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Excess Benefit Transaction Tax Calculator (Section 4958)

What does this come to under the current IRS rules?

The 25 percent tax on the disqualified person, the 10 percent manager tax capped at $20,000 and the 200 percent tax if not corrected.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Tax on the disqualified person (25%)
$30,000
Tax on participating managers (10%, capped at $20,000)
$12,000
Joint and several among the managers liable
Additional tax if not corrected (200%)
$0
Drawn to one scale
Tax on the disqualified person (25%)$30,000
Tax on participating managers (10%, capped at $20,000)$12,000
Additional tax if not corrected (200%)$0
Total excise taxes$42,000
All results
MeasureResult
Tax on the disqualified person (25%)$30,000
Tax on participating managers (10%, capped at $20,000)
Joint and several among the managers liable
$12,000
Additional tax if not corrected (200%)$0
Total excise taxes$42,000
How this was worked out
Work shownrecomputed as you type
First-tier tax on the disqualified person = 25% of the excess benefit
Manager tax = 10% of the excess benefit, at most $20,000 per transaction
Second-tier tax = 200% of the excess benefit not corrected within the taxable period

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • First-tier tax on the disqualified person = 25% of the excess benefit
  • Manager tax = 10% of the excess benefit, at most $20,000 per transaction
  • Second-tier tax = 200% of the excess benefit not corrected within the taxable period

How it works

Section 4958 taxes the disqualified person who receives an excess benefit from an applicable tax-exempt organization at 25 percent of the excess. An organization manager who knowingly participated pays 10 percent, unless the participation was not willful and was due to reasonable cause, with a cap of $20,000 per transaction shared jointly and severally.

If the excess benefit is not corrected within the taxable period, the disqualified person owes a further 200 percent.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Does the organization pay these taxes?

No. The taxes fall on the disqualified person and on the managers, not on the organization.

Is the $20,000 cap per manager?

It is per transaction. Where more than one manager is liable, they are jointly and severally liable for that amount.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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