Economic Benefits Determined by Revenues

Note: This section doesn’t apply to the special definition of excess benefit transaction for certain transactions involving DAFs and supporting organizations. Please see section II.C.8 and II.C.9 below for the special rules.

(1) Revenue-sharing transactions are subject to Section 4958 liability under the

general rules governing excess benefit transactions, but only to the extent that the value of the economic benefits provided to the disqualified person is shown to exceed the value of the services or other consideration received in return. See Preamble to the Final Regulations under section 4958, T.D. 8978, 2002-7 I.R.B. 500 9 (effective Jan. 22, 2002).

(2) The final regulations for Section 4958 reserved a separate section governing

revenue-sharing transactions. See Treas. Reg.53.4958-5.

(3) Until final regulations are published regarding revenue-sharing transactions, these

transactions should be evaluated under the general rules set forth in Treas. Reg. 53.4958-4 which define excess benefit transactions that apply to all transactions with disqualified persons regardless of whether the person’s compensation is computed by reference to revenues of the organization. See Preamble to the Final Regulations under section 4958, T.D. 8978, 2002-7 I.R.B. 500 9 (effective Jan. 22, 2002).

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