The transfer of assets of a private foundation to another private foundation in a liquidation, merger, recapitalization, redemption or other adjustment, organization, or reorganization is a section 507(b)(2) transfer. A transfer under this section will not cause the transferee to be treated as a newly created organization for purposes of the private foundation provisions, requiring notice to the IRS to rebut the presumption of private foundation classification. However, the transferee may be required to reapply for exemption if it wishes to be exempt under section 501(c)(3) of the Code. Because such a transfer of assets is not considered a termination of the transferor foundation unless the transferor voluntarily gives notice, it is not a termination to which the private foundation termination tax applies. Additional information Transferee succeeds to combined tax benefit of transferor foundation Distribution requirements of transferor foundation Excess business holdings and taxable expenditures of transferee foundation Substantial contributors of transferor foundation Private foundation excise tax liability of transferor foundation Status of transferee organization under section 507(b)(2) Revenue Ruling 2002-28: Examples of terminations under these provisions PDF Return to Life Cycle of a Private Foundation
