATION

(a) Introduction

(b) Overall Partnership Income and Loss

(c) Exceptions to the Fractions Rule for Preferred Returns and Guaranteed Payments

(i) Preferred Returns.

(ii) Guaranteed Payments.

(iii) “Reasonable” Amount Safe Harbor.

(iv) Unreturned Capital.

(v) Timing Rules.

 (d) Chargebacks and Offsets

(i) Disproportionate Allocations.

(ii) Minimum Gain Chargebacks Attributable to Nonrecourse Deductions.

(iii) Chargebacks Attributable to the Distribution of Nonrecourse Liability Proceeds.

(e) Partner-Specific Items of Deduction

(f) Unlikely Losses and Deductions

(g) De Minimis Rules

(i) De Minimis Interests.

(ii) De Minimis Allocations.

(h) Anti-Abuse Rule

(i) Tiered Partnerships

(j) Effective Date

9.7 THE FRACTIONS RULE: A TRAP FOR THE UNWARY

Chapter 10: Limitation on Excess Business Holdings

10.1 INTRODUCTION

10.2 EXCESS BUSINESS HOLDINGS: GENERAL RULES

10.3 TAX IMPOSED

10.4 EXCLUSIONS

(a) Functionally Related Business

(b) Program-Related Investment

(c) Income from Passive Sources

Chapter 11: Impact on Taxable Joint Ventures: Tax-Exempt Entity Leasing Rules

11.1 INTRODUCTION

11.2 TYPES OF TRANSACTIONS COVERED BY 1984 ACT RULES

11.3 INTERNAL REVENUE CODE §168(h)

(a) Definition of Tax-Exempt Entity

(b) Five-Year Lookback Rule

(i) Successor Organizations.

(ii) Definition of “First Used.”

(c) Subsidiaries of Tax-Exempt Organizations

11.4 TAX-EXEMPT USE PROPERTY

(a) Real Property

(b) Disqualified Lease

(i) Tax-Exempt Financing.

(ii) Purchase/Sale Option.

(iii) Term of Lease Exceeds Twenty Years.

(iv) Sale/Leaseback.

(c) Personal Property

(d) Short-Term Leases Not Covered

11.5 RESTRICTIONS ON TAX-EXEMPT USE PROPERTY

(a) Depreciation of Personal Property

(b) Depreciation of Real Property

(c) Tax Credits

(d) Deducting Losses

(e) Transfer Restrictions

11.6 PARTNERSHIP RULES

(a) Property Treated as Tax-Exempt Use Property

(b) Qualified Allocation

(c) Compliance with General Partnership Rules

(d) Proportionate Share Owned by Tax-Exempt Entity

(e) Change as a Result of Sale or Redemption

(f) Impact of Rules on Partnerships in Low-Income Housing Endeavors

(g) Circumventing the Qualified Allocation Rules

(h) Partnership and Tax-Exempt Leasing Rules Interplay

(i) Service Contracts

(j) Loss Deferral Rules

Chapter 12: Healthcare Entities in Joint Ventures

12.1 OVERVIEW

12.2 CLASSIFICATIONS OF JOINT VENTURES

12.3 TAX ANALYSIS

(a) Overview of Tax Restrictions

(b) The IRS’s Historical Position

(i) Charitable Purpose.

(ii) Charitable Assets Must Further Exempt Purposes.

(iii) Private Benefit and Inurement.

(iv) Redlands Surgical Services.

(v) St. David’s Health Care System.

(vi) IRS Revocation of Exempt Status of BHS.

(c) Intermediate Sanctions

(i) Disqualified Person.

(ii) Excess Benefit Transactions.

(iii) Enforcement.

(d) Revenue Ruling 98-15

(i) Overview.

(ii) The Ruling.

(iii) Pre/Post-Joint-Venture Control.

(iv) Financial Control—Private Benefit.

(v) 1999 CPE—Comments on Rev. Rul. 98-15.

(vi) Whole Hospital Joint Ventures: Inherent Tax Issues.

(vii) Pre/Post–Joint-Venture Management Issues.

(viii) Drafting the Partnership and LLC Operating Agreements

(ix) Application of Rev. Rul. 98-15 to Ancillary Joint Ventures: Rev. Rul. 2004-51.

