General Instructions

Table of Contents

Purpose of Form

Use Form 5227 to:

  • Report the financial activities of a split-interest trust.

  • Provide certain information regarding charitable deductions and distributions of or from a split-interest trust.

  • Determine if the trust is treated (for Chapter 42 excise tax purposes) as a private foundation and subject to certain excise taxes under Chapter 42.

Form 5227 is open to public inspection.

Use Schedule A of Form 5227 to report:

  • Accumulations of income for charitable remainder trusts,

  • Distributions to non-charitable beneficiaries, and

  • Information about donors and assets contributed during the year.

Schedule A of Form 5227 is not open for public inspection.

Who Must File

All charitable remainder trusts described in section 664 must file Form 5227. All pooled income funds described in section 642(c)(5) and all other trusts such as charitable lead trusts that meet the definition of a split-interest trust under section 4947(a)(2) must file Form 5227 unless the Exception (below) applies.

Exception.   Generally, a split-interest trust created before May 27, 1969, is not required to file Form 5227. However, if any amounts were transferred to the trust after May 26, 1969, for which a deduction was allowed under any of the sections listed under section 4947(a)(2), Form 5227 must be filed for the year of the transfer and all subsequent years regardless of whether additional transfers are made in subsequent years.

  If all transfers of corpus to the trust occurred before May 27, 1969, then the trust is not required to file Form 5227.

  If a trust was created before May 27, 1969, and any amount was transferred to the trust after May 26, 1969, for which no deduction was allowed under any of the sections listed under section 4947(a)(2), then the trust is not required to file Form 5227.

Note.

Regulations section 1.6012-3(a)(6) references Form 1041-B, Charitable Remainder Trust. Form 5227 replaces Form 1041-B. Regulations section 1.6034-1(c) references Form 1041-A, U.S. Information Return Trust Accumulation of Charitable Amounts. Form 5227 replaces Form 1041-A for split-interest trusts.

Which Parts To Complete

Certain parts in the return only apply to a particular type of trust (such as a charitable remainder trust). Parts (or lines) that only apply to a particular type of trust are appropriately labeled. If a part does not reference any particular type of trust, then the part may be applicable to all split-interest trusts. However, charitable remainder trusts and charitable lead trusts whose charitable interests involve only war veterans' posts or cemeteries (as described in sections 170(c)(3) and 170(c)(5)) do not have to complete Parts VI-A and VI-B.

Definitions

Split-interest trust.   A split-interest trust is a trust that:

  • Is not exempt from tax under section 501(a);

  • Has some unexpired interests that are devoted to purposes other than religious, charitable, or similar purposes described in section 170(c)(2)(B); and

  • Has amounts transferred in trust after May 26, 1969, for which a deduction was allowed under one of the sections listed in section 4947(a)(2).

A split-interest trust is subject to many of the same requirements and restrictions that are imposed on private foundations.

Split-interest trusts are usually one of the following types:

  • Charitable Remainder Trusts described in section 664 (see Type of Entity later),

  • Pooled Income Funds described in section 642(c)(5) (see Type of Entity later), and

  • Charitable Lead Trusts which are trusts that make payments for charitable purposes, have at least one noncharitable beneficiary entitled to a remainder interest, and claimed a deduction under one of the sections listed under section 4947(a)(2).

Recipient.   A recipient is a beneficiary who receives the possession or beneficial enjoyment of the unitrust or annuity amount.

Foundation manager.   A foundation manager is an officer, director, or trustee (or an individual who has powers or responsibilities similar to those of officers, directors, or trustees). In the case of any act or failure to act, the term foundation manager may also include an employee of the trust who has the authority to act.

Disqualified person.   A disqualified person is:

  1. A substantial contributor;

  2. A foundation manager;

  3. A person who owns more than 20% of a corporation, partnership, trust, or unincorporated enterprise, which is itself a substantial contributor;

  4. A member of the family of an individual in the first three categories; or

  5. A corporation, partnership, trust, or estate in which persons described in (1), (2), (3), or (4) above own a total beneficial interest of more than 35%.

  6. For purposes of section 4943 (excess business holdings), a disqualified person also includes:

    a. A private foundation which is effectively controlled (directly or indirectly) by the same persons who control the trust in question, or

    b. A private foundation substantially all of the contributions to which were made (directly or indirectly) by the same person or persons described in (1), (2), or (3) above, or members of their families, within the meaning of section 4946(d), who made (directly or indirectly) substantially all of the contributions to the trust in question.

  7. For purposes of section 4941 (self-dealing), a disqualified person also includes certain government officials. (See section 4946(c) and the related regulations.)

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

Phone Help

If you have questions and/or need help completing this form, please call 1-877-829-5500. This toll-free telephone service is available Monday through Friday.

Additional Information

For additional information on private foundations and foundation managers, visit 
www.irs.gov/charities/foundations/index.html.

Other Forms You May Have To File

You may also be required to file one or more of the following forms.

  • Form 56, Notice Concerning Fiduciary Relationship.

  • Form 1041, U.S. Income Tax Return for Estates and Trusts.

