Private Foundations

CHAPTER ELEVENUnrelated Business Income

1. § 11.1 General Rules
   1. (b) Trade or Business
2. *§ 11.2 Exceptions
3. § 11.3 Rules Specifically Applicable to Private Foundations
   1. (b) Permitted Businesses
   2. *(e) Provision of Technical Advice
4. § 11.5 Calculating and Reporting the Tax

§ 11.1 GENERAL RULES

(b) Trade or Business

p. 518. Add another item to “Nature of Items Sold” in Exhibit 11.2:

• Is the nexus between information on items sold and objects displayed and used in the school, church, museum, or other type of exempt organization sufficient to create the necessary relatedness?

*§ 11.2 EXCEPTIONS

p. 526. Insert as first complete paragraph, before heading:

A private foundation received, out of its founder's estate, accounts receivable in connection with legal services provided by its founder. The foundation did not provide any services that gave rise to the legal fees. The IRS ruled that receipt of these receivables by the foundation will be passive income, not subject to unrelated business taxation.^69.1

§ 11.3 RULES SPECIFICALLY APPLICABLE TO PRIVATE FOUNDATIONS

(b) Permitted Businesses

p. 535, note 130. Insert following existing text:

For example, the IRS ruled that a low-income housing program for the elderly, operated by a private foundation by means of a disregarded limited liability company, was a functionally related business in that it relieved the poor and distressed (Priv. Ltr. Rul. 201603032).

*p. 543. Insert following first paragraph, before heading:

(e) Provision ...