Transfer of Assets to a Public Charity: Private Foundation Termination
A private foundation may terminate its status under section 507(b)(1)(A) by distributing its net assets to organization(s) with ruling or determination letters that they are public charities described in Code section 509(a)(1). However, the organization to which the distribution is made must have been in existence and so described for a continuous period of at least 60 months before the distribution.
A distribution to a public charity formed from the consolidation of two public charities, for the same purpose and with the same activity, each of which would have met the 60-month existence requirement, had they not consolidated, is a qualifying distribution.
An organization will have distributed all its net assets only if it transfers all of its right, title, and interest in, and to, all of its net assets.
An organization that continues in existence after terminating its private foundation status under section 507(b)(1)(A) must file a new application on Form 1023 in order to be treated as a section 501(c)(3) organization, unless it is a type of organization that is not required to file Form 1023.
Revenue Ruling 2003-13 describes the responsibilities of a private foundation that transfers all of its assets to one or more public charities.
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