Private Foundation Rules Clause Samples
The Private Foundation Rules clause defines the requirements and restrictions that apply to organizations classified as private foundations under tax law. It typically outlines the obligations such foundations have, such as limitations on self-dealing, requirements for annual distributions, and prohibitions on certain types of investments or expenditures. For example, the clause may specify that the foundation must avoid transactions with insiders or ensure a minimum percentage of assets is distributed each year. The core function of this clause is to ensure the foundation maintains its tax-exempt status by complying with federal regulations and to prevent misuse of charitable assets.
Private Foundation Rules. Notwithstanding any other provisions in these Articles of Incorporation, in the event that, and for so long as, the Corporation is classified as a private foundation within the meaning of Section 509(a) of the Internal Revenue Code, the Corporation:
(a) shall not engage in any act of self-dealing as defined in Section 4941(d) of the Internal Revenue Code;
(b) shall make distributions for each taxable year at such time and in such manner as not to become subject to the tax on undistributed income imposed by Section 4942 of the Internal Revenue Code;
(c) shall not retain any excess business holdings as defined in Section 4943(c) of the Internal Revenue Code;
(d) shall not make any investments in such manner as to subject it to tax under Section 4944 of the Internal Revenue Code; and
(e) shall not make any taxable expenditures as defined in Section 4945(d) of the Internal Revenue Code.
Private Foundation Rules. If, and for so long as, the Supporting Organization is a private foundation which does not qualify as a supporting organization under Section 509(a)(3), then, notwithstanding any provision of this agreement, Trustees, Trustees' employees, and the Supporting Organization and its employees are prohibited from:
1. engaging in any act of self-dealing as defined in Code Section 4941,
2. failing to distribute income in a manner which would result in tax liability under Code Section 4942,
3. retaining any excess business holdings as defined in Code Section 4943, 4. making any investments which would subject the Supporting Organization, to tax under Code Section 4944, or 5. making any taxable expenditure as defined in Code Section 4945.