At a glance
- Private Letter Ruling 202625012, dated June 18, 2026, covers a related group of taxpayers who together owned a majority of a company's stock, according to WealthManagement.com's Tax Law Update.
- For a family office running this structure, the trustee's charity designation is the switch that decides whether the private foundation is a party to the buyback at all.
- Once the trustee directs assets to the foundation, the same dealing is between the foundation and a disqualified person.
A company can buy back estate stock without triggering self-dealing excise taxes if it exercises its option before the trustee names the charities receiving the charitable share, the IRS found.
Private Letter Ruling 202625012, dated June 18, 2026, covers a related group of taxpayers who together owned a majority of a company's stock, according to WealthManagement.com's Tax Law Update. The taxpayers, their estates, their revocable trusts and the trustees of those trusts were all disqualified persons with respect to a private foundation. Each revocable trust provided for a charitable share, designated irrevocably for charities the trustees would select, and based on the taxpayers' assets a significant portion of the company stock would land in that share. Separately, each taxpayer had given the company an option to buy stock from the estate, revocable trust or marital trust at fair market value set by appraisal. The taxpayers asked the IRS to confirm the plans would not run afoul of the self-dealing rules or trigger excise taxes.
For a family office running this structure, the trustee's charity designation is the switch that decides whether the private foundation is a party to the buyback at all. Before the trustee's irrevocable determination, the IRS concluded, the foundation had no interest in the estate or revocable trust; it had an interest only if and when the trustee directed some portion of the charitable share to it. During that window, exercising the options, or any other transaction with the family or the company, was not a transaction between disqualified persons and the foundation. Advisors whose clients hold a concentrated block earmarked for charity have a lever here that costs nothing to pull: the order of the two events.
Once the trustee directs assets to the foundation, the same dealing is between the foundation and a disqualified person. The IRS said that would be self-dealing but for the estate administration exception in Treasury Regulations Section 53.4941(d)-1(b)(3). As WealthManagement.com summarizes it, the exception covers transactions relating to property held in an estate or trust, and its first condition is that the transaction occur during the period of estate administration, prior to termination.
Trustees had six months after each death to decide which charities would benefit, the private foundation among them. For an estate whose charitable share is mostly one company's stock, that fixes two dates — the close of the designation window and the close of estate administration — and the buyback sits on different sides of the self-dealing line depending on which side of the first date it falls.
| Event | Timing under the plans | Self-dealing analysis |
|---|---|---|
| Company exercises buyback option | Before trustee names charities | Not a transaction with the private foundation; foundation had no interest |
| Trustee designates charities | Six months after death | Foundation acquires its interest |
| Buyback or other dealing with the company | After designation, during estate administration | Self-dealing unless the estate administration exception applies |
Reported by the Family Office desk from WealthManagement.com, Tax Law Update: November 2026. Published . Corrections