Table of Contents
- Completing the Heading
- Part I. Analysis of Revenue and Expenses
- Part II. Balance Sheets
- Part III. Analysis of Changes in Net Assets or Fund Balances
- Part IV. Capital Gains and Losses for Tax on Investment Income
- Part V. Qualification Under Section 4940(e) for Reduced Tax on Net Investment Income
- Part VI. Excise Tax Based on Investment Income (Section 4940(a), 4940(b), 4940(e), or 4948)
- Part VII-A. Statements Regarding Activities
- Part VII-B. Activities for Which Form 4720 May Be Required
- Part VIII. Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors
- Part IX-A. Summary of Direct Charitable Activities
- Part IX-B. Summary of Program-Related Investments
- Part X. Minimum Investment Return
- Part XI. Distributable Amount
- Part XII. Qualifying Distributions
- Part XIII. Undistributed Income
- Part XIV. Private Operating Foundations
- Part XV. Supplementary Information
- Part XVI-A. Analysis of Income-Producing Activities
- Part XVI-B. Relationship of Activities to the Accomplishment of Exempt Purposes
- Part XVII. Information Regarding Transfers To and Transactions and Relationships With Noncharitable Exempt Organizations
- Signature
- Paid Preparer
The following instructions are keyed to items in the Form 990-PF Entity section.
If the organization operates under a name different from its legal name, give the legal name of the organization but identify its alternate name, after the legal name, by writing “aka”(also known as) and the alternate name of the organization. The address used must be that of the principal office of the foundation.
Include the suite, room, or other unit number after the street address. If the post office does not deliver mail to the street address and the organization has a P.O. box, show the box number instead of the street address.
The organization should have only one employer identification number (EIN). If it has more than one EIN, notify the Internal Revenue Service Center at the address shown under General Instruction J. Explain what numbers the organization has, the name and address to which each number was assigned, and the address of the organization's principal office. The IRS will then advise which number to use.
Enter a foundation telephone number (including the area code) that the public and government regulators may use to obtain information about the foundation's finances and activities. This information should be available at this telephone number during normal business hours. If the foundation does not have a telephone, enter a telephone number of a foundation official who can provide this information during normal business hours.
If the foreign organization meets the 85% test of Regulations section 53.4948-1(b), then:
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Check the box in D2 on page 1 of Form 990-PF,
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Check the box at the top of Part XI,
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Do not fill in Parts XI and XIII,
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Do not fill in Part X unless it is claiming status as a private operating foundation, and
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Attach the computation of the 85% test to Form 990-PF.
Note.
In addition to these requirements, foreign organizations checking the box in D1 of the Form do not complete Part IV or Part I, line 7. See General Instruction B for more details.
A private foundation that has terminated its private foundation status under section 507(b)(1)(A), by distributing all its net assets to one or more public charities without keeping any right, title, or interest in those assets, should check this box. See General Instructions Q and T.
Check this box if the organization is terminating its private foundation status under the 60-month provisions of section 507(b)(1)(B) during the period covered by this return. To begin such a termination, a private foundation must have given advance notice to TE/GE at the Cincinnati address given earlier and provided the information outlined in Regulations section 1.507-2T(b)(3). See General Instruction U for information regarding filing requirements during a section 507(b)(1)(B) termination.
See General Instruction V for information regarding payment of the tax based on investment income (computed in Part VI) during a section 507(b)(1)(B) termination.
Check the box for “Section 501(c)(3) exempt private foundation” if the foundation has a ruling or determination letter from the IRS in effect that recognizes its exemption from federal income tax as an organization described in section 501(c)(3) or if the organization's exemption application is pending with the IRS.
Check the “Section 4947(a)(1) nonexempt charitable trust” box if the trust is a nonexempt charitable trust treated as a private foundation. All others, check the “Other taxable private foundation” box.
The total of amounts in columns (b), (c), and (d) may not necessarily equal the amounts in column (a).
The amounts entered in column (a) and on line 5b must be analyzed in Part XVI-A.
Enter in column (a) all items of revenue and expense shown in the books and records that increased or decreased the net assets of the organization. However, do not include the value of services donated to the foundation or items such as free use of equipment or facilities in contributions received. Also, do not include any expenses used to compute capital gains and losses on lines 6, 7, and 8 or expenses included in cost of goods sold on line 10b.
All domestic private foundations (including section 4947(a)(1) nonexempt charitable trusts) are required to pay an excise tax each tax year on net investment income.
Exempt foreign foundations are subject to an excise tax on gross investment income from U.S. sources. These foreign organizations should complete lines 3, 4, 5, 11, 12, and 27b of column (b) and report only income derived from U.S. sources. No other income should be included. No expenses are allowed as deductions.
Gross investment income is the total amount of investment income that was received by a private foundation from all sources. However, it does not include any income subject to the unrelated business income tax. It includes interest, dividends, rents, payments with respect to securities loans (as defined in section 512(a)(5)), royalties received from assets devoted to charitable activities, income from notional principal contracts (as defined in Regulations section 1.863-7), annuities, substantially similar income from ordinary and routine investments, and income from similar sources. Therefore, interest received on a student loan is includible in the gross investment income of a private foundation making the loan.
The deduction for expenses paid or incurred in any tax year for producing gross investment income earned incident to a charitable function cannot be more than income earned from the function includible as gross investment income for the year.
For example, if rental income is incidentally realized in 2011 from historic buildings held open to the public, deductions for amounts paid or incurred in 2011 for the production of this income may not be more than the amount of rental income includible as gross investment income in column (b) for 2011.
For column (c), include income from charitable functions, investment activities, short-term capital gains from investments, amounts set aside, and unrelated trade or business activities. Do not include gifts, grants or contributions, or long-term capital gains or losses.
Deductible expenses include the part of a private foundation's operating expenses paid or incurred to produce or collect gross income reported on lines 3–11 of column (c). If only part of the property produces income includible in column (c), deductions such as interest, taxes, and rent must be divided between the charitable and noncharitable uses of the property. If the deductions for property used for a charitable, educational, or other similar purpose are more than the income from the property, the excess will not be allowed as a deduction but may be treated as a qualifying distribution in Part I, column (d). See Examples 1 and 2 below.
