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Department, Congress enacted section 4958. See H. Rept. 104-506,
supra at 56, 1996-3 C.B. at 104.
A disqualified person who receives an excess benefit from an
excess benefit transaction is liable for an initial excise tax
equal to 25 percent of the excess benefit. Sec. 4958(a)(1). If
the initial tax is imposed and the transaction is not corrected
within the taxable period, then the disqualified person is liable
for an additional tax of 200 percent of the excess benefit. Sec.
4958(b).
Here, the fair market value of the Sta-Home tax-exempt
entities’ transferred assets far exceeded the consideration paid
by the Sta-Home for-profit entities. Thus, the asset transfers
were excess benefit transactions which directly benefited the
transferees (i.e., the Sta-Home for-profit entities) and
indirectly benefited the Sta-Home for-profit entities’
shareholders (i.e., the Caracci family members). Petitioners do
not seriously dispute that they are disqualified persons with
respect to the Sta-Home tax-exempt entities. Joyce P. Caracci,
Michael Caracci, and Christina C. McQuillen, as directors and
officers of each of the three Sta-Home tax-exempt entities, are
disqualified persons because they were in positions to exercise
substantial influence over the entities’ affairs. Sec.
4958(f)(1)(A). Victor Caracci and Vincent Caracci are
disqualified persons because of their familial relationships to
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