-15-
section 53.4941(e)-1, Foundation Excise Tax Regs., may be relied
upon in interpreting terms appearing both in section 4941(e) and
section 4975(f). Sec. 141.4975-13, Temporary Excise Tax Regs.,
41 Fed. Reg. 32890 (Aug. 6, 1976); see also Leib v.
Commissioner, 88 T.C. 1474, 1482 (1987). The regulations under
section 4941, which relate to self-dealings involving private
foundations, are instructive in deciding whether a prohibited
transaction has been properly corrected. Section
53.4941(e)-1(c)(3), Foundation Excise Tax Regs., provides the
following: "in the case of the sale of property to a private
foundation by a disqualified person for cash, undoing the
transaction includes, but is not limited to, requiring rescission
of the sale where possible." (Emphasis added.)
The prohibited transaction was the assignment of the
accounts receivable by the Corporation to the Plan. With this
exchange, the Corporation's funding obligation was satisfied.
While this was not a straight cash sale of the accounts
receivable to the Plan, the transaction is economically similar
when the following two steps are combined: First, sale of
accounts receivable for cash; second, the Corporation's
contributing the cash to discharge its funding obligation.
A rescission could occur if the Corporation replaced the
assigned accounts receivable with cash. While this was feasible,
the Corporation has never replaced the accounts receivable
contributed to the Plan with cash.
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