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Abstract: 

It is well known to managers of private foundations that one of the restrictions placed on private foundations by the Internal Revenue Code is a prohibition on jeopardizing investments. It is also well known that the IRS can impose excise taxes on both the private foundation and its managers if the foundation has made a jeopardizing investment. However, while the existence of this rule is generally clear, the question of just what constitutes a jeopardizing investment is often anything but clear. This article examines how the IRS and the courts have applied the rule against jeopardizing investments as a means of providing clearer guidelines to private foundation managers in making their investments.

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Affiliations:  1: Schiff Hardin LLP; 2: Schiff Hardin LLP.