501(c)(3) Status

Best Practices to Avoid Excess Benefit Transactions

Part III of a four-part overview of private inurement, private benefit, and excess benefit transactions. The first whitepaper in this series described the basics of private benefit and private inurement issues for tax-exempt organizations. The second whitepaper explained a specific type of private inurement issue, the excess benefit transaction (EBT). The second whitepaper also described how to avoid an EBT and what the consequences are if an EBT takes place. This third whitepaper provides best practices for avoiding excess benefit transactions: (1) using the rebuttable presumption of reasonableness; (2) avoiding automatic excess benefit transactions; and (3) being aware of exceptions to excess benefit transactions.
Part III of a four-part overview of private inurement, private benefit, and excess benefit transactions. The first whitepaper in this series described the basics of private benefit and private inurement issues for tax-exempt organizations. The second whitepaper explained a specific type of private inurement issue, the excess benefit transaction (EBT). The second whitepaper also described how to avoid an EBT and what the consequences are if an EBT takes place. This third whitepaper provides best practices for avoiding excess benefit transactions: (1) using the rebuttable presumption of reasonableness; (2) avoiding automatic excess benefit transactions; and (3) being aware of exceptions to excess benefit transactions.