IRS Published Taxpayer Determination Letter 202640010

Private letter rulings and published taxpayer determination letters. Native document type is retained separately; a determination letter is not labeled a private letter ruling. These taxpayer-specific releases cannot be used or cited as precedent under 26 USC 6110(k)(3); applicability and current legal force are not independently certified. Keep repeated UILC subjects attached to one actual numbered document. Native kind: determination letter; this is not a private letter ruling.

# Department of the Treasury Internal Revenue Service Tax Exempt and Government Entities

IRS

Date:

07/07/2026

Taxpayer ID number:

Person to contact:

Name:

ID number:

Telephone:

Release Number: 202640010

Release Date: 10/2/26

LEGEND

B =Entity
C = Field
E = Number
f dollars = Dollar Range
G = Number

UIL: 4945.04-04

Dear
:

You asked for advance approval of your employer-related scholarship procedures under Internal Revenue Code
Section (IRC) 4945(g)(1). You requested approval of your scholarship program to fund the education of certain
qualifying students.

This approval is required because IRC Section 4945 provides for the imposition of taxes on each taxable
expenditure of a private foundation. IRC Section 4945(d)(3) provides that the term "taxable expenditure"
includes any amount paid or incurred by a private foundation as a grant to an individual for travel, study, or
similar purposes by the individual, unless the grant satisfies the advance approval requirement of IRC Section
4945(g).

Our determination

We approved your procedures for awarding employer-related scholarships. Based on the information you
submitted, and assuming you will conduct your program as proposed, we determined that your procedures for
awarding employer-related scholarships meet the requirements of IRC Section 4945(g)(1). As a result,
expenditures you make under these procedures won't be taxable.

Awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if
they use them for qualified tuition and related expenses (subject to the limitations provided in IRC Section 117(b)).

Description of your request

Your letter indicates you will operate an employer-related scholarship program for children or legal dependents
of employees of B or its subsidiaries.

To be eligible for apply for a scholarship, the student must:

· Be a legal dependent of an employee of B or its affiliates who has been employed for at least one year prior
to the application deadline,

· Be a high school senior, or a college student with at least one full year of academic study remaining at the
time of the award

<!-- PageFooter="Letter 4792 (Rev. 1-2022) Catalog Number 58263T" -->
<!-- PageBreak -->

· Pledge to discuss with an academic and/or career advisor, at least annually, prospective applications of their
learning and post-graduate work or civic engagement in a C-related field, and

· Attend a US-accredited, not-for-profit college or university in pursuit of an undergraduate degree.

The parent or guardian of the recipient must be employed by B or its affiliates when the awards are announced,
but do not need to maintain employment for renewals. Dependents of your officers or fiduciaries, major gift
donors, and or high-ranking employees are not eligible.

You will employ a professional third-party scholarship services firm to select all recipients with impartiality. B
staff will assist with eligibility verification as required but will not offer any opinion or preference either for or
against providing an award to any eligible applicant. Applicants will be selected based on:

· Academic merit

· Community involvement

· Extracurricular activity

· Recommendations

You intend to award E grants of approximately f dollars per year. Including renewals of past grants, you
anticipate up to G students receiving a grant each year.

To be eligible for a scholarship renewal, the student must:

· Maintain a GPA of 2.5 or higher

· Be enrolled in a US-accredited, not-for-profit college or university in pursuit of an undergraduate degree

· Have received scholarship funding no more than three times previously,

· Pledge to discuss with an academic and/or career advisor, at least annually, prospective applications of their
learning to post-graduate work or civic engagement in a C-related field, and

· Complete a renewal application.

Supervision of your scholarship will be conducted by a professional third-party scholarship services firm with
your oversight. Your third-party firm will be contracted to obtain relevant eligibility and compliance
information such that only complete applications may be considered for any and all awards. Information
gathered will include but is not limited to academic transcripts and recommendations. Your scholarship
funding will be conveyed to postsecondary education institutions only. Your third-party fill will be contracted
to recover funds as able if award terms are violated.

You represent that you will complete the following:

· Arrange to receive and review grantee reports annually and upon completion of the purpose for which the
grant was awarded,

· Investigate diversion of funds from their intended purposes,

· Take all reasonable and appropriate steps to recover the diverted funds and ensure other grant funds held by
a grantee are used for their intended purposes, and

· Withhold further payments to grantees until you obtain grantees' assurances that future diversions will not
occur and that grantees will take extraordinary precautions to prevent future diversion from occurring.

