US Codex
U.S.C.
Notes

§4946. Definitions and special rules — Inbound Citations

26 U.S.C. § 4946

Cited by 136 provisions in release 119-102.

Citations to 26 U.S.C. § 4946 as a whole

Citations to §4946(a)

Citations to §4946(a)(1)

  • 26 U.S.C. § 4941(a)(1)
    Go to provision →
    (1) There is hereby imposed a tax on each act of self-dealing between a disqualified person and a private foundation. The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participates in the act of self-dealing. In the case of a government official (as defined in section 4946(c)), a tax shall be imposed by this paragraph only if such disqualified person participates in the act of self-dealing knowing that it is such an act.
  • 26 U.S.C. § 4941(a)(2)
    Go to provision →
    (2) In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any foundation manager in an act of self-dealing between a disqualified person and a private foundation, knowing that it is such an act, a tax equal to 5 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who participated in the act of self-dealing.
  • 26 U.S.C. § 4941(b)(1)
    Go to provision →
    (1) In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a private foundation and the act is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participated in the act of self-dealing.
  • 26 U.S.C. § 4941(d)(1)(A)
    Go to provision →
    (A) sale or exchange, or leasing, of property between a private foundation and a disqualified person;
  • 26 U.S.C. § 4941(d)(1)(B)
    Go to provision →
    (B) lending of money or other extension of credit between a private foundation and a disqualified person;
  • 26 U.S.C. § 4941(d)(1)(C)
    Go to provision →
    (C) furnishing of goods, services, or facilities between a private foundation and a disqualified person;
  • 26 U.S.C. § 4941(d)(1)(D)
    Go to provision →
    (D) payment of compensation (or payment or reimbursement of expenses) by a private foundation to a disqualified person;
  • 26 U.S.C. § 4941(d)(1)(E)
    Go to provision →
    (E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a private foundation; and
  • 26 U.S.C. § 4941(d)(2)(A)
    Go to provision →
    (A) the transfer of real or personal property by a disqualified person to a private foundation shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the foundation assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer;
  • 26 U.S.C. § 4941(d)(2)(B)
    Go to provision →
    (B) the lending of money by a disqualified person to a private foundation shall not be an act of self-dealing if the loan is without interest or other charge (determined without regard to section 7872) and if the proceeds of the loan are used exclusively for purposes specified in section 501(c)(3);
  • 26 U.S.C. § 4941(d)(2)(C)
    Go to provision →
    (C) the furnishing of goods, services, or facilities by a disqualified person to a private foundation shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for purposes specified in section 501(c)(3);
  • 26 U.S.C. § 4941(d)(2)(D)
    Go to provision →
    (D) the furnishing of goods, services, or facilities by a private foundation to a disqualified person shall not be an act of self-dealing if such furnishing is made on a basis no more favorable than that on which such goods, services, or facilities are made available to the general public;
  • 26 U.S.C. § 4941(d)(2)(E)
    Go to provision →
    (E) except in the case of a government official (as defined in section 4946(c)), the payment of compensation (and the payment or reimbursement of expenses) by a private foundation to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the private foundation shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive;
  • 26 U.S.C. § 4941(d)(2)(F)
    Go to provision →
    (F) any transaction between a private foundation and a corporation which is a disqualified person (as defined in section 4946(a)), pursuant to any liquidation, merger, redemption, recapitalization, or other corporate adjustment, organization, or reorganization, shall not be an act of self-dealing if all of the securities of the same class as that held by the foundation are subject to the same terms and such terms provide for receipt by the foundation of no less than fair market value;
  • 26 U.S.C. § 4941(d)(2)(H)
    Go to provision →
    (H) the leasing by a disqualified person to a private foundation of office space for use by the foundation in a building with other tenants who are not disqualified persons shall not be treated as an act of self-dealing if—
    (i) such leasing of office space is pursuant to a binding lease which was in effect on October 9, 1969, or pursuant to renewals of such a lease;
    (ii) the execution of such lease was not a prohibited transaction (within the meaning of section 503(b) or any corresponding provision of prior law) at the time of such execution; and
    (iii) the terms of the lease (or any renewal) reflect an arm’s-length transaction.
  • 26 U.S.C. § 4941(e)(3)
    Go to provision →
    (3) The terms “correction” and “correct” mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the private foundation in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.
  • 26 U.S.C. § 4942(g)(1)(A)
    Go to provision →
    (A) any amount (including that portion of reasonable and necessary administrative expenses) paid to accomplish one or more purposes described in section 170(c)(2)(B), other than any contribution to (i) an organization controlled (directly or indirectly) by the foundation or one or more disqualified persons (as defined in section 4946) with respect to the foundation, except as provided in paragraph (3), or (ii) a private foundation which is not an operating foundation (as defined in subsection (j)(3)), except as provided in paragraph (3), or
  • 26 U.S.C. § 4942(g)(4)(A)(ii)(I)
    Go to provision →
    (I) a disqualified person of the private foundation directly or indirectly controls such organization or a supported organization (as defined in section 509(f)(3)) of such organization, or
  • 26 U.S.C. § 4943(c)(1)
    Go to provision →
    (1) The term “excess business holdings” means, with respect to the holdings of any private foundation in any business enterprise, the amount of stock or other interest in the enterprise which the foundation would have to dispose of to a person other than a disqualified person in order for the remaining holdings of the foundation in such enterprise to be permitted holdings.
  • 26 U.S.C. § 4943(c)(2)(A)
    Go to provision →
    (A) The permitted holdings of any private foundation in an incorporated business enterprise are—
    (i) 20 percent of the voting stock, reduced by
    (ii) the percentage of the voting stock owned by all disqualified persons.
    In any case in which all disqualified persons together do not own more than 20 percent of the voting stock of an incorporated business enterprise, nonvoting stock held by the private foundation shall also be treated as permitted holdings.
  • 26 U.S.C. § 4943(c)(2)(A)(ii)
    Go to provision →
    (ii) the percentage of the voting stock owned by all disqualified persons.
