[Code of Federal Regulations]
[Title 26, Volume 17]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR53.4958-8]

[Page 238]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 53_FOUNDATION AND SIMILAR EXCISE TAXES--Table of Contents
 
                   Subpart K_Second Tier Excise Taxes
 
Sec. 53.4958-8  Special rules.

    (a) Substantive requirements for exemption still apply. Section 4958 
does not affect the substantive standards for tax exemption under 
section 501(c)(3) or (4), including the requirements that the 
organization be organized and operated exclusively for exempt purposes, 
and that no part of its net earnings inure to the benefit of any private 
shareholder or individual. Thus, regardless of whether a particular 
transaction is subject to excise taxes under section 4958, existing 
principles and rules may be implicated, such as the limitation on 
private benefit. For example, transactions that are not subject to 
section 4958 because of the initial contract exception described in 
Sec. 53.4958-4(a)(3) may, under certain circumstances, jeopardize the 
organization's tax-exempt status.
    (b) Interaction between section 4958 and section 7611 rules for 
church tax inquiries and examinations. The procedures of section 7611 
will be used in initiating and conducting any inquiry or examination 
into whether an excess benefit transaction has occurred between a church 
and a disqualified person. For purposes of this rule, the reasonable 
belief required to initiate a church tax inquiry is satisfied if there 
is a reasonable belief that a section 4958 tax is due from a 
disqualified person with respect to a transaction involving a church. 
See Sec. 301.7611-1 Q&A 19 of this chapter.
    (c) Other substantiation requirements. These regulations, in Sec. 
53.4958-4(c)(3), set forth specific substantiation rules. Compliance 
with the specific substantiation rules of that section does not relieve 
applicable tax-exempt organizations of other rules and requirements of 
the Internal Revenue Code, regulations, Revenue Rulings, and other 
guidance issued by the Internal Revenue Service (including the 
substantiation rules of sections 162 and 274, or Sec. 1.6001-1(a) and 
(c) of this chapter).

[T.D. 8978, 67 FR 3083, Jan. 23, 2002]