A person will be considered to have participated in a transaction knowing that it is an act of self-dealing only if:
- The person has actual knowledge of enough facts so that, based only upon those facts, the transaction would be an act of self-dealing,
- The person is aware that such an act may violate the provisions of federal tax law governing self-dealing, and
- The person negligently fails to make reasonable attempts to learn whether the transaction is an act of self-dealing, or the person is aware that the transaction is an act of self-dealing.
The term knowing does not mean having reason to know. However, evidence tending to show that a person had reason to know of a particular fact or rule is relevant in determining whether that person has actual knowledge of the fact or rule. The burden of proof that a foundation manager has knowingly participated in an act of self-dealing is on the IRS.