  • Form 1041-ES, Estimated Income Tax for Estates and Trusts.

  • Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.

  • Form 8275, Disclosure Statement. Use this form to disclose items or positions (except those contrary to a regulation—see Form 8275-R, next) that are not otherwise adequately disclosed on the tax return. The disclosure is made to avoid parts of the accuracy-related penalty for disregard of rules or substantial understatement of tax. Form 8275 is also used for disclosures relating to preparer penalties for understatements due to unrealistic positions or for willful or reckless conduct.

  • Form 8275-R, Regulation Disclosure Statement. Use this form to disclose any item on a tax return for which a position has been taken that is contrary to Treasury regulations.

  • Form 8822-B, Change of Address—Business.

  • Form 8868, Application for Extension of Time To File an Exempt Organization Return.

  • Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts.

  • Form 8886, Reportable Transaction Disclosure Statement.

You can order forms and publications by calling 1-800-TAX-FORM (1-800-829-3676). You can also get most forms and publications at your local IRS office or online at IRS.gov.

Period To Be Covered by Return

File Form 5227 for each calendar year. This revision of the form is for the 2012 calendar year.

Accounting Methods

Trust income must be computed using the method of accounting regularly used in keeping the trust's books and records. Generally, permissible methods include the cash method, the accrual method, or any other method authorized by the Internal Revenue Code. The method used must clearly reflect income.

Unless otherwise allowed by law, the trust may not change the accounting method used to report income (for income as a whole or for any material item) without first getting consent on Form 3115, Application for Change in Accounting Method. See Pub. 538, Accounting Periods and Methods, for more details.

When To File

File Form 5227 for calendar year 2012 by April 15, 2013.

Extension of Time To File.   Use Form 8868 to request an automatic 3-month extension of time to file. The request for an automatic extension must be filed by the due date of the return. After receiving an automatic 3-month extension, you can also use Form 8868 to apply for an additional (not automatic) 3-month extension. The request for an additional 3-month extension must be filed by the extended due date of the return.

Where To File

U.S. Address.    If you are located in the United States, file Form 5227 at the following address: 

Department of the Treasury 
Internal Revenue Service Center 
Ogden, UT 84201-0027

Outside the U.S.    If you are located in a foreign country or a U.S. possession, file Form 5227 at this address: 

Internal Revenue Service Center 
P.O. Box 409101 
Ogden, UT 84409

Private delivery services (PDSs).   In addition to the United States mail, exempt organizations can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services include only the following.

  • DHL Express (DHL): DHL Same Day Service.

  • Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First.

  • United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.

  PDSs cannot deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

  PDSs deliver to:

Internal Revenue Submission Processing Center 
1973 Rulon White Blvd. 
Ogden, UT 84404

  The private delivery service can tell you how to get written proof of the mailing date.

Penalty for Failure To File Timely, Completely, or Correctly

The failure to file penalty under section 6652(c)(2)(C) is imposed on a split-interest trust unless the failure is due to reasonable cause. The penalty is imposed on the trust for failure to:

  • Timely file a return,

  • File a complete return, or

  • Furnish correct information.

The penalty is $20 for each day the failure continues with a maximum of $10,000 for any one return. However, if the trust has gross income greater than $250,000, the penalty is $100 for each day the failure continues with a maximum of $50,000 for any one return.

The IRS may make a written demand that the delinquent return be filed or information be furnished specifying a time to comply with the demand. If the trustee fails to comply with the demand by the specified date, the trustee will be charged a penalty of $10 for each day the failure continues with a maximum of $5,000 for any one return.

If the trustee required to file the return knowingly fails to file the return, the same penalty that is imposed on the trust will also be imposed on such trustee. Also, penalties for filing a false or fraudulent return apply.

Trust Instrument

When you file the first return for a charitable remainder annuity trust or unitrust, or charitable lead annuity or unitrust, include:

  1. A copy of the trust instrument, and

  2. A written declaration under penalties of perjury that it is a true and complete copy.

For sample forms of trusts that meet the requirements of a charitable remainder unitrust, see Rev. Procs. 2005-52 through 2005-59, 2005-2 C.B. 326, 339, 353, 367, 383, 392, 402, and 412.

For sample forms of a trust that meet the requirements of a charitable remainder annuity trust, see Rev. Procs. 2003-53 through 2003-60, 2003-2 C.B. 230, 236, 242, 249, 257, 262, 268, and 274.

For sample forms of trusts that meet the requirements of an inter vivos grantor or nongrantor charitable lead annuity trust, see Rev. Proc. 2007-45, 2007-29 I.R.B. 89. For a sample form of a trust that meets the requirements of a testamentary charitable lead annuity trust, see Rev. Proc. 2007-46, 2007-29 I.R.B. 102.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on your return and schedules. If you do round dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

Attachments

If you need more space, attach separate sheets showing the same information in the same order as on the printed form. Show the totals on the printed form.

Enter the trust's name and employer identification number on each sheet. Also, use sheets that are the same size as the forms and indicate clearly the line of the printed form to which the information relates.

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