Charitable Donations of LLC and Limited Partnership Interests to Nonprofits

Avoiding Negative Tax Consequences for Public Charities, Private Foundations and Donor-Advised Funds

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, October 27, 2016

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide nonprofit organization professionals and counsel with a practical guide to the planning and reporting implications involved when a donor contemplates gifting an interest in a partnership or an LLC to an exempt organization. The panel will outline gifting impacts to donors, detail the due diligence requirements and possible tax consequences to the donee charity, and offer operational insights. The webinar will also describe the differences in treatment between gifts to public charities vs. gifts to private foundations.

Description

For many clients owning interests in limited partnerships or LLCs, a component of charitable tax planning involves donating some or all of their interests in those entities to exempt organizations. While many charities are hesitant to accept contributions of partnership or LLC units, these donations can be of value to the exempt organization but the nonprofit adviser must understand the operations risks and/or exit strategy of holding the asset.

Exempt organization advisers should have a firm understanding of the tax consequences of contributions of limited partnership of LLC interests to both the donor and the donee organization. Advisers can play a critical role in structuring tax-efficient donative transfers that benefit both the donor and the tax exempt charity.

The exempt organization can help facilitate the contribution by performing a due diligence review of the partnership or LLC. Key elements include determining whether the entity generates any unrelated business taxable income (UBTI), whether the entity's operating agreement provides details on cash flow requirements, including capital calls, and whether the entity's business has any hidden liability risks.

Additionally, advisers to clients with private foundations or donor-advised funds should also be aware of the tax implications of partnership or LLC interest gifts to avoid unanticipated, negative tax consequences.

Listen as our experienced panel provides a practical guide to the tax issues and opportunities involved with charitable contributions of partnership or LLC interests.

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Outline

  1. Structure of partnership or LLC interest donations
  2. Cash flow considerations
  3. Due diligence requirements by donee charity
  4. UBTI traps
  5. Factors unique to private foundations and donor advised funds

Benefits

The panel will discuss these and other important issues:

  • What are the benefits—and risks—of charitable contributions of partnership and LLC interests to an exempt organization?
  • What due diligence must the exempt organization advisers undergo to ensure that a partnership or LLC interest contribution does not involve tax, operational or cash-flow risk to the donee charity?
  • What are the factors unique to private foundations and donor advised funds that impact charitable contributions of partnership or LLC interests?
  • How should an exempt organization structure a donative transaction of a partnership or LLC interest?

Faculty

Michael I. Sanders
Michael I. Sanders

Partner
Blank Rome

Mr. Sanders focuses his practice in the area of taxation, particularly in matters affecting partnerships, limited...  |  Read More

Amanda H. Nussbaum
Amanda H. Nussbaum

Partner
Proskauer Rose

Ms. Nussbaum advises not-for-profit clients on matters such as applying for and maintaining exemption from federal...  |  Read More

Richard F. Riley, Jr.
Richard F. Riley, Jr.

Partner
Foley & Lardner

Mr. Riley is a member of his firm's Taxation practice. He focuses on tax-exempt and nonprofit organizations;...  |  Read More

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$147