If a disqualified person uses property owned by a private foundation, 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:

  1. The fair market value of the use of the property over the amount paid by the disqualified person for the use until termination, and
  2. The amount that the disqualified person would have paid by for the use of the property on or after the date of termination, for the period the disqualified person would have used the property (disregarding further extensions or renewals of the period) were it not for termination, over the fair market value of the use for the period.

In (1), the fair market value of the use of the property will be the greater of the rate at the time of self-dealing, or the rate at the time of correction of the act of self-dealing.  In (2), the fair market value of the use of property will be the rate at the time of correction.

The rate for use of property other than money will be the fair rental value per period.  For use of money, the rate will be the fair interest rate.


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