Specific Instructions

Table of Contents

Completing the Heading

The following instructions are keyed to items in the Form 990-PF Heading section on page 1.

Name and Address

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.

Item A. Employer Identification Number

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, earlier. 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.

Item B. Telephone Number

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.

Item D2. Foreign Organizations

If the foreign organization meets the 85% test of Regulations section 53.4948-1(b), then:

  • Check the box in D2 in the Heading section on page 1 of Form 990-PF,

  • Check the box at the top of Part XI,

  • Do not fill in Parts XI and XIII,

  • Do not fill in Part X unless it is claiming status as a private operating foundation, and

  • 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 Heading on Form 990–PF do not complete Part IV or Part I, line 7. See General Instruction B for more details.

Item E. Section 507(b)(1)(A) Terminations

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.

Item F. 60-Month Termination Under Section 507(b)(1)(B)

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 1.509(a)-(3). See General Instruction U for information regarding filing requirements during a section 507(b)(1)(B) termination.

See General Instruction V, earlier, for information regarding payment of the tax based on investment income (computed in Part VI) during a section 507(b)(1)(B) termination.

Item G. Initial Return of Certain Former Public Charities

If this is the initial Form 990-PF return of a former public charity under section 170(b)(1)(A)(vi) or 509(a)(2), then the organization is treated as a private foundation for the tax year being reported only for purposes of section 6033 (filing Form 990-PF), section 4940 (paying excise tax on investment income), and section 507 (terminating private foundation status).

Item H. Type of Organization

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.

Item I. Fair Market Value of All Assets

In Item I in the Heading on page 1 of Form 990-PF, enter the fair market value of all assets the foundation held at the end of the tax year.

This amount should be the same as the figure reported in Part II, line 16, column (c).

Part I. Analysis of Revenue and Expenses

Column Instructions

The total of amounts in columns (b),(c), and (d) (or any combination of them, such as columns (b) and (d)) may differ from the amount in column (a).

The amounts entered in column (a) and on line 5b must be analyzed in Part XVI-A.

Column (a). Revenue and Expenses per Books

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. For foundations that do not use the cash method of accounting for book purposes, charitable expenditures reported in column (a) will not necessarily match amounts reported in column (d).

Column (b). Net Investment Income

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.

Definitions

Gross investment income.

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.

Net investment income.

Net investment income is the amount by which the sum of gross investment income and the capital gain net income exceeds the allowable deductions discussed later. Tax-exempt interest on governmental obligations and related expenses are excluded.

Investment income.   Include in column (b) all or part of any amount from column (a) that applies to investment income. However, do not include in column (b) any income and related expenses reported on Form 990-T.

  For example, investment income from debt-financed property unrelated to the organization's charitable purpose and certain rents (and related expenses) treated as unrelated trade or business income should be reported on Form 990-T. Income from debt-financed property that is not taxed under section 511 is taxed under section 4940. Thus, if the debt/basis percentage of a debt-financed property is 80%, only 80% of the gross income (and expenses) for that property is used to figure the section 511 tax on Form 990-T. The remaining 20% of the gross income (and expenses) of that property is used to figure the section 4940 tax on net investment income on Form 990-PF. (See Form 990-T and its instructions for more information.)

Investment expenses.   Include in column (b) all ordinary and necessary expenses paid or incurred to produce or collect investment income from interest, dividends, rents, amounts received from payments on securities loans (as defined in section 512(a)(5)), royalties, income from notional principal contracts, annuities, substantially similar income from ordinary and routine investments, and income from similar sources; or for the management, conservation, or maintenance of property held for the production of income that is taxable under section 4940.

  If any of the expenses listed in column (a) are paid or incurred for both investment and charitable purposes, they must be allocated on a reasonable basis between the investment activities and the charitable activities so that only expenses from investment activities appear in column (b). Examples of allocation methods are given in the instructions for Part IX-A.

Limitation.

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 2013 from historic buildings held open to the public, deductions for amounts paid or incurred in 2013 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 2013.

Expenses related to tax-exempt interest.

Do not include on lines 13–23 of column (b) any expenses paid or incurred that are allocable to tax-exempt interest that is excluded from lines 3 
and 4.

If the foundation is a partner in a partnership, a beneficiary of a trust, or a shareholder of an S corporation, then pertinent items of income, gain, loss, deduction, or credit from the entity's Schedule K-1 (Form 1065, 1041, or 1120S) generally should be reported in columns (b) and (c) for the tax year of the entity ending with or within the foundation's tax year.

Column (c). Adjusted Net Income

Nonoperating private foundations should see Nonoperating private foundations, later, to find out if they need to complete column (c).

Private operating foundations.   All organizations that claim status as private operating foundations under section 4942(j)(3) or (5) must complete all lines of column (c) that apply, according to the general rules for income and expenses that apply to this column, the specific line instructions for lines 3–27c, the special rule below and Examples 1 and 2 below.

General rules.   In general, adjusted net income is the amount of a private foundation's gross income that is more than the expenses of earning the income. The modifications and exclusions explained below are applied to gross income and expenses in figuring adjusted net income.

  For income and expenses, include on each line of column (c) only that portion of the amount from column (a) applicable to the adjusted net income computation.

Income.

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.

Expenses.

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.

Special rule.   The expenses attributable to each specific charitable activity, limited by the amount of income from the activity, must be reported in column (c) on lines 13–26. If the expenses of any charitable activity exceed the income generated by that activity, only the excess of these expenses over the income should be reported in column (d).

Examples.

  1. 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).

  2. 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).

Nonoperating private foundations.   A foundation that does not claim status as a private operating foundation is not required to complete column (c) unless either of the following applies.
  1. The foundation received income from a charitable activity and wishes to claim a qualifying distribution for expenses incurred in the activity in excess of the income. The foundation must report such income only on lines 10 and/or 11 in column (c), and any expenses relating to this income following the general rules and the special rule above. See Examples 1 and 2 above. The foundation need not report other kinds of income and expenses (such as investment income and expenses) in column (c).

  2. The foundation claims status under section 170(b)(1)(F)(iii) (relating to foundations that maintain a common fund). The foundation must complete all lines of column (c) that apply.

Column (d). Disbursements for Charitable Purposes

Expenses entered in column (d) relate to activities that constitute the charitable purpose of the foundation.

For amounts entered in column (d):

  • Use the cash receipts and disbursements method of accounting no matter what accounting method is used in keeping the books of the foundation;

  • Do not include any amount or part of an amount included in column (b) or (c);

  • 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;

  • Include a distribution of property at the fair market value on the date the distribution was made; and

  • Include only the part entered in column (a) that is allocable to the charitable purposes of the foundation.

Example.

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).

Qualifying distributions.   Generally, amounts paid to accomplish the foundation’s exempt purposes are qualifying distributions. Special rules apply in certain situations—see the line 25, column (d) instructions.

  
The total of the expenses and disbursements on line 26 is also entered on line 1a in Part XII to figure qualifying distributions.

Alternative to completing lines 13–25.   If you want to provide an analysis of disbursements that is more detailed than column (d), you may attach a schedule instead of completing lines 13–25. The schedule must include all the specific items of lines 13–25, and the total from the schedule must be entered on line 26, column (d).

Line Instructions

Line 1. Contributions, gifts, grants, etc., received.   Enter the total of gross contributions, gifts, grants, and similar amounts received.

Schedule B (Form 990, 990-EZ, or 990-PF).

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.

Split-interest trusts.

Distributions from split-interest trusts should be entered on line 1, column (a). They are a part of the amount on line 1.

Substantiation requirements.

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:

  1. The amount of cash contributed,

  2. A description of any property contributed,

  3. Whether the foundation provided any goods or services to the donor, and

  4. A description and a good-faith estimate of the value of any goods or services the foundation gave in return for the contribution, unless:

    1. The goods and services have insubstantial value, or

    2. A statement is included that these goods and services consist solely of intangible religious benefits.

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.

Penalties.

An organization that does not make the required disclosure for each quid pro quo contribution will incur a penalty of $10 for each failure, not to exceed $5,000 for a particular fundraising event or mailing, unless it can show reasonable cause for not providing the disclosure.

For more information.

See Regulations section 1.170A-13 for more information on charitable recordkeeping and substantiation requirements.

Line 2.   Check this box if the foundation is not required to attach Schedule B.

Line 3. Interest on savings and temporary cash investments.

In column (a).

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.

In column (b).

Enter the amount of interest income shown in column (a). Do not include interest on tax-exempt government obligations.

In column (c).

Enter the amount of interest income shown in column (a). Include interest on tax-exempt government obligations.

Line 4. Dividends and interest from securities.

In column (a).

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.

In column (b).

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.

In column (c).