(x) Use of a Subsidiary to Protect the Exempt Parent.

12.4 OTHER HEALTHCARE INDUSTRY ISSUES

(a) Revenue Stream Sharing

(i) General Counsel Memorandum 39,862.

(b) Audit Guidelines for Hospitals

(c) Physician Recruitment Guidelines

(i) Revenue Ruling 97-21, Final Physician Recruitment Guidelines.

(d) Federal Healthcare Fraud and Abuse Statutes

(e) IRS Policy and the HHS Office of Inspector General

(f) Health Information Technology

(g) Department of Justice/Federal Trade Commission

(h) Integrated Delivery Systems, PHOs, MSOs, and HMOs

(i) Physician Hospital Organizations.

(ii) Managed Service Organizations.

(iii) Health Maintenance Organizations.

(iv) Point of Service HMOs.

(v) Exemption of Individual Components of Healthcare Systems.

12.5 PRESERVING THE 50/50 JOINT VENTURE

(a) Overview

(b) Expanding Nonprofit Veto Authority in the 50/50 Joint Venture

(c) Resolving Disputes Through Arbitration

(d) Comparison of For-Profit and Tax-Exempt Joint Venture Structures

(e) Preserving “Control” in the 50/50 Venture

12.6 VALUATION

(a) Overview

(b) Anclote Psychiatric

(c) Valuation Guidance from General Accounting Office

(d) 1999 CPE Hospital Joint Venture Article

(e) Intermediate Sanctions Regulations

12.7 JOINT OPERATING AGREEMENTS

(a) Background

(b) The IRS JOA Checklist—A Relaxation of the Integral Part Test

(c) Application of the IRS “Flexible” Ruling Guidelines

(d) Intermediate Sanctions

(e) Conclusion

12.8 UBIT IMPLICATIONS OF HOSPITAL JOINT VENTURES

12.9 GOVERNMENT SCRUTINY

(a) The IRS Exempt Organizations Hospital Compliance Project

(b) Congressional Scrutiny

(i) Reporting Requirements.

(ii) Executive Compensation.

12.10 REDESIGNED FORM 990

12.11 THE PATIENT PROTECTION AND AFFORDABLE CARE ACT OF 2010:  §501(r) AND OTHER STATUTORY CHANGES IMPACTING NONPROFIT HOSPITALS

(a) Introduction

(b) Organizations Subject to §501(r)

(c) Operational Requirements of §501(r)

(i) Community Health Needs Assessment (CHNA).

(ii) Financial Assistance Policy.

(iii) Limitation on Charges.

(iv) Collection Process.

(d) Additional Statutory Requirements Applicable to Hospital Organizations

(i) Mandatory Disclosure of CHNA Results and Compliance.

(ii) Disclosure of Financial Statements.

(iii) The §4959 Excise Tax.

(iv) IRS Periodic Review of Community Benefit Compliance and Annual Congressional Report.

(v) Filing Requirements.

(e) Implications for Joint Ventures

(i) Analysis.

(ii) Going Forward.

12.12 THE PATIENT PROTECTION AND AFFORDABLE CARE ACT OF 2010: ACOs AND CO- OPs: NEW JOINT VENTURE HEALTHCARE ENTITIES

(a) Introduction

(b) ACOs

(i) ACOs Defined.

(ii) Forming an ACO: Participants.

(iii) Forming an ACO: Choice of Entity.

(iv) Inurement, Private Benefit, and Control.

(v) Issues Related to ACO Activities and Non- ACO Activities: Loss of Exemption and UBIT

 (vi) Planning

12.13 PRECAUTIONARY STEPS: A ROAD MAP

12.14 CONCLUSION

Appendix 12A: Sample Conflicts Of Interest Policy

Article I

Purpose

Article II

Definitions

Article III

Procedures

Article IV

Records of Proceedings

Article V

Compensation

Article VI

Annual Statements

Article VII

Periodic Reviews

Article VIII

Use of Outside Experts

Appendix 12B: Model Joint Venture Participation Policy

Chapter 13: Low-Income Housing, New Markets, Rehabilitation, and Other Tax Credits Programs

