EXEMPT ORGANIZATIONS

T.D. 9605, page 587. REG–155929–06, page 650. Final and temporary regulations under section 509 of the Code, required by the Pension Protection Act of 2006, provide rules for supporting organizations that are operated “in connection with” their supported organization(s) (called “Type III supporting organizations”). These final regulations specify the information that Type III supporting organizations are required to provide their supported organizations. The final regulations also provided the criteria that Type III supporting organizations must satisfy in order to qualify as “functionally integrated.” For those Type III supporting organizations that do not qualify as functionally integrated, the temporary regulations require an annual payout of the greater of 3.5 percent of the fair market value of non-exempt-use assets or 85 percent of adjusted net income.