Enter the amount of dividend and interest income and payments on securities loans from column (a). Include interest on tax-exempt government obligations.

Line 5a. Gross rents.

In column (a).

Enter the gross rental income for the year from investment property reportable in Part II, line 11.

In columns (b) and (c).

Enter the gross rental income from column (a).

Line 5b. Net rental income or (loss).   Figure the net rental income or (loss) for the year and enter that amount on the entry line to the left of column (a).

  Report rents from other sources on line 11. Enter any expenses attributable to the rental income reported on line 5, such as interest and depreciation, on lines 13–23.

Line 6a. Net gain or (loss) from sale of assets.   Enter the net gain or (loss) per books from all asset sales not included on line 10.

  For assets sold and not included in Part IV, attach a schedule showing:
  • Date acquired,

  • Manner of acquisition,

  • Gross sales price,

  • Cost, other basis, or value at time of acquisition (if donated) and which of these methods was used,

  • Date sold,

  • To whom sold,

  • Expense of sale and cost of improvements made subsequent to acquisition, and

  • Depreciation since acquisition (if depreciable property).

Line 6b. Gross sales price for all assets on line 6a.   Enter the gross sales price from all asset sales whose net gain or loss was reported on line 6a.

Line 7. Capital gain net income.   Enter the capital gain net income from Part IV, line 2. See Part IV instructions.

Line 8. Net short-term capital gain.   Include only net short-term capital gain for the year (assets sold or exchanged that were held not more than 1 year). Do not include net long-term capital gain or net loss in column (c).

  Do not include on line 8 a net gain from the sale or exchange of depreciable property, or land used in a trade or business (section 1231) and held for more than 1 year. However, include net loss from such property on line 23 as an Other expense.

  In general, foundations may carry to line 8 the net short-term capital gain reported in Part IV, line 3. However, if the foundation had any short-term capital gain from sales of debt-financed property, add it to the amount reported in Part IV, line 3 to figure the amount to include on line 8. For information dealing with “debt-financed property,” see the Instructions for Form 990-T.

Only private operating foundations report their short-term capital gains on line 8.

Line 9. Income modifications.   Include on this line:
  1. Amounts received or accrued as repayments of amounts taken into account as qualifying distributions;

  2. 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;

  3. 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;

  4. Income received from an estate, but only if the estate was considered terminated for income tax purposes due to a prolonged administration period; and

  5. Amounts treated in an earlier tax year as qualifying distributions to:

  • 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

  • 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.

Lines 10a, b, c. Gross profit from sales of inventory.   Enter the gross sales (less returns and allowances), cost of goods sold, and gross profit or (loss) from the sale of all inventory items, including those sold in the course of special events and activities. These inventory items are the ones the organization either makes to sell to others or buys for resale.

  Do not report any sales or exchanges of investments on line 10.

  Do not include any profit or (loss) from the sale of capital items such as securities, land, buildings, or equipment on line 10. Enter these amounts on 
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, and 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).

Line 11. Other income.   Enter the total of all the foundation's other income for the year. Attach a schedule that gives a description and the amount of the income. Include all income not reported on lines 1 through 10c. Also, see the instructions for Part XVI-A, line 11 later.

  Include imputed interest on certain deferred payments figured under section 483 and any investment income not reportable on lines 3 through 5, including income from program-related investments (defined in the instructions for Part IX-B).

  Do not include unrealized gains and losses on investments carried at market value. Report those as fund balance or net asset adjustments in Part III.

In column (b).

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.

In column (c).

Include all other items includible in adjusted net income not covered elsewhere in column (c).

Line 12. Total. In column (b).   Domestic organizations should enter the total of lines 3–11. Exempt foreign organizations should enter the total of lines 3, 4, 5, and 11 only.

Line 13. Compensation of officers, directors, trustees, etc.

In column (a).

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.

In columns (b), (c), and (d).

Enter the portion of the compensation included in column (a) that is applicable to the column. For example, in column (c) enter the portion of the compensation included in column (a) paid or incurred to produce or collect income included in column (c).

Line 14. Other employee salaries and wages.   Enter the salaries and wages of all employees other than those included on line 13.

Line 15. Contributions to employee pension plans and other benefits.   Enter the employer's share of contributions the organization paid to qualified and nonqualified pension plans and the employer's share of contributions to employee benefit programs (such as insurance, health, and welfare programs) that are not an incidental part of a pension plan. Complete the return/report of the Form 5500 series appropriate for the organization's plan. See the Instructions for Form 5500 for information about employee welfare benefit plans required to file that form.

  Also include the amount of federal, state, and local payroll taxes for the year, but only include those that are imposed on the organization as an employer. This includes the employer's share of social security and Medicare taxes, FUTA tax, state unemployment compensation tax, and other state and local payroll taxes. Do not include taxes withheld from employees' salaries and paid over to the various governmental units (such as federal and state income taxes and the employee's share of social security and Medicare taxes).

Lines 16a, b, and c. Legal, accounting, and other professional fees.   On the appropriate line(s), enter the legal, accounting, auditing, and other professional fees (such as fees for fundraising or investment services) charged by outside firms and individuals who are not employees of the foundation.

  Attach a schedule for lines 16a, b, and c. Show the type of service and expense for each. If the same person provided more than one of these services, include an allocation of those expenses.

  Report any fines, penalties, or judgments imposed against the foundation as a result of legal proceedings on line 23.

Line 18. Taxes.    Attach a schedule listing the type and amount of each tax reported on line 18. Do not enter any taxes included on line 15.

In column (a).

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.

In column (b).

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.

In column (c).

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.

In column (d).

Do not include any excise tax paid on investment income (as reported in Part VI of this return or the equivalent part of a return for prior years) unless the organization is claiming status as a private operating foundation and completes Part XIV.

Line 19. Depreciation and depletion.   

In column (a).

Enter the expense recorded in the books for the year.

For depreciation, attach a schedule showing:

  • A description of the property,

  • The date acquired,

  • The cost or other basis (exclude any land),

  • The depreciation allowed or allowable in prior years,

  • The method of computation,

  • The rate (%) or life (years), and

  • 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.

In columns (b) and (c).

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.

Line 20. Occupancy.   Enter the amount paid or incurred for the use of office space or other facilities. If the space is rented or leased, enter the amount of rent. If the space is owned, enter the amount of mortgage interest, real estate taxes, and similar expenses, but not depreciation reportable on line 19. In either case, include the amount for utilities and related expenses (for example, heat, lights, water, power, telephone, sewer, trash removal, outside janitorial services, and similar services). Do not include any salaries of the organization's own employees reportable on line 14.

Line 21. Travel, conferences, and meetings.   Enter the expenses for officers, employees, or others during the year for travel, attending conferences, meetings, etc. Include transportation (including fares, mileage allowance, or automobile expenses), meals and lodging, and related costs whether paid on the basis of a per diem allowance or actual expenses incurred. Do not include any compensation paid to those who participate.

In column (b).

Only 50% of the expense for business meals, etc., paid or incurred in connection with travel, meetings, etc., relating to the production of investment income may be deducted in figuring net investment income (section 274(n)).

In column (c).

Enter the total amount of expenses paid or incurred by officers, employees, or others for travel, conferences, meetings, etc., related to income included in column (c).

Line 22. Printing and publications.   Enter the expenses for printing or publishing and distributing any newsletters, magazines, etc. Also include the cost of subscriptions to, or purchases of, magazines, newspapers, etc.

Line 23. Other expenses.   Enter all other expenses for the year. Include all expenses not reported on lines 13–22. Attach a schedule showing the type and amount of each expense.

  If a deduction is claimed for amortization, attach a schedule showing:
  • Description of the amortized expenses;

  • Date acquired, completed, or expended;

  • Amount amortized;

  • Deduction for prior years;

  • Amortization period (number of months);

  • Current-year amortization; and

  • Total amount of amortization.

In column (c).

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).

Line 25. Contributions, gifts, grants paid.   Do not report on line 25 direct program expenditures that are not contributions, gifts, or grants. These amounts should be reported on lines 13-24.

In column (a).

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:

  1. Each class of activity,

  2. A separate total for each activity,

  3. Name and address of donee,

  4. Relationship of donee if related by:

    1. Blood,

    2. Marriage,

    3. Adoption, or

    4. Employment (including children of employees) to any disqualified person (see General Instruction C for definitions), and

  5. 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:

  • A description of the contributed property,

  • The book value of the contributed property,

  • The method used to determine the book value,

  • The method used to determine the fair market value, and

  • The date of the gift.

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.

In column (d).

Enter on line 25 all contributions, gifts, and grants the foundation paid during the year with the following exceptions.

