The fair market value of economic benefits received for the performance of services is reasonable compensation, which is the value that would ordinarily be paid for like services by a like enterprise under like circumstances. In determining the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for the performance of services are taken into account. Items of compensation include: All forms of cash and non-cash compensation, including salary, fees, bonuses, severance payments, and deferred and noncash compensation The payment of liability insurance premiums, or the payment or reimbursement by the organization of taxes or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit All other compensatory benefits, whether or not included in gross income for income tax purposes Taxable and nontaxable fringe benefits, except fringe benefits described in section 132 Foregone interest on loans An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. An applicable tax-exempt organization is treated as clearly indicating its intent only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Ways to provide contemporaneous written substantiation include: The organization produces a signed written contract The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed prior to the start of an IRS examination The disqualified person reports the benefit as income on his original Form 1040 or an amended form filed prior to the start of an IRS examination To the extent the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to treat the benefit as compensation. Additional information Disregarded Benefits Initial Contract Exception Rebuttable Presumption
