Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 11 JUNE 2012

Mixing Oil & Water

Waller Lansden Dortch & Davis
Explore more from Waller Lansden Dortch & Davis

Pension plans and certain other exempt organizations known as "Qualified Organizations" have been significant investors in leveraged real estate partnerships.

United StatesTax
J. Leigh Griffith
J. Leigh Griffith

Originally published in Tennessee Bar Association

Exempt Organizations and Troubled Real Estate Partnerships

Pension plans and certain other exempt organizations known as "Qualified Organizations"1 have been significant investors in leveraged real estate partnerships.2 Although Qualified Organizations are normally subject to tax on unrelated trade or business income (UBTI)3 if they invest in partnerships directly or indirectly using borrowed funds, there is an exception for partnerships with debt-financed real property if certain conditions are met. These conditions include compliance with the substantial economic effect rules under Internal Revenue Code4 (IRC) §704(b) and compliance with the so-called Fractions Rule under IRC §514(c)(9)(E) (the Fractions Rule).

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

GENIUS Act Crypto Tax Guide 2025-2026: What US Investors, Businesses, And Taxpayers Need To Know About The New Stablecoin Law, Form 1099-DA, And Digital Asset Regulation

The United States cryptocurrency regulatory landscape has undergone its most dramatic transformation in history. The signing of the GENIUS Act into law on July 18, 2025 — the first comprehensive federal crypto statute ever enacted — marks a before-and-after moment for American digital asset law.
United StatesTax
Rotfleisch & Samulovitch P.C.
Rotfleisch & Samulovitch P.C.
Article

A 5% Wealth Tax? Preparing Clients For California's Billionaire Tax Act

California's proposed Billionaire Tax Act would impose a onetime 5% excise tax on individuals and trusts with assets exceeding $1 billion, creating unprecedented challenges for estate planners. The retroactive application and anti-abuse provisions raise critical questions about the treatment of grantor trusts, non-grantor trusts, and beneficiary interests that deviate significantly from established federal wealth transfer tax principles.
United StatesTax
Withers LLP
Withers LLP
Article

IRS Proposes New Racial Nondiscrimination Regulations For Tax-exempt Private Schools

The US Treasury and IRS have proposed regulations that would eliminate longstanding exceptions allowing tax-exempt private schools to maintain race-conscious admissions and scholarship policies. Following the Supreme Court's decision in Students for Fair Admissions v. Harvard, these rules would apply to all private educational institutions, including K-12 schools not directly affected by that ruling, and could result in loss of tax-exempt status for noncompliance.
United StatesTax
McDermott Will & Schulte
McDermott Will & Schulte