  • Do not include contributions to organizations controlled by the foundation or by one or more disqualified persons, or contributions to nonoperating private foundations, unless the donee organization is exempt from tax under section 501(c)(3) and redistributes the contributions, and the foundation maintains sufficient evidence of redistribution, in accordance with section 4942(g)(3) and Regulations section 53.4942(a)-3(c).

  • 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 Regulations section 1.509(a)-4.

  • 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.

  • 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.

  • 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.

  • 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.

  • Do not include any payments that are not qualifying distributions as defined in section 4942(g)(1).

Net Amounts

Line 27a. Excess of revenue over expenses and disbursements.   Subtract line 26, column (a), from line 12, column (a) and enter the result. Generally, the amount shown in column (a) on this line is also the amount by which net assets (or fund balances) have increased or decreased for the year. See the instructions for Part III, Analysis of Changes in Net Assets or Fund Balances.

Line 27b. Net investment income.   Domestic organizations should subtract line 26 from line 12 and enter the result. Exempt foreign organizations should enter the amount shown on line 12. However, if the organization is a domestic organization and line 26 is more than line 12 (such as when expenses exceed income), enter zero (not a negative amount).

Line 27c. Adjusted net income.   Subtract line 26, column (c) from line 12, column (c) and enter the result.

Part II. Balance Sheets

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).

Line 1. Cash—Non-interest-bearing.   Enter the amount of cash on deposit in checking accounts, deposits in transit, change funds, petty cash funds, or any other non-interest-bearing account. Do not include advances to employees or officers or refundable deposits paid to suppliers or others.

Line 2. Savings and temporary cash investments.   Enter the total of cash in 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 governmental obligations that mature in less than 1 year.

Line 3. Accounts receivable.   On the dashed lines to the left of column (a), enter the year-end figures for total accounts receivable and allowance for doubtful accounts from the sale of goods and/or the performance of services. In columns (a), (b), and (c), enter net amounts (total accounts receivable reduced by the corresponding allowance for doubtful accounts). Claims against vendors or refundable deposits with suppliers or others may be reported here if not significant in amount. (Otherwise, report them on line 15.) Any receivables due from officers, directors, trustees, foundation managers, or other disqualified persons must be reported on line 6. Report receivables (including loans and advances) due from other employees on line 15.

Line 4. Pledges receivable.   On the dashed lines to the left of column (a), enter the year-end figures for total pledges receivable and allowance for doubtful accounts (pledges estimated to be uncollectible). In columns (a), (b), and (c), enter net amounts (total pledges receivable reduced by the corresponding allowance for doubtful accounts).

Line 5. Grants receivable.   Enter the total grants receivable from governmental agencies, foundations, and other organizations as of the beginning and end of the year.

Line 6. Receivables due from officers, directors, trustees, and other disqualified persons.   Enter here (and on an attached schedule described below) all receivables due from officers, directors, trustees, foundation managers, and other disqualified persons and all secured and unsecured loans (including advances) to such persons. Disqualified person is defined in General Instruction C.

Attached schedules. (a)

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.

(b)

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):

  1. Borrower's name and title,

  2. Original amount,

  3. Balance due,

  4. Date of note,

  5. Maturity date,

  6. Repayment terms,

  7. Interest rate,

  8. Security provided by the borrower,

  9. Purpose of the loan, and

  10. 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.

Line 7. Other notes and loans receivable.   On the dashed lines to the left of column (a), enter the combined total year-end figures for notes receivable and loans receivable and the allowance for doubtful accounts.

Notes receivable.

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.

Loans receivable.

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.

Line 8. Inventories for sale or use.   Enter the amount of materials, goods, and supplies purchased or manufactured by the organization and held for sale or use in some future period.

Line 9. Prepaid expenses and deferred charges.   Enter the amount of short-term and long-term prepayments of expenses attributable to one or more future accounting periods. Examples include prepayments of rent, insurance, and pension costs, and expenses incurred in connection with a solicitation campaign to be conducted in a future accounting period.

Lines 10a, b, and c. Investments— government obligations, corporate stocks and bonds.   Enter the book value (which may be market value) of these investments.

  Attach a schedule that lists each security held at the end of the year and shows whether the security is listed at cost (including the value recorded at the time of receipt in the case of donated securities) or end-of-year market value. Do not include amounts shown on line 2. Governmental obligations reported on line 10a are those that mature in 1 year or more. Debt securities of the U.S. Government may be reported as a single total rather than itemized. Obligations of state and municipal governments may also be reported as a lump-sum total. Do not combine U.S. Government obligations with state and municipal obligations on this schedule.

Line 11. Investments—land, buildings, and equipment.   On the dashed lines to the left of column (a), enter the year-end book value (cost or other basis) and accumulated depreciation of all land, buildings, and equipment held for investment purposes, such as rental properties. In columns (a) and (b), enter the book value of all land, buildings, and equipment held for investment less accumulated depreciation. In column (c), enter the fair market value of these assets. Attach a schedule listing these investment fixed assets held at the end of the year and showing, for each item or category listed, the cost or other basis, accumulated depreciation, and book value.

Line 12. Investments—mortgage loans.   Enter the amount of mortgage loans receivable held as investments but do not include program-related investments (see instructions for line 15).

Line 13. Investments—other.   Enter the amount of all other investment holdings not reported on lines 10 through 12. Attach a schedule listing and describing each of these investments held at the end of the year. Show the book value for each and indicate whether the investment is listed at cost or end-of-year market value. Do not include program-related investments (see instructions for line 15).

Line 14. Land, buildings, and equipment.   On the dashed lines to the left of column (a), enter the year-end book value (cost or other basis) and accumulated depreciation of all land, buildings, and equipment owned by the organization and not held for investment. In columns (a) and (b), enter the book value of all land, buildings, and equipment not held for investment less accumulated depreciation. In column (c), enter the fair market value of these assets. Include any property, plant, and equipment owned and used by the organization to conduct its charitable activities. Attach a schedule listing these fixed assets held at the end of the year and showing the cost or other basis, accumulated depreciation, and book value of each item or category listed.

Line 15. Other assets.   List and show the book value of each category of assets not reportable on lines 1 through 14. Attach a separate schedule if more space is needed.

  One type of asset reportable on line 15 is program-related investments. These are investments made primarily to accomplish a charitable purpose of the filing organization with no significant purpose to produce income.

Line 16. Total assets.   All filers must complete line 16 of columns (a), (b), and (c). These entries represent the totals of lines 1 through 15 of each column. However, foundations that have assets of less than $5,000 per books at all times during the year need not complete lines 1 through 15 of column (c).

  
The column (c) amount is also entered on the entry space for I in the Heading section on page 1.

Line 17. Accounts payable and accrued expenses.   Enter the total of accounts payable to suppliers and others and accrued expenses, such as salaries payable, accrued payroll taxes, and interest payable.

Line 18. Grants payable.   Enter the unpaid portion of grants and awards the organization has made a commitment to pay other organizations or individuals, whether or not the commitments have been communicated to the grantees.

Line 19. Deferred revenue.   Include revenue that the organization has received but not yet earned as of the balance sheet date under its method of accounting.

Line 20. Loans from officers, directors, trustees, and other disqualified persons.   Enter the unpaid balance of loans received from officers, directors, trustees, and other disqualified persons. For loans outstanding at the end of the year, attach a schedule that shows (for each loan) the name and title of the lender and the information listed in items 2 through 10 of the instructions for line 6 above.

Line 21. Mortgages and other notes payable.   Enter the amount of mortgages and other notes payable at the beginning and end of the year. Attach a schedule showing, as of the end of the year, the total amount of all mortgages payable and, for each nonmortgage note payable, the name of the lender and the other information specified in items 2 through 10 of the instructions for line 6. The schedule should also identify the relationship of the lender to any officer, director, trustee, foundation manager, or other disqualified person.

Line 22. Other liabilities.   List and show the amount of each liability not reportable on lines 17 through 21. Attach a separate schedule if more space is needed.

Lines 24 Through 31. Net Assets or Fund Balances

Foundations that follow SFAS 117 (ASC 958).   If the foundation follows SFAS 117 (ASC 958), check the box above line 24. Classify and report net assets in three groups—unrestricted, temporarily restricted, and permanently restricted—based on the existence or absence of donor-imposed restrictions and the nature of those restrictions. Show the sum of the three classes of net assets on line 30. On line 31, add the amounts on lines 23 and 30 to show total liabilities and net assets. This figure should be the same as the figure for total assets on line 16.

Line 24. Unrestricted.   Enter the balances per books of the unrestricted class of net assets. Unrestricted net assets are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. All funds without donor-imposed restrictions must be classified as unrestricted, regardless of the existence of any board designations or appropriations.

Line 25. Temporarily restricted.   Enter the balances per books of the temporarily restricted class of net assets. Donors' temporary restrictions may require that resources be used in a later period or after a specified date (time restrictions), or that resources be used for a specified purpose (purpose restrictions), or both.

