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Exceptions - Taxable Expenditures

Examples of expenditures ordinarily not treated as taxable expenditures include:

  1. Expenditures to acquire investments that generate income to be used to further the purposes of the organization,
  2. Reasonable expenses related to acquiring these investments,
  3. Payment of taxes,
  4. Expenses that qualify as allowable deductions in figuring the tax on unrelated business income,
  5. Any payment that is a qualifying distribution,
  6. Any deduction allowed in arriving at taxable net investment income,
  7. Reasonable expenditures to evaluate, acquire, modify, and dispose of program-related investments, and
  8. Business expenses of the recipient of a program-related investment.

However, payment of unreasonable administrative expenses, including wages, consultant fees, and other fees for services performed, ordinarily will be taxable expenditures unless made by the foundation in the good faith belief that the amounts were reasonable and were consistent with ordinary business care and prudence.


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Page Last Reviewed or Updated: 13-Oct-2016