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§ 4958.
Section 4958 imposes an excise tax on any “excess benefit transaction.” Section
4958(c)(1) defines an excess benefit transaction generally as any transaction in which
an economic benefit is provided by an applicable tax-exempt organization (including a
§ 501(c)(3) sponsoring organization of a DAF) directly or indirectly to or for the use of a
disqualified person (including in the case of any transaction that involves a DAF a
donor, donor advisor, or a person related to a donor or donor advisor, as described in
§ 4958(f)(7)), if the value of the economic benefit provided exceeds the value of the
consideration received. In general, the term “excess benefit” refers to the amount by
which the value of the economic benefit provided exceeds the value of the consideration
received. Section 4958(c)(2) provides that, in the case of any DAF, an excess benefit
transaction also includes any grant, loan, compensation, or other similar payment from
the DAF to a donor, donor advisor, or related person. For purposes of this special rule
for DAFs, the excess benefit includes the full amount of the grant, loan, compensation,
or other similar payment. This excise tax under § 4958 is paid by the disqualified
person with respect to the transaction. A separate excise tax, paid by organization
managers, is imposed on the participation of any organization manager in the
transaction, knowing that it is an excess benefit transaction, unless such participation is
not willful and is due to reasonable cause.
Notice 2006-109, 2006-2 C.B. 1121, provided interim guidance on several DAF
issues, including criteria for determining whether a supporting organization is a
disqualified supporting organization, exclusion of certain employer-sponsored disaster
relief funds from the definition of DAF, and transitional rules for educational grants. The