Line 26. Permanently restricted.   Enter the total of the balances for the permanently restricted class of net assets. Permanently restricted net assets are (a) assets, such as land or works of art, donated with stipulations that they be used for a specified purpose, be preserved, and not be sold or (b) assets donated with stipulations that they be invested to provide a permanent source of income. The latter result from gifts and bequests that create permanent endowment funds.

Foundations that do not follow SFAS 117 (ASC 958).   If the foundation does not follow SFAS 117 (ASC 958), check the box above line 27 and report account balances on lines 27 through 29. Report net assets or fund balances on line 30. Also complete line 31 to report the sum of the total liabilities and net assets/fund balances.

Line 27. Capital stock, trust principal, or current funds.   For corporations, enter the balance per books for capital stock accounts. Show par or stated value (or for stock with no par or stated value, total amount received upon issuance) of all classes of stock issued and, as yet, uncanceled. For trusts, enter the amount in the trust principal or corpus account. For foundations continuing to use the fund method of accounting, enter the fund balances for the foundation's current restricted and unrestricted funds.

Line 28. Paid-in or capital surplus, or land, building, and equipment fund.   Enter the balance per books for all paid-in capital in excess of par or stated value for all stock issued and uncanceled. If stockholders or others gave donations that the organization records as paid-in capital, include them here. Report any current-year donations you included on line 28 in Part I, line 1. The fund balance for the land, building, and equipment fund would be entered here.

Line 29. Retained earnings, accumulated income, endowment, or other funds.   For corporations, enter the balance in the retained earnings, or similar account, minus the cost of any corporate treasury stock. For trusts, enter the balance per books in the accumulated income or similar account. For foundations using fund accounting, enter the total of the fund balances for the permanent and term endowment funds as well as balances of any other funds not reported on lines 27 and 28.

Line 30. Total net assets or fund balances.   For foundations that follow SFAS 117 (ASC 958), enter the total of lines 24 through 26. For all other foundations, enter the total of lines 27 through 29. Enter the beginning-of-year figure in Part III, line 1. The end-of-year figure in column (b) must agree with the figure in Part III, line 6.

Line 31. Total liabilities and net assets/fund balances.   Enter the total of lines 23 and 30. This amount must equal the amount for total assets reported on line 16 for both the beginning and end of the year.

Part III. Analysis of Changes in Net Assets or Fund Balances

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.

Part IV. Capital Gains and Losses for Tax on Investment Income

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.

Reportable gains and losses.   Capital gains or losses include gains or losses from the sale or other disposition of property that:
  • Is used for a charitable purpose,

  • Is held for investment, or

  • 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.

   However, do not include gains or losses for any portion of property if:
  • The property was used for 1 year or more in furthering the foundation's exempt purpose or function, and

  • 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.

  Capital gains and losses may arise from the deemed sale of section 1256 contracts (marked to market).

Basis.

The basis for determining gain from the sale or other disposition of property is the larger of:

  • 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

  • The basis of the property on the date of disposition under normal basis rules (actual basis). See 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:

  • Section 1011, adjusted basis for determining gain or loss;

  • Section 1012, basis of property-cost;

  • Section 1014, basis of property acquired from a decedent before 2010;

  • Section 1015, basis of property acquired by gifts and transfers in trust;

  • Section 1016, adjustments to basis; and

  • Section 1022, basis of property acquired from a decedent after 2009.

Section 1015 provides in some circumstances for a carryover basis of property acquired by gift, i.e., the basis in the hands of the donor carries over to the foundation. Section 1014 generally provides for a stepped-up basis of property acquired by bequest (other than an item of income in respect of a decedent), i.e., the fair market value of the property at the decedent's death. For property acquired from a decedent dying after December 31, 2009, however, section 1022 modifies the stepped-up basis rule.

Losses.

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.

Reporting Transactions in Part IV

Publicly traded securities.   For sales of publicly traded securities through a broker, enter the description “publicly traded securities” on line 1, column (a). Leave columns (b), (c), and (d) blank. Total the gross sales price, the cost or other basis, and the expense of sale on all such securities sold. Report these lump-sum figures in columns (e) through (l), as appropriate. You must maintain detailed records of each transaction in your books and records.

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:

  • Common and preferred stock,

  • Bonds (including governmental obligations), and

  • Mutual fund shares.

Other gains and losses.   For sales of anything other than publicly traded securities sold, each transaction must be listed and reported separately, completing all appropriate columns in Part IV.

Part V. Qualification Under Section 4940(e) for Reduced Tax on Net Investment Income

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.

Line 1, column (b).   Enter the amount of adjusted qualifying distributions made for each year shown. The amounts in column (b) are taken from Part XII, line 6 of the Form 990-PF for 2008–2012.

Line 1, column (c).   Enter the net value of noncharitable-use assets for each year. The amounts in column (c) are taken from Part X, line 5, for 2008–2012.

Part VI. Excise Tax Based on Investment Income (Section 4940(a), 4940(b), 4940(e), or 4948)

General Rules

Domestic exempt private foundations.   These foundations are subject to a 2% tax on net investment income under section 4940(a). However, certain exempt operating foundations described in section 4940(d)(2) may not owe any tax, and certain private foundations that meet the requirements of section 4940(e) may qualify for a reduced tax of 1% (see the Part V instructions).

Exception.

The section 4940 tax does not apply to an organization making an election under section 41(e)(6). Enter 
N/A” in Part VI.

Domestic taxable private foundations and section 4947(a)(1) nonexempt charitable trusts.    These organizations are subject to a modified 2% tax on net investment income under section 4940(b). (See Part V and its instructions to find out if they meet the requirements of section 4940(e) that allows them to use a modified 1% tax on net investment income.) However, they must first compute the tax under section 4940(a) as if that tax applied to them.

Foreign organizations.   Under section 4948, exempt foreign private foundations are subject to a 4% tax on their gross investment income derived from U.S. sources.

  
Under new section 871(m) added by the Hiring Incentives to Restore Employment Act (HIRE), a “dividend equivalent” is treated as a dividend from U.S. sources for certain purposes, including U.S. withholding tax rules applicable to foreign organizations. See section 871(m) for more information.

  

  Taxable foreign private foundations that filed Form 1040NR, U.S. Nonresident Alien Income Tax Return, or Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, enter “N/A” in Part VI.

Estimated tax.   Domestic exempt and taxable private foundations and section 4947(a)(1) nonexempt charitable trusts may have to make estimated tax payments for the excise tax based on investment income. See General Instruction O for more information.

Tax Computation

Line 1a only applies to domestic exempt operating foundations described in section 4940(d)(2) that have a ruling or determination letter from the IRS establishing exempt operating foundation status. If your organization does not have this letter, skip line 1a.

Line 1a.   A domestic exempt private foundation that qualifies as an exempt operating foundation under section 4940(d)(2) is not liable for any tax on net investment income on this return.

  If your organization qualifies, check the box and enter the date of the ruling or determination letter on line 1a and enter “N/A” on line 1. Leave the rest of Part Vl blank. For the first year, the organization must attach a copy of the ruling or determination letter establishing exempt operating foundation status. As long as the organization retains this status, write the date of the ruling or determination letter in the space on line 1a. If the organization no longer qualifies under section 4940(d)(2), leave the date line blank and compute the section 4940 tax in the normal manner.

Qualification.

To qualify as an exempt operating foundation for a tax year, an organization must meet the following requirements of section 4940(d)(2).

  • It is an operating foundation described in section 4942(j)(3).

  • 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.

  • 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.

  • It has no officer who was a disqualified individual at any time during the tax year.

Line 1c.   Exempt foreign organizations should not include net capital gain income when computing the excise tax due under section 4948(a).

Line 2. Section 511 tax.   Under section 4940(b), a domestic section 4947(a)(1) nonexempt charitable trust or taxable private foundation must add to the tax figured under section 4940(a) (on line 1) the tax which would have been imposed under section 511 for the tax year if it had been exempt from tax under section 501(a). If the domestic section 4947(a)(1) nonexempt charitable trust or taxable private foundation has unrelated business taxable income that would have been subject to the tax imposed by section 511, the computation of tax must be shown in an attachment. Form 990-T may be used as the attachment. All other filers, enter zero.

Line 4. Subtitle A tax.   Domestic section 4947(a)(1) nonexempt charitable trusts and taxable private foundations, enter the amount of subtitle A (income) tax for the year reported on Form 1041 or Form 1120. All other filers, enter zero.

