Internal Revenue Code

Today is Friday, September the 18th, 2026.

And the world moves on, and so does the outrageousness of the Internal Revenue Code and the way that it is administered in certain circumstances.

And who better to discuss and dissect this with me today than tax lawyer Virginia LaTorre-Jeker.

And today we are going to begin by revisiting a topic that we have talked about in the past, but it's such an important topic that I feel like we are playing the role of evangelists, educating the world about this.

Sure.

Okay.

So essentially what 6039 capital F of the Internal Revenue Code says is if the value of the aggregate foreign gifts received by a United States person exceeds a certain amount, which is $100,000, then they have to report that according to how this IRS prescribes.

And then it says penalty for failure to file the information.

So in the context of covered calls, I want to make sure we're sort of confining this to situations where we don't own a put on that stock, because that changes everything I would say.

So In effect, and IRC section 1092 gets into this, you create a straddle on a stock when you sell a call that's more than one strike price in the money.

Now, let's use the $100 example.

And let's say the nearest call strike is $97.50. below the money.

It's anchored to a body of authoritative content.

in the Internal Revenue Code, Treasury Regulations, state tax laws.

And here's an important part.

It operates at a scale that drives substantial projected results when you start to think about the money that can be made by AI companies when they start putting their business case together because the tax system is so big.

So if we back all the way up, Pankaj, we need to answer the question, truly, what is a 409A?

So yeah, the name comes from Section 409A of the Internal Revenue Code.

It was added by the American Job Creation Act in 2004 and took effect in January of 2005.

The final regulations came out April of 2007.

And what he's really saying there is that the Roman Empire at the time, the Roman emperor was the legal authority over Palestine, over the Jewish nation at that point in time, right? So we have a responsibility to follow the law, right? Well, we've got a law in this country.

It's not an emperor, thankfully, but it is the Internal Revenue Code, which might be worse, really, when you look at the terms of the tax code.

So our responsibility as Christians is to follow the law, not to just turn your pockets out because the IRS might say, well, you owe this or you owe that.

If you owe it, you have a responsibility to pay it.

I mean, how big is it? A paragraph or what?

Yeah, put it this way, Gary.

The current size of the Internal Revenue Code is more than 4 million words.

It's been changed more than 6,000 times just since 2001 alone.

So if you make, say, a million-dollar contribution in December of 2026, the 1.39% tax on the investment income earned on that contribution will apply in 2027, and quarterly estimated tax payments are required.

The next excise tax to be aware of is the penalty tax on insider transactions that are determined to be self-dealing within the rules of the Internal Revenue Code.

Again, that's a big topic.

If you do plan on the organization compensating family members or the founder or engaging in any other insider transactions, it's really important to make sure that you understand those rules before forming the foundation, because sometimes those sorts of insider transactions are just non-starters, and so you may want to go a different direction.