I am the director of a nonprofit and want to rent an area of my home to the organization. Is this illegal?
If your nonprofit is a private foundation, this is a prohibited self-dealing transaction for which you will be liable for an excise tax based on the rental value. If you don't give the money back, you can be taxed at 200% of the value. (See Ready Reference Page: "Private Foundations Must Avoid Self-Dealing.") If your nonprofit is a public charity, you need to consider the arrangement under the rules for excess benefit tax transactions and will want to be sure that a disinterested committee checks comparable rental situations and determines that it is a fair rental rate. (See Ready Reference Page: "Charities Must Avoid Excess Benefit Transactions.")