  • 26 U.S.C. § 4943(c)(2)(B)(i)
    Go to provision →
    (i) the private foundation and all disqualified persons together do not own more than 35 percent of the voting stock of an incorporated business enterprise, and
  • 26 U.S.C. § 4943(c)(2)(B)(ii)
    Go to provision →
    (ii) it is established to the satisfaction of the Secretary that effective control of the corporation is in one or more persons who are not disqualified persons with respect to the foundation,
  • 26 U.S.C. § 4943(c)(4)(A)(i)
    Go to provision →
    (i) In applying this section with respect to the holdings of any private foundation in a business enterprise, if such foundation and all disqualified persons together have holdings in such enterprise in excess of 20 percent of the voting stock on May 26, 1969, the percentage of such holdings shall be substituted for “20 percent,” and for “35 percent” (if the percentage of such holdings is greater than 35 percent), wherever it appears in paragraph (2), but in no event shall the percentage so substituted be more than 50 percent.
  • 26 U.S.C. § 4943(c)(4)(A)(ii)
    Go to provision →
    (ii) If the percentage of the holdings of any private foundation and all disqualified persons together in a business enterprise (or if the percentage of the holdings of the private foundation in such enterprise) decreases for any reason, clause (i) and subparagraph (D) shall, except as provided in the next sentence, be applied for all periods after such decrease by substituting such decreased percentage for the percentage held on May 26, 1969, but in no event shall the percentage substituted be less than 20 percent. For purposes of the preceding sentence, any decrease in percentage holdings attributable to issuances of stock (or to issuances of stock coupled with redemptions of stock) shall be disregarded so long as—
    (I) the net percentage decrease disregarded under this sentence does not exceed 2 percent, and
    (II) the number of shares held by the foundation is not affected by any such issuance or redemption.
  • 26 U.S.C. § 4943(c)(4)(B)
    Go to provision →
    (B) Any interest in a business enterprise which a private foundation holds on May 26, 1969, if the private foundation on such date has excess business holdings, shall (while held by the foundation) be treated as held by a disqualified person (rather than by the private foundation)—
    (i) during the 20-year period beginning on such date, if the private foundation and all disqualified persons have more than a 95 percent voting stock interest on such date,
    (ii) except as provided in clause (i), during the 15-year period beginning on such date, if the foundation and all disqualified persons have more than a 75 percent voting stock interest (or more than a 75 percent profits or beneficial interest in the case of any unincorporated enterprise) on such date or more than a 75 percent interest in the value of all outstanding shares of all classes of stock (or more than a 75 percent capital interest in the case of a partnership or joint venture) on such date, or
    (iii) during the 10–year period beginning on such date, in any other case.
  • 26 U.S.C. § 4943(c)(4)(B)(i)
    Go to provision →
    (i) during the 20-year period beginning on such date, if the private foundation and all disqualified persons have more than a 95 percent voting stock interest on such date,
  • 26 U.S.C. § 4943(c)(4)(B)(ii)
    Go to provision →
    (ii) except as provided in clause (i), during the 15-year period beginning on such date, if the foundation and all disqualified persons have more than a 75 percent voting stock interest (or more than a 75 percent profits or beneficial interest in the case of any unincorporated enterprise) on such date or more than a 75 percent interest in the value of all outstanding shares of all classes of stock (or more than a 75 percent capital interest in the case of a partnership or joint venture) on such date, or
  • 26 U.S.C. § 4943(c)(4)(D)(i)
    Go to provision →
    (i) If, at any time during the second phase, all disqualified persons together have holdings in a business enterprise in excess of 2 percent of the voting stock of such enterprise, then subparagraph (A)(i) shall be applied by substituting for “50 percent” the following: “50 percent, of which not more than 25 percent shall be voting stock held by the private foundation”.
  • 26 U.S.C. § 4943(c)(4)(D)(ii)
    Go to provision →
    (ii) If, immediately before the close of the second phase, clause (i) of this subparagraph did not apply with respect to a business enterprise, then for all periods after the close of the second phase subparagraph (A)(i) shall be applied by substituting for “50 percent” the following: “35 percent, or if at any time after the close of the second phase all disqualified persons together have had holdings in such enterprise which exceed 2 percent of the voting stock, 35 percent, of which not more than 25 percent shall be voting stock held by the private foundation”.
  • 26 U.S.C. § 4943(c)(6)
    Go to provision →
    (6) Except as provided in paragraph (5), if, after May 26, 1969, there is a change in the holdings in a business enterprise (other than by purchase by the private foundation or by a disqualified person) which causes the private foundation to have—
    (A) excess business holdings in such enterprise, the interest of the foundation in such enterprise (immediately after such change) shall (while held by the foundation) be treated as held by a disqualified person (rather than by the foundation) during the 5-year period beginning on the date of such change in holdings; or
    (B) an increase in excess business holdings in such enterprise (determined without regard to subparagraph (A)), subparagraph (A) shall apply, except that the excess holdings immediately preceding the increase therein shall not be treated, solely because of such increase, as held by a disqualified person (rather than by the foundation).
    In any case where an acquisition by a disqualified person would result in a substitution under clause (i) or (ii) of subparagraph (D) of paragraph (4), the preceding sentence shall be applied with respect to such acquisition as if it did not contain the phrase “or by a disqualified person” in the material preceding subparagraph (A).
  • 26 U.S.C. § 4943(c)(6)(A)
    Go to provision →
    (A) excess business holdings in such enterprise, the interest of the foundation in such enterprise (immediately after such change) shall (while held by the foundation) be treated as held by a disqualified person (rather than by the foundation) during the 5-year period beginning on the date of such change in holdings; or
  • 26 U.S.C. § 4943(c)(6)(B)
    Go to provision →
    (B) an increase in excess business holdings in such enterprise (determined without regard to subparagraph (A)), subparagraph (A) shall apply, except that the excess holdings immediately preceding the increase therein shall not be treated, solely because of such increase, as held by a disqualified person (rather than by the foundation).
  • 26 U.S.C. § 4943(d)(1)
