IRS Ruling: 501(c)(3) Agreements Don't Endanger Bonds' Exempt Status

Duff, Susanna
June 2003
Bond Buyer;6/17/2003, Vol. 344 Issue 31658, p5
Trade Publication
The U.S. Internal Revenue Service (IRS) has released a private-letter ruling that finds a joint operating agreement entered into by 501 (c) (3) organizations does not constitute private business use and would not jeopardize the tax-exempt status of bonds issued to finance a project operated by one of the organizations. In the March 5 private-letter ruling released on June 16, 2003, the IRS addressed a situation in which several 501 (c) (3) organizations entered into a joint operating agreement that created shared management of health care services and facilities owned by two not-for-profit hospitals. In the most recent related ruling, the IRS in December determined that a limited partnership and a general partnership created by two 501 (c) (3) organizations to manage and operate their hospital could lease the parking garage of one of the hospitals without making the bonds that financed it taxable.


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