- 6 - some or all of the board members, and the tax effects of such a transaction on petitioner's tax-exempt status. It became clear to Mr. O'Donnell that the board did not want to relinquish control of the hospital and that petitioner needed access to the hospital in order to conduct research; these factors limited the options and effectively prevented selling to a third party. Mr. O'Donnell advised the board on the choice of purchasing entity (e.g., partnership or S corporation) and the associated liability and tax implications for the purchasers. On November 30, 1981, Mr. O'Donnell, on behalf of petitioner, requested a private letter ruling (PLR) from the Internal Revenue Service (IRS) as to the income tax consequences of a sale of the hospital to a private entity (the request), namely: (1) Whether petitioner would retain its charitable qualification under section 501(c)(3); (2) whether any unrelated business income would result; and (3) whether the proposed transaction was prohibited by any Code provision, rule, or regulation. Under "Statement of Facts", the request states: 7. Because of the highly specialized nature of the hospital's facilities there is a very limited market for its sale. Further, the risks and uncertainties related to the operation of the hospital are best understood and therefore subject to evaluation by the Board of Directors of APC [petitioner]. For these reasons, APC has decided to sell the hospital at its appraised value, to its Board of Directors, or an entity which they propose to form, probably a limited partnership. Under "Description of Proposed Transaction", the request states:Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011