D.2. Transfers to Sections 509(a)(1), (a)(2), or (a)(3) Organizations

(1) The assets transferred by a private foundation to a Section 509(a)(1), (a)(2), or

(a)(3) organization are no longer subject to Chapter 42, unless the transferee subsequently becomes a private foundation within three years of the transfer, in which case the transfer will be treated as if it were a Section 507(b)(2) transfer at the time it was made. See Treas. Reg. 1.507-3(e).

(2) Rev. Rul. 2003-13, 2003-1 C.B. 305, discusses the responsibilities of private

foundations that distribute all their net assets to one or more public charities described in Section 509(a)(1), (a)(2), or (a)(3). If the private foundation does not provide notice and does not terminate, the private foundation is not subject to tax under Section 507(c). If the private foundation chooses to provide notice, and therefore terminates, it is subject to the tax under Section 507(c) on the date notice is given; however, if the private foundation has no net assets on the day it provides notice (for example, it provides notice at least one day after it distributes all its net assets), the tax imposed by Section 507(c) will be zero.

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