    Go to provision →
    (1) In computing the holdings of a private foundation, or a disqualified person (as defined in section 4946) with respect thereto, in any business enterprise, any stock or other interest owned, directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered as being owned proportionately by or for its shareholders, partners, or beneficiaries. The preceding sentence shall not apply with respect to an income or remainder interest of a private foundation in a trust described in section 4947(a)(2), but only if, in the case of property transferred in trust after May 26, 1969, such foundation holds only an income interest or only a remainder interest in such trust.
  • 26 U.S.C. § 4943(d)(4)
    Go to provision →
    (4) The term “disqualified person” (as defined in section 4946(a)) does not include a plan described in section 4975(e)(7) with respect to the holdings of a private foundation described in paragraphs (4) and (5) of subsection (c).
  • 26 U.S.C. § 4943(e)(2)
    Go to provision →
    (2) In applying this section to any donor advised fund (as so defined), the term “disqualified person” means, with respect to the donor advised fund, any person who is—
    (A) described in section 4966(d)(2)(A)(iii),
    (B) a member of the family of an individual described in subparagraph (A), or
    (C) a 35-percent controlled entity (as defined in section 4958(f)(3) by substituting “persons described in subparagraph (A) or (B) of section 4943(e)(2)” for “persons described in subparagraph (A) or (B) of paragraph (1)” in subparagraph (A)(i) thereof).
  • 26 U.S.C. § 4943(f)(4)(A)
    Go to provision →
    (A) In applying this section to any organization described in paragraph (3), the term “disqualified person” means, with respect to the organization—
    (i) any person who was, at any time during the 5-year period ending on the date described in subsection (a)(2)(A), in a position to exercise substantial influence over the affairs of the organization,
    (ii) any member of the family (determined under section 4958(f)(4)) of an individual described in clause (i),
    (iii) any 35-percent controlled entity (as defined in section 4958(f)(3) by substituting “persons described in clause (i) or (ii) of section 4943(f)(4)(A)” for “persons described in subparagraph (A) or (B) of paragraph (1)” in subparagraph (A)(i) thereof),
    (iv) any person described in section 4958(c)(3)(B), and
    (v) any organization—
    (I) which is effectively controlled (directly or indirectly) by the same person or persons who control the organization in question, or
    (II) substantially all of the contributions to which were made (directly or indirectly) by the same person or persons described in subparagraph (B) or a member of the family (within the meaning of section 4946(d)) of such a person.
  • 26 U.S.C. § 4948(c)(2)
    Go to provision →
    (2) For purposes of this subsection, the term “prohibited transaction” means any act or failure to act (other than with respect to section 4942(e)) which would subject a foreign organization described in subsection (b), or a disqualified person (as defined in section 4946) with respect thereto, to liability for a penalty under section 6684 or a tax under section 507 if such foreign organization were a domestic organization.
  • 26 U.S.C. § 4951(a)(1)
    Go to provision →
    (1) There is hereby imposed a tax on each act of self-dealing between a disqualified person and a trust described in section 501(c)(21). The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a trustee acting only as a trustee of the trust) who participates in the act of self-dealing.
  • 26 U.S.C. § 4951(a)(2)
    Go to provision →
    (2) In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any trustee of such a trust in an act of self-dealing between a disqualified person and the trust, knowing that it is such an act, a tax equal to 2½ percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any such trustee who participated in the act of self-dealing.
  • 26 U.S.C. § 4951(b)(1)
    Go to provision →
    (1) In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a trust described in section 501(c)(21) and in which the act is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a trustee acting only as a trustee of such a trust) who participated in the act of self-dealing.
  • 26 U.S.C. § 4951(d)(1)(A)
    Go to provision →
    (A) sale, exchange, or leasing of real or personal property between a trust described in section 501(c)(21) and a disqualified person;
  • 26 U.S.C. § 4951(d)(1)(B)
    Go to provision →
    (B) lending of money or other extension of credit between such a trust and a disqualified person;
  • 26 U.S.C. § 4951(d)(1)(C)
    Go to provision →
    (C) furnishing of goods, services, or facilities between such a trust and a disqualified person;
  • 26 U.S.C. § 4951(d)(1)(D)
    Go to provision →
    (D) payment of compensation (or payment or reimbursement of expenses) by such a trust to a disqualified person; and
  • 26 U.S.C. § 4951(d)(1)(E)
    Go to provision →
    (E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of such a trust.
  • 26 U.S.C. § 4951(d)(2)(A)
    Go to provision →
    (A) the transfer of personal property by a disqualified person to such a trust shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien;
  • 26 U.S.C. § 4951(d)(2)(B)
    Go to provision →
    (B) the furnishing of goods, services, or facilities by a disqualified person to such a trust shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for the purposes specified in section 501(c)(21)(A); and
  • 26 U.S.C. § 4951(d)(2)(C)
    Go to provision →
    (C) the payment of compensation (and the payment or reimbursement of expenses) by such a trust to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the trust shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive.
  • 26 U.S.C. § 4951(e)(3)
    Go to provision →
    (3) The terms “correction” and “correct” mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the trust in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.
  • 26 U.S.C. § 4951(e)(4)
    Go to provision →
    (4) The term “disqualified person” means, with respect to a trust described in section 501(c)(21), a person who is—
    (A) a contributor to the trust,
    (B) a trustee of the trust,
    (C) an owner of more than 10 percent of—
    (i) the total combined voting power of a corporation,
    (ii) the profits interest of a partnership, or
    (iii) the beneficial interest of a trust or unincorporated enterprise,
    which is a contributor to the trust,
    (D) an officer, director, or employee of a person who is a contributor to the trust,
    (E) the spouse, ancestor, lineal descend­ant, or spouse of a lineal descendant of an individual described in subparagraph (A), (B), (C), or (D),
    (F) a corporation of which persons described in subparagraph (A), (B), (C), (D), or (E) own more than 35 percent of the total combined voting power,
    (G) a partnership in which persons described in subparagraph (A), (B), (C), (D), or (E), own more than 35 percent of the profits interest, or