Line 5. Tax based on investment income.   Subtract line 4 from line 3 and enter the difference (but not less than zero) on line 5. Any overpayment entered on line 10 that is the result of a negative amount shown on line 5 will not be refunded. Unless the organization is a domestic section 4947(a)(1) nonexempt charitable trust or taxable private foundation, the amount on line 5 is the same as on line 1.

Line 6a.   Enter the amount of 2013 estimated tax payments and any 2012 overpayment of taxes that the organization specified on its 2012 return to be credited toward payment of 2013 estimated taxes.

  
Line 6a applies only to domestic foundations. 
 

Trust payments treated as beneficiary payments.

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.

Line 6b.   Exempt foreign foundations must enter the amount of tax withheld at the source. Attach Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, or other form that verifies the withheld tax reported on line 6b (Form 8288-A or Form 8805).

Line 6d.   Enter the amount of any backup withholding erroneously withheld. Recipients of interest or dividend payments must generally certify their correct tax identification number to the bank or other payer on Form W-9, Request for Taxpayer Identification Number and Certification. If the payer does not get this information, it must withhold part of the payments as “backup withholding.” If the organization files Form 990-PF and was subject to erroneous backup withholding because the payer did not realize the payee was an exempt organization and not subject to this withholding, the organization can claim credit for the amount withheld.

  
Do not claim erroneous backup withholding on line 6d if you claim it on Form 990-T.

Line 8. Penalty.   Enter any penalty for underpayment of estimated tax shown on Form 2220. Form 2220 is used by both corporations and trusts.

Line 9. Tax due.   Domestic foundations should see General Instruction P.

  All foreign organizations should enclose a check or money order (in U.S. funds), made payable to the United States Treasury, with Form 990-PF.

Amended return.   If you are amending Part VI, be sure to combine any tax due that was paid with the original return (or any overpayment credited or refunded) in the total for line 7. On the dotted line to the left of the line 7 entry space, write “Tax Paid w/ O.R.” and the amount paid. If you had an overpayment, write “O.R. Overpayment” and the amount credited or refunded in brackets.

  If you file more than one amended return, attach a schedule listing the tax due amounts that were paid and overpayment amounts that were credited or refunded. Write “See Attachment” on the dotted line and enter the net amount in the entry space for line 7.

Part VII-A. Statements Regarding Activities

Each question in this section must be answered “Yes,” “No,” or “N/A” (not applicable).

Line 1.    “Political purposes” include, but are not limited to, directly or indirectly accepting contributions or making payments to influence the selection, nomination, election, or appointment of any individual to any federal, state, or local public office or office in a political organization, or the election of presidential or vice presidential electors, whether or not the individual or electors are actually selected, nominated, elected, or appointed.

Line 3.   A “conformed copy” of an organizational document is one that agrees with the original document and all its amendments. If copies are not signed, attach a written declaration signed by an officer authorized to sign for the organization, certifying that they are complete and accurate copies of the original documents.

Note.   If you are filing electronically, send a conformed copy of the changes to the IRS at the address listed in General Instruction U.

Line 6.   For a private foundation to be exempt from income tax, its governing instrument must include provisions that require it to act or refrain from acting so as not to engage in an act of self-dealing (section 4941) or subject the foundation to the taxes imposed by sections 4942 (failure to distribute income), 4943 (excess business holdings), 4944 (investments which jeopardize charitable purpose), and 4945 (taxable expenditures). A private foundation may satisfy these section 508(e) requirements either by express language in its governing instrument or by application of state law that imposes the above requirements on the foundation or treats these requirements as being contained in the governing instrument. If an organization claims it satisfies the requirements of section 508(e) by operation of state law, the provisions of state law must effectively impose the section 508(e) requirements on the organization. See Rev. Rul. 75-38, 1975-1 C.B. 161, for a list of states with legislation that satisfies the requirements of section 508(e).

  However, if the state law does not apply to a governing instrument that contains mandatory directions conflicting with any of its requirements and the organization has such mandatory directions in its governing instrument, then the organization has not satisfied the requirements of section 508(e) by the operation of that legislation.

  Line 6 does not apply to foreign foundations described in section 4948(b).

Line 8a.   In the space provided list all states:
  1. To which the organization reports in any way about its organization, assets, or activities; and

  2. 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.

  Attach a separate list if you need more space.

  Line 8 does not apply to foreign foundations described in section 4948(b).

Line 8b.    If the organization has not furnished a copy of its Form 990-PF to the Attorney General (or his or her designate) of each state required to be listed in the response to line 8a, then explain in an attached statement why not. If the Attorney General (or his or her designate) will not accept such filings, then so state.

Line 9.   If the organization claims status as a private operating foundation for 2013 and, in fact, meets the private operating foundation requirements for that year (as reflected in Part XIV), any excess distributions carryover from 2012 or prior years may not be carried over to 2013 or any year after 2013 even if it does not meet the private operating foundation requirements. See the instructions for Part XIII.

Line 10. Substantial contributors.   If you answer “Yes,” attach a schedule listing the names and addresses of all persons who became substantial contributors during the year.

  The term “substantial contributor” means any person whose contributions or bequests during the current tax year and prior tax years total more than $5,000 and are more than 2% of the total contributions and bequests received by the foundation from its creation through the close of its tax year. In the case of a trust, the term “substantial contributor” also means the creator of the trust (section 507(d)(2)(A)).

  The term “person” includes individuals, trusts, estates, partnerships, associations, corporations, and other exempt organizations.

  Each contribution or bequest must be valued at fair market value on the date it was received.

  Any person who is a substantial contributor on any date will remain a substantial contributor for all later periods.

  However, a person will cease to be a substantial contributor with respect to any private foundation if:
  1. 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;

  2. The person, or any related person, was never the foundation's manager during this 10-year period; and

  3. 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.

  The term “related person” includes any other person who would be a disqualified person because of a relationship with the substantial contributor (section 4946). When the substantial contributor is a corporation, the term also includes any officer or director of the corporation. The term “substantial contributor” does not include public charities (organizations described in section 509(a)(1), (2), or (3)).

  A foreign foundation described in section 4948(b) should report only substantial contributors that are U.S. citizens.

Line 11.   Answer “Yes” if at any time during the tax year the foundation owned a controlled entity. A controlled entity is an entity in which the foundation owns more than 50% of the:
  1. Stock (by vote or value) in a corporation,

  2. Interest (of profit or capital) in a partnership, or

  3. Beneficial interest of any other entity.

  The foundation must apply section 318 in determining its ownership of stock in a corporation and use similar principles in determining its ownership interests in other entities.

Attached schedule of controlled entities.

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 listing the name, address, and employer identification number of each controlled entity and stating whether the controlled entity is an excess business holding.

Attached schedule for transfers to controlled entities.   If at any time during the tax year, the foundation made any loans or transfers to a corporation, partnership, or other entity, which it controlled within the meaning of section 512(b)(13), attach a schedule using the format provided in the sample schedule, Line 11 - Example A, later. In column (c), describe each loan or transfer. In column (d), enter the amount for each loan or transfer to each controlled entity.

Attached schedule for transfers from controlled entities.   If at any time during the tax year, the foundation received any transfers of funds or payments from a controlled entity within the meaning of section 512(b)(13), attach a schedule using the format provided in the sample schedule, Line 11 - Example B, later. In column (c), describe each transfer or payment received, including payment of interest, annuities, royalties, rents, dividends, fees or other payments for services, contributions to capital, and loans. In column (d), enter the amount of each loan or transfer from each controlled entity.

  

Note.

For both schedules, if additional space is needed, make a copy of the schedule, and enter one total amount on the first page of the schedule.

Line 12. Distribution to a donor advised fund.   If a distribution was made from the foundation to a donor advised fund over which the foundation or a disqualified person had advisory privileges, then in an attachment state whether the foundation treated any distribution to a donor advised fund as a qualifying distribution, and explain how the distributions will be used to accomplish a purpose described in section 170(c)(2)(B).

Line 13. Public inspection requirements and website address.    All domestic private foundations (including section 4947(a)(1) nonexempt charitable trusts treated as private foundations) are subject to the public inspection requirements. See General Instruction Q for information on making the foundation's annual returns and exemption application available for public inspection.

  Enter the foundation's website address if the foundation has a website. Otherwise, enter “N/A.

Line 15. Section 4947(a)(1) trusts.   Section 4947(a)(1) nonexempt charitable trusts that file Form 990-PF instead of Form 1041 must complete this line. The trust should include exempt-interest dividends received from a mutual fund or other regulated investment company as well as tax-exempt interest received directly.

Line 16. Foreign Accounts.    Answer “Yes” if either (1) or (2) below applies.
  1. 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

    1. The combined value of all such accounts was more than $10,000 at any time during the calendar year; and

    2. The accounts were not with a U.S. military banking facility operated by a U.S. financial institution.

  2. The foundation owns more than 50% of the stock in any corporation that would answer “Yes” to item 1 above.

If “Yes,” electronically file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) (formerly TD F 90–22.1), by June 30, 2014, with the Department of the Treasury using the FinCEN's BSA E-Filing System. Because FinCEN Form 114 is not a tax form, do not file it with Form 990-PF.

