Unreasonable Executive Compensation Paid to Executives of 501c3 Organizations Is

question 154

Multiple Choice

Unreasonable executive compensation paid to executives of 501c3 organizations is an area of concern for the IRS. Which of the following is a sanction available to the IRS?

• A) If the executive receiving the excess benefits fails to repay the amount in a timely manner, an additional tax equal to 100 percent may be imposed.
• B) Revoke the organization's 501c)3) status.
• C) In the event compensation is found to be unreasonable, the organization will receive a penalty equal to 200% of the excess compensation.
• D) In the event compensation is found to be unreasonable, the executive is required to pay back the excess benefit to the tax-exempt organization plus a penalty of 25% of the excess benefit on the individual receiving the compensation and a penalty of 10 percent on the individuals responsible for approving it.

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Definitions:

Nash Equilibrium

A concept in game theory where no player can benefit by changing strategies while the other players keep theirs unchanged; it represents a state of mutual best responses.

Simultaneous Game

A strategic interaction where all participants make decisions or moves at the same time without knowledge of the others' choices.

Best Response

In game theory, the strategy that yields the highest payoff for a player, given the strategies chosen by other players.

Simultaneous Game

A strategic game in which all players make their moves at the same time, without knowledge of the other players' actions.