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Abstract: 

The prohibition on self-dealing transactions between a private foundation and a “disqualified person” is absolute, and the penalties—in the form of excise taxes and potential loss of private foundation status—are severe. Because the question of whether a self-dealing transaction has occurred often turns on technical definitional issues, it is important that foundation managers and their advisors understand the rules. The first article this this series, examined the definition of “disqualified person.” This installment examines acts that can be considered self-dealing; although the definition of self-dealing is broad, there numerous exceptions that permit private foundations to transact with disqualified persons. Knowing the rules and exceptions can help foundations avoid punitive excise taxes without unduly constraining their operations.

Keywords: Sales or Exchanges of Property; Leases; Loans; Payment of Compensation

Affiliations:  1: Clark Hill Strasburger.