  See www.fincen.gov for more information.

  
If you are required to file FinCEN Form 114 but do not do so, you may have to pay a penalty of up to $10,000 (more in some cases).

  Enter the name of each foreign country in which a foreign account described on line 16 is located.

Part VII-B. Activities for Which Form 4720 May Be Required

The purpose of these questions is to determine whether there is any initial excise tax due under sections 4941-4945, 170(f)(10), and 4965. If the answer is “Yes” to the question on line 1b, 1c, 2b, 3b, 4a, 4b, 5b, 6b, or 7b, complete and file Form 4720 unless an exception applies. Foundations described in section 4948(b) must complete Part VII-B (except line 2) but are not required to file Form 4720. Organizations in a 60-month termination under section 507(b)(1)(B) must complete this part but might not be liable for private foundation excise taxes—see General Instructions U and V.

Line 1. Self-dealing.   The activities listed in lines 1a(1)–(6) are considered self-dealing under section 4941 unless one of the exceptions applies. See www.irs.gov/charities/foundations/Acts of self-dealing.

  The terms “disqualified person” and “foundation manager” are defined in General Instruction C.

Line 11—Example A 
Statement of Information Regarding Transfers To a 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  

Line 11—Example B 
Statement of Information Regarding Transfers From a 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  
Line 1b.   If you answered “Yes” to any of the questions in 1a, you should answer “Yes” to 1b unless all of the acts engaged in were “excepted” acts. Excepted acts are described in Regulations sections 53.4941(d)-3 and 4 or appear in Notices published in the Internal Revenue Bulletin relating to disaster assistance.

Line 2b. Taxes on failure to distribute income.   If you answer “No” to the question on line 2b, attach a statement explaining:
  • All the facts regarding the incorrect valuation of assets, and

  • The actions taken (or planned) to comply with section 4942(a)(2)(B), (C), and (D) and the related regulations.

  Foreign foundations described in section 4948(b) need not complete line 2.

Line 3a.   A private foundation generally is subject to tax under section 4943 if it owns any excess business holdings. In general, the holdings of a private foundation, combined with the holdings of related foundations and other disqualified persons, cannot exceed 20% of the voting stock of a corporation, the profits interest in a partnership, or the beneficial remainder interest in a trust. (See “disqualified person” under General Instruction C.) Regardless of the holdings of disqualified persons, however, a foundation is permitted to own holdings that do not exceed 2% of either the voting stock or value of all outstanding shares of all classes of stock in a corporation. A similar exception applies to a beneficial or profits interest in any business enterprise that is a trust or partnership.

  For more information about excess business holdings, see the Instructions for Form 4720.

Line 4. Taxes on investments that jeopardize charitable purposes.   In general, an investment that jeopardizes any of the charitable purposes of a private foundation is one for which a foundation manager did not exercise ordinary business care to provide for the long-and short-term financial needs of the foundation in carrying out its charitable purposes. For more details, see the regulations under section 4944.

Line 5. Taxes on taxable expenditures and political expenditures.   In general, payments made for the activities described on lines 5a(1)–(5) are taxable expenditures. Go to http://www.irs.gov/charities/foundations/Taxable Expenditures of Private Foundations.

  Except as discussed below, a grant by a private foundation to a public charity is not a taxable expenditure if the private foundation does not earmark the grant for any of the activities described in lines 5a(1)–(5), and there is no oral or written agreement by which the grantor foundation may cause the grantee to engage in any such prohibited activity or to select the grant recipient.

  Grants made to exempt operating foundations (as defined in section 4940(d)(2) and the instructions to Part VI) are not subject to the expenditure responsibility provisions of section 4945.

  A grant from a nonoperating foundation may be a taxable expenditure if made to a Type III supporting organization (as defined in 4943(f)(5)) that is not a functionally integrated supporting organization (as defined in 4943(f)(5)(B)). Check “Yes” on Line 5a(4) if you made such a grant. See Regulations section 1.509(a)-4 and Notice 2006-109, 2006-51 I.R.B. 1121, for more information.

  A grant from a nonoperating foundation may be a taxable expenditure if made to any other supporting organization (including a functionally integrated Type III), if a disqualified person of the private foundation controls the supporting organization or any of its supported organizations. Check “Yes” on line 5a(4) if you made such a grant. See Notice 2006-109, 2006-51 I.R.B. 1121, for more information.

  Under section 4955, a section 501(c)(3) organization must pay an excise tax for any amount paid or incurred on behalf of or opposing any candidate for public office. The organization must pay an additional excise tax if it does not correct the expenditure timely.

  A manager of a section 501(c)(3) organization who knowingly agrees to a political expenditure must pay an excise tax unless the agreement is not willful and there is reasonable cause. A manager who does not agree to a correction of the political expenditure may have to pay an additional excise tax.

  A section 501(c)(3) organization will lose its exempt status if it engages in political activity.

  A political expenditure that is treated as an expenditure under section 4955 is not treated as a taxable expenditure under section 4945.

  For purposes of the section 4955 tax, when an organization promotes a candidate for public office (or is used or controlled by a candidate or prospective candidate), amounts paid or incurred for the following purposes are political expenditures:
  • Remuneration to the individual (or candidate or prospective candidate) for speeches or other services,

  • Travel expenses of the individual,

  • Expenses of conducting polls, surveys, or other studies, or preparing papers or other material for use by the individual,

  • Expenses of advertising, publicity, and fundraising for such individual, and

  • Any other expense that has the primary effect of promoting public recognition or otherwise primarily accruing to the benefit of the individual.

  See the regulations under section 4945 for more information.

Line 5b.   If you answered “Yes” to any of the questions in 5a, you should answer “Yes” to 5b unless all of the transactions engaged in were “excepted” transactions. Excepted transactions are described in Regulations section 53.4945 and appear in Notices published in the Internal Revenue Bulletin relating to disaster assistance. For example, see Pub. 3833, Disaster Relief.

Line 6b.   Check “Yes” if, in connection with any transfer of funds to a private foundation, the foundation directly or indirectly pays premiums on any personal benefit contract, or there is an understanding or expectation that any person will directly or indirectly pay these premiums.

  Report the premiums it paid and the premiums paid by others, but treated as paid by the private foundation, on Form 8870 and pay the excise tax (which is equal to premiums paid) on Form 4720.

  For more information, see Form 8870 and Notice 2000-24, 2000-17 I.R.B. 952.

Line 7a.   Answer “Yes” if the foundation was a party to a prohibited tax shelter transaction (“PTST”) as described in section 4965(e) at any time during the tax year.

Prohibited tax shelter transaction.   In general, prohibited tax shelter transaction means any listed transaction and any prohibited reportable transaction.

Listed transaction.   A listed transaction, within the meaning of section 6707A(c)(2), is a transaction that is the same as, or substantially similar to, any transaction that has been specifically identified by the Secretary in published guidance as a tax avoidance transaction for purposes of section 6011.

Prohibited reportable transaction.   Prohibited reportable transaction means any confidential transaction or any transaction with contractual protection (as defined under regulations prescribed by the Secretary) (see Regulations section 1.6011-4(b)(3) and (4)) which is a reportable transaction (as defined in section 6707A(c)(1)).

   If the answer to this question is Yes, the foundation must also file Form 8886-T.

Line 7b.   Answer “Yes” if the foundation answered “Yes” to 7a, and it had net income or received proceeds attributable to the PTST during the tax year.

   If the foundation answers “Yes” to both lines 7a and 7b, it may be required to file Form 4720 and pay tax with respect to each PTST. The foundation's managers also may be required to file Form 4720 and pay tax with respect to the relevant PTSTs.

Part VIII. Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors

Line 1. List of officers, directors, trustees, etc.   List the names, addresses, and other information requested for those who were officers, directors, and trustees (or any person who had responsibilities or powers similar to those of officers, directors, or trustees) of the foundation at any time during the year. Each must be listed whether or not they receive any compensation from the foundation. Give the address at which officers, etc., prefer the Internal Revenue Service to contact them.

  Also include on this list any officers or directors (or any person who had responsibilities or powers similar to those of officers or directors) of a disregarded entity owned by the foundation who are not officers, directors, etc., of the foundation.

  If the foundation (or disregarded entity) pays any other person, such as a management services company, for the services provided by any of the foundation's officers, directors, or trustees (or any person who had responsibilities or powers similar to those of officers, directors, or trustees), report the compensation and other items on Part VIII as if you had paid the officers, etc., directly. Also, see Announcement 2001-33, 2001-17 I.R.B. 1137.

