§4946 — Title 26 Internal Revenue Code | U.S. Code

Summary

Private foundation rules restrict dealings with insiders, and these definitions say who counts as an insider, called a "disqualified person." The list covers substantial contributors, foundation managers, anyone owning more than 20 percent of a company, partnership, or trust that is a substantial contributor, family members of any of these people, and businesses or trusts in which such people own more than 35 percent. Family means only a spouse, ancestors, children, grandchildren, great grandchildren, and the spouses of those descendants. A foundation manager is an officer, director, trustee, or an employee with authority over the act in question. For the self-dealing rules only, government officials are also disqualified persons; that group includes elected federal officials, presidential appointees, certain senior federal employees, congressional staff paid at an annual rate of $15,000 or more, and state or local officials paid at an annual rate of $20,000 or more, along with their personal assistants and members of the IRS Oversight Board.

Title 26, §4946

Internal Revenue Code — Source: USLM XML via OLRC

(a)(1)For purposes of this subchapter, the term “disqualified person” means, with respect to a private foundation, a person who is—

(A)a substantial contributor to the foundation,

(B)a foundation manager (within the meaning of subsection (b)(1)),

(C)an owner of more than 20 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,

(D)a member of the family (as defined in subsection (d)) of any individual described in subparagraph (A), (B), or (C),

(E)a corporation of which persons described in subparagraph (A), (B), (C), or (D) own more than 35 percent of the total combined voting power,

(F)a partnership in which persons described in subparagraph (A), (B), (C), or (D) own more than 35 percent of the profits interest,

(G)a trust or estate in which persons described in subparagraph (A), (B), (C), or (D) hold more than 35 percent of the beneficial interest,

(H)only for purposes of section 4943, a private foundation—

(i)which is effectively controlled (directly or indirectly) by the same person or persons who control the private foundation 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 (A), (B), or (C), or members of their families (within the meaning of subsection (d)), who made (directly or indirectly) substantially all of the contributions to the private foundation in question, and

(I)only for purposes of section 4941, a government official (as defined in subsection (c)).

(2)For purposes of paragraph (1), the term “substantial contributor” means a person who is described in section 507(d)(2).

(3)For purposes of paragraphs (1)(C)(i) and (1)(E), 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 the members within the meaning of subsection (d).

(4)For purposes of paragraphs (1)(C)(ii) and (iii), (1)(F), and (1)(G), 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 the members within the meaning of subsection (d).

(b)For purposes of this subchapter, the term “foundation manager” means, with respect to any private foundation—

(1)an officer, director, or trustee of a foundation (or an individual having powers or responsibilities similar to those of officers, directors, or trustees of the foundation), and

(2)with respect to any act (or failure to act), the employees of the foundation having authority or responsibility with respect to such act (or failure to act).

(c)For purposes of subsection (a)(1)(I) and section 4941, the term “government official” means, with respect to an act of self-dealing described in section 4941, an individual who, at the time of such act, holds any of the following offices or positions (other than as a “special Government employee”, as defined in section 202(a) of title 18, United States Code):

(1)an elective public office in the executive or legislative branch of the Government of the United States,

(2)an office in the executive or judicial branch of the Government of the United States, appointment to which was made by the President,

(3)a position in the executive, legislative, or judicial branch of the Government of the United States—

(A)which is listed in schedule C of rule VI of the Civil Service Rules, or

(B)the compensation for which is equal to or greater than the lowest rate of basic pay for the Senior Executive Service under section 5382 of title 5, United States Code,

(4)a position under the House of Representatives or the Senate of the United States held by an individual receiving gross compensation at an annual rate of $15,000 or more,

(5)an elective or appointive public office in the executive, legislative, or judicial branch of the government of a State, possession of the United States, or political subdivision or other area of any of the foregoing, or of the District of Columbia, held by an individual receiving gross compensation at an annual rate of $20,000 or more,

(6)a position as personal or executive assistant or secretary to any of the foregoing, or

(7)a member of the Internal Revenue Service Oversight Board.

(d)For purposes of subsection (a)(1), the family of any individual shall include only his spouse, ancestors, children, grandchildren, great grandchildren, and the spouses of children, grandchildren, and great grandchildren.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2000—Subsec. (c)(3)(B). Pub. L. 106–554 substituted “the lowest rate of basic pay for the Senior Executive Service under section 5382” for “the lowest rate of compensation prescribed for GS–16 of the General Schedule under section 5332”. 1998—Subsec. (c)(7). Pub. L. 105–206 added par. (7). 1986—Subsec. (c)(5). Pub. L. 99–514 substituted “$20,000” for “$15,000”. 1984—Subsec. (d). Pub. L. 98–369 amended subsec. (d) generally, substituting references to children, grandchildren, and great grandchildren for references to lineal descendants in two places. 1978—Subsecs. (a)(1), (b). Pub. L. 95–227 substituted “subchapter” for “chapter”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1986 Amendment Pub. L. 99–514, title XVI, § 1606(b), Oct. 22, 1986, 100 Stat. 2771, provided that: “The amendment made by this section [amending this section] shall apply to compensation received after December 31, 1985.”

Effective Date

of 1984 Amendment Pub. L. 98–369, div. A, title III, § 306(c), July 18, 1984, 98 Stat. 784, provided that: “The

Amendments

made by this subsection [probably should be “section”, amending this section and section 6104 of this title] shall take effect on January 1, 1985.”

Effective Date

of 1978 AmendmentAmendment by Pub. L. 95–227 applicable with respect to contributions, acts, and expenditures made after Dec. 31, 1977, in and for taxable years beginning after such date, see section 4(f) of Pub. L. 95–227, set out as an

Effective Date

note under section 192 of this title.

§4946 Definitions and Special Rules

Summary

Title 26, §4946

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Amendments

Effective Date

Effective Date

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