Many financial transactions between disqualified individuals and a private foundation constitute self-dealing, and self-dealing will cost both parties big in taxes. Each act of self-dealing can result in a 10% tax for the disqualified person and 5% up to $20,000 for the foundation manager. If the taxable period passes without correction of the self-dealing, then an additional tax is imposed on the disqualified person of 200% and on the foundation manager of 50% up to $20,000.
See Stephanie Moll & Keith Kehrer, A 200% Tax on Self-Dealing? And People Think the Estate Tax is High!, Bryan Cave, May 12, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
