
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC4951]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                 Subtitle D--Miscellaneous Excise Taxes
 
     CHAPTER 42--PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT 
                              ORGANIZATIONS
 
                 Subchapter B--Black Lung Benefit Trusts
 
Sec. 4951. Taxes on self-dealing


(a) Initial taxes

                         (1) On self-dealer

        There is hereby imposed a tax on each act of self-dealing 
    between a disqualified person and a trust described in section 
    501(c)(21). The rate of tax shall be equal to 10 percent of the 
    amount involved with respect to the act of self-dealing for each 
    year (or part thereof) in the taxable period. The tax imposed by 
    this paragraph shall be paid by any disqualified person (other than 
    a trustee acting only as a trustee of the trust) who participates in 
    the act of self-dealing.

                           (2) On trustee

        In any case in which a tax is imposed by paragraph (1), there is 
    hereby imposed on the participation of any trustee of such a trust 
    in an act of self-dealing between a disqualified person and the 
    trust, knowing that it is such an act, a tax equal to 2\1/2\ percent 
    of the amount involved with respect to the act of self-dealing for 
    each year (or part thereof) in the taxable period, unless such 
    participation is not willful and is due to reasonable cause. The tax 
    imposed by this paragraph shall be paid by any such trustee who 
    participated in the act of self-dealing.

(b) Additional taxes

                         (1) On self-dealer

        In any case in which an initial tax is imposed by subsection 
    (a)(1) on an act of self-dealing by a disqualified person with a 
    trust described in section 501(c)(21) and in which the act is not 
    corrected within the taxable period, there is hereby imposed a tax 
    equal to 100 percent of the amount involved. The tax imposed by this 
    paragraph shall be paid by any disqualified person (other than a 
    trustee acting only as a trustee of such a trust) who participated 
    in the act of self-dealing.

                           (2) On trustee

        In any case in which an additional tax is imposed by paragraph 
    (1), if a trustee of such a trust refused to agree to part or all of 
    the correction, there is hereby imposed a tax equal to 50 percent of 
    the amount involved. The tax imposed by this paragraph shall be paid 
    by any such trustee who refused to agree to part or all of the 
    correction.

(c) Joint and several liability

    If more than one person is liable under any paragraph of subsection 
(a) or (b) with respect to any one act of self-dealing, all such persons 
shall be jointly and severally liable under such paragraph with respect 
to such act.

(d) Self-dealing

                           (1) In general

        For purposes of this section, the term ``self-dealing'' means 
    any direct or indirect--
            (A) sale, exchange, or leasing of real or personal property 
        between a trust described in section 501(c)(21) and a 
        disqualified person;
            (B) lending of money or other extension of credit between 
        such a trust and a disqualified person;
            (C) furnishing of goods, services, or facilities between 
        such a trust and a disqualified person;
            (D) payment of compensation (or payment or reimbursement of 
        expenses) by such a trust to a disqualified person; and
            (E) transfer to, or use by or for the benefit of, a 
        disqualified person of the income or assets of such a trust.

                          (2) Special rules

        For purposes of paragraph (1)--
            (A) the transfer of personal property by a disqualified 
        person to such a trust shall be treated as a sale or exchange if 
        the property is subject to a mortgage or similar lien;
            (B) the furnishing of goods, services, or facilities by a 
        disqualified person to such a trust shall not be an act of self-
        dealing if the furnishing is without charge and if the goods, 
        services, or facilities so furnished are used exclusively for 
        the purposes specified in section 501(c)(21)(A); and
            (C) the payment of compensation (and the payment or 
        reimbursement of expenses) by such a trust to a disqualified 
        person for personal services which are reasonable and necessary 
        to carrying out the exempt purpose of the trust shall not be an 
        act of self-dealing if the compensation (or payment or 
        reimbursement) is not excessive.

(e) Definitions

    For purposes of this section--

                         (1) Taxable period

        The term ``taxable period'' means, with respect to any act of 
    self-dealing, the period beginning with the date on which the act of 
    self-dealing occurs and ending on the earliest of--
            (A) the date of mailing a notice of deficiency with respect 
        to the tax imposed by subsection (a)(1) under section 6212,
            (B) the date on which the tax imposed by subsection (a)(1) 
        is assessed, or
            (C) the date on which correction of the act of self-dealing 
        is completed.

                         (2) Amount involved

        The term ``amount involved'' means, with respect to any act of 
    self-dealing, the greater of the amount of money and the fair market 
    value of the other property given or the amount of money and the 
    fair market value of the other property received; except that in the 
    case of services described in subsection (d)(2)(C), the amount 
    involved shall be only the excess compensation. For purposes of the 
    preceding sentence, the fair market value--
            (A) in the case of the taxes imposed by subsection (a), 
        shall be determined as of the date on which the act of self-
        dealing occurs; and
            (B) in the case of taxes imposed by subsection (b), shall be 
        the highest fair market value during the taxable period.

