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Taxable Period: Jeopardizing Investments

The taxable period begins with the date of the investment and ends on the earliest of:

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

It may include more than one tax year of the foundation.

Example.  The Wilson Foundation has the calendar year as its tax year.  It makes a jeopardizing investment on November 28, 2005, and does not remove the investment from jeopardy until January 15, 2006.  The taxable period is from November 28, 2005, to January 15, 2006.  It therefore is liable for a total initial tax of 10 percent of the amount invested (five percent for each tax year or part of a year in the taxable period).

Return to Life Cycle of a Private Foundation

Page Last Reviewed or Updated: 08-Jul-2015