Tax Planning and Compliance for Tax-Exempt Organizations, Fifth Edition 2019 Cumulative Supplement, 5th Edition
by Jody Blazek
CHAPTER 16Excess Business Holdings and Jeopardizing Investments: IRC §§ 4943 and 4944
§ 16.1 Excess Business Holdings
(a) Definition of Business Enterprise
p. 428. Add to paragraph at top of page:
Note that permitted holdings for the 20 percent limits are expressed in the numbers of shares of voting stock without reference to the value of the shares. However, the 2 percent de minimis amount is either 2 percent of voting shares or 2 percent of the value of all outstanding shares of all classes of stock. Neither the code nor the regulations contain specific rules for valuation.
p. 429. Add after second complete paragraph:
In a complex nontax case involving a violation of the Pension Benefit Guaranty Corporation standards, a private equity fund was found to be conducting a business owned by an employer pension plan that acquired controlling interests in struggling companies. The IRS used an “Investment Plus” theory to analyze the services provided to the companies in which the fund invested created an active business interest.1 The decision also stated that the donation of shares of the fund by a private foundation would not result in a jeopardizing ...