Exempt Organizations Technical Guide: Excise Taxes on Self-Dealing under IRC 4941

23 February 2024


This guide provides a comprehensive overview of the tax framework governing private foundations, with a particular focus on Chapter 42, which addresses excise taxes related to self-dealing.It traces the evolution of these regulations from their origins in the Revenue Act of 1950 to the more stringent prohibitions established by the Tax Reform Act of 1969, aimed at safeguarding the integrity of private foundations. Recent updates, including the electronic filing mandate of 2019 and adjustments to tax rates by the Taxpayer Certainty and Disaster Tax Relief Act of 2019, are discussed, along with changes in net asset reporting standards and individual filing requirements for excise taxes.

In addition, the guide now offers a detailed exploration of self-dealing within private foundations, highlighting how any transaction, whether advantageous or disadvantageous, undergoes scrutiny if it meets the criteria outlined in Section 4941(d)(1), with certain exceptions. This added section underscores the complexities of compliance, shedding light on scenarios where transactions may not be deemed self-dealing, such as specific anonymous securities transactions and the application of the "first bite" rule, which permits initial transactions without triggering self-dealing status. By delving into these intricacies, the guide provides a more comprehensive understanding of the regulatory environment influencing the operations and governance of private foundations.

View the guide in detail


For more information, please contact:

Desireé M. Bennett, EA - Principal 


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