The Law of Tax-Exempt Organizations, 12th Edition

CHAPTER TWENTY-NINETax-Exempt Organizations and Exempt Subsidiaries

• § 29.1 Subsidiaries Basics
• § 29.2 Charitable Organizations as Subsidiaries
  • (a) Introduction
  • (b) Subsidiaries of Domestic Charitable Organizations
  • (c) Subsidiaries of Foreign Charitable Organizations
• § 29.3 Tax-Exempt Subsidiaries of Charitable Organizations
• § 29.4 Other Combinations of Tax-Exempt Organizations
• § 29.5 Potential of Attribution
• § 29.6 Contributions and Other Payments
• § 29.7 Revenue from Tax-Exempt Subsidiary

This chapter contains an analysis of the law concerning tax-exempt organizations and exempt subsidiaries; the following two chapters discuss the utilization of for-profit subsidiaries and partnerships and other joint ventures.

§ 29.1 SUBSIDIARIES BASICS

The reasons for the advent of combinations of tax-exempt organizations are varying and manifold. In the early years, the law mandated most of the structuring, such as the placement of lobbying activities by a charitable organization¹ into a separate organization,² or the placement of property with a potential for incurring liability into a title-holding corporation.³ Likewise, as discussed in the next chapter, the law frequently dictated the placement by an exempt organization of a substantial unrelated business in a for-profit subsidiary.

The basic concepts of restructuring and the potential for use of various operational forms offer great opportunities and flexibility for today's exempt organization in the performance of its exempt ...