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A charitable activity generated $5,000 of income and $4,000 of expenses. Report all income and expenses in column (c) and none in column (d).
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A charitable activity generated $5,000 of income and $6,000 of expenses. Report $5,000 of income and $5,000 of expenses in column (c) and the excess expenses of $1,000 in column (d).
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If a nonoperating private foundation has no income from charitable activities that would be reportable on line 10 or line 11 of Part I, it does not have to make any entries in column (c).
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If a nonoperating private foundation has income from charitable activities, it must report that income only on lines 10 and/or 11 in column (c). These foundations do not need to report other kinds of income and expenses (such as investment income and expenses) in column (c).
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If a nonoperating private foundation has income that it reports on lines 10 and/or 11, report any expenses relating to this income following the general rules and the special rule above. See examples 1 and 2 above.
Expenses entered in column (d) relate to activities that constitute the charitable purpose of the foundation.
For amounts entered in column (d):
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Use the cash receipts and disbursements method of accounting no matter what accounting method is used in keeping the books of the foundation;
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Do not include any amount or part of an amount included in column (b) or (c);
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Include on lines 13–25 all expenses, including necessary and reasonable administrative expenses, paid by the foundation for religious, charitable, scientific, literary, educational, or other public purposes, or for the prevention of cruelty to children or animals;
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Include a distribution of property at the fair market value on the date the distribution was made; and
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Include only the part entered in column (a) that is allocable to the charitable purposes of the foundation.
An educational seminar produced $1,000 in income that was reportable in columns (a) and (c). Expenses attributable to this charitable activity were $1,900. Only $1,000 of expense should be reported in column (c) and the remaining $900 in expense should be reported in column (d).
If money, securities, or other property valued at $5,000 or more was received directly or indirectly from any one person during the year, complete Schedule B and attach it to the return. If the foundation is not required to complete Schedule B (no person contributed $5,000 or more), be sure to check the box on line 2.
To determine whether a person has contributed $5,000 or more, total only gifts of $1,000 or more from each person. Separate and independent gifts need not be totaled if less than $1,000. If a contribution is in the form of property, describe the property and include its fair market value.
The term “person” includes individuals, fiduciaries, partnerships, corporations, associations, trusts, and exempt organizations.
Distributions from split-interest trusts should be entered on line 1, column (a). They are a part of the amount on line 1.
An organization must keep records, as required by the regulations under section 170.
Generally, a donor making a charitable contribution of $250 or more will not be allowed a federal income tax deduction unless the donor obtains a written acknowledgment from the donee organization by the earlier of the date on which the donor files a tax return for the tax year in which the contribution was made or the due date, including extensions, for filing that return. However, see section 170(f)(8)(D) and Regulations section 1.170A-13(f) for exceptions to this rule.
The written acknowledgment the foundation provides to the donor must show:
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The amount of cash contributed,
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A description of any property contributed,
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Whether the foundation provided any goods or services to the donor, and
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A description and a good-faith estimate of the value of any goods or services the foundation gave in return for the contribution, unless:
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The goods and services have insubstantial value, or
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A statement is included that these goods and services consist solely of intangible religious benefits.
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Generally, if a charitable organization solicits or receives a contribution of more than $75 for which it gives the donor something in return (a quid pro quo contribution), the organization must inform the donor, by written statement, that the amount of the contribution deductible for federal income tax purposes is limited to the amount by which the contribution exceeds the value of the goods or services received by the donor. The written statement must also provide the donor with a good-faith estimate of the value of goods or services given in return for the contribution.
Enter the total amount of interest income from investments reportable in Part II, line 2. These include savings or other interest-bearing accounts and temporary cash investments, such as money market funds, commercial paper, certificates of deposit, and U.S. Treasury bills or other government obligations that mature in less than 1 year.
Enter the amount of interest income shown in column (a). Do not include interest on tax-exempt government obligations.
Enter the amount of dividend and interest income from securities (stocks and bonds) reportable in Part II, line 10. Include amounts received from payments on securities loans as defined in section 512(a)(5). Do not include any capital gain dividends reportable on line 6. Report income from program-related investments on line 11. For debt instruments with an original issue discount, report the original issue discount ratably over the life of the bond on line 4. See section 1272 for more information.
Enter the amount of dividend and interest income and payments on securities loans from column (a). Do not include interest on tax-exempt government obligations.
Enter the gross rental income for the year from investment property reportable in Part II, line 11.
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Date acquired,
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Manner of acquisition,
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Gross sales price,
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Cost, other basis, or value at time of acquisition (if donated) and which of these methods was used,
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Date sold,
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To whom sold,
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Expense of sale and cost of improvements made subsequent to acquisition, and
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Depreciation since acquisition (if depreciable property).
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Amounts received or accrued as repayments of amounts taken into account as qualifying distributions;
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Amounts received or accrued from the sale or other disposition of property to the extent that the acquisition of the property was considered a qualifying distribution for any tax year;
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Any amount set aside for a specific project (see explanation in the instructions for Part XII) that was not necessary for the purposes for which it was set aside;
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Income received from an estate, but only if the estate was considered terminated for income tax purposes due to a prolonged administration period; and
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Amounts treated in an earlier tax year as qualifying distributions to:
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A nonoperating private foundation if the amounts were not redistributed by the grantee organization by the close of its tax year following the year in which it received the funds, or
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An organization controlled by the distributing foundation or a disqualified person if the amounts were not redistributed by the grantee organization by the close of its tax year following the year in which it received the funds.
line 6a. Do not include any business expenses such as salaries, taxes, rent, etc., on line 10. Include them on lines 13–23. Attach a schedule showing the following items: gross sales, cost of goods sold, gross profit or (loss). These items should be classified according to type of inventory sold (such as books, tapes, other educational or religious material, etc.). The totals from the schedule should agree with the entries on lines 10a–10c. In column (c), enter the gross profit or (loss) from sales of inventory shown on line 10c, column (a).
Enter the amount of investment income included in line 11, column (a). Include dividends, interest, rents, and royalties derived from assets devoted to charitable activities, such as interest on student loans.
Enter the total compensation for the year of all officers, directors, and trustees. If none was paid, enter zero. Complete line 1 of Part VIII to show the compensation of officers, directors, trustees, and foundation managers.
