Article Archives >> Ready Reference >> December 2002
Preview of Article:
Foundations Avoid Excess Business Holdings
Private foundations may be subject to tax if they and their disqualified persons hold too much stock in a business functionally unrelated to the purpose of the foundation
Excerpt:
Private foundations don’t normally have
to worry too much about excess business holdings because they diversify
their investments in publicly traded companies where the chance of their
owning more than 20% of the stock is remote at best.
When they invest in a small business, however, they should be sure to
question their disqualified persons on their personal holdings, because
the limit is based on the aggregate holdings of the group. Don’t
forget to send the questionnaire to a disqualified substantial contributor
who is no longer on the Board. You could easily to be blind-sided by
the aggregate holdings if you are not vigilant in making your inquiries.
Article Archives >> Ready Reference >> December 2002