13.1 RELATIONSHIPS BETWEEN NONPROFITS AND FOR-PROFITS IN AFFORDABLE HOUSING - A BASIC BUSINESS TYPOLOGY

(a) Business Relationships

(b) Joint Nonprofit/For-Profit Ownership Formats

(i) First Format

(ii) Second Format

(c) Principal Forms of Contractual Arrangements

(d) Codification of Economic Substance Doctrine

13.2 NONPROFIT-SPONSORED LIHTC PROJECT

13.3 LOW-INCOME HOUSING TAX CREDIT

(a) History of LIHTC Authority

(b) Introduction to the Low-Income Housing Tax Credit

(c) Utilization of the LIHTC by Tax-Exempt Organizations

(i) Other Sources of Financing Used With the LIHTC.

(ii) Construction, Development, and Management of the Project.

(iii) Partnership Allocations and the Impact of the Tax-Exempt Leasing Rules.

(d) Allocation of Credits

(e) Tax-Exempt Bond-Financed Project

(f) Qualified Low-Income Housing Project

(i) Minimum Set-Aside Requirement.

(ii) Rent Restriction Requirement.

(g) Applicable Credit Percentage

(i) Impact of Check-the-Box Regulations on Credit.

(h) Federal Subsidies

(i) Qualified Basis

(j) Eligible Basis

(i) Exclusion of Federal Grants from Eligible Basis.

(ii) Increase in Eligible Basis for High-Cost Areas.

(k) Recapture of the Credit

(l) Application of the At-Risk Rules

(m) Disposition of the Partnership’s or Investor’s Interest Following the Compliance Period

(n) LIHTC 15-Year Issues

(o) IRS Audits

(p) State LIHTC

(q) Compliance and Rev. Rul. 2004-82

(i) Extended Use Commitments.

(ii) HOME Rent.

(iii) Vacant Unit Rule and Move in Last Day of the Month.

(r) LIHTC Projects in Federal Disaster Areas

(s) Redesigned Form 990 (2010)

13.4 HISTORIC INVESTMENT TAX CREDIT

(a) Overview

(b) Introduction to the Historic Investment Tax Credit

(c) Certified Historic Structures

(d) Qualified Rehabilitation Expenditures

(e) Claiming the Historic Tax Credit

(f) Profit Motive Requirement

(g) Recapture Provisions

(h) State Tax Credits

13.5 EMPOWERMENT ZONE TAX INCENTIVES

(a) Overview

(b) Definition of Empowerment Zones and Enterprise Communities

(i) Tax-Exempt Enterprise Zone Facility Bonds.

(ii) Empowerment Zone Employment Credit.

(iii) Increased IRC §179 Expensing.

(iv) Partial Exclusion of Gain from Sale of Qualified Small Business Stock.

13.6 NEW MARKETS TAX CREDITS

(a) General Overview

(b) Allocation of New Markets Tax Credit

(c) Compliance Monitoring

(d) Allocation Process

 (e) Qualified CDE

(i) Control of Subsidiary Allocatees.

(ii) Control of Sub-Allocatees: Meaning of Control.

(iii) Control of Sub-Allocatees: Management Policies.

(iv) Control of Sub-Allocatees: Investment Decisions.

(f) Qualified Equity Investments

(g) Qualified Low-Income Community Investments

(h) Use of Other Federal Subsidies

(i) Qualified Active Low-Income Community Business

(j) Rental of Real Property: Substantial Improvement Definition

(k) Residential Rental Property

(l) Investment In Non-Real Estate Businesses

(m) Timing of the NMTC Investment

(n) Look-Through Rule: Trade of Business Involving “Intangibles”

(o) Low-Income Community

(p) Targeted Populations

(q) Recapture

(r) Reasonable Expectation Test

(s) Leveraged Structure

(t) Management Services Provided by Tax-Exempt CDFIs—PLR 200644044

(i) Background.

(ii) IRS Determination.

(u) Closing of NMTC Transaction

(v) Exiting the NMTC Transaction: The Unwind

(i) Tax Issues: Use of the A and B Notes by For-Profit QALICBs

(ii) Equity Rather Than Debt—No Cancellation of Indebtedness

(iii) Use of Nonprofit as QALICB or Leverage Lender.

