Internal Revenue Code · 26 U.S.C.
§ 4941. Taxes on self-dealing
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 4941
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- December 30, 1969 by Pub. L. 91–172
- Last amended
- August 17, 2006 by Pub. L. 109–280
- Amendments
- 7 dated changes in the source credit
- Length
- 5 subsections · 1,836 words · about 8 min to read
- Defines
- 5 terms
- Cross-references
- cites 10; cited by 8 Code sections and 30 other regulations
- Regulations
- 9 issued under this section
There is hereby imposed a tax on each act of self-dealing between a disqualified person and a private foundation. The rate of tax shall be equal to 10 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participates in the act of self-dealing. In the case of a government official (as defined in section 4946(c)), a tax shall be imposed by this paragraph only if such disqualified person participates in the act of self-dealing knowing that it is such an act.
In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any foundation manager in an act of self-dealing between a disqualified person and a private foundation, knowing that it is such an act, a tax equal to 5 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who participated in the act of self-dealing.
In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a private foundation and the act is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participated in the act of self-dealing.
In any case in which an additional tax is imposed by paragraph (1), if a foundation manager refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount involved. The tax imposed by this paragraph shall be paid by any foundation manager who refused to agree to part or all of the correction.
The terms “correction” and “correct” mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the private foundation in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.
(Added Pub. L. 91–172, title I, § 101(b), Dec. 30, 1969, 83 Stat. 499; amended Pub. L. 94–455, title XIX, §§ 1901(b)(8)(H), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1795, 1834; Pub. L. 96–596, § 2(a)(1)(A), (B), (2)(A), (3)(A), Dec. 24, 1980, 94 Stat. 3469, 3471; Pub. L. 96–608, § 5, Dec. 28, 1980, 94 Stat. 3553; Pub. L. 99–234, title I, § 107(c), Jan. 2, 1986, 99 Stat. 1759; Pub. L. 99–514, title I, § 122(a)(2)(A), title XVIII, § 1812(b)(1), Oct. 22, 1986, 100 Stat. 2110, 2833; Pub. L. 100–647, title I, § 1001(d)(1)(A), Nov. 10, 1988, 102 Stat. 3350; Pub. L. 109–280, title XII, § 1212(a)(1), (2), Aug. 17, 2006, 120 Stat. 1074.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 4941
- § 53.4941(a)-1 Imposition of initial taxes.
- § 53.4941(b)-1 Imposition of additional taxes.
- § 53.4941(c)-1 Special rules.
- § 53.4941(d)-1 Definition of self-dealing.
- § 53.4941(d)-2 Specific acts of self-dealing.
- § 53.4941(d)-3 Exceptions to self-dealing.
- § 53.4941(d)-4 Transitional rules.
- § 53.4941(e)-1 Definitions.
- § 53.4941(f)-1 Effective dates.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 10 other sections
- § 4946(c) Definitions and special rules
- § 7872 Treatment of loans with below-market interest rates
- § 501(c)(3) Exemption from tax on corporations, certain trusts, etc.
- § 74(b) Prizes and awards
- § 117(a) Qualified scholarships
- § 170(b)(1)(A)(ii) Charitable, etc., contributions and gifts
- § 401 Qualified pension, profit-sharing, and stock bonus plans
- § 404(a)(2) Deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan
- § 503(b) Requirements for exemption
- § 6212 Notice of deficiency
Cited by 8 Code sections
- § 508(e)(1)(B) Special rules with respect to section 501(c)(3) organizations
- § 4946(a)(1)(I) Definitions and special rules
- § 4947(a)(2) Application of taxes to certain nonexempt trusts
- § 4962(b) Abatement of first tier taxes in certain cases
- § 4963(a) Definitions
- § 6213(e) Restrictions applicable to deficiencies; petition to Tax Court
- § 7422(g)(2) Civil actions for refund
- § 7454(b) Burden of proof in fraud, foundation manager, and transferee cases
Cited in 30 regulations not issued under it
- § 1.46-8 Requirements for taxpayers electing additional one-percent investment credit (TRASOP's).