  Show all forms of compensation earned by each listed officer, etc. In addition to completing Part VIII, if you want to explain the compensation of one or more officers, directors, and trustees, you may provide an attachment describing the person's entire 2013 compensation package.

   Enter zero in columns (c), (d), and (e) if no compensation was paid. Attach a schedule if more space is needed.

Column (b).

A numerical estimate of the average hours per week devoted to the position is required for the answer to be considered complete.

Phrases such as “as needed” or “as required” are unacceptable entries for column (b).

Column (c).

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.

Column (d).

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.

Column (e).

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).

Line 2. Compensation of five highest-paid employees.   Fill in the information requested for the five employees (if any) of the foundation (or disregarded entity that the foundation owns) who received the greatest amount of annual compensation over $50,000. Do not include employees listed on line 1. Also enter the total number of other employees who received more than $50,000 in annual compensation.

  Show each listed employee's entire compensation package for the period covered by the return. Include all forms of compensation that each listed employee received in return for his or her services. See the line 1 instructions for more details on includible compensation.

Line 3. Five highest-paid independent contractors for professional services.   Fill in the information requested for the five highest-paid independent contractors (if any), whether individuals or professional service corporations or associations, to whom the organization paid more than $50,000 for the year to perform personal services of a professional nature for the organization (for example, attorneys, accountants, and doctors). Also show the total number of all other independent contractors who received more than $50,000 for the year for performing professional services.

Part IX-A. Summary of Direct Charitable Activities

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:

  1. Acquire or maintain the operating assets of a museum, library, or historic site or to operate the facility;

  2. 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;

  3. Conduct educational conferences and seminars;

  4. Operate a home for the elderly or disabled;

  5. 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;

  6. Publish and disseminate the results of such research, reports of educational conferences, or similar educational material;

  7. Support the service of foundation staff on boards or advisory committees of other charitable organizations or on public commissions or task forces;

  8. 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;

  9. Conduct performing arts performances; or

  10. 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:

    1. Compliance with governmental regulations,

    2. Reducing operating costs or increasing program accomplishments,

    3. Fundraising methods, and

    4. 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 IX-B. Summary of Program-Related Investments

Program-related investment.   Section 4944(c) and corresponding regulations define a program-related investment as one that is made primarily to accomplish a charitable purpose of the foundation and no substantial purpose of which is to produce investment income or a capital gain from the sale of the investment. Examples of program-related investments include educational loans to individuals and low-interest loans to other section 501(c)(3) organizations.

General instructions.    Report all program-related investments made in the current tax year. Do not report any investments made in a prior year even if they were still held by the foundation in the current tax year.

  Report in the amount column only the amounts of program-related investments that may be treated as qualifying distributions. Do not report in the amount column (1) the amount of a loan guarantee except to the extent that the foundation makes a guarantee payment that would be a qualifying distribution, or (2) the amount of a program-related investment in an organization described in the exceptions set forth in the Part I, line 25, column (d) instructions. If an amount is not reportable in the amount column, then report it in the column describing the program-related investment.

  Investments consisting of loans to individuals (such as educational loans) are not required to be listed separately but may be grouped with other program-related investments of the same type. Loans to other section 501(c)(3) organizations and all other types of program-related investments must be listed separately on lines 1 through 3 or on an attachment.

Lines 1 and 2.   List the two largest program-related investments made by the foundation in 2013, whether or not the investments were still held by the foundation at the end of the year.

Line 3.   Combine all other program-related investments and enter the total on the line 3 Amount column. List the individual investments or groups of investments included (attach a schedule if necessary).

The total of lines 1 through 3 in the Amount column must equal the amount reported on line 1b of Part XII.

Part X. Minimum Investment Return

Who must complete this section?   All domestic foundations must complete 
Part X.

  Foreign foundations that checked Item D2 in the Heading do not have to complete Part X unless claiming status as a private operating foundation.

  Private operating foundations described in section 4942(j)(3) or 4942(j)(5) must complete Part X in order to complete Part XIV.

Overview.   A private foundation that is not a private operating foundation must pay out, as qualifying distributions, its minimum investment return. This is generally 5% of the total fair market value of its noncharitable assets, subject to further adjustments as explained in the instructions for Part XI. The amount of this minimum investment return is figured in Part X and is used in Part XI to figure the amount required to be paid out (the distributable amount).

Minimum investment return.   In figuring the minimum investment return, include only those assets that are not actually used or held for use by the organization for a charitable, educational, or other similar function that contributed to the charitable status of the foundation. Cash on hand and on deposit is considered used or held for use for charitable purposes only to the extent of the reasonable cash balances reported in Part X, line 4. See the instructions for lines 1b and 4 below.

  Assets held for the production of income or for investment are not considered to be used directly for charitable functions even though the income from the assets is used for charitable functions. It is a factual question whether an asset is held for the production of income or for investment rather than used or held for use directly by the foundation for charitable purposes.

  For example, an office building used to provide offices for employees engaged in managing endowment funds for the foundation is not considered an asset used for charitable purposes.

Dual-use property.

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.

Excluded property.

Certain assets are excluded entirely from the computation of the minimum investment return. These include pledges of grants and contributions to be received in the future and future interests in estates and trusts.

Line 1a. Average monthly fair market value of securities.   If market quotations are readily available, a foundation may use any reasonable method to determine the average monthly fair market value of securities such as common and preferred stock, bonds, and mutual fund shares, as long as that method is consistently used. For example, a value for a particular month might be determined by the closing price on the first or last trading days of the month or an average of the closing prices on the first and last trading days of the month. Market quotations are considered readily available if a security is any of the following:
  • 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.

  If securities are held in trust for, or on behalf of, a foundation by a bank or other financial institution that values those securities periodically using a computer pricing system, a foundation may use that system to determine the value of the securities. The system must be acceptable to the IRS for federal estate tax purposes.

  The foundation may reduce the fair market value of securities only to the extent that it can establish that the securities could only be liquidated in a reasonable period of time at a price less than the fair market value because of:
  • 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.

  Any reduction in value allowed under these provisions may not be more than 10% of the fair market value (determined without regard to any reduction in value).

  Also, see Regulations sections 53.4942(a)-2(c)(4)(i)(b), (c), and (iv)(a).

Line 1b. Average of monthly cash balances.   Compute cash balances on a monthly basis by averaging the amount of cash on hand on the first and last days of each month. Include all cash balances and amounts that may be used for charitable purposes (see line 4 below) or set aside and taken as a qualifying distribution (see Part XII).

Line 1c. Fair market value of all other assets.   The foundation must report on line 1c the value of all assets other than charitable-use assets, publicly traded securities, cash, and assets described in Regulations section 53.4942(a)-2(c)(2). The foundation must value the assets reported on line 1c annually, except that real estate may be valued every 5 years if the procedures discussed under 5-year valuation are followed. The annual valuation may be made by private foundation employees or by any other person even if that person is a disqualified person. If the IRS accepts the valuation, it is valid only for the tax year for which it is made. A new valuation is required for the next tax year.

5-year valuation.

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.

Valuation date.

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.

Assets held for less than a tax year.

To determine the value of an asset held less than 1 tax year, divide the number of days the foundation held the asset by the number of days in the tax year. Multiply the result by the fair market value of the asset.

Line 1e. Reduction claimed for blockage or other factors.   If the fair market value of any securities, real estate holdings, or other assets reported on lines 1a and 1c reflects a blockage discount, marketability discount, or other reduction from full fair market value because of the size of the asset holding or any other factor, enter on line 1e the aggregate amount of the discounts claimed. Attach an explanation that includes the following information for each asset or group of assets involved:
  1. A description of the asset or asset group (for example, 20,000 shares of XYZ, Inc., common stock),

  2. For securities, the percentage of the total issued and outstanding securities of the same class that is represented by the foundation's holding,

  3. The fair market value of the asset or asset group before any claimed blockage discount or other reduction,

  4. The amount of the discount claimed, and

  5. A statement that explains why the claimed discount is appropriate in valuing the asset or group of assets for section 4942 purposes.

  In the case of securities, there are certain limitations on the size of the reduction in value that can be claimed. See the instructions for Part X, line 1a.

Line 2. Acquisition indebtedness.   Enter the total acquisition indebtedness that applies to assets included on line 1. For details, see section 514(c)(1).

Line 4. Cash deemed held for charitable activities.   Foundations may exclude from the assets used in the minimum investment return computation the reasonable cash balances necessary to cover current administrative expenses and other normal and current disbursements directly connected with the charitable, educational, or other similar activities. The amount of cash that may be excluded is generally 1½% of the fair market value of all assets (minus any acquisition indebtedness) as computed in Part X, line 3. However, if under the facts and circumstances an amount larger than the deemed amount is necessary to pay expenses and disbursements, then you may enter the larger amount instead of 1½% of the fair market value on line 4. If you use a larger amount, attach an explanation.