    (H) a trust or estate in which persons described in subparagraph (A), (B), (C), (D), or (E), hold more than 35 percent of the beneficial interest.
    For purposes of subparagraphs (C)(i) and (F), there shall be taken into account indirect stockholdings which would be taken into account under section 267(c), except that, for purposes of this paragraph, section 267(c)(4) shall be treated as providing that the members of the family of an individual are only those individuals described in subparagraph (E) of this paragraph. For purposes of subparagraphs (C) (ii) and (iii), (G), and (H), the ownership of profits or beneficial interests shall be determined in accordance with the rules for constructive ownership of stock provided in section 267(c) (other than paragraph (3) thereof), except that section 267(c)(4) shall be treated as providing that the members of the family of an individual are only those individuals described in subparagraph (E) of this paragraph.
  • 26 U.S.C. § 4958(a)(1)
    Go to provision →
    (1) There is hereby imposed on each excess benefit transaction a tax equal to 25 percent of the excess benefit. The tax imposed by this paragraph shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction.
  • 26 U.S.C. § 4958(b)
    Go to provision →
    (b) In any case in which an initial tax is imposed by subsection (a)(1) on an excess benefit transaction and the excess benefit involved in such transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the excess benefit involved. The tax imposed by this subsection shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction.
  • 26 U.S.C. § 4958(c)(1)(A)
    Go to provision →
    (A) The term “excess benefit transaction” means any transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person if the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing such benefit. For purposes of the preceding sentence, an economic benefit shall not be treated as consideration for the performance of services unless such organization clearly indicated its intent to so treat such benefit.
  • 26 U.S.C. § 4958(c)(3)(A)(i)(II)
    Go to provision →
    (II) any loan provided by such organization to a disqualified person (other than an organization described in subparagraph (C)(ii)), and
  • 26 U.S.C. § 4958(c)(4)
    Go to provision →
    (4) To the extent provided in regulations prescribed by the Secretary, the term “excess benefit transaction” includes any transaction in which the amount of any economic benefit provided to or for the use of a disqualified person is determined in whole or in part by the revenues of 1 or more activities of the organization but only if such transaction results in inurement not permitted under paragraph (3) or (4) of section 501(c), as the case may be. In the case of any such transaction, the excess benefit shall be the amount of the inurement not so permitted.
  • 26 U.S.C. § 4958(f)(1)
    Go to provision →
    (1) The term “disqualified person” means, with respect to any transaction—
    (A) any person who was, at any time during the 5-year period ending on the date of such transaction, in a position to exercise substantial influence over the affairs of the organization,
    (B) a member of the family of an individual described in subparagraph (A),
    (C) a 35-percent controlled entity,
    (D) any person who is described in subparagraph (A), (B), or (C) with respect to an organization described in section 509(a)(3) and organized and operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of the applicable tax-exempt organization,
    (E) which involves a donor advised fund (as defined in section 4966(d)(2)), any person who is described in paragraph (7) with respect to such donor advised fund (as so defined), and
    (F) which involves a sponsoring organization (as defined in section 4966(d)(1)), any person who is described in paragraph (8) with respect to such sponsoring organization (as so defined).
  • 26 U.S.C. § 4958(f)(6)
    Go to provision →
    (6) The terms “correction” and “correct” mean, with respect to any excess benefit transaction, undoing the excess benefit to the extent possible, and taking any additional measures necessary to place the organization in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards, except that in the case of any correction of an excess benefit transaction described in subsection (c)(2), no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund.
  • 26 U.S.C. § 4975(a)
    Go to provision →
    (a) There is hereby imposed a tax on each prohibited transaction. The rate of tax shall be equal to 15 percent of the amount involved with respect to the prohibited transaction for each year (or part thereof) in the taxable period. The tax imposed by this subsection shall be paid by any disqualified person who participates in the prohibited transaction (other than a fiduciary acting only as such).
  • 26 U.S.C. § 4975(b)
    Go to provision →
    (b) In any case in which an initial tax is imposed by subsection (a) on a prohibited transaction and the transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 100 percent of the amount involved. The tax imposed by this subsection shall be paid by any disqualified person who participated in the prohibited transaction (other than a fiduciary acting only as such).
  • 26 U.S.C. § 4975(c)(1)(A)
    Go to provision →
    (A) sale or exchange, or leasing, of any property between a plan and a disqualified person;
  • 26 U.S.C. § 4975(c)(1)(B)
    Go to provision →
    (B) lending of money or other extension of credit between a plan and a disqualified person;
  • 26 U.S.C. § 4975(c)(1)(C)
    Go to provision →
    (C) furnishing of goods, services, or facilities between a plan and a disqualified person;
  • 26 U.S.C. § 4975(c)(1)(D)
    Go to provision →
    (D) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;
  • 26 U.S.C. § 4975(c)(1)(E)
    Go to provision →
    (E) act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interest or for his own account; or
  • 26 U.S.C. § 4975(c)(1)(F)
    Go to provision →
    (F) receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan.
  • 26 U.S.C. § 4975(c)(2)
    Go to provision →
    (2) The Secretary shall establish an exemption procedure for purposes of this subsection. Pursuant to such procedure, he may grant a conditional or unconditional exemption of any disqualified person or transaction, orders of disqualified persons or transactions, from all or part of the restrictions imposed by paragraph (1) of this subsection. Action under this subparagraph may be taken only after consultation and coordination with the Secretary of Labor. The Secretary may not grant an exemption under this paragraph unless he finds that such exemption is—
    (A) administratively feasible,
    (B) in the interests of the plan and of its participants and beneficiaries, and
    (C) protective of the rights of participants and beneficiaries of the plan.