Enter the taxes paid (or accrued) during the year. Include all types of taxes recorded on the books, including real estate tax not reported on line 20; the tax on investment income; and any income tax.
Enter only those taxes included in column (a) related to investment income taxable under section 4940. Do not include the section 4940 tax paid or incurred on net investment income or the section 511 tax on unrelated business income. Sales taxes may not be deducted separately but must be treated as a part of the cost of acquired property or as a reduction of the amount realized on disposition of the property.
Enter only those taxes included in column (a) that relate to income included in column (c). Do not include any excise tax paid or incurred on the net investment income (as shown in Part VI) or any tax reported on Form 990-T.
Enter the expense recorded in the books for the year.
For depreciation, attach a schedule showing:
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A description of the property,
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The date acquired,
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The cost or other basis (exclude any land),
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The depreciation allowed or allowable in prior years,
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The method of computation,
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The rate (%) or life (years), and
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The depreciation this year.
On a separate line on the schedule, show the amount of depreciation included in cost of goods sold and not included on line 19.
A deduction for depreciation is allowed only for property used in the production of income reported in the column, and only using the straight line method of computing depreciation. A deduction for depletion is allowed but must be figured only using the cost depletion method.
The basis used in figuring depreciation and depletion is the basis determined under normal basis rules, without regard to the special rules for using the fair market value on December 31, 1969, that relate only to gain or loss on dispositions for purposes of the tax on net investment income.
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Description of the amortized expenses;
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Date acquired, completed, or expended;
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Amount amortized;
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Deduction for prior years;
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Amortization period (number of months);
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Current-year amortization; and
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Total amount of amortization.
In addition to the applicable portion of expenses from column (a), include any net loss from the sale or exchange of land
or depreciable property that was held for more than
1 year and used in a trade or business.
A deduction for amortization is allowed but only for assets used for the production of income reported in column (c).
Enter the total of all contributions, gifts, grants, and similar amounts paid (or accrued) for the year. List each contribution, gift, grant, etc., in Part XV, or attach a schedule of the items included on line 25 and list:
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Each class of activity,
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A separate total for each activity,
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Name and address of donee,
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Relationship of donee if related by:
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Blood,
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Marriage,
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Adoption, or
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Employment (including children of employees) to any disqualified person (see General Instruction C for definitions), and
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The organizational status of donee (for instance, public charity—an organization described in section 509(a)(1), (2), or (3)).
You do not have to give the name of any indigent person who received one or more gifts or grants from the foundation unless that individual is a disqualified person or one who received a total of more than $1,000 from the foundation during the year.
Activities should be classified according to purpose and in greater detail than merely classifying them as charitable, educational, religious, or scientific activities. For example, use identification such as payments for nursing service, for fellowships, or for assistance to indigent families.
Foundations may include, as a single entry on the schedule, the total of amounts paid as grants for which the foundation exercised expenditure responsibility. Attach a separate report for each grant.
When the fair market value of the property at the time of disbursement is the measure of a contribution, the schedule must also show:
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A description of the contributed property,
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The book value of the contributed property,
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The method used to determine the book value,
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The method used to determine the fair market value, and
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The date of the gift.
Enter on line 25 all contributions, gifts, and grants the foundation paid during the year with the following exceptions.
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Do not include contributions to organizations controlled by the foundation or by a disqualified person (see General Instruction C for definitions).
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Do not include contributions to nonoperating private foundations unless the donees are exempt from tax under section 501(c)(3), they redistribute the contributions, and they maintain sufficient evidence of redistributions according to the regulations under section 4942(g).
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Do not include contributions paid from a nonoperating private foundation to a Type III supporting organization as defined under section 4943(f)(5) that is not a functionally integrated Type III supporting organization as defined under section 4943(f)(5)(B). See Ann. 2007-87, 2007-40 I.R.B. 753, available at www.irs.gov/irb/2007-40_IRBar17.html.
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Do not include contributions paid from a nonoperating private foundation to any supporting organization if a disqualified person of the private foundation controls the supporting organization or any of its supported organizations. See Notice 2006-109, 2006-51 I.R.B. 1121, as modified by Rev. Proc. 2009-32, 2009-28 I.R.B. 142 available at www.irs.gov/irb/2009–28_IRS/ar10.html.
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Do not reduce the amount of grants paid in the current year by the amount of grants paid in a prior year returned or recovered in the current year. Report those repayments on line 9, column (c), and in Part XI, line 4.
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Do not include any payments of set-asides (see instructions for Part XII, line 3) taken into account as qualifying distributions in the current year or any prior year. All set-asides are included in qualifying distributions (Part XII, line 3) in the year of the set-aside, regardless of when paid.
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Do not include current year write-offs of prior years' program-related investments. All program-related investments are included in qualifying distributions (Part XII, line 1b) in the year the investment is made.
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Do not include any payments that are not qualifying distributions as defined in section 4942(g)(1).
For column (b), show the book value at the end of the year. For column (c), show the fair market value at the end of the year. Attached schedules must show the end-of-year value for each asset listed in columns (b) and (c).
Foundations whose books of account included total assets of $5,000 or more at any time during the year must complete all of columns (a), (b), and (c).
Foundations with less than $5,000 of total assets per books at all times during the year must complete all of columns (a) and (b) and only line 16 of column (c).
Instruction C.
On the required schedule, report each loan separately, even if more than one loan was made to the same person or the same terms apply to all loans made.
Salary advances and other advances for the personal use and benefit of the recipient and receivables subject to special terms or arising from transactions not functionally related to the foundation's charitable purposes must be reported as separate loans for each officer, director, etc.
Receivables that are subject to the same terms and conditions (including credit limits and rate of interest) as receivables due from the general public from an activity functionally related to the foundation's charitable purposes may be reported as a single total for all the officers, directors, etc. Travel advances made for official business of the organization may also be reported as a single total.
For each outstanding loan or other receivable that must be reported separately, the attached schedule should show the following information (preferably using columns):
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Borrower's name and title,
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Original amount,
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Balance due,
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Date of note,
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Maturity date,
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Repayment terms,
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Interest rate,
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Security provided by the borrower,
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Purpose of the loan, and
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Description and fair market value of the consideration furnished by the lender (for example, cash—$1,000; or 100 shares of XYZ, Inc., common stock— $9,000).
