January 23, 2003 | Read Time: 1 minute
The Internal Revenue Service has published guidelines for foundations that want to transfer assets to another organization without incurring taxes.
Until now, the only way a foundation could be sure it was complying with the law would be to ask the IRS for a special ruling, known as a private-letter ruling — a time-consuming process for which the foundation must pay a fee. Now, foundations simply have to follow the just-released guidelines, known in tax parlance as a revenue ruling. Revenue rulings from the IRS are designed to help the public by stating the government’s official position on aspects of tax law.
Foundations face numerous situations in which they might decide to transfer assets. For example, a creator of a foundation might decide to close his philanthropy before his death and give the assets to another organization whose board he trusts to use the money for goals similar to his own.
The guidelines on transferring assets describe four common situations in which a foundation might wish to give its assets to different types of groups. In all four cases, a foundation need not incur a tax by giving away its assets, the IRS says.
The guidelines are published in Revenue Ruling 2003-13, which will be published in Internal Revenue Bulletin 2003-4.
