Exempt Organizations Technical Guide›TG 65: Excise Taxes - Excess Benefit Transactions - IRC Section 4958
Table of Contents
0224 Publ 5835 (PDF) · 2026-10-03 edition · updated 2026-10-04 · United States
In this part
- I. Overview
- A. Background / History
- B. Relevant Terms
- C. Law / Authority
- II. Section 4958: Taxes on Excess Benefit Transations
- A. Applicable Tax-Exempt Organizations
- Special Rules for Churches
- Lookback Period
- Exceptions
- Effect of Non-Recognition or Revocation
- B. Disqualified Persons
- Definition
- Substantial Influence
- Facts and Circumstances
- C. Excess Benefit Transaction
- Definition
- Date of Occurrence
- Indirect Benefits
- Fair Market Value
- Reasonable Compensation
- Intent to Treat Benefit as Compensation
- Economic Benefits Determined by Revenues
- Special Rules for Donor-Advised Funds (DAFs)
- Special Rules for Supporting Organizations
- D. Specific Excess Benefit Transaction Exceptions
- Initial Contract Rule
- Disregarded Benefits
- Payment under ERISA
- Existing Binding Contracts prior to September 13, 1995
- Existing Arrangements with Supporting Organizations Prior to August 17, 2006
- E. Rebuttable Presumption
- Requirements for Invoking Rebuttable Presumption
- Non-fixed Payments
- F. Taxes on Excess Benefit Transactions
- Initial Tax on Disqualified Persons
- Initial Tax on Organization Managers
- Additional tax on Disqualified Persons
- Statute of Limitations
- G. Correcting an Excess Benefit Transaction
- Forms of Correction
- Correction Amount
- Correction Where the ATEO is No Longer in Existence or Tax- Exempt
- H. Abatement of Tax on Excess Benefit Transactions
- Correction Period
- Abatement of Initial Tax
- Abatement of Additional Tax
- Reasonable Cause and Not Willful Neglect
- I. Revocation and Section 4958 Special Rules
- J. Penalties
- Section 6684 - Assessable Penalties with Respect to Liability for Tax Under Chapter 42
- Section 6651 - Failure to File Tax Return or To Pay Tax
- K. Additional Guidance
- Court Cases
- Non-precedential Guidance
- III. Examination Techniques
- A. Identifying and Developing Section 4958 Issues
- Determining the Value of an Excess Benefit Transaction
- Factors for determining a bona-fide loan
- Other Section 4958 Issues
- B. Required Returns
- C. Practical Example
- Case Facts
- Statute of Limitations Considerations
- Excise Tax Calculations
- Revenue Agent Report
- IV. Exhibits A. Exhibit 1: Form 4720, Return of Certain Excise Taxes on Charities and…
- Completing Form 4720, Specific Instructions
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