You also represent that you will:

<!-- PageFooter="Letter 4792 (Rev. 1-2022) Catalog Number 58263T" -->
<!-- PageBreak -->

· Maintain all records relating to individual grants including information obtained to evaluate grantees,

· Identify a grantee is a disqualified person,

· Establish the amount and purpose of each grant, and

· Establish that you undertook the supervision and investigation of grants described above.

## Basis for our determination

IRC Section 4945 imposes excise taxes on the taxable expenditures of private foundations. A taxable expenditure
is any amount a private foundation pays as a grant to an individual for travel, study or other similar purposes.
However, a grant that meets all the following requirements of IRC Section 4945(g) is not a taxable expenditure.

· The foundation awards the grant on an objective and nondiscriminatory basis.

· The IRS approves in advance the procedure for awarding the grant.

· The grant is a scholarship or fellowship subject to IRC Section 117(a).

· The grant is to be used for study at an educational organization described in IRC Section 170(b)(1)(A)(ii).

Revenue Procedure (Rev. Proc.) 76-47, provides guidelines to determine whether grants a private foundation
makes under an employer-related program to employees or children of employees are scholarship or fellowship
grants subject to the provisions of IRC Section 117(a). If the program satisfies the seven conditions in sections
4.01 through 4.07 of Rev. Proc. 76-47 and meets the percentage tests described in Section 4.08 of Rev. Proc. 76-47,
we will assume the grants are subject to the provisions of IRC Section 117(a).

You represented that your grant program will meet the requirements of either the 25% or 10% percentage test in
Rev. Proc. 76-47. These tests require that:

· The number of grants awarded to employees' children in any year won't exceed 25% of the number of
employees' children who were eligible for grants, were applicants for grants, and were considered by the
selection committee for grants, or

· The number of grants awarded to employees' children in any year won't exceed 10% of the number of
employees' children who were eligible for grants (whether or not they submitted an application), or

· The number of grants awarded to employees in any year won't exceed 10% of the number of employees
who were eligible for grants, were applicants for grants, and were considered by the selection committee
for grants.

You further represented that you will include only children who meet the eligibility standards described in
Rev. Proc. 85-51, when applying the 10% test to employees' children.

In determining how many employee children are eligible for a scholarship under the 10% test, a private
foundation may include only those children who submit a written statement or who meet the foundation's
eligibility requirements. They must also satisfy certain enrollment conditions.

You represented that your procedures for awarding grants under this program will meet the requirements of
Rev. Proc. 76-47. In particular:

· An independent selection committee whose members are separate from you, your creator, and the employer
will select individual grant recipients.

. You will not use grants to recruit employees nor will you end a grant if the employee leaves the employer.

. You will not limit the recipient to a course of study that would particularly benefit you or the employer.

Other conditions that apply to this determination

· This determination only covers the grant program described above. This approval will apply to
succeeding grant programs only if their standards and procedures don't differ significantly from those

<!-- PageFooter="Letter 4792 (Rev. 1-2022) Catalog Number 58263T" -->
<!-- PageBreak -->

described in your original request.

· This determination applies only to you. It may not be cited as a precedent.

. You cannot rely on the conclusions in this letter if the facts you provided have changed substantially.
You must report any significant changes to your program to the IRS at:

Internal Revenue Service
Exempt Organizations Determinations
TE/GE Stop 31A Team 105
P.O. Box 12192
Covington, KY 41012-0192

· You can't award grants to your creators, officers, directors, trustees, foundation managers, or
members of selection committees or their relatives.

· All funds distributed to individuals must be made on a charitable basis and further the purposes of your
organization. You cannot award grants for a purpose that is inconsistent with IRC Section 170(c)(2)(B).

· You should keep adequate records and case histories so that you can substantiate your grant
distributions with the IRS if necessary.

We'll make this determination letter available for public inspection after deleting personally identifiable
information, as required by IRC Section 6110. We've enclosed Letter 437, Notice of Intention to Disclose -
Rulings, and a copy of the letter that shows our proposed deletions.

. If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how to notify us.

. If you agree with our deletions, you don't need to take any further action.

Please keep a copy of this letter in your records.

If you have questions, you can contact the person shown at the top of this letter.

Sincerely,

Enclosures:
Letter 437

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

<!-- PageFooter="Letter 4792 (Rev. 1-2022) Catalog Number 58263T" -->