Looking for a Form 4720 Templates? Download it for free!

Carry the total amount in column (d)

Taxable period. Taxable period

benefit received from the applicable

for each organization manager to page

means the period beginning with the

organization over the consideration

1, Part II-A, column (g).

date on which the excess benefit

given (including services) by a

transaction occurs and ending on the

disqualified person.

earlier of:

However, an economic benefit will

Schedule I—Initial Taxes

1. The date a notice of deficiency

not be treated as compensation for

was mailed to the disqualified person

services unless the applicable

on Excess Benefit

for the initial tax on the excess benefit

organization clearly indicates its intent

Transactions (Section

transaction, or

to treat the economic benefit (when

2. The date on which the initial tax

paid) as compensation for a disqualified

4958)

on the excess benefit transaction for

person’s services. See Regulations

the disqualified person is assessed.

section 53.4958-4(c) for more

General Instructions

information.

Excess benefit transaction. An

Requirement. Complete Schedule I

Exception. Generally, section 4958

excess benefit transaction is any

for any Excess benefit transaction in

does not apply to any fixed payment

transaction in which:

which an Applicable organization

made to a person under an initial

1. An excess benefit is provided by

provides an Excess benefit to a

contract. See Regulations section

the organization, directly or indirectly to,

Disqualified person. These terms are

53.4958-4(a)(3) for details.

or for the use of, any disqualified

discussed below.

Special rule. The initial and additional

person, or

Applicable organization. In

taxes of this section do not apply if the

2. The amount of any economic

general, an applicable organization is

transaction described in 1 under

benefit provided to, or for the use of, a

any section 501(c)(3) (except a private

Excess benefit transaction was

disqualified person is determined in

foundation) or any 501(c)(4)

pursuant to a written contract in effect

whole or in part by the revenues of the

organization.

on September 13, 1995, and at all

organization and violates the private

times after that date until the time that

Also, an applicable organization

inurement prohibition rules (to the

the transaction occurs.

includes any organization that was a

extent provided in regulations).

501(c)(3) (except a private foundation)

However, if a written contract is

or 501(c)(4) organization at any time

Until final regulations are issued

materially modified, it is treated as a

during a five-year period ending on the

regarding the special rules for

new contract entered into as of the date

date of an excess benefit transaction

revenue sharing transactions

of the material modification. A material

CAUTION

(the lookback period).

described in 2 above, these

modification includes amending the

transactions will only be subject to

Initial taxes. Excise taxes are

contract to extend its term or to

section 4958 liability under the general

imposed under section 4958 on each

increase the compensation payable to a

excess benefit transaction. If a

rule described in 1 above.

disqualified person.

manager receives an excess benefit

Supporting organization

Disqualified person. For purposes of

from an excess benefit transaction, the

transactions occurring after July 25,

this Schedule I, a disqualified person

manager may be liable for the tax on

2006. For any supporting organization,

means:

disqualified persons and the tax on the

as defined in section 509(a)(3), any

1. Any person (at any time during

organization manager. See Abatement

grant, loan, compensation, or other

the 5-year period ending on the date of

on page 4 for information on

similar payment provided to a

the transaction) in a position to exercise

abatement, refund, or relief from this

substantial contributor (defined later),

substantial influence over the affairs of

tax.

family member, or 35% controlled entity

the organization,

Tax on disqualified persons. The

will be considered an excess benefit

2. A family member of an individual

tax is 25% of the excess benefit and is

transaction. The amount of the excess

described in 1 above, and

paid by any disqualified person who

benefit is the amount of such grant,

3. A 35% controlled entity of a

improperly benefited from the excess

loan, compensation, or other similar

person described in 1 or 2 above.

benefit transaction.

payment. Also, any loan provided to a

disqualified person that is not an

Tax on organization managers. If

Family members. Family members

organization described in section

tax is imposed on a disqualified person

of a disqualified person described in 1

509(a)(1), (2), or (4) or a supported

for any excess benefit transaction, then

above include a disqualified person’s

organization of the supporting

tax is also imposed on any manager

spouse, ancestors, children,

organization exempt under section

who knowingly participated in the

grandchildren, great grandchildren, and

501(c)(4), (5), (6) and described in the

excess benefit transaction. The tax is

brothers and sisters (whether by whole-

last sentence of section 509(a) is

10% of the excess, not to exceed

or half-blood). It also includes the

considered an excess benefit

$20,000 for each transaction.

spouse of the children, grandchildren,

transaction.

great grandchildren, brothers, or sisters

Additional tax on the disqualified

Donor advised fund transactions

(whether by whole- or half-blood).

person. If the initial tax is imposed on

occurring after August 17, 2006.

an excess benefit transaction and the

35% controlled entity. The term

Any grant, loan, compensation, or other

transaction is not corrected within the

35% controlled entity means:

•

similar payment from any donor

taxable period, then any disqualified

A corporation in which a disqualified

advised fund to a donor, donor advisor,

person involved shall be liable for an

person described in 1 or 2 above owns

family member, or 35% controlled entity

additional tax equal to 200% of the

more than 35% of the total combined

is an excess benefit transaction. The

excess benefit.

voting power,

•

amount of the excess benefit is the

This additional tax is abated

A partnership in which such persons

amount of such grant, loan,

(refunded if collected) if the excess

own more than 35% of the profits

compensation, or other similar

benefit transaction is corrected within

interest, or

•

payment.

the correction period (defined in

A trust or estate in which such

Question B, under Specific Instructions

Excess benefit. Excess benefit

persons own more than 35% of the

for Page 1 on page 4).

means the excess of the economic

beneficial interest.

-12-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2009 Page 12

Related Articles

Related forms

Related Categories