Final regs. issued for transfers from taxable corporations to exempt entities.(IRS regulations)

Tax Adviser, The, April, 1999 by Musi, Gennaro

In recent years, there has been a surge in the number of conversions of entities, either from for-profit to not-for-profit status, or from not-for-profit to for-profit status. The IRS has issued final regulations on the repeal of the General Utilities doctrine, involving asset transfers from taxable corporations to exempt entities. The final regulations adopt, in most part, the rules in the proposed regulations. The final regulations apply to transfers of assets occurring after Jan. 28, 1999, unless the transfer is pursuant to a written agreement binding on or before that date. The purpose of the regulations is to prevent taxable corporations with appreciated assets from using exempt entities to escape taxation on the appreciation.

Background

Under...