                           (3) Correction

        The terms ``correction'' and ``correct'' mean, with respect to 
    any act of self-dealing, undoing the transaction to the extent 
    possible, but in any case placing the trust in a financial position 
    not worse than that in which it would be if the disqualified person 
    were dealing under the highest fiduciary standards.

                       (4) Disqualified person

        The term ``disqualified person'' means, with respect to a trust 
    described in section 501(c)(21), a person who is--
            (A) a contributor to the trust,
            (B) a trustee of the trust,
            (C) an owner of more than 10 percent of--
                (i) the total combined voting power of a corporation,
                (ii) the profits interest of a partnership, or
                (iii) the beneficial interest of a trust or 
            unincorporated enterprise,

        which is a contributor to the trust,
            (D) an officer, director, or employee of a person who is a 
        contributor to the trust,
            (E) the spouse, ancestor, lineal descendant, or spouse of a 
        lineal descendant of an individual described in subparagraph 
        (A), (B), (C), or (D),
            (F) a corporation of which persons described in subparagraph 
        (A), (B), (C), (D), or (E) own more than 35 percent of the total 
        combined voting power,
            (G) a partnership in which persons described in subparagraph 
        (A), (B), (C), (D), or (E), own more than 35 percent of the 
        profits interest, or
            (H) a trust or estate in which persons described in 
        subparagraph (A), (B), (C), (D), or (E), hold more than 35 
        percent of the beneficial interest.

    For purposes of subparagraphs (C)(i) and (F), there shall be taken 
    into account indirect stockholdings which would be taken into 
    account under section 267(c), except that, for purposes of this 
    paragraph, section 267(c)(4) shall be treated as providing that the 
    members of the family of an individual are only those individuals 
    described in subparagraph (E) of this paragraph. For purposes of 
    subparagraphs (C) (ii) and (iii), (G), and (H), the ownership of 
    profits or beneficial interests shall be determined in accordance 
    with the rules for constructive ownership of stock provided in 
    section 267(c) (other than paragraph (3) thereof), except that 
    section 267(c)(4) shall be treated as providing that the members of 
    the family of an individual are only those individuals described in 
    subparagraph (E) of this paragraph.

(f) Payments of benefits

    For purposes of this section, a payment, out of assets or income of 
a trust described in section 501(c)(21), for the purposes described in 
subclause (I) or (IV) of section 501(c)(21)(A)(i) shall not be 
considered an act of self-dealing.

(Added Pub. L. 95-227, Sec. 4(c)(1), Feb. 10, 1978, 92 Stat. 18; amended 
Pub. L. 96-596, Sec. 2(a)(1)(G), (H), (2)(F), (3)(E), Dec. 24, 1980, 94 
Stat. 3469-3471; Pub. L. 102-486, title XIX, Sec. 1940(b), Oct. 24, 
1992, 106 Stat. 3035.)


                               Amendments

    1992--Subsec. (f). Pub. L. 102-486 substituted ``subclause (I) or 
(IV) of section 501(c)(21)(A)(i)'' for ``clause (i) of section 
501(c)(21)(A)''.
    1980--Subsec. (b)(1). Pub. L. 96-596, Sec. 2(a)(1)(G), substituted 
``taxable period'' for ``correction period''.
    Subsec. (e)(1)(B), (C). Pub. L. 96-596, Sec. 2(a)(2)(F), added 
subpar. (B) and redesignated former subpar. (B) as (C).
    Subsec. (e)(2)(B). Pub. L. 96-596, Sec. 2(a)(1)(H), substituted 
``taxable period'' for ``correction period''.
    Subsec. (e)(4), (5). Pub. L. 96-596, Sec. 2(a)(3)(E), redesignated 
par. (5) as (4) and struck out former par. (4) which defined correction 
period, with respect to any act of self-dealing, as the period beginning 
with the date on which the act of self-dealing occurs and ending 90 days 
after the date of mailing of a notice of deficiency under section 6212 
of this title with respect to the tax imposed by subsec. (b)(1) of this 
section, extended by any period in which a deficiency cannot be assessed 
under section 6213(a) of this title and any other period which the 
Secretary determines is reasonable and necessary to bring about 
correction of the act of self-dealing.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-486 applicable to taxable years beginning 
after Dec. 31, 1991, see section 1940(d) of Pub. L. 102-486, set out as 
a note under section 192 of this title.


                    Effective Date of 1980 Amendment

    For effective date of amendment by Pub. L. 96-596 with respect to 
any first tier tax and to any second tier tax, see section 2(d) of Pub. 
L. 96-596, set out as an Effective Date note under section 4961 of this 
title.


                             Effective Date

    Subchapter effective with respect to contributions, acts, and 
expenditures made after Dec. 31, 1977, in and for taxable years 
beginning after such date, see section 4(f) of Pub. L. 95-227, set out 
as a note under section 192 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 468A, 4953, 4963, 6213, 
7422, 7454 of this title.
