Correction Period

(1) The correction period, defined in Section 4963(e),

a. Begins when the excess benefit transaction between an ATEO and a

disqualified person occurs, and

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b. Ends 90 days after the notice of deficiency mailing date with respect to the

200% tax. See Treas. Reg.53.4958-1(c)(2)(iii).

(2) The correction period can be extended by:

a. The period when a Tax Court petition is pending, and

b. Any other period that the IRS determines is reasonable and necessary to

bring about correction of the excess benefit. See Section 4963(e)(1)(B).

(3) For the IRS to extend the correction period, the following factors ordinarily should

be present:

a. The taxpayer is actively seeking in good faith to correct the taxable event.

b. Adequate corrective action cannot reasonably be expected to result during

the unextended correction period.

c. The taxable event appears to have been an isolated occurrence so that it

appears unlikely that similar taxable events will occur in the future. See Treas. Reg. 53.4963-1(e)(3).