Modification on the Excise Tax Rate on Net Investment Income of Private Foundations

President Trump signed legislation on Friday, December 20th which will set a flat-rate on the excise tax applicable to the net investment income of private foundations.

The House of Representatives passed the legislation on December 17th and the Senate passed the legislation Thursday, December 19th. President Trump signed the legislation on Friday, December 20th.

This modification to the current two-tier excise tax structure for private foundations on their investment income under IRC Section 4940 will amend Section 4940(a) by changing the current 2% rate to 1.39% and by striking out Section 4940(e) which allowed for a reduced tax rate of 1% for private foundations that meet certain distribution requirements.

For more information on this topic, please
contact a member of the Not-for-Profit and Education Services Team.

The Senate will send the bill to the President for his signature, which may happen as early as Friday, December 20th or early next week. The effective date of this amendment shall apply to taxable years beginning after the date the bill is signed.

Authors: Thomas Parisi, Manager | [email protected] and Richard Ruvelson, Principal | [email protected]

Not-for-Profit and Education Services

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