Tax Law Commons^™

Creating Complex Monsters: Joint Operating Agreements And The Logical Invalidity Of Treasury Regulation 1.502-1(B), Darryll K. Jones

Journal Publications

This article questions the validity of Regulations section 1.502-1(b) and its resulting insistence upon virtual mergers. It argues that the regulation is invalid as having no basis in section 502, the statute under which it was codified. This article argues, instead, that the regulation is a logically incorrect amalgamation of two distinct judicial tax doctrines by which tax exemption may be or could have been gained vicariously: (1) the integral part doctrine which allows one organization to achieve tax exemption on the basis of another organization's charitable activities, and (2) the now-discarded destination of income doctrine under which tax exemption …