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Special Allocations And Preferential Distributions In Joint Ventures Involving Taxable And Tax Exempt Entities, Darryll K. Jones

Journal Publications

Joint ventures involving taxable and tax-exempt organizations, referred to in this article as "taxable-tax exempt joint ventures," engender conflict between the doctrinal requirements pertaining to tax exemption and the flexibility afforded joint ventures in Subchapter K.' The nonprofit partner must exercise ultimate governing control over the joint venture so that charitable goals take precedence over profit-seeking goals if the nonprofit's share of income is to remain tax exempt. On the other hand, a for-profit partner is entitled and indeed expected to pursue profit but its lack of control over the joint venture exposes the for-profit partner to greater risk of …