    Before granting an exemption under this paragraph, the Secretary shall require adequate notice to be given to interested persons and shall publish notice in the Federal Register of the pendency of such exemption and shall afford interested persons an opportunity to present views. No exemption may be granted under this paragraph with respect to a transaction described in subparagraph (E) or (F) of paragraph (1) unless the Secretary affords an opportunity for a hearing and makes a determination on the record with respect to the findings required under subparagraphs (A), (B), and (C) of this paragraph, except that in lieu of such hearing the Secretary may accept any record made by the Secretary of Labor with respect to an application for exemption under section 408(a) of title I of the Employee Retirement Income Security Act of 1974.
  • 26 U.S.C. § 4975(d)(1)
    Go to provision →
    (1) any loan made by the plan to a disqualified person who is a participant or beneficiary of the plan if such loan—
    (A) is available to all such participants or beneficiaries on a reasonably equivalent basis,
    (B) is not made available to highly compensated employees (within the meaning of section 414(q)) in an amount greater than the amount made available to other employees,
    (C) is made in accordance with specific provisions regarding such loans set forth in the plan,
    (D) bears a reasonable rate of interest, and
    (E) is adequately secured;
  • 26 U.S.C. § 4975(d)(2)
    Go to provision →
    (2) any contract, or reasonable arrangement, made with a disqualified person for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor;
  • 26 U.S.C. § 4975(d)(3)(B)
    Go to provision →
    (B) such loan is at a reasonable rate of interest, and any collateral which is given to a disqualified person by the plan consists only of qualifying employer securities (as defined in subsection (e)(8));
  • 26 U.S.C. § 4975(d)(5)(B)
    Go to provision →
    (B) a disqualified person which is wholly owned (directly or indirectly) by the employer establishing the plan, or by any person which is a disqualified person with respect to the plan, but only if the total premiums and annuity considerations written by such insurers for life insurance, health insurance, or annuities for all plans (and their employers) with respect to which such insurers are disqualified persons (not including premiums or annuity considerations written by the employer maintaining the plan) do not exceed 5 percent of the total premiums and annuity considerations written for all lines of insurance in that year by such insurers (not including premiums or annuity considerations written by the employer maintaining the plan);
  • 26 U.S.C. § 4975(d)(8)
    Go to provision →
    (8) any transaction between a plan and a common or collective trust fund or pooled investment fund maintained by a disqualified person which is a bank or trust company supervised by a State or Federal agency or between a plan and a pooled investment fund of an insurance company qualified to do business in a State if—
    (A) the transaction is a sale or purchase of an interest in the fund,
    (B) the bank, trust company, or insurance company receives not more than a reasonable compensation, and
    (C) such transaction is expressly permitted by the instrument under which the plan is maintained, or by a fiduciary (other than the bank, trust company, or insurance company, or an affiliate thereof) who has authority to manage and control the assets of the plan;
  • 26 U.S.C. § 4975(d)(9)
    Go to provision →
    (9) receipt by a disqualified person of any benefit to which he may be entitled as a participant or beneficiary in the plan, so long as the benefit is computed and paid on a basis which is consistent with the terms of the plan as applied to all other participants and beneficiaries;
  • 26 U.S.C. § 4975(d)(10)
    Go to provision →
    (10) receipt by a disqualified person of any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with the plan, but no person so serving who already receives full-time pay from an employer or an association of employers, whose employees are participants in the plan or from an employee organization whose members are participants in such plan shall receive compensation from such fund, except for reimbursement of expenses properly and actually incurred;
  • 26 U.S.C. § 4975(d)(11)
    Go to provision →
    (11) service by a disqualified person as a fiduciary in addition to being an officer, employee, agent, or other representative of a disqualified person;
  • 26 U.S.C. § 4975(d)(18)
    Go to provision →
    (18) any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary of Labor), between a plan and a disqualified person (other than a fiduciary described in subsection (e)(3)) with respect to a plan if—
    (A) the transaction involves a block trade,
    (B) at the time of the transaction, the interest of the plan (together with the interests of any other plans maintained by the same plan sponsor), does not exceed 10 percent of the aggregate size of the block trade,
    (C) the terms of the transaction, including the price, are at least as favorable to the plan as an arm’s length2 transaction, and
    (D) the compensation associated with the purchase and sale is not greater than the compensation associated with an arm’s length2 transaction with an unrelated party,1
  • 26 U.S.C. § 4975(d)(19)
    Go to provision →
    (19) any transaction involving the purchase or sale of securities, or other property (as determined by the Secretary of Labor), between a plan and a disqualified person if—
    (A) the transaction is executed through an electronic communication network, alternative trading system, or similar execution system or trading venue subject to regulation and oversight by—
    (i) the applicable Federal regulating entity, or
    (ii) such foreign regulatory entity as the Secretary of Labor may determine by regulation,
    (B) either—
    (i) the transaction is effected pursuant to rules designed to match purchases and sales at the best price available through the execution system in accordance with applicable rules of the Securities and Exchange Commission or other relevant governmental authority, or
    (ii) neither the execution system nor the parties to the transaction take into account the identity of the parties in the execution of trades,
    (C) the price and compensation associated with the purchase and sale are not greater than the price and compensation associated with an arm’s length2 transaction with an unrelated party,
    (D) if3 the disqualified person has an ownership interest in the system or venue described in subparagraph (A), the system or venue has been authorized by the plan sponsor or other independent fiduciary for transactions described in this paragraph, and
    (E) not less than 30 days prior to the initial transaction described in this paragraph executed through any system or venue described in subparagraph (A), a plan fiduciary is provided written or electronic notice of the execution of such transaction through such system or venue,1
  • 26 U.S.C. § 4975(d)(19)(D)
    Go to provision →
