The self-dealing rules, transactions and taxes under IRC §4941 apply to Charitable Remainder Trusts, Charitable Lead Trusts and Private Foundations. There are 2 elements of self-dealing: A disqualified person and a self-dealing transaction. This FAQ describes disqualified persons.

A. Substantial Contributors – IRC §4946(a)(1)(A).

B. Foundation Managers – IRC §4946(a)(1)(B).

C. 20% Owners – IRC §4946(b)(2).

D. Family Members – IRC §4946(a)(1)(D). A member of the family of a substantial contributor, a foundation manager, or a 20% owner is a disqualified person. Family members include the individual’s spouse, ancestors, children, grandchildren, great grandchildren and the spouses of children, grandchildren and great grandchildren (IRC §4946(d). Note that siblings are not included.

E. Corporations and Other Entities – IRC §4946(a)(1)(E),(F) and (G).

F. Government Officials – IRC §4946(a)(1)(l).

G. Exceptions and Special Rules.

1. Disqualified persons do not include any charitable organization (Treas. Reg. §53.4946-(1)(a)(8).

2. In determining the voting power of a corporation, profits interest in a partnership and beneficial interest in an estate or trust, the ownership attribution rules apply (IRC §4946(a)(3)&(4).

3. A disqualified person participates in an act of self-dealing if they take part in the transaction, alone or with others, or directs any person to do so.

4. Participation includes silence or inaction of a foundation manager, as well as their affirmative acts. A manager has not participated when they have opposed the act in a manner consistent with fulfillment of their foundation responsibilities.