- § 1.403(b)-10 Miscellaneous provisions.
- § 1.501(c)(21)-1 Black lung trusts—certain terms.
- § 1.507-3 Special rules; transferee foundations.
- § 1.507-6 Substantial contributor defined.
- § 1.507-9 Abatement of taxes.
- § 1.508-2 Disallowance of certain charitable, etc., deductions.
- § 1.508-3 Governing instruments.
- § 1.537-1 Reasonable needs of the business.
- § 1.664-1 Charitable remainder trusts.
- § 1.664-2 Charitable remainder annuity trust.
- § 1.664-3 Charitable remainder unitrust.
- § 53.4944-5 Definitions.
- § 53.4945-4 Grants to individuals.
- § 53.4946-1 Definitions and special rules.
- § 53.4947-1 Application of tax.
- § 53.4951-1 Black lung trusts—taxes on self-dealing.
- § 53.4963-1 Definitions.
- § 53.6011-1 General requirement of return, statement or list.
- § 53.6651-1 Failure to file tax return or to pay tax.
- § 141.4975-13 Definition of “amount involved” and “correction”.
- § 143.2 Taxes on self-dealing; scholarship and fellowship grants by private foundations.
- § 143.5 Taxes on self-dealing; indirect transactions by a private foundation.
- § 301.6213-1 Restrictions applicable to deficiencies; petition to Tax Court.
Show 6 more
- § 301.6501(e)-1 Omission from return.
- § 301.6501(n)-1 Special rules for chapter 42 and similar taxes.
- § 301.6511(f)-1 Special rules for chapter 42 taxes.
- § 301.6861-1 Jeopardy assessments of income, estate, gift, and certain excise taxes.
- § 301.7422-1 Special rules for certain excise taxes imposed by chapter 42 or 43.
- § 301.7454-2 Burden of proof in foundation manager, etc. cases.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 109–280Parts changed in 2006: (a)(1) (a)(2) (c)(2)
- Amended by Pub. L. 100–647Parts changed in 1988: (d)(2)(G)(ii)
- Amended by Pub. L. 99–514Parts changed in 1986: (d)(2)(B) (d)(2)(G)(i) (d)(2)(G)(vii)
- Amended by Pub. L. 99–234
- Amended by Pub. L. 96–608Parts changed in 1980: (b)(1) (d)(2)(H) (e)(1)(B) (e)(2)(B) (e)(4)
- Amended by Pub. L. 96–596
- Amended by Pub. L. 94–455Parts changed in 1976: (d)(2)(G)(ii) (e)(4)
- Added by Pub. L. 91–172
Where it sits in the Code
- Subtitle D Miscellaneous Excise Taxes
- Chapter 42 PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT ORGANIZATIONS
- Subchapter A Private Foundations
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
References in Text
The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (d)(2)(G)(ii), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986.
Codification
Section 1212(a)(1), (2) of Pub. L. 109–280, which directed the amendment of section 4941 without specifying the act to be amended, was executed to this section, which is section 4941 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2006 Amendment notes below.
Amendments
2006—Subsec. (a)(1). Pub. L. 109–280, § 1212(a)(1)(A), substituted “10 percent” for “5 percent”. See Codification note above.
Subsec. (a)(2). Pub. L. 109–280, § 1212(a)(1)(B), substituted “5 percent” for “2½ percent”. See Codification note above.
Subsec. (c)(2). Pub. L. 109–280, § 1212(a)(2), substituted “$20,000” for “$10,000” wherever appearing in heading and text. See Codification note above.
1988—Subsec. (d)(2)(G)(ii). Pub. L. 100–647 amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “scholarships and fellowship grants which are subject to the provisions of section 117(a) and are to be used for study at an educational organization described in section 170(b)(1)(A)(ii),”.
1986—Subsec. (d)(2)(B). Pub. L. 99–514, § 1812(b)(1), inserted “(determined without regard to section 7872)” after “without interest or other charge”.
Subsec. (d)(2)(G)(i). Pub. L. 99–514, § 122(a)(2)(A), inserted “(without regard to paragraph (3) thereof)” after “section 74(b)”.
