508
PUBLIC LAW 91-172-DEC. 30, 1969
[83 STAT.
holdings of the foundation in such enterprise to be permitted holdings. "(2)
PERMITTED HOLDINGS I N A CORPORATION.—
" (A) IN GENERAL.—The permitted holdings of any private foundation in an incorporated business enterprise are— " (i) 20 percent of the voting stock, reduced by "(ii) the percentage of the voting stock owned by all disqualified persons. I n any case in which all disqualified persons together do not own more than 20 percent of the voting stock of an incorporated business enterprise, nonvoting stock held by the private foundation shall also be treated as permitted holdings. " (B) 3 5 PERCENT RULE WHERE THIRD PERSON HAS EFFECTIVE CONTROL o r ENTERPRISE.—If
"(i) the private foundation and all disqualified persons together do not own more than 35 percent of the voting stock of an incorporated business enterprise, and "(ii) it is established to the satisfaction of the Secretary or his delegate that effective control of the corporation IS in one or more persons who are not disqualified persons with respect to the foundation, then subparagraph (A) shall be applied by substituting 35 percent for 20 percent. " (C) 2 PERCENT DE MINIMIS RULE.—A private foundation shall not be treated as having excess business holdings in any corporation in which it (together with all other private foundations which are described in section 4946(a)(1)(H)) owns not more than 2 percent of the voting stock and not more than 2 percent in value of all outstanding shares of all classes of stock. "(3) PERMITTED HOLDINGS IN PARTNERSHIPS, ETC.—The permitted holdings of a private foundation in any business enterprise which is not incorporated shall be determined under regulations prescribed by the Secretary or his delegate. Such regulations shall be consistent in principle with paragraphs (2) and (4), except that— " (A) in the case of a partnership or joint venture, 'profits interest' shall be substituted for 'voting stock', and 'capital interest' shall be substituted for 'nonvoting stock', " (B) in the case of a proprietorship, there shall be no permitted holdings, and " (C) in any other case, 'beneficial interest' shall be substituted for 'voting stock'. "(4)
PRESENT HOLDINGS.—
" (A)(i) I n applying this section with respect to the holdings of any private foundation in a business enterprise, if such foundation and all disqualified persons together have holdings in such enterprise in excess of 20 percent of the voting stock on May 26, 1969, the percentage of such holdings shall be substituted for '20 percent,' and for '35 percent' (if the percentage of such holdings is greater than 35 percent), wherever it appears in paragraph (2), but in no event shall the percentage so substituted be more than 50 percent. "(ii) If the percentage of the holdings of any private foundation and all disqualified persons together in a business enterprise (or if the percentage of the holdings of the private foundation in such enterprise) decreases for any reason, clause (i) and subparagraph (D) shall, except as provided
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