    (D) if3 the disqualified person has an ownership interest in the system or venue described in subparagraph (A), the system or venue has been authorized by the plan sponsor or other independent fiduciary for transactions described in this paragraph, and
  • 26 U.S.C. § 4975(d)(20)
    Go to provision →
    (20) transactions described in subparagraphs (A), (B), and (D) of subsection (c)(1) between a plan and a person that is a disqualified person other than a fiduciary (or an affiliate) who has or exercises any discretionary authority or control with respect to the investment of the plan assets involved in the transaction or renders investment advice (within the meaning of subsection (e)(3)(B)) with respect to those assets, solely by reason of providing services to the plan or solely by reason of a relationship to such a service provider described in subparagraph (F), (G), (H), or (I) of subsection (e)(2), or both, but only if in connection with such transaction the plan receives no less, nor pays no more, than adequate consideration,1
  • 26 U.S.C. § 4975(d)(21)
    Go to provision →
    (21) any foreign exchange transactions, between a bank or broker-dealer (or any affiliate of either) and a plan (as defined in this section) with respect to which such bank or broker-dealer (or affiliate) is a trustee, custodian, fiduciary, or other disqualified person, if—
    (A) the transaction is in connection with the purchase, holding, or sale of securities or other investment assets (other than a foreign exchange transaction unrelated to any other investment in securities or other investment assets),
    (B) at the time the foreign exchange transaction is entered into, the terms of the transaction are not less favorable to the plan than the terms generally available in comparable arm’s length2 foreign exchange transactions between unrelated parties, or the terms afforded by the bank or broker-dealer (or any affiliate of either) in comparable arm’s-length foreign exchange transactions involving unrelated parties,
    (C) the exchange rate used by such bank or broker-dealer (or affiliate) for a particular foreign exchange transaction does not deviate by more than 3 percent from the interbank bid and asked rates for transactions of comparable size and maturity at the time of the transaction as displayed on an independent service that reports rates of exchange in the foreign currency market for such currency, and
    (D) the bank or broker-dealer (or any affiliate of either) does not have investment discretion, or provide investment advice, with respect to the transaction,1
  • 26 U.S.C. § 4975(e)(2)
    Go to provision →
    (2) For purposes of this section, the term “disqualified person” means a person who is—
    (A) a fiduciary;
    (B) a person providing services to the plan;
    (C) an employer any of whose employees are covered by the plan;
    (D) an employee organization any of whose members are covered by the plan;
    (E) an owner, direct or indirect, of 50 percent or more of—
    (i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation,
    (ii) the capital interest or the profits interest of a partnership, or
    (iii) the beneficial interest of a trust or unincorporated enterprise,
    which is an employer or an employee organization described in subparagraph (C) or (D);
    (F) a member of the family (as defined in paragraph (6)) of any individual described in subparagraph (A), (B), (C), or (E);
    (G) a corporation, partnership, or trust or estate of which (or in which) 50 percent or more of—
    (i) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation,
    (ii) the capital interest or profits interest of such partnership, or
    (iii) the beneficial interest of such trust or estate,
    is owned directly or indirectly, or held by persons described in subparagraph (A), (B), (C), (D), or (E);
    (H) an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G); or
    (I) a 10 percent or more (in capital or profits) partner or joint venturer of a person described in subparagraph (C), (D), (E), or (G).
    The Secretary, after consultation and coordination with the Secretary of Labor or his delegate, may by regulation prescribe a percentage lower than 50 percent for subparagraphs (E) and (G) and lower than 10 percent for subparagraphs (H) and (I).
  • 26 U.S.C. § 4975(e)(8)
    Go to provision →
    (8) The term “qualifying employer security” means any employer security within the meaning of section 409(l). If any moneys or other property of a plan are invested in shares of an investment company registered under the Investment Company Act of 1940, the investment shall not cause that investment company or that investment company’s investment adviser or principal underwriter to be treated as a fiduciary or a disqualified person for purposes of this section, except when an investment company or its investment adviser or principal underwriter acts in connection with a plan covering employees of the investment company, its investment adviser, or its principal underwriter.
  • 26 U.S.C. § 4975(e)(9)(B)
    Go to provision →
    (B) In the case of any trust to which this section applies by reason of subparagraph (A), the term “disqualified person” includes any person who is a disqualified person with respect to any plan to which such trust is permitted to make payments under section 4223 of the Employee Retirement Income Security Act of 1974.
  • 26 U.S.C. § 4975(f)(3)
    Go to provision →
    (3) A transfer or real or personal property by a disqualified person to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer.
  • 26 U.S.C. § 4975(f)(5)
    Go to provision →
    (5) The terms “correction” and “correct” mean, with respect to a prohibited transaction, undoing the transaction to the extent possible, but in any case placing the plan in a financial position not worse than that in which it would be if the disqualified person were acting under the highest fiduciary standards.
  • 26 U.S.C. § 4975(f)(11)(A)
    Go to provision →
    (A) For purposes of subsection (d)(23), the term “correction period” means the 14-day period beginning on the date on which the disqualified person discovers, or reasonably should have discovered, that the transaction would (without regard to this paragraph and subsection (d)(23)) constitute a prohibited transaction.
  • 26 U.S.C. § 4975(f)(11)(B)(ii)
    Go to provision →
    (ii) In the case of any disqualified person, subsection (d)(23) does not apply to a transaction if, at the time the transaction is entered into, the disqualified person knew (or reasonably should have known) that the transaction would (without regard to this paragraph) constitute a prohibited transaction.
  • 26 U.S.C. § 4979A(a)(4)
    Go to provision →
    (4) any synthetic equity is owned by a disqualified person in any nonallocation year,
  • 26 U.S.C. § 4979A(e)(2)(C)
    Go to provision →
    (C) For purposes of subparagraph (A), the amount involved for the first nonallocation year of any employee stock ownership plan shall be determined by taking into account the total value of all the deemed-owned shares of all disqualified persons with respect to such plan.