The above detail is not required for receivables or travel advances that may be reported as a single total (see (b) above); however, report and identify those totals separately on the attachment.
In columns (a), (b), and (c), enter the amount of all notes receivable not listed on line 6 and not acquired as investments. Attach a schedule similar to the one for line 6. The schedule should also identify the relationship of the borrower to any officer, director, trustee, foundation manager, or other disqualified person.
For a note receivable from any section 501(c)(3) organization, list only the name of the borrower and the balance due on the required schedule.
In columns (a), (b), and (c), enter the gross amount of loans receivable, minus the allowance for doubtful accounts, from the normal activities of the filing organization (such as scholarship loans). An itemized list of these loans is not required, but attach a schedule showing the total amount of each type of outstanding loan. Report loans to officers, directors, trustees, foundation managers, or other disqualified persons on line 6 and loans to other employees on line 15.
Generally, the excess of revenue over expenses accounts for the difference between the net assets at the beginning and end of the year.
On Part III, line 2, re-enter the figure from Part I, line 27(a), column (a).
On lines 3 and 5, list any changes in net assets that were not caused by the receipts or expenses shown in Part I, column (a). For example, if a foundation follows SFAS 115 (ASC 320-10-35) and shows an asset in the ending balance sheet at a higher value than in the beginning balance sheet because of an increased market value (after a larger decrease in a prior year), include the increase in Part III, line 3.
If the organization uses a stepped-up basis to determine gains on sales of assets included in Part I, column (a), then include the amount of step-up in basis in Part III. If you entered a contribution, gift, or grant of property valued at fair market value in Part I, line 25, column (a), the difference between fair market value and book value should be shown in the books of account and as a net asset adjustment in Part III.
Use Part IV to figure the amount of net capital gain to report on lines 7 and 8 of Part I.
Part IV does not apply to foreign organizations.
Nonoperating private foundations may not have to figure their short-term capital gain or loss on line 3. See Nonoperating private foundations earlier.
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Is used for a charitable purpose,
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Is held for investment, or
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Is used in the production of income. Do not include the gain or loss that is included in figuring the foundation's unrelated business taxable income.
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The property was used for 1 year or more in furthering the foundation's exempt purpose or function, and
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Immediately following the use, is exchanged for property of like kind that is to be used primarily in furthering the foundation's exempt purpose or function. Rules similar to the rules of section 1031 relating to exchange of property held for productive use or investment apply. See Gross Investment Income earlier.
The basis for determining gain from the sale or other disposition of property is the larger of:
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The fair market value of the property on December 31, 1969, plus or minus all adjustments after December 31, 1969, and before the date of disposition, if the foundation held the property on that date and continuously after that date until disposition, or
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The basis of the property on the date of disposition under normal basis rules (actual basis). See Code sections 1011–1022.
To figure a loss, basis on the date of disposition is determined under normal basis rules.
The rules that generally apply to property dispositions reported in this part are:
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Section 1011, adjusted basis for determining gain or loss;
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Section 1012, basis of property-cost;
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Section 1014, basis of property acquired from a decedent before 2010;
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Section 1015, basis of property acquired by gifts and transfers in trust;
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Section 1016, adjustments to basis; and
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Section 1022, basis of property acquired from a decedent after 2009.
If the disposition of investment property results in a loss, that loss may be subtracted from capital gains realized from the disposition of property during the same tax year but only to the extent of the gains. If losses are more than gains, the excess may not be subtracted from gross investment income nor may the losses be carried back or forward to other tax years.
Publicly traded securities are securities that are listed and regularly traded on an over-the-counter market or an established exchange in which market quotations are published or otherwise readily available. Securities include:
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Common and preferred stock,
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Bonds (including governmental obligations), and
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Mutual fund shares.
This part is used by domestic private foundations (exempt and taxable) to determine whether they qualify for the reduced 1% tax under section 4940(e) on net investment income rather than the 2% tax on net investment income under section 4940(a).
Do not complete Part V if this is the organization's first year. A private foundation cannot qualify under section 4940(e) for its first year of existence, nor can a former public charity qualify for the first year it is treated as a private foundation.
A separate computation must be made for each year in which the foundation wants to qualify for the reduced tax.
To qualify as an exempt operating foundation for a tax year, an organization must meet the following requirements of section 4940(d)(2).
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It is an operating foundation described in section 4942(j)(3).
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It has been publicly supported for at least 10 tax years or was a private operating foundation on January 1, 1983, or for its last tax year ending before January 1, 1983.
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Its governing body, at all times during the tax year, consists of individuals less than 25% of whom are disqualified individuals and is broadly representative of the general public.
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It has no officer who was a disqualified individual at any time during the tax year.
A trust may treat any part of estimated taxes it paid as taxes paid by the beneficiary. If the filing organization was a beneficiary that received the benefit of such a payment from a trust, include the amount on line 6a of Part VI and write, “Includes section 643(g) payment.” See section 643(g) for more information about estimated tax payments treated as paid by a beneficiary.
Each question in this section must be answered “Yes,” “No,” or “N/A” (not applicable).
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To which the organization reports in any way about its organization, assets, or activities; and
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With which the organization has registered (or which it has otherwise notified in any manner) that it intends to be, or is, a charitable organization or that it is, or intends to be, a holder of property devoted to a charitable purpose.
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The person, and all related persons, made no contributions to the foundation during the 10-year period ending with the close of the taxable year;
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The person, or any related person, was never the foundation's manager during this 10-year period; and
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The aggregate contributions made by the person, and related persons, are determined by the IRS to be insignificant compared to the aggregate amount of contributions to the foundation by any other person and the appreciated value of contributions held by the foundation.
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Stock (by vote or value) in a corporation,
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Interest (of profit or capital) in a partnership, or
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Beneficial interest of any other entity.
