Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 12Private Foundations—General Concepts

• § 12.4 Termination of Private Foundation Status
  • (e) Mergers, Split-Ups, and Transfers Between Foundations
  • (h) Notifying the IRS

§ 12.4 Termination of Private Foundation Status

(e) Mergers, Split-Ups, and Transfers Between Foundations

p. 319. Add after first paragraph:

One must not forget the somewhat illogical words needed to understand tax compliance reporting and tax consequences of transfers between private foundations. Words from the sixth edition are reprinted below for reference due to their significance.

The Transferred (recipient) foundation is not treated as a newly created organization. Furthermore, the transferor foundation has not terminated its private foundation status and need not have notified the IRS in advance of its intentions. When 25 percent or more of a foundation's assets are transferred (called a “significant disposition of assets”) to one or more other private foundations, the recipient private foundation(s) “shall be treated as possessing those attributes and characteristics of the transferor which are described in [Reg. §§ 1.507-3(a)(2), (3), and (4)].” When assets are distributed to commonly controlled foundations, the transferee foundations succeed to certain other tax attributes of the transfer, in the proportion of assets received, if they are effectively controlled by the transferor.

The most recent IRS private ruling on September 20, 2020, continues to issue guidance and conclusion to that ...