### Question
How does the law define prohibited transaction?


### Answer
Under *26 U.S.C. § 4948*, **prohibited transaction** is defined as:

> any act or failure to act (other than with respect to section 4942(e)) which would subject a foreign organization described in subsection (b), or a disqualified person (as defined in section 4946) with respect thereto, to liability for a penalty under section 6684 or a tax under section 507 if such foreign organization were a domestic organization

#### Citation:
  - *26 U.S.C. § 4948*
  - Heading: **Subtitle D-Miscellaneous Excise Taxes > CHAPTER 42-PRIVATE FOUNDATIONS; AND CERTAIN OTHER TAX-EXEMPT ORGANIZATIONS > Subchapter A-Private Foundations**