If at any time during the tax year the foundation was the controlling organization of a controlled entity under section 512(b)(13), attach a schedule showing the name, address, and employer identification number of each controlled entity.
| (A) Name and address of each controlled entity |
(B) Employer identification number |
(C) Description of transfer |
(D) Amount of transfer |
|
| a | ||||
| b | ||||
| c | ||||
| d | ||||
| e | ||||
| Total | ||||
| (A) Name and address of each controlled entity |
(B) Employer identification number |
(C) Description of transfer |
(D) Amount of transfer |
|
| a | ||||
| b | ||||
| c | ||||
| d | ||||
| e | ||||
| Total | ||||
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At any time during the calendar year ending with or within the foundation's tax year, the foundation had an interest in, or signature or other authority over, a financial account in a foreign country (such as a bank account, securities account, or other financial account); and
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The combined value of all such accounts was more than $10,000 at any time during the calendar year; and
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The accounts were not with a U.S. military banking facility operated by a U.S. financial institution.
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The foundation owns more than 50% of the stock in any corporation that would answer “Yes” to item 1 above.
The purpose of these questions is to determine if there is any initial excise tax due under sections 170(f)(10), 4941–4945, 4955, 4958, 4966, and 4967. If the answer is “Yes” to question 1b, 1c, 2b, 3b, 4a, 4b, 5b, 6b, or 7b, complete and file Form 4720 unless an exception applies.
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All the facts regarding the incorrect valuation of assets, and
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The actions taken (or planned) to comply with section 4942(a)(2)(B), (C), and (D) and the related regulations.
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Remuneration to the individual (or candidate or prospective candidate) for speeches or other services,
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Travel expenses of the individual,
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Expenses of conducting polls, surveys, or other studies, or preparing papers or other material for use by the individual,
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Expenses of advertising, publicity, and fundraising for such individual, and
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Any other expense that has the primary effect of promoting public recognition or otherwise primarily accruing to the benefit of the individual.
A numerical estimate of the average hours per week devoted to the position is required for the answer to be considered complete.
Enter salary, fees, bonuses, and severance payments received by each person listed. Include current year payments of amounts reported or reportable as deferred compensation in any prior year.
Include all forms of deferred compensation and future severance payments (whether or not funded or vested, and whether or not the deferred compensation plan is a qualified plan under section 401(a)). Include payments to welfare benefit plans (employee welfare benefit plans covered by Part I of Title 1 of ERISA, providing benefits such as medical, dental, life insurance, apprenticeship and training, scholarship funds, severance pay, disability, etc.) on behalf of the officers, etc. Reasonable estimates may be used if precise cost figures are not readily available.
Unless the amounts are reported in column (c), report, as deferred compensation in column (d), salaries and other compensation earned during the period covered by the return, but not yet paid by the date the foundation files its return.
Enter both taxable and nontaxable fringe benefits, expense account and other allowances (other than de minimis fringe benefits described in section 132(e)). See Pub. 525, Taxable and Nontaxable Income, for more information. Examples of allowances include amounts for which the recipient did not account to the organization or allowances that were more than the payee spent on serving the organization. Include payments made in connection with indemnification arrangements, the value of the personal use of housing, automobiles, or other assets owned or leased by the organization (or provided for the organization's use without charge).
List the foundation's four largest programs as measured by the direct and indirect expenses attributable to each that consist of the direct active conduct of charitable activities. Whether any expenditure is for the direct active conduct of a charitable activity is determined, generally, by the definitions and special rules of section 4942(j)(3) and the related regulations, which define a private operating foundation.
Except for significant involvement grant programs, described below, do not include in Part IX-A any grants or expenses attributable to administering grant programs, such as reviewing grant applications, interviewing or testing applicants, selecting grantees, and reviewing reports relating to the use of the grant funds.
Include scholarships, grants, or other payments to individuals as part of an active program in which the foundation maintains some significant involvement. Related administrative expenses should also be included. Examples of active programs and definitions of the term “significant involvement” are provided in Regulations sections 53.4942(b)-1(b)(2) and 53.4942(b)-1(d).
Do not include any program-related investments (reportable in Part IX-B) in the description and expense totals, but be sure to include qualified set-asides for direct charitable activities reported on line 3 of Part XII. Also, include in Part IX-A amounts paid or set aside to acquire assets used in the direct active conduct of charitable activities.
Expenditures for direct charitable activities include, among others, amounts paid or set aside to:
-
Acquire or maintain the operating assets of a museum, library, or historic site or to operate the facility;
-
Provide goods, shelter, or clothing to indigent or disaster victims if the foundation maintains some significant involvement in the activity rather than merely making grants to the recipients;
-
Conduct educational conferences and seminars;
-
Operate a home for the elderly or disabled;
-
Conduct scientific, historic, public policy, or other research with significance beyond the foundation's grant program that does not constitute a prohibited attempt to influence legislation;
-
Publish and disseminate the results of such research, reports of educational conferences, or similar educational material;
-
Support the service of foundation staff on boards or advisory committees of other charitable organizations or on public commissions or task forces;
-
Provide technical advice or assistance to a governmental body, a governmental committee, or subdivision of either, in response to a written request by the governmental body, committee, or subdivision;
-
Conduct performing arts performances; or
-
Provide technical assistance to grantees and other charitable organizations. This assistance must have significance beyond the purposes of the grants made to the grantees and must not consist merely of monitoring or advising the grantees in their use of the grant funds. Technical assistance involves the furnishing of expert advice and related assistance regarding, for example:
-
Compliance with governmental regulations,
-
Reducing operating costs or increasing program accomplishments,
-
Fundraising methods, and
-
Maintaining complete and accurate financial records.
-
Report both direct and indirect expenses in the expense totals. Direct expenses are those that can be specifically identified as connected with a particular activity. These include, among others, compensation and travel expenses of employees and officers directly engaged in an activity, the cost of materials and supplies utilized in conducting the activity, and fees paid to outside firms and individuals in connection with a specific activity.
Indirect (overhead) expenses are those that are not specifically identified as connected with a particular activity but that relate to the direct costs incurred in conducting the activity. Examples of indirect expenses include:
-
Occupancy expenses;
-
Supervisory and clerical compensation;
-
Repair, rental, and maintenance of equipment;
-
Expenses of other departments or cost centers (such as accounting, personnel, and payroll departments or units) that service the department or function that incurs the direct expenses of conducting an activity; and
-
Other applicable general and administrative expenses, including the compensation of top management, to the extent reasonably allocable to a particular activity.