Citations to §4946(a)(1)(H)

  • 26 U.S.C. § 4942(j)(3)(B)(iii)
    Go to provision →
    (iii) substantially all of the support (other than gross investment income as defined in section 509(e)) of which is normally received from the general public and from 5 or more exempt organizations which are not described in section 4946(a)(1)(H) with respect to each other or the recipient foundation; not more than 25 percent of the support (other than gross investment income) of which is normally received from any one such exempt organization; and not more than half of the support of which is normally received from gross investment income.
  • 26 U.S.C. § 4943(c)(2)(C)
    Go to provision →
    (C) A private foundation shall not be treated as having excess business holdings in any corporation in which it (together with all other private foundations which are described in section 4946(a)(1)(H)) owns not more than 2 percent of the voting stock and not more than 2 percent in value of all outstanding shares of all classes of stock.
  • 26 U.S.C. § 4945(f)(4)
    Go to provision →
    (4) substantially all of the support (other than gross investment income as defined in section 509(e)) of which is received from exempt organizations, the general public, governmental units described in section 170(c)(1), or any combination of the foregoing; not more than 25 percent of such support is received from any one exempt organization (for this purpose treating private foundations which are described in section 4946(a)(1)(H) with respect to each other as one exempt organization); and not more than half of the support of which is received from gross investment income, and

