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Adjustment Period - Excess Qualifying Distributions

The adjustment period is the five tax years immediately following the tax year in which the excess of qualifying distributions is created. Thus, an excess qualifying distribution for any one tax year may not be carried over for more than five tax years.  However, if during any tax year of the adjustment period, the organization ceases to be subject to the initial tax (such as by becoming a private operating foundation), any portion of the excess qualifying distributions, that, before that tax year, has not been applied against distributable amounts may not be carried over to that tax year or later tax years in the adjustment period.  This rule applies even though during any of those tax years the organization again becomes subject to the initial tax.


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Page Last Reviewed or Updated: 18-Apr-2014