Excess Benefit

General Rule

An excess benefit transaction takes place when...

• an economic benefit is
• provided by a (c)(3)/(4)
• to a Disqualified Person
• which exceeds the value of consideration given

Disqualified Person (DQP)

(A) Persons in a position to exercise substantial influence over the affairs of the organization
(B) Family members of individuals in (A)
(C) 35% controlled entities

Based on Excess Benefit (Amount by which economic benefit provided exceeds consideration given)

Imposed on the DQP:

1. 25% of excess benefit
2. 200% of excess benefit, if the transaction is not corrected

1. 10% of Excess Benefit [Max $10,000/transaction]

Decision must be:

1. Reached independently
2. Based on appropriate comparative data
3. Completely documented