[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: 26CFR53.4943-1]

[Page 109]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 53_FOUNDATION AND SIMILAR EXCISE TAXES--Table of Contents
 
               Subpart D_Taxes on Excess Business Holdings
 
Sec. 53.4943-1  General rule; purpose.

    Authority: Secs. 4943 and 7805, Internal Revenue Code of 1954, 68A 
Stat. 917, 83 Stat. 507; 26 U.S.C. 4943, 7805.

    Source: T.D. 7496, 42 FR 46285, Sept. 15, 1977, unless otherwise 
noted.


    Generally, under section 4943, the combined holdings of a private 
foundation and all disqualified persons (as defined in section 4946(a)) 
in any corporation conducting a business which is not substantially 
related (aside from the need of the foundation for income or funds or 
the use it makes of the profits derived) to the exempt purposes of the 
foundation are limited to 20 percent of the voting stock in such 
corporation. In addition, the combined holdings of a private foundation 
and all disqualified persons in any unincorporated business (other than 
a sole proprietorship) which is not substantially related (aside from 
the need of the foundation for income or funds or the use it makes of 
the profits derived) to the exempt purposes of such foundation are 
limited to 20 percent of the beneficial or profits interest in such 
business. In the case of a sole proprietorship which is not 
substantially related (within the meaning of the preceding sentence), 
section 4943 provides that a private foundation shall have no permitted 
holdings. These general provisions are subject to a number of exceptions 
and special provisions which will be described in following sections.