Note:

Since this is a tax determination, a Form 4549-A should be attached showing the computation and summary.

Chapter 42 Excise Tax

9. We have determined that you were a disqualified person of XX Public Charity (“XXPC”) during 2015 and 2016, within the meaning of I.R.C. 4958(f)(1). We have further determined that XXPC is an applicable tax exempt organization and that you engaged in certain “excess benefit transactions” with XXPC.

Specifically, we have determined that in 2015 XXPC paid $12,434.23 in economic benefits to you or for your use and that you provided reciprocal value to XXPC in the amount of $121.65. The payments to or for your personal use occurred throughout 2015. For 2016, we have determined that you intercepted $10,000 of XXPC assets without providing any reciprocal value. As such, you engaged in excess benefit transactions and are liable for the first tier excise taxes computed pursuant to I.R.C. 4958(a)(1) as shown on the attached Form 4883.

We have further determined that you were an organization manager of XXPC and that as an organization manager you participated in the excess benefit transactions described above, knowing them to be such transactions within the meaning of I.R.C. 4958(a)(2). We have further determined that you have not demonstrated that such participation was not willful or that there was reasonable cause for such knowing participation. As such, you are liable for the excise taxes computed pursuant to I.R.C. 4958(a)(2) as shown on the attached Form 4883.

We have further determined that you have not established that you have corrected these excess benefit transactions. To correct, the amount of the excess benefit transactions plus applicable interest must be paid to an organization described in I.R.C. 501(c)(3) in accord with the principles enumerated in Treas. Reg. 53.4958-7, including sub-paragraph (e) of these regulations, Correction in the case of an applicable tax-exempt organization that has ceased to exist, or is no longer tax-exempt is specifically mandated. As such, we have determined that you are liable for the applicable second tier excise tax of I.R.C. 4958(b).

Addendum to Form 4883

Explanation of Adjustments

Name of Taxpayer

EIN of Taxpayer

We have determined that you were a disqualified person of XXPC during 2012, within the meaning of I.R.C. 4958(f)(1). We have further determined that XXPC is an applicable tax exempt organization and that you engaged in certain “excess benefit transactions” with XXPC.

Specifically, we have determined that in 2012 XXPC paid $100,000 in economic benefits to you or for your use by making credit card payments on your behalf for purchases of personal goods and services. You have not demonstrated that you provided reciprocal economic value to XXPC and have not demonstrated that you received these economic benefits as a bona fide loan from XXPC to you. Our determination is made in accordance with the principles described in Treas. Reg. 53.4958-4(c)(1). As such, you engaged in excess benefit transactions and are liable for the first tier excise taxes computed pursuant to I.R.C. 4958(a)(1) as shown on the attached Form 4883.