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Taxable Period - Excess Business Holdings

The taxable period begins on the first day that the foundation has excess business holdings and ends on the earlier of either:

  1. The date a notice of deficiency for the initial tax is mailed, or
  2. The date the initial tax is assessed.

Example.  The Y private foundation files tax returns on a calendar year basis.  It acquires excess business holdings on July 7, 2002, and does not dispose of them until after the Service mails a notice of deficiency for the initial and additional tax on December 10, 2003.  For Y's excess business holdings, the taxable period begins on July 7, 2002, and ends on December 10, 2003.  Because the 2002 tax year of the foundation ended in the taxable period, the foundation is liable for a tax of 5 percent of the largest amount of excess holdings it had at any time during that year.


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Page Last Reviewed or Updated: 30-Apr-2013