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"Knowing" agreement to taxable expenditure

A foundation manager is considered to have agreed to an expenditure knowing that it is a taxable expenditure only if he or she:

  1. Has actual knowledge of enough facts that, based only on these facts, the expenditure would be a taxable expenditure,
  2. Is aware that an expenditure under these circumstances may violate the federal tax law governing taxable expenditures, and
  3. Negligently fails to make reasonable attempts to determine whether the expenditure is a taxable expenditure, or is aware that it is in fact a taxable expenditure.

Having reason to know certain facts does not constitute knowing, except to the extent that it tends to prove actual knowledge.


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Page Last Reviewed or Updated: 24-Apr-2014