Question

The tool the IRS most likely will use when key officers in a tax-exempt entity receive excess economic benefits from transactions with the not-for-profit organization is:

a) Tax returns.
b) Form 990.
c) Schedule A.
d) Schedule B.

Answer 1

The IRS uses Form 990 to review financial information of tax-exempt organizations and to monitor transactions for excess economic benefits provided to key officers.

Step-by-step explanation:

The tool the IRS is most likely to use when key officers in a tax-exempt entity receive excess economic benefits from transactions with the not-for-profit organization is Form 990. This form is particularly designed for tax-exempt organizations to provide the IRS with annual financial information. It includes information on the organization's mission, programs, and finances, including the compensation of its officers, directors, and key employees. Form 990 helps the IRS and the public to understand how the organization operates and ensures that it adheres to tax-exempt standards, including the limitation on excess benefit transactions. It provides detailed information about the organization's activities, governance, and financial transactions, including any excess benefits received by key officers.