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GiftLaw Pro Home   >  Chapter 7 - Charitable Organizations  >  7.2 Private Foundations  >  7.2.2 Self-Dealing  >  Basic Quiz

Basic Quiz - 7.2.2 Self-Dealing

1. While payment of a reasonable salary is not an act of self-dealing, the sale or exchange of property between a private foundation and a disqualified individual is self-dealing.
           
2. A disqualified person, for the purpose of the self-dealing rule, is a substantial contributor, a board member, an entity controlled by a disqualified person, or a family member of a disqualified person, not including a brother or sister of the disqualified.
           
3. A private foundation purchases Dodger baseball tickets for Sandy Koufax, the single largest contributor to the foundation. The same day Mr. Koufax made a $10,000 donation to the foundation. This is not an example of self-dealing.
           
4. There are no exceptions to the self-dealing rules.
           
5. A private foundation may provide services to a disqualified party so long as the services are offered to the general public on the same basis.
           
6. Under the self-dealing rules, whether a person is in a position to exercise substantial influence over a foundation is determined by applying several well-defined rules.
           
7. Managers of private foundations whom engage in self-dealing transactions may be punished by the imposition of an excise tax.
           
8. The initial excise tax imposed on a disqualified party who enters into a self-dealing transaction is 25% of the amount involved.
           
9. If, after the imposition of an initial excise tax penalty, the self-dealing violation is not corrected, an excise tax of 200% of the amount of the excess benefit is imposed upon the participating disqualified person.
           
10. Foundation managers are subject to an additional 50% excise tax if the self-dealing is not corrected or undone to the extent possible.