I. Overview

(1) A private foundation is any domestic or foreign organization described in

Section 501(c)(3) except for an organization referred to in Sections 509(a)(1), (a)(2), (a)(3), or (a)(4). The definition divides Section 501(c)(3) organizations into two classes: private foundations and public charities. Private foundations are subject to the provisions of Chapter 42. Once an organization is classified as a private foundation, it can only terminate that status by complying with the requirements of Section 507, either through transfer of its assets to a Section 509(a)(1) charity, by operation as a Section 509(a)(1), (a)(2) or (a)(3) charity, or by payment of the Section 507 tax. Section 507 only terminates the private foundation status with the IRS, it does not terminate organization’s legal existence under state law.