Exempt Organizations Technical Guide: Disqualified Persons - IRC Section 4946
22 April 2024
SUMMARY:The "Exempt Organizations Technical Guide" outlines the role and implications of "disqualified persons" in the context of IRC Section 4946, essential for managing private foundations. This term affects many aspects of a foundation's operations, from determining the legality of transactions as self-dealing to affecting a foundation's status regarding excess business holdings and qualification for public charity status. Disqualified persons include substantial contributors to the foundation, foundation managers, owners with significant interests in related entities, and their family members, along with entities substantially controlled by these individuals.
The guide details how these classifications influence foundation management and regulatory compliance, emphasizing the need for foundations to monitor and document transactions carefully. Understanding who qualifies as a disqualified person helps prevent violations that could lead to penalties, making it crucial for foundations to maintain rigorous oversight of their operations and associations. The complexities highlighted in the guide underline the importance of diligence in managing private foundations to ensure adherence to legal and tax obligations.
EXPLORE: Disqualifying and Non-Exempt Activities - Trade or Business Activities
EXPLORE: Excise Taxes on Self-Dealing under IRC 4941
For more information, please contact:
Desireé M. Bennett, EA - Principal
