GiftLaw Pro http://www.gcfccc.org/giftlaw/glawprosodc.jsp?AhblD=G12003-0474... Wednesday, July 20, 2011 GiftLaw Pro Sec. 4958 Taxes on Excess Benefit Transactions Code Sections (a) INITIAL TAXES (b) ADDITIONAL TAX ON THE DISQUALIFIED PERSON (c) EXCESS BENEFIT TRANSACTION; EXCESS BENEFIT (d) SPECIAL RULES (e) APPLICABLE TAX-EXEMPT ORGANIZATION (f) OTHER DEFINITIONS (a) INITIAL TAXES (1) ON THE DISQUALIFIED PERSON There is hereby imposed on each excess benefit transaction a tax equal to 25 percent of the excess benefit. The tax imposed by this paragraph shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction. (2) ON THE MANAGEMENT In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any organization manager in the excess benefit transaction, knowing that it is such a transaction, a tax equal to 10 percent of the excess benefit, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any organization manager who participated in the excess benefit transaction. (b) ADDITIONAL TAX ON THE DISQUALIFIED PERSON In any case in which an initial tax is imposed by subsection (a)(1) on an excess benefit transaction and the excess benefit involved in such transaction is not corrected within the taxable period, there is hereby imposed a tax equal to 200 percent of the excess benefit involved. The tax imposed by this subsection shall be paid by any disqualified person referred to in subsection (f)(1) with respect to such transaction. (c) EXCESS BENEFIT TRANSACTION; EXCESS BENEFIT. For purposes of this section-- (1) EXCESS BENEFIT TRANSACTION (A) IN GENERAL The term "excess benefit transaction" means any transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person if the value of the ec