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Adjusted Net Income Defined

Adjusted net income is the excess of gross income for the tax year (including gross income from any unrelated trade or business) deter­mined with certain modifications over the total deductions (including deduc­tions directly connected with carrying on any unrelated trade or business) that would be al­lowed a taxable corporation determined with certain deduction modifications.

Gross income does not include gifts, grants, or contributions received by the private operat­ing foundation but does include income from a functionally-related business. Gross income and the total deductions allowable from that income will be figured as they are normally figured for income tax purposes except as otherwise pro­vided.  When figuring adjusted net income, there will be no exclusions, deductions, or credits un­less otherwise provided under income modifications and deduction modifications.

Amounts received by the foundation in tax years beginning after 1969 representing repay­ment of principal on loans made in tax years before 1970 are not includible in gross income.  However, payments of interest on those loans are includible in gross income.


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Page Last Reviewed or Updated: 18-Oct-2013