(w) Nonprofits’ Use of NMTC

(i) In General.

(ii) Multiple Roles.

(iii) Board Approval.

(iv) Nonprofits: Parameters of Exemption.

13.7 RECENT IRS GUIDANCE REGARDING GUARANTEES AND INDEMNIFICATIONS

(a) Overview

(b) Background

(c) Requirements For Applicant Organizations

(d) Description of Organization and Activities

(e) Written Representations Regarding Charitable Purpose

(f) Written Representations Regarding Management

(g) Written Representations Regarding Guarantees

(h) IRS Audits

(i) Conclusion

13.8 REPORTABLE LIHTC/NMTC TRANSACTIONS

13.9 GULF ZONE OPPORTUNITY ACT OF 2005

13.10 THE ENERGY TAX CREDITS

(a) Overview

(b) §45(a) Production Tax Credit (PTC)

(c) §48 Energy Investment Tax Credit (ITC)

(d) Choice to Use ITCs Rather Than PTCs

(e) §1603 ARRA Grant Election

(f) Combination with the NMTC

Appendix 13A: New Markets Tax Credits Project Compliance/Qualification/Accounting Projections Checklist

Chapter 14: Joint Ventures with Universities

14.1 INTRODUCTION

(a) IRS Position on University Joint Ventures

(i) Rev. Rul. 2004-51: An Overview.

(ii) Implications of Rev. Rul. 2004-51: Examples and Explanations.

(iii) Rev. Rul. 2004-51: Practice Pointers and Recommendations.

14.2 REDESIGNED FORM 990: ANNUAL INFORMATION REPORTING REQUIREMENTS FOR COLLEGES AND UNIVERSITIES

14.3 COLLEGES AND UNIVERSITIES IRS COMPLIANCE INITIATIVE

14.4 RESEARCH JOINT VENTURES

(a) Scientific Research Organizations: Four-Part Analysis of the Regulations

(i) Scientific Research.

(ii) Commercial or Industrial Operations.

(iii) Specific Public Interest.

(iv) General Public Interest.

(b) IRS Rulings

(c) Case Law

(d) IRS Position

14.5 FACULTY PARTICIPATION IN RESEARCH JOINT VENTURES

14.6 NONRESEARCH JOINT VENTURE ARRANGEMENTS

(a) Basic Functions

(b) Entertainment, Sports, and Travel Activities

(i) Entertainment.

(ii) Sports Activity.

(iii) Corporate Sponsorship.

(iv) Pouring-Rights.

(v) Travel Tours.

(vi) University Fitness Centers.

(c) Two Exempt Venturers

14.7 MODES OF PARTICIPATION BY UNIVERSITIES IN JOINT VENTURES

(a) Introduction

(b) University Housing

(c) Distance Learning

(i) Introduction

(ii) Massive Open Online Courses (MOOCs)

(d) The Internet

(e) Activities Involving Affinity Cards, Mailing Lists, and Logos.

(f) University Endowments

(i) Investments in University Endowments.

(ii) Government Scrutiny of University Endowments.

14.8 INCENTIVES AVAILABLE TO TAXABLE JOINT VENTURERS

14.9 CONCLUSION

Chapter 15: Business Leagues Engaged in Joint Ventures

15.1 OVERVIEW

(a) General Rules

(b) Internal Revenue Code §501(c)(6) and Joint Ventures

(c) Definition of IRC §501(c)(6) Organizations

15.2 THE FIVE-PRONG TEST

(a) Members with a Common Business Interest

(b) Promoting the Common Business Interest

(c) Activities

(i) Entire Industry Benefited.

(ii) Limitation on Particular Services for Individuals.

