26 U.S.C. § 4967 — Taxes on prohibited benefits

Page 3054 TITLE 26—INTERNAL REVENUE CODE § 4967 (ii) any organization which is described in subparagraph (B) or (C) if— (I) the donor or any person designated by the donor for the purpose of advising with respect to distributions from a donor advised fund (and any related par- ties) directly or indirectly controls a supported organization (as defined in section 509(f)(3)) of such organization, or (II) the Secretary determines by regu- lations that a distribution to such orga- nization otherwise is inappropriate. (B) Type I and type II supporting organiza- tions An organization is described in this sub- paragraph if the organization meets the re- quirements of subparagraphs (A) and (C) of section 509(a)(3) and is— (i) operated, supervised, or controlled by one or more organizations described in paragraph (1) or (2) of section 509(a), or (ii) supervised or controlled in connec- tion with one or more such organizations. (C) Functionally integrated type III sup- porting organizations An organization is described in this sub- paragraph if the organization is a function- ally integrated type III supporting organiza- tion (as defined under section 4943(f)(5)(B)). (Added Pub. L. 109–280, title XII, § 1231(a), Aug. 17, 2006, 120 Stat. 1095.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section applicable to taxable years beginning after Aug. 17, 2006, see section 1231(c) of Pub. L. 109–280, set out as an Effective Date of 2006 Amendment note under section 4963 of this title. § 4967. Taxes on prohibited benefits (a) Imposition of taxes (1) On the donor, donor advisor, or related per- son There is hereby imposed on the advice of any person described in subsection (d) to have a sponsoring organization make a distribution from a donor advised fund which results in such person or any other person described in subsection (d) receiving, directly or indirectly, a more than incidental benefit as a result of such distribution, a tax equal to 125 percent of such benefit. The tax imposed by this para- graph shall be paid by any person described in subsection (d) who advises as to the distribu- tion or who receives such a benefit as a result of the distribution. (2) On the fund management There is hereby imposed on the agreement of any fund manager to the making of a distribu- tion, knowing that such distribution would confer a benefit described in paragraph (1), a tax equal to 10 percent of the amount of such benefit. The tax imposed by this paragraph shall be paid by any fund manager who agreed to the making of the distribution. (b) Exception No tax shall be imposed under this section with respect to any distribution if a tax has been imposed with respect to such distribution under section 4958. (c) Special rules For purposes of subsection (a)— (1) Joint and several liability If more than one person is liable under para- graph (1) or (2) of subsection (a) with respect to a distribution described in subsection (a), all such persons shall be jointly and severally liable under such paragraph with respect to such distribution. (2) Limit for management With respect to any one distribution de- scribed in subsection (a), the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000. (d) Person described A person is described in this subsection if such person is described in section 4958(f)(7) with re- spect to a donor advised fund. (Added Pub. L. 109–280, title XII, § 1231(a), Aug. 17, 2006, 120 Stat. 1097.) Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section applicable to taxable years beginning after Aug. 17, 2006, see section 1231(c) of Pub. L. 109–280, set out as an Effective Date of 2006 Amendment note under section 4963 of this title. Subchapter H—Excise Tax Based on Invest- ment Income of Private Colleges and Univer- sities Sec. 4968. Excise tax based on investment income of pri- vate colleges and universities. § 4968. Excise tax based on investment income of private colleges and universities (a) Tax imposed There is hereby imposed on each applicable educational institution for the taxable year a tax equal to 1.4 percent of the net investment income of such institution for the taxable year. (b) Applicable educational institution For purposes of this subchapter— (1) In general The term ‘‘applicable educational institu- tion’’ means an eligible educational institu- tion (as defined in section 25A(f)(2))— (A) which had at least 500 tuition-paying students during the preceding taxable year, (B) more than 50 percent of the tuition- paying students of which are located in the United States, (C) which is not described in the first sen- tence of section 511(a)(2)(B) (relating to State colleges and universities), and (D) the aggregate fair market value of the assets of which at the end of the preceding taxable year (other than those assets which are used directly in carrying out the institu- tion’s exempt purpose) is at least $500,000 per student of the institution. (2) Students For purposes of paragraph (1), the number of students of an institution (including for pur-