Subsec. (d)(2)(G)(vii). Pub. L. 99–234 substituted “5702” for “5702(a)”.
1980—Subsec. (b)(1). Pub. L. 96–596, § 2(a)(1)(A), substituted “taxable period” for “correction period”.
Subsec. (d)(2)(H). Pub. L. 96–608 added subpar. (H).
Subsec. (e)(1)(B), (C). Pub. L. 96–596, § 2(a)(2)(A), added subpar. (B) and redesignated former subpar. (B) as (C).
Subsec. (e)(2)(B). Pub. L. 96–596, § 2(a)(1)(B), substituted “taxable period” for “correction period”.
Subsec. (e)(4). Pub. L. 96–596, § 2(a)(3)(A), struck out par. (4) which defined correction period, with respect to any act of self-dealing, as the period beginning with the date on which the act of self-dealing occurs and ending 90 days after the date of mailing of a notice of deficiency with respect to the tax imposed by subsec. (b)(1) of this section under section 6212 of this title, extended by any period in which the deficiency cannot be assessed under section 6213(a) of this title and any other period which the Secretary determines is reasonable and necessary to bring about correction of the act of self-dealing.
1976—Subsec. (d)(2)(G)(ii). Pub. L. 94–455, § 1901(b)(8)(H), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution described in section 151(e)(4)” after “study at an”.
Subsec. (e)(4). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Pub. L. 109–280, title XII, § 1212(f), Aug. 17, 2006, 120 Stat. 1075, provided that: “The amendments made by this section [amending this section and sections 4942 to 4945 and 4958 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 17, 2006].”
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendments
Amendment by section 122(a)(2)(A) of Pub. L. 99–514 applicable to prizes and awards granted after Dec. 31, 1986, see section 151(c) of Pub. L. 99–514, set out as a note under section 1 of this title.
Amendment by section 1812(b)(1) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Amendment by Pub. L. 99–234 effective (1) on effective date of regulations to be promulgated not later than 150 days after Jan. 2, 1986, or (2) 180 days after Jan. 2, 1986, whichever occurs first, see section 301(a) of Pub. L. 99–234, set out as a note under section 5701 of Title 5, Government Organization and Employees.
Effective Date of 1980 Amendment
For effective date of amendment by Pub. L. 96–596 with respect to any first tier tax and to any second tier tax, see section 2(d) of Pub. L. 96–596, set out as an Effective Date note under section 4961 of this title.
Savings Provision
Exceptions to applicability of section, see section 101(l)(2) of Pub. L. 91–172, set out as a note under section 4940 of this title.
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
Tax on Self-Dealing Not To Apply to Certain Stock Purchases
Pub. L. 98–369, div. A, title III, § 312, July 18, 1984, 98 Stat. 786, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(a) General Rule.— Section 4941 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to taxes on self-dealing) shall not apply to the purchase during 1978 of stock from a private foundation (and to any note issued in connection with such purchase) if—“(1) consideration for such purchase equaled or exceeded the fair market value of such stock,“(2) the purchaser of such stock did not make any contribution to such foundation at any time during the 5-year period ending on the date of such purchase,“(3) the aggregate contributions to such foundation by the purchaser before such date were less than $10,000 and less than 2 percent of the total contributions received by the foundation as of such date, and“(4) such purchase was pursuant to the settlement of litigation involving the purchaser.“(b) Statute of Limitations.— If credit or refund of any overpayment of tax resulting from subsection (a) is prevented at any time before the close of the 1-year period beginning on the date of the enactment of this Act [July 18, 1984] by the operation of any law or rule of law, refund or credit of such overpayment may, nevertheless, be made or allowed if claim therefor is filed before the close of such 1-year period.”
Applicability to Determination of Status as Substantial Contributor for Purposes of Taxes on Self-Dealing of Contributions Made Prior to October 9, 1969
Determination of status as substantial contributor within section 507(d)(2) of this title for purposes of applying this section, see section 3 of Pub. L. 95–170, set out as a note under section 507 of this title.