§ 53.4958-0. Table of contents.

§ 53.4958-1 Taxes on excess benefit transactions

(a) In general.

(b) Excess benefit defined.

(c) Taxes paid by disqualified person.

(1) Initial tax.

(2) Additional tax on disqualified person.

(i) In general.

(ii) Taxable period.

(iii) Abatement if correction during the correction period.

(d) Tax paid by organization managers.

(1) In general.

(2) Organization manager defined.

(i) In general.

(ii) Special rule for certain committee members.

(3) Participation.

(4) Knowing.

(i) In general.

(ii) Amplification of general rule.

(iii) Reliance on professional advice.

(iv) Satisfaction of rebuttable presumption of reasonableness.

(5) Willful.

(6) Due to reasonable cause.

(7) Limits on liability for management.

(8) Joint and several liability.

(9) Burden of proof.

(e) Date of occurrence.

(1) In general.

(2) Special rules.

(3) Statute of limitations rules.

(f) Effective date for imposition of taxes.

(1) In general.

(2) Existing binding contracts.

§ 53.4958-2 Definition of applicable tax-exempt organization

(a) Organizations described in section 501(c)(3) or (4) and exempt from tax under section 501(a).

(1) In general.

(2) Exceptions from definition of applicable tax-exempt organization.

(i) Private foundation.

(ii) Governmental unit or affiliate.

(3) Organizations described in section 501(c)(3).

(4) Organizations described in section 501(c)(4).

(5) Effect of non-recognition or revocation of exempt status.

(b) Special rules.

(1) Transition rule for lookback period.

(2) Certain foreign organizations.

§ 53.4958-3 Definition of disqualified person

(a) In general.

(1) Scope of definition.

(2) Transition rule for lookback period.

(b) Statutory categories of disqualified persons.

(1) Family members.

(2) Thirty-five percent controlled entities.

(i) In general.

(ii) Combined voting power.

(iii) Constructive ownership rules.

(A) Stockholdings.

(B) Profits or beneficial interest.

(c) Persons having substantial influence.

(1) Voting members of the governing body.

(2) Presidents, chief executive officers, or chief operating officers.

(3) Treasurers and chief financial officers.

(4) Persons with a material financial interest in a provider-sponsored organization.

(d) Persons deemed not to have substantial influence.

(1) Tax-exempt organizations described in section 501(c)(3).

(2) Certain section 501(c)(4) organizations.

(3) Employees receiving economic benefits of less than a specified amount in a taxable year.

(e) Facts and circumstances govern in all other cases.

(1) In general.

(2) Facts and circumstances tending to show substantial influence.

(3) Facts and circumstances tending to show no substantial influence.

(f) Affiliated organizations.

(g) Examples.

§ 53.4958-4 Excess benefit transaction

(a) Definition of excess benefit transaction.

(1) In general.

(2) Economic benefit provided indirectly.

(i) In general.

(ii) Through a controlled entity.

(A) In general.

(B) Definition of control.

(1) In general.

(2) Constructive ownership.

(iii) Through an intermediary.

(iv) Examples.

(3) Exception for fixed payments made pursuant to an initial contract.

(i) In general.

(ii) Fixed payment.

(A) In general.

(B) Special rules.

(iii) Initial contract.

(iv) Substantial performance required.

(v) Treatment as a new contract.

(vi) Evaluation of non-fixed payments.

(vii) Examples.

(4) Certain economic benefits disregarded for purposes of section 4958.

(i) Nontaxable fringe benefits.

(ii) Expense reimbursement payments pursuant to accountable plans.

(iii) Certain economic benefits provided to a volunteer for the organization.

(iv) Certain economic benefits provided to a member of, or donor to, the organization.

(v) Economic benefits provided to a charitable beneficiary.

(vi) Certain economic benefits provided to a governmental unit.

(5) Exception for certain payments made pursuant to an exemption granted by the Department of Labor under ERISA.

(b) Valuation standards.

(1) In general.

(i) Fair market value of property.

(ii) Reasonable compensation.

(A) In general.

(B) Items included in determining the value of compensation for purposes of determining reasonableness under section 4958.

(C) Inclusion in compensation for reasonableness determination does not govern income tax treatment.

(2) Timing of reasonableness determination.

(i) In general.

(ii) Treatment as a new contract.

(iii) Examples.

(c) Establishing intent to treat economic benefit as consideration for the performance of services.

(1) In general.

(2) Nontaxable benefits.

(3) Contemporaneous substantiation.

(i) Reporting of benefit.

(A) In general.

(B) Failure to report due to reasonable cause.

(ii) Other written contemporaneous evidence.

(4) Examples.

§ 53.4958-5 Transaction in which the amount of the economic benefit is determined in whole or in part by the revenues of one or more activities of the organization. [Reserved] § 53.4958-6 Rebuttable presumption that a transaction is not an excess benefit transaction.

(a) In general.

(b) Rebutting the presumption.

(c) Requirements for invoking rebuttable presumption.

(1) Approval by an authorized body.

(i) In general.

(ii) Individuals not included on authorized body.

(iii) Absence of conflict of interest.

(2) Appropriate data as to comparability.

(i) In general.

(ii) Special rule for compensation paid by small organizations.

(iii) Application of special rule for small organizations.

(iv) Examples.

(3) Documentation.

(d) No presumption with respect to non-fixed payments until amounts are determined.

(1) In general.

(2) Special rule for certain non-fixed payments subject to a cap.

(e) No inference from absence of presumption.

(f) Period of reliance on rebuttable presumption.

§ 53.4958-7 Correction.

(a) In general.

(b) Form of correction.

(1) Cash or cash equivalents.

(2) Anti-abuse rule.

(3) Special rule relating to nonqualified deferred compensation.

(4) Return of specific property.

(i) In general.

(ii) Payment not equal to correction amount.

(iii) Disqualified person may not participate in decision.

(c) Correction amount.

(d) Correction where contract has been partially performed.

(e) Correction in the case of an applicable tax-exempt organization that has ceased to exist, or is no longer tax-exempt.

(1) In general.

(2) Section 501(c)(3) organizations.

(3) Section 501(c)(4) organizations.

(f) Examples.

§ 53.4958-8 Special rules.

(a) Substantive requirements for exemption still apply.

(b) Interaction between section 4958 and section 7611 rules for church tax inquiries and examinations.

(c) Other substantiation requirements.