In April 2016, the IRS issued final regulations that provide guidance to private foundations (PFs) on program-related investments (PRIs).
A much-needed and anticipated notice of proposed rulemaking relating to PRIs was published in April 2012 in the Federal Register (77 FR 23429). This notice added nine additional proposed examples to Section 53.4944-3(b) that make the process of investing easier for the tax-exempt sector. These examples demonstrated that PRIs may:
The IRS received 15 comments from the public. After consideration, the proposed regulations were adopted as amended by this Treasury decision.
Here’s an overview of just two of the amended examples:
While some examples weren’t changed within the final regulations, the examples do provide discussion on the comments provided to the IRS and why the agency felt clarification wasn’t necessary. The IRS intends to post the principles illustrated in the examples on its Web site but not within the final regulations.
The Treasury Department and the IRS are also considering whether to address PRIs in the form of investments in partnership interests through the issuance of a revenue ruling.
The final regulations provide guidance that may be helpful if you’re considering making PRIs or want to explore more complex forms of PRIs. Contact your Moss Adams professional for more information.