[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR143.5]

[Page 445-446]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 143_TEMPORARY EXCISE TAX REGULATIONS UNDER THE TAX REFORM ACT OF 
1969--Table of Contents
 
Sec. 143.5  Taxes on self-dealing; indirect transactions by a private 
foundation.

    (a) In general. Section 4941(d)(1)(D) of the Internal Revenue Code 
of 1954 as added by section 101(b) of the Tax Reform Act of 1969 (83 
Stat. 500) provides that the term ``self-dealing'' includes any direct 
or indirect payment of compensation (or payment or reimbursement of 
expenses) by a private foundation to a disqualified person. Section 
4941(d)(1)(E) provides that the term ``self-dealing'' includes any 
direct or indirect transfer to, or use by, or for the benefit of, a 
disqualified person of the income or assets of a private foundation. 
Section 4941(d)(1)(F) provides that the term ``self-dealing'' includes 
any direct or indirect agreement by a private foundation to make any 
payment of money or other property to a government official other than 
an agreement to employ such individual for any period after the 
termination of his government service if such individual is terminating 
his government service within a 90-day period.
    (b) Indirect transactions by a private foundation. A transaction 
engaged in directly with a Government official by an organization 
described in section 509(a) (1), (2), or (3) which is the recipient of a 
grant from a private foundation shall not constitute an indirect act of 
self-dealing between such private foundation and Government official if 
the private foundation does not earmark the use of the grant for any 
named Government official and does not control or retain any veto power 
over the selection of the Government official by the grantee 
organization. For purposes of the preceding sentence, a grant by a 
private foundation shall not constitute an indirect act of self-dealing 
even though such foundation had reason to believe that certain 
Government officials would derive benefits from such grant so long as 
the grantee, in fact, exercises control over the selecting process and 
actually makes the selection completely independent of the private 
foundation.
    (c) Example. The provisions of subsection (b) of this section may be 
illustrated by the following example.

    Example. A private foundation made a grant to an organization 
described in section 509(a) (1), (2), or (3) to conduct a judicial 
seminar. The grantee conducting the seminar made payments to certain 
Government officials. By the nature of the seminar the grantor 
foundation had reason to believe that Government officials would be 
compensated for participation in such seminar. The grantee, however, had 
complete independent control over the selection of such participants. 
Since the grantee has not acted

[[Page 446]]

as a conduit for the private foundation and has, in fact, exercised 
independent control over the use of the grant, such grant by the private 
foundation shall not constitute an act of self-dealing with respect to 
the Government officials.

[T.D. 7036, 35 FR 6322, Apr. 18, 1970]