No specific method of allocation is required. The method used, however, must be reasonable and must be used consistently.
Examples of acceptable allocation methods include:
-
Compensation allocated on a time basis,
-
Employee benefits allocated on the basis of direct salary expenses,
-
Travel, conference, and meeting expenses charged directly to the activity that incurred the expense,
-
Occupancy expenses allocated on a space-utilized basis, and
-
Other indirect expenses allocated on the basis of direct salary expenses or total direct expenses.
Part X. Foreign foundations that checked box D2 on page 1 do not have to complete Part X unless claiming status as a private operating foundation. Private operating foundations described in sections 4942(j)(3) or 4942(j)(5) must complete Part X in order to complete Part XIV.
When property is used both for charitable and other purposes, the property is considered used entirely for charitable purposes if 95% or more of its total use is for that purpose. If less than 95% of its total use is for charitable purposes, a reasonable allocation must be made between charitable and noncharitable use.
-
Listed on the New York or American Stock Exchange or any city or regional exchange in which quotations appear on a daily basis, including foreign securities listed on a recognized foreign national or regional exchange,
-
Regularly traded in the national or regional over-the-counter market for which published quotations are
available, or -
Locally traded, for which quotations can be readily obtained from established brokerage firms.
-
The size of the block of the securities,
-
The fact that the securities held are securities in a closely held corporation, or
-
The fact that the sale of the securities would result in a forced or distress sale.
A written, certified, and independent appraisal of the fair market value of any real estate, including any improvements, may be determined on a 5-year basis by a qualified person.
The qualified person may not be a disqualified person (see General Instruction C) with respect to the private foundation or an employee of the foundation.
Commonly accepted valuation methods must be used in making the appraisal. A valuation based on acceptable methods of valuing property for federal estate tax purposes will be considered acceptable.
The appraisal must include a closing statement that, in the appraiser's opinion, the appraised assets were valued according to valuation principles regularly employed in making appraisals of such property, using all reasonable valuation methods. The foundation must keep a copy of the independent appraisal for its records. If a valuation is reasonable, the foundation may use it for the tax year for which the valuation is made and for each of the 4 following tax years.
Any valuation of real estate by a certified independent appraisal may be replaced during the 5-year period by a subsequent 5-year certified independent appraisal or by an annual valuation as described above. The most recent valuation should be used to compute the foundation's minimum investment return.
If the valuation is made according to the above rules, the IRS will continue to accept it during the 5-year period for which it applies even if the actual fair market value of the property changes during the period.
An asset required to be valued annually may be valued as of any day in the private foundation's tax year, provided the foundation values the asset as of that date in all tax years. However, a valuation of real estate determined on a 5-year basis by a certified, independent appraisal may be made as of any day in the first tax year of the foundation to which the valuation applies.
-
A description of the asset or asset group (for example, 20,000 shares of XYZ, Inc., common stock),
-
For securities, the percentage of the total issued and outstanding securities of the same class that is represented by the foundation's holding,
-
The fair market value of the asset or asset group before any claimed blockage discount or other reduction,
-
The amount of the discount claimed, and
-
A statement that explains why the claimed discount is appropriate in valuing the asset or group of assets for section 4942 purposes.
If the organization is claiming status as a private operating foundation described in section 4942(j)(3) or (j)(5) or if it is a foreign foundation that checked box D2 on page 1, check the box in the heading for Part XI. You do not need to complete this part. See the Part XIV instructions for more details on private operating foundations.
Section 4942(j)(5) foundations are classified as private operating foundations for purposes of section 4942 only if they meet the requirements of Regulations section 53.4942(b)-1(a)(2).
The distributable amount for 2011 is the amount that the foundation must distribute by the end of 2012 as qualifying distributions to avoid the 30% tax on the undistributed portion.
“Qualifying distributions”
are amounts spent or set aside for religious, educational, or similar charitable purposes. The total amount of qualifying
distributions for any year is used to reduce the distributable amount for specified years to arrive at the undistributed income
(if any) for
those years.
If the foundation borrowed money in a tax year beginning before January 1, 1970, or later borrows money under a written commitment binding on December 31, 1969, the foundation may elect to treat any repayments of the loan principal after December 31, 1969, as qualifying distributions at the time of repayment, rather than at the earlier time that the borrowed funds were actually distributed, only if:
-
The money is used to make expenditures for a charitable or similar purpose, and
-
Repayment on the loan did not start until a year beginning after 1969.
On these loans, deduct any interest payment from gross income to compute adjusted net income in the year paid.
To make this election, attach a statement to Form 990-PF for the first tax year beginning after 1969 in which a repayment of loan principal is made and for each tax year after that in which any repayment of loan principal is made. The statement should show:
-
The lender's name and address,
-
The amount borrowed,
-
The specific use of the borrowed funds, and
-
The private foundation's election to treat repayments of loan principal as qualifying distributions.
-
The project can be better accomplished by a set-aside than by the immediate payment of funds (suitability test).
-
The private foundation meets the requirements of section 4942(g)(2)(B)(ii) (cash distribution test).
For any set-aside under 1 above, the private foundation must apply for IRS approval by the end of the tax year in the amount is set aside. The request for approval is submitted with Form 8940, Request for Miscellaneous Determination, under section 507, 509(a), 4940, 4942, 4945, and 6033. The instructions to Form 8940 provide what information is required to be included with the set-aside ruling request. Send completed Form 8940, user fee payment, and all other required information to:
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
If you are using express mail or a delivery service, send Form 8940, user fee payment, and all other required information to:
Internal Revenue Service
201 West Rivercenter Blvd.
Attn. Extracting Stop 312
Covington, KY 41011
The application for approval must give all of the following information:
-
The nature and purposes of the specific project and the amount of the set-aside for which approval is requested,
-
The amounts and approximate dates of any planned additions to the set-aside after its initial establishment,
-
The reasons why the project can be better accomplished by the set-aside than by the immediate payment of funds,
-
A detailed description of the project, including estimated costs, sources of any future funds expected to be used for completion of the project, and the location(s) (general or specific) of any physical facilities to be acquired or constructed as part of the project, and
-
A statement of an appropriate foundation manager that the amounts set aside will actually be paid for the specific project within a specified period of time ending within 60 months after the date of the first set-aside, or a statement explaining why the period for paying the amount set aside should be extended and indicating the extension of time requested. (Include in this statement the reason why the proposed project could not be divided into two or more projects covering periods of no more than 60 months each.)
