A tax how-to guide for private foundations
Despite enjoying tax-exempt status, private foundations are not immune to taxation. Yes, as long as a private foundation does not engage in activities unrelated to its tax-exempt mission, it will not be subject to any income taxes; however, private foundations, unlike their public charity counterparts, are potentially subject to an assortment of excise taxes. They are subject to the complex tax rules of Chapter 42 of the Internal Revenue Code; navigating those rules is crucial to effective tax planning.
To learn more please see the link below: https://www.grantthornton.com/insights/articles/nfp/2023/tax-how-to-guide-for-private-foundations