If a private foundation uses property that is owned by a disqualified person, undoing the transaction includes, but is not limited to, terminating the use of the property. In addition, the disqualified person must pay the foundation any excess of:
- The amount paid to the disqualified person for the use until termination over the fair market value of the use of the property, and
- The fair market value of the use of the property, for the period the foundation would have used the property (disregarding extensions or renewals of the period) had use not been terminated, over the amount that would have been paid to the disqualified person on or after the date of termination for use during that period.
In (1), the fair market value of the use of the property is the lesser of the rate (that is, the fair rental value per period for use of property other than money or the fair interest rate for the use-of money) at the time of self-dealing, or the rate at the time of correction of the act of self-dealing. In (2), the fair rental value of the use of property will be the rate at the time of correction.