For any set-aside under 2 above, the private foundation must attach a schedule to its annual information return showing how the requirements are met. A schedule is required for the year of the set-aside and for each subsequent year until the set-aside amount has been distributed. See Regulations section 53.4942(a)-3(b)(7)(ii) for specific requirements.
If you checked box D2 on page 1, do not fill in this part.
If the organization is a private operating foundation for any of the years shown in Part XIII, do not complete the portions of Part XIII that apply to those years. If there are excess qualifying distributions for any tax year, do not carry them over to a year in which the organization is a private operating foundation or to any later year. For example, if a foundation made excess qualifying distributions in 2009 and became a private operating foundation in 2011, the excess qualifying distributions from 2009 could be applied against the distributable amount for 2010 but not to any year after 2010.
The purpose of this part is to enable the foundation to comply with the rules for applying its qualifying distributions for the year 2011. In applying the qualifying distributions, there are three basic steps.
-
Reduce any undistributed income for 2010 (but not below zero).
-
The organization may use any part or all remaining qualifying distributions for 2011 to satisfy elections. For example, if undistributed income remained for any year before 2010, it could be reduced to zero or, if the foundation wished, the distributions could be treated as distributions out of corpus.
-
If no elections are involved, apply remaining qualifying distributions to the 2011 distributable amount on line 4d. If the remaining qualifying distributions are greater than the 2011 distributable amount, the excess is treated as a distribution out of corpus on line 4e.
If for any reason the 2011 qualifying distributions do not reduce any 2010 undistributed income to zero, the amount not distributed is subject to a 30% tax. If the 2010 income remains undistributed at the end of 2012, it could be subject again to the 30% tax. Also, see section 4942(b) for the circumstances under which a second-tier tax could be imposed.
2011 tax year.
To make these elections, the organization must file a statement with the IRS or attach a statement, as described in the above regulations section, to Form 990-PF. An election made by filing a separate statement with the IRS must be made within the year for which the election is made. Otherwise, attach a statement to the Form 990-PF filed for the year the election was made.
If the organization elected to apply all or part of the remaining amount to the undistributed income remaining from years before 2010, enter the amount on line 4b.
If the organization elected to treat those qualifying distributions as a distribution out of corpus, enter the amount on line 4c.
All organizations that claim status as private operating foundations under section 4942(j)(3) or (5) for 2011 must complete Part XIV.
“N/A” on all other lines in the Total column for Part XIV.
-
Assets test. 65% or more of the foundation's assets are devoted directly to those activities or functionally related businesses, or both; or 65% or more of the foundation's assets are stock of a corporation that is controlled by the foundation, and substantially all of the assets of the corporation are devoted to those activities or functionally related businesses.
-
Endowment test. The foundation normally makes qualifying distributions directly for the active conduct of the exempt purpose or functions for which it is organized and operated in an amount that is two-thirds or more of its minimum investment return.
-
Support test. The foundation normally receives 85% or more of its support (other than gross investment income as defined in section 509(e)) from the public and from five or more exempt organizations that are not described in section 4946(a)(1)(H) with respect to each other or the recipient foundation. Not more than 25% of the support (other than gross investment income) normally may be received from any one of the exempt organizations and not more than one-half of the support normally may be received from gross investment income.
A foundation may meet the income test and either the assets, endowment, or support test by satisfying the tests for any 3 years during a 4-year period consisting of the tax year in question and the 3 immediately preceding tax years. It may also meet the tests based on the total of all related amounts of income or assets held, received, or distributed during that 4-year period. A foundation may not use one method for satisfying the income test and another for satisfying one of the three alternative tests. Thus, if a foundation meets the income test on the 3-out-of-4-year basis for a particular tax year, it may not use the 4-year aggregation method for meeting one of the three alternative tests for that same year.
In completing line 3c(3) of Part XIV under the aggregation method, the largest amount of support from an exempt organization will be based on the total amount received for the 4-year period from any one exempt organization.
A new private foundation must use the aggregation method to satisfy the tests for its first tax year in order to be treated as a private operating foundation from the beginning of that year. It must continue to use the aggregation method for its 2nd and 3rd tax years to maintain its status for those years.
Complete this part only if the foundation had assets of $5,000 or more at any time during the year. This part does not apply
to a foreign foundation that during its entire period of existence received substantially all (85% or more) of its support
(other than gross investment income) from sources outside the
United States.
Entries under this column should reflect the grant's or contribution's purpose and should be in greater detail than merely classifying them as charitable, educational, religious, or scientific activities.
For example, use an identification such as payments:
-
For nursing service,
-
For fellowships, or
-
For assistance to indigent families.
List all contributions, grants, etc., actually paid during the year, including grants or contributions that are not qualifying distributions under section 4942(g). Include current year payments of set-asides treated as qualifying distributions in the current tax year or any prior year.
In Part XVI-A, analyze revenue items that are also entered in Part I, lines 3–11, column (a), and on line 5b. Contributions reported on line 1 of Part I are not entered in Part XVI-A. For information on unrelated business income, see the Instructions for Form 990-T and Pub. 598.
| Amounts in Part XVI-A on line . . . |
Correspond to Amounts in Part I, column (a), line . . . |
|
| 1a–g | 11 | |
| 2 | 11 | |
| 3 | 3 | |
| 4 | 4 | |
| 5 and 6 | 5b (description column) | |
| 7 | 11 | |
| 8 | 6 | |
| 9 | 11 minus any special event expenses included on lines 13 through 23 of Part I, column (a) | |
| 10 | 10c | |
| 11a–e | 11 | |
| Line 13, | Part XVI-A | |
| Minus: | Part I, Line 5b | |
| Note: If Part I, line 5b, reflects a loss, add that amount here instead of subtracting. | ||
| Plus: | Part I, Line 1 | |
| Plus: | Part I, Line 5a, | |
| Plus: | Expenses of special events deducted in computing Part XVI-A, line 9 | |
| Equal: | Part I, Line 12, column (a) |
To explain how each amount in column (e) of Part XVI-A was related or exempt function income, show the line number of the amount in column (e) and give a brief description of how each activity reported in column (e) contributed importantly to the accomplishment of the organization's exempt purposes (other than by providing funds for such purposes). Activities that generate exempt-function income are activities that form the basis of the organization's exemption from tax.