(d) Commercial Activity for Profit

(e) No Inurement

15.3 UNRELATED BUSINESS INCOME TAX

(a) General Rules

(b) Exception for Indirect Investment in Ancillary Joint Ventures

(c) Exception for Qualified Trade Show Activity

(d) Associate Member Dues

Chapter 16: Conservation Organizations in Joint Ventures

16.1 OVERVIEW

16.2 CONSERVATION AND ENVIRONMENTAL PROTECTION AS A CHARITABLE OR EDUCATIONAL PURPOSE: PUBLIC AND PRIVATE BENEFIT

(a) IRS Ruling Position

(b) Judicial Holdings

16.3 CONSERVATION GIFTS AND §170(H) CONTRIBUTIONS

(a) Qualified Conservation Easements

(b) Exclusively for Conservation Purposes: Enforceable in Perpetuity

(c) Qualified Farmers and Ranchers

(d) Valuation Issues

(i) Valuation, Substantiation, and Appraisals

(ii) Penalties and Burden of Proof

(e) IRS Notice 2004-41: The Tax Avoidance Transaction Settlement Initiative

16.4 UNRELATED BUSINESS INCOME TAX ISSUES

(a) In General

(b) Special Partnership Rules

16.5 JOINT VENTURES INVOLVING CONSERVATION

16.6 SENATE FINANCE COMMITTEE INVESTIGATION OF THE NATURE CONSERVANCY (TNC)

16.7 EMERGING ISSUES

(a) Tax Treatment of Emissions Credits and Similar Arrangements

(b) Promotion of Conservation or Environmental Preservation as an Essential Governmental Function

(c) New Annual Information Reporting for Conservation Organizations

(d) Developments at the State Level

16.8 CONCLUSION

Chapter 17: International Joint Ventures

17.1 OVERVIEW

17.2 DOMESTIC CHARITIES EXPENDING FUNDS ABROAD

(a) Deductibility of Contributions Under §170

(b) Effect of “Friends” Organizations

17.3 POTENTIAL FOR ABUSE: THE USE OF CHARITIES AS ACCOMMODATING PARTIES IN INTERNATIONAL TERRORIST ACTIVITIES

(a) Implications of Global Terrorism on Exempt Organizations

(i) U.S. Government Initiatives.

(b) The Nonprofit: An Ideal Entity for Exploitation? A Discussion

(c) Alternative Money Transfers: Tradition-Meets-Need or Vehicle for Terror?

17.4 GUIDELINES FOR U.S.-BASED CHARITIES ENGAGING IN INTERNATIONAL AID AND INTERNATIONAL CHARITIES

17.5 GENERAL GRANT-MAKING RULES

(a) Public Charity Grant-Making Considerations

(b) Private Foundation Grant-Making Rules

17.6 FOREIGN ORGANIZATIONS RECOGNIZED BY THE IRS AS §501(c)(3) ORGANIZATIONS

17.7 PUBLIC CHARITY EQUIVALENCY TEST

17.8 EXPENDITURE RESPONSIBILITY

17.9 DOMESTIC CHARITIES ENTERING INTO JOINT VENTURES WITH FOREIGN ORGANIZATIONS

17.10 APPLICATION OF FOREIGN LAWS IN OPERATING A JOINT VENTURE IN A FOREIGN COUNTRY

17.11 APPLICATION OF FOREIGN TAX TREATIES

(a) The Effect of Foreign Treaty Provisions on Charitable Deductions

(b) The Effects of Foreign Treaty Provisions on the Taxation of Charitable Organizations

(c) Joint Ventures with Canadian Nonprofits: The Legal Challenges

(i) In General.

(ii) Use of Subsidiaries by Canadian Registered Charities.

(iii) Structure of Canadian Registered Charity and U.S. Tax-Exempt Organization.

17.12 CURRENT DEVELOPMENTS

(a) The IRS Focus on International Activity

(b) IRS Form 990.

(c) IRS Interim Report on Colleges and Universities Compliance Project

(d) Fundraising and Other Trends

17.14 CONCLUSIONS AND FORECAST

Chapter 18: The Exempt Organization as Lender or Ground Lessor

18.1 OVERVIEW

18.2 PARTICIPATION AS A LENDER OR GROUND LESSOR

(a) Advantages of Lender/Lessor Arrangement

(b) Advantages of Equity Ownership

(c) Tax Consequences of Reclassification of Loan or Lease as Joint Venture

18.3 TYPES OF REAL ESTATE LOANS

(a) Construction Loans

(b) Bridge Loans

(c) Wraparound or Second Mortgage Loans

(d) Permanent Loans

(e) Bond Financing

18.4 PARTICIPATING LOANS

(a) Overview

(b) Debt-Equity Classification

(i) The Farley Case.