Citations to §4946(a)(2)

Citations to §4946(a)(3)

Citations to §4946(a)(4)

Citations to §4946(b)

Citations to §4946(b)(1)

Citations to §4946(c)

  • 26 U.S.C. § 4911(d)(1)(B)
    Go to provision →
    (B) any attempt to influence any legislation through communication with any member or employee of a legislative body, or with any government official or employee who may participate in the formulation of the legislation.
  • 26 U.S.C. § 4941(a)(1)
    Go to provision →
    (1) There is hereby imposed a tax on each act of self-dealing between a disqualified person and a private foundation. The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participates in the act of self-dealing. In the case of a government official (as defined in section 4946(c)), a tax shall be imposed by this paragraph only if such disqualified person participates in the act of self-dealing knowing that it is such an act.
  • 26 U.S.C. § 4941(d)(1)(F)
    Go to provision →
    (F) agreement by a private foundation to make any payment of money or other property to a government official (as defined in section 4946(c)), other than an agreement to employ such individual for any period after the termination of his government service if such individual is terminating his government service within a 90-day period.
  • 26 U.S.C. § 4941(d)(2)(E)
    Go to provision →
    (E) except in the case of a government official (as defined in section 4946(c)), the payment of compensation (and the payment or reimbursement of expenses) by a private foundation to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the private foundation shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive;
  • 26 U.S.C. § 4941(d)(2)(G)
    Go to provision →
    (G) in the case of a government official (as defined in section 4946(c)), paragraph (1) shall in addition not apply to—
    (i) prizes and awards which are subject to the provisions of section 74(b) (without regard to paragraph (3) thereof), if the recipients of such prizes and awards are selected from the general public,
    (ii) scholarships and fellowship grants which would be subject to the provisions of section 117(a) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) and are to be used for study at an educational organization described in section 170(b)(1)(A)(ii),
    (iii) any annuity or other payment (forming part of a stock-bonus, pension, or profit-sharing plan) by a trust which is a qualified trust under section 401,
    (iv) any annuity or other payment under a plan which meets the requirements of section 404(a)(2),
    (v) any contribution or gift (other than a contribution or gift of money) to, or services or facilities made available to, any such individual, if the aggregate value of such contributions, gifts, services, and facilities to, or made available to, such individual during any calendar year does not exceed $25,
    (vi) any payment made under chapter 41 of title 5, United States Code, or
    (vii) any payment or reimbursement of traveling expenses for travel solely from one point in the United States to another point in the United States, but only if such payment or reimbursement does not exceed the actual cost of the transportation involved plus an amount for all other traveling expenses not in excess of 125 percent of the maximum amount payable under section 5702 of title 5, United States Code, for like travel by employees of the United States; and
  • 26 U.S.C. § 4945(e)(2)
    Go to provision →
    (2) any attempt to influence legislation through communication with any member or employee of a legislative body, or with any other government official or employee who may participate in the formulation of the legislation (except technical advice or assistance provided to a governmental body or to a committee or other subdivision thereof in response to a written request by such body or subdivision, as the case may be),

Citations to §4946(d)