FROM THE OFFICE OF PUBLIC AFFAIRS
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May 6, 2004
JS-1516
Treasury Issues Guidance on Joint Ventures Between Tax Exempt Organizations And For-Profit Entities
The Treasury Department and the Internal Revenue Service today issued guidance on joint ventures between tax-exempt organizations and for-profit entities.
Revenue Ruling 2004-51 addresses whether an exempt organization that contributes a portion of its assets to, and conducts a portion of its activities through, a limited liability company (LLC) formed with a for-profit corporation continues to qualify for tax exemption. This ruling also addresses whether the exempt organization is subject to unrelated business income tax on income derived from the LLC.
"Tax-exempt organizations requested guidance on how to structure joint ventures when the joint venture represents only an insubstantial part of the exempt organization's activities," said Acting Assistant Secretary for Tax Policy Greg Jenner. "This ruling offers practical guidance on how the IRS will analyze whether the joint venture affects the organization's tax-exempt status or subjects the organization to unrelated business income tax."
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