Michael Graham - Page 5

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          the residence.  Mrs. Graham appealed the ruling.  On November 16,           
          2000, in an unpublished opinion, the Court of Appeals for the               
          Fifth Circuit affirmed the bankruptcy court’s decision.                     
               Respondent determined that petitioner sold the property at a           
          “bargain” price, resulting in a contribution to the Foundation              
          sufficient to make petitioner a substantial contributor.                    
          Consequently, respondent determined deficiencies pursuant to                
          section 4941 and a section 6684 penalty, as set forth earlier.              
               Section 4941(a)(1) imposes an excise tax on acts of self-              
          dealing between a private foundation and a disqualified person.             
          Section 4941(b)(1) imposes a second-tier tax on an act of self-             
          dealing that is not corrected within the taxable period.  Self-             
          dealing transactions include sale and leases of property and                
          loans between a disqualified person and a private foundation, as            
          well as transfers of a foundation’s assets to a disqualified                
          person.  Sec. 4941(d)(1).                                                   
               Disqualified persons include substantial contributors to a             
          foundation, as defined in section 507(d)(2).  Sec. 4946(a)(1)(A),           
          (2).  A substantial contributor is a person who, in the                     
          aggregate, contributed “more than $5,000 to the private                     
          foundation, if such amount is more than 2 percent of the total              
          contributions * * * received by the foundation before the close             
          of the taxable year of the foundation in which the contribution             

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