Also, explain any income entered in column (e) that is specifically excluded from gross income other than by Code section 512, 513, or 514. If no amount is entered in column (e), do not complete Part XVI-B.
Example.
M, a performing arts association, is primarily supported by endowment funds. It raises revenue by charging admissions to its performances. These performances are the primary means by which the organization accomplishes its cultural and educational purposes.
M reported admissions income in column (e) of Part XVI-A and explained in Part XVI-B that these performances are the primary means by which it accomplishes its cultural and educational purposes.
Because M also reported interest from state bonds in column (e) of Part XVI-A, M explained in Part XVI-B that such interest was excluded from gross income by Code section 103.
Part XVII is used to report direct and indirect transfers to (line 1a) and direct and indirect transactions with (line 1b) and relationships with (line 2) any other noncharitable exempt organization. A “noncharitable exempt organization” is an organization exempt under section 501(c) (that is not exempt under section 501(c)(3)), or a political organization described in section 527.
For purposes of these instructions, the section 501(c)(3) organization completing Part XVII is referred to as the “reporting organization.”
A noncharitable exempt organization is “related to or affiliated with” the reporting organization if either:
-
The two organizations share some element of common control, or
-
A historic and continuing relationship exists between the two organizations.
A noncharitable exempt organization is unrelated to the reporting organization if:
-
The two organizations share no element of common control, and
-
A historic and continuing relationship does not exist between the two organizations.
An “element of common control” is present when one or more of the officers, directors, or trustees of one organization are elected or appointed by the officers, directors, trustees, or members of the other. An element of common control is also present when more than 25% of the officers, directors, or trustees of one organization serve as officers, directors, or trustees of the other organization.
A “historic and continuing relationship” exists when two organizations participate in a joint effort to achieve one or more common purposes on a continuous or recurring basis rather than on the basis of one or more isolated transactions or activities. Such a relationship also exists when two organizations share facilities, equipment, or paid personnel during the year, regardless of the length of time the arrangement is in effect.
If the noncharitable exempt organization is related to or affiliated with the reporting organization, report all direct and indirect transfers and transactions except for contributions and grants it received.
All transfers to an unrelated noncharitable exempt organization must be reported on line 1a. All transactions between the reporting organization and an unrelated noncharitable exempt organization must be shown on line 1b unless they meet the exception in the specific instructions for line 1b.
Answer “Yes” for any transaction between the reporting organization and an unrelated noncharitable exempt organization, regardless of its amount, if the reporting organization received less than adequate consideration. There is adequate consideration when the fair market value of the goods and other assets or services furnished by the reporting organization is not more than the fair market value of the goods and other assets or services received from the unrelated noncharitable exempt organization. The exception described below does not apply to transactions for less than adequate consideration.
Answer “Yes” for any transaction between the reporting organization and an unrelated noncharitable exempt organization if the “amount involved” is more than $500. The “amount involved” is the fair market value of the goods, services, or other assets furnished by the reporting organization.
For each entry, enter the line number from line 1a–c. For example, if the answer was “Yes” to line 1b(3), enter “b(3)” in column (a).
the year. Do not enter unrelated noncharitable exempt organizations on line 2 even if transfers to or transactions with those organizations were entered on line 1. For example, if a one-time transfer to an unrelated noncharitable exempt organization was entered on line 1a(2), do not enter the organization on line 2.
In most cases, a simple description, such as “common directors” or “auxiliary of reporting organization” will be sufficient. If you need more space, write “see attached” in column (c) and use an attached sheet to describe the relationship. If you are entering more than one organization on line 2, identify which organization you are describing on the attached sheet.
The return must be signed by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as tax officer) who is authorized to sign. A receiver, trustee, or assignee must sign any return that he or she is required to file for a corporation. If the return is filed for a trust, it must be signed by the authorized trustee or trustees. Sign and date the form and fill in the signer's title.
If an officer or employee of the organization prepares the return, the Paid Preparer Use Only area should remain blank. If someone prepares the return without charge, that person should not sign the return.
Generally, anyone who is paid to prepare the organization's tax return must sign the return and fill in the Paid Preparer Use Only area. If you have questions about whether a preparer is required to sign the return, please contact an IRS office.
The paid preparer must complete the required preparer information and:
-
Sign it in the space provided for the preparer's signature (a facsimile signature is acceptable), and
-
Give the organization a copy of the return in addition to the copy to be filed with the IRS.
Note.
A paid preparer must sign original or amended return by rubber stamp, mechanical device, or computer software program.
Generally, anyone who is paid to prepare the return must sign the return and fill in the other blanks in the Paid Preparer Use Only area. An employee of the filing organization is not a paid preparer.
-
Sign the return in the space provided for the preparer's signature,
-
Enter the preparer information,
-
Enter the preparer tax identification number (PTIN), and
-
Give a copy of the return to the organization.
On the “Sign Here” line, check “Yes” if the IRS can contact the paid preparer who signed the return to discuss the return. This authorization applies only to the individual whose signature appears in the Paid Preparer Use Only section of Form 990-PF. It does not apply to the firm, if any, shown in that section.
By checking “Yes,” to this box, the organization is authorizing the IRS to contact the paid preparer to answer any questions that arise during the processing of the return. The organization is also authorizing the paid preparer to:
-
Give the IRS any information missing from the return,
-
Call the IRS for information about processing the return, and
-
Respond to certain IRS notices about math errors, offsets, and return preparation.
The organization is not authorizing the paid preparer to bind the organization to anything or otherwise represent the organization before the IRS.
The authorization will automatically end no later than the due date (excluding extensions) for filing of the organization's 2011 Form 990-PF. If the organization wants to expand the paid preparer's authorization or revoke it before it ends, see Pub. 947, Practice Before the IRS and Power of Attorney.
Check “No” if the IRS should contact the organization listed in the Heading rather than the paid preparer.
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