Advancing Philanthropic Goals While Divesting Excess Business Holdings

Congress enacted the excess business holdings rule to limit the ability of individuals to retain control of business enterprises by setting up private foundations to hold substantial or controlling stakes in these businesses (it applies equally to nonoperating and operating foundations). The rule defines the percentage of holdings a private foundation may have in a business, provides a fixed time period during which a foundation must dispose of excess business holdings, and limits the ability of the foundation to sell its holdings to disqualified persons.

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