(ii) Contingent Interest.

(iii) Option to Purchase: Sale-Leaseback.

(c) Guidelines in Structuring Contingent Interest Debt

(i) Definite Maturity Date and Cap on Interest Participation.

(ii) Convertibility.

(iii) Management Rights.

(iv) Interest Based on Gross Receipts.

(v) Adequate Capitalization.

(vi) Prepayment Penalty or “Premium”.

(vii) Other Controls.

(d) Service and Commitment Fees

18.5 GROUND LEASE WITH LEASEHOLD MORTGAGE

(a) Overview

(b) Will Rental Income be Treated as UBIT?

(i) Rental Income Based on Net Income or Profits.

(ii) Income Attributable to Rental of Real Estate Versus Provision of Services.

(c) Non-Tax Considerations

18.6 SALE OF UNDEVELOPED LAND

(a) Unrelated Business Income

(i) The Purpose for Which the Property was Acquired.

(ii) The Frequency, Continuity, and Size of Sales.

(iii) The Extent of Improvements to the Property.

(iv) The Activities of the Owner in Improving and Disposing of the Property.

(v) The Purposes for Which the Property is Held.

(vi) The Proximity of Purchase and Sale.

(b) Discussion of IRS Rulings

(i) Installment Sale to Developer.

(ii) Developer Engaged to Subdivide and Sell Property.

(iii) Four Alternative Uses of Property.

(iv) Eight Sales Over Five Years did not Constitute UBI.

(v) Subdivision and Sale of 31 Lots not Substantially Related.

(c) Excess Business Holding Rules

(d) Participating Ground Lease

(e) Use of Taxable Subsidiary

18.7 GUARANTEES

(a) Overview

(b) Third-Party Guaranty

(c) Limited Individual Recourse Guaranty

(d) Master Lease

(e) Limitations of the Guaranty

18.8 CONCLUSION

Chapter 19: Debt Restructuring and Asset Protection Issues

19.1 INTRODUCTION

(a) Options for Complex Nonprofit/For-Profit Families of Entities in Hard Economic Times

(i) General Restructuring Options.

(ii) Factors to Be Considered in Analysis.

(iii) Specific Analytical Steps.

19.2 OVERVIEW OF BANKRUPTCY

(a) Chapter 7 Bankruptcy

(b) Chapter 11 Bankruptcy

(i) Generally.

(ii) Commencement of Chapter 11 Bankruptcy.

(iii) Operation of Business.

(iv) Plan/Sale.

(c) Comparison of Chapter 7 Bankruptcy and Chapter 11 Bankruptcy

19.3 THE ESTATE AND THE AUTOMATIC STAY

(a) Automatic Stay: Generally

(b) Exceptions to the Automatic Stay

(c) Effect of the Automatic Stay

(d) Acts Done in Violation of the Stay

(e) Duration of an Automatic Stay

(f) Relief from the Automatic Stay

(g) Application of the Automatic Stay to Third Parties

(h) Application of Automatic Stay to IRS Revocation of Tax-Exempt Status

19.4 CASE ADMINISTRATION

(a) Use of Cash: Generally

(b) Use of Cash: HUD Context

(c) Postpetition Financing

(d) Sale of Property/Rejection, Assumption or Assignment of Contracts

19.5 CHAPTER 11 PLAN

(a) Basic Contents of Plan

(b) Acceptance Requirements

(c) Best Interests Test

(d) Cramdown

(i) Fair and Equitable Requirement: Generally.

(ii) Fair and Equitable Requirement: Secured Claims.

(iii) Fair and Equitable Requirement: Unsecured Claims—New Value.

(iv) Fair and Equitable Requirement: Ownership Interests.

(v) Unfair Discrimination.

(e) Effect of Plan Confirmation on HUD Regulatory Agreement

19.6 DISCHARGE

19.7 SPECIAL ISSUES: CONSEQUENCES OF DEBT REDUCTION

(a) Exclusions from Gross Income

(b) Application to Partnerships

(c) Exclusion of COD Income in Bankruptcy

(d) Exclusion of COD Income for Insolvency

(e) Exclusion of COD Income from Qualified Farm Debt

(f) Exclusion of COD Income from Qualified Real Property Business Debt

Index