Intermediate Sanctions. For each of the following independent situations, determine whether the organization is at risk for receiving intermediate sanctions from the Internal Revenue Service for conferring excess economic benefits on disqualified persons. If so, indicate how the organization can minimize those sanctions.
1. Jane is president of an IRC Sec. 501 (c) (3) public charity and personally owns a building that she has decided to sell to the not-for-profit organization. The appraisal value is $200,000, and the agreed-upon selling price is $250,000.
2. A large public charity is very happy with its president’s performance and offers him a new compensation agreement for the coming year. He will receive a base salary plus a percentage of the increase in the gross revenues of the organization with no limitation as to the maximum amount.
3. Ann is a member and the director of a symphony association. She receives 20 free admission tickets as a member of the organization.
4. The local chapter of the United Way recently hired Joe Curtis as its new president at a salary of $200,000. The outgoing president was paid $150,000. Mr. Curtis had other offers that ranged from $95,000 to $190,000. The minutes of the meeting reflected that he was exceptionally talented and would not have accepted the position for a lower salary.