Line 6. Short tax periods.   If the foundation's tax period is less than 12 months, determine the applicable percentage by dividing the number of days in the short tax period by 365 (or 366 in a leap year). Multiply the result by 5%. Then multiply the modified percentage by the amount on line 5 and enter the result on line 6.

Part XI. Distributable Amount

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 Item D2 in the Heading 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 2013 is the amount that the foundation must distribute by the end of 2014 as qualifying distributions to avoid the 30% tax on the undistributed portion.

Line 4.   Enter the total of recoveries of amounts treated as qualifying distributions for any year under section 4942(g). Include recoveries of part or all (as applicable) of grants previously made, proceeds from the sale or other disposition of property whose cost was treated as a qualifying distribution when the property was acquired, and any amount set aside under section 4942(g) to the extent it is determined that this amount is not necessary for the purposes of the set-aside.

Line 6. Deduction from distributable amount.   If the foundation was organized before May 27, 1969, and its governing instrument or any other instrument continues to require the accumulation of income after a judicial proceeding to reform the instrument has terminated, then the income required to be accumulated must be subtracted from the distributable amount beginning with the first tax year after the tax year in which the judicial proceeding was terminated. (See the instructions for Part VII-A, line 6.)

Part XII. Qualifying Distributions

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. Foreign foundations described in section 4948(b) not claiming operating foundation status need not complete this part.

Line 1a. Expenses, contributions, gifts, etc.   Enter the amount from Part I, line 26, column (d). However, if the borrowed funds election applies, add the total of the repayments during the year to the amount from Part I, line 26, column (d), and enter it on line 1a.

Borrowed funds.

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:

  1. The money is used to make expenditures for a charitable or similar purpose, and

  2. 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.

Election.

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.

Line 1b. Program-related investments.   Enter the total of the “Amount” column from Part IX-B. See the Part IX-B instructions for the definition of program-related investments.

Line 3. Amounts set aside.   Amounts set aside may be treated as qualifying distributions only if the private foundation establishes to the satisfaction of the IRS that the amount will be paid for the specific project within 60 months from the date of the first set-aside and meets 1 or 2 below.
  1. The project can be better accomplished by a set-aside than by the immediate payment of funds (suitability test).

  2. The private foundation meets the requirements of section 4942(g)(2)(B)(ii) (cash distribution test).

Set-aside under item 1.

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 of the set- aside. The request for approval is submitted with Form 8940, Request for Miscellaneous Determination, under sections 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.)

Set-aside under item 2.

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.

Line 5. Reduced tax on investment income under section 4940(e).   If the organization does not qualify for the 1% tax under section 4940(e), enter zero. See Parts V and VI of the instructions.

Part XIII. Undistributed Income

If you checked Item D2 in the Heading 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 2011 and became a private operating foundation in 2013, the excess qualifying distributions from 2011 could be applied against the distributable amount for 2012 but not to any year after 2012.

The purpose of this part is to enable the foundation to comply with the rules for applying its qualifying distributions for the year 2013. In applying the qualifying distributions, there are three basic steps.

  1. Reduce any undistributed income for 2012 (but not below zero).

  2. The organization may use any part or all remaining qualifying distributions for 2013 to satisfy elections. For example, if undistributed income remained for any year before 2012, it could be reduced to zero or, if the foundation wished, the distributions could be treated as distributions out of corpus.

  3. If no elections are involved, apply remaining qualifying distributions to the 2013 distributable amount on line 4d. If the remaining qualifying distributions are greater than the 2013 distributable amount, the excess is treated as a distribution out of corpus on line 4e.

If for any reason the 2013 qualifying distributions do not reduce any 2012 undistributed income to zero, the amount not distributed is subject to a 30% tax. If the 2012 income remains undistributed at the end of 2014, 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.

Excess distribution carryovers.   An excess of qualifying distributions is created for a particular tax year (and available as a carryover for the five succeeding years) if the total qualifying distributions treated as made out of the undistributed income for the year or out of corpus with respect to the year (other than amounts distributed in satisfaction of sections 170(b)(1)(F)(ii) or 4942(g)(3) or applied to a prior tax year by election) exceeds the distributable amount for the year. See Regulations section 53.4942(a)-3(e)(2). Thus, in no case does the excess for the particular tax year exceed the qualifying distributions for the year less the distributable amount for the year.

Example.

X Foundation has an excess distribution carryover of $100,000 from 5 years ago that will expire to the extent that it is not used in its current tax year. For its current tax year, X Foundation has a distributable amount of $110,000, qualifying distributions also of $90,000, and no undistributed income from prior years. X Foundation does not elect to distribute any part of its qualifying distributions in satisfaction of section 170(b)(1)(F)(ii) or 4942(g)(3). Under these circumstances, X Foundation has no excess distributions for its current tax year. X Foundation may apply $20,000 of its $100,000 carryover from 5 years ago to its undistributed income in the current tax year, but the remaining $80,000 must expire. X Foundation cannot create an excess distribution for its current tax year by electing to treat all or part of its qualifying distributions for the current year as made out of corpus and applying the $100,000 carryover from the prior year in satisfaction of its distributable amount for the current year.

Line 1. Distributable amount.   Enter the distributable amount for 2013 from Part XI, line 7.

Line 2. Undistributed income.   Enter the distributable amount for 2012 and amounts for earlier years that remained undistributed at the beginning of the 
2013 tax year.

Line 2b.   Enter the amount of undistributed income for years before 2012.

Line 3. Excess distributions carryover to 2013.   If the foundation has made excess distributions out of corpus in prior years, which have not been applied in any year, enter the amount for each year. Do not enter an amount for a particular year if the organization was a private operating foundation for any later year.

Lines 3a through 3e.   Enter the amount of any excess distribution made on the line for each year listed. Do not include any amount that was applied against the distributable amount of an earlier year or that was already used to meet pass-through distribution requirements. (See the instructions for line 7.)

Line 3f.   This amount can be applied 
in 2013.

Line 4. Qualifying distributions.   Enter the total amount of qualifying distributions made in 2013 from Part XII, line 4. The total of the amounts applied on lines 4a through 4e is equal to the qualifying distributions made in 2013.

Line 4a.   The qualifying distributions for 2013 are first used to reduce any undistributed income remaining from 2012. Enter only enough of the 2013 qualifying distributions to reduce the 2012 undistributed income to zero.

Lines 4b and 4c.   If there are any 2013 qualifying distributions remaining after reducing the 2012 undistributed income to zero, one or more elections can be made under Regulations section 53.4942(a)-3(d)(2) to apply all or part of the remaining qualifying distributions to any undistributed income remaining from years before 2012 or to apply to corpus.

  
A foundation may make a corpus election on line 4c in order to qualify under section 170(b)(1)(F)(ii) for the benefit of its contributors, or in order for a foundation grantor to the foundation to obtain a qualifying distribution under section 4942(g)(3), as described in the Part XIII, line 7 instructions. A foundation cannot make a corpus election on line 4c in an attempt to create or increase an excess distributions carryover for the current year on line 10e by applying excess distribution carryovers to its current-year distributable amount on line 5. See Regulations section 53.4942(a)-3(e)(2).

Elections.

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.

Where to enter.

If the organization elected to apply all or part of the remaining amount to the undistributed income remaining from years before 2012, 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.

Entering an amount on line 4b or 4c without submitting the required statement is not considered a valid election.

Line 4d.   Treat as a distribution of the distributable amount for 2013 any qualifying distributions for 2013 that remain after reducing the 2012 undistributed income to zero and after electing to treat any part of the remaining distributions as a distribution out of corpus or as a distribution of a prior year's undistributed income. Enter only enough of the remaining 2013 qualifying distributions to reduce the 2013 distributable amount to zero.

Line 4e.   Any 2013 qualifying distributions remaining after reducing the 2013 distributable amount to zero should be treated as an excess distribution out of corpus. This amount may be carried over and applied to later years.

Line 5. Excess qualifying distributions carryover applied to 2013.   The foundation may apply excess qualifying distribution carryovers from its five prior years to its current-year undistributed income, but only to the extent that the undistributed income exceeds its qualifying distributions for the year. For example, if for the tax year X Foundation has a distributable amount of $1,000, qualifying distributions of $800 which it elects to treat as made out of corpus, prior-year carryovers of $700, and no undistributed income for prior years, then it may apply only $200 of the carryovers to its current-year undistributed income. See Regulations section 53.4942(a)-3(e)(1).

  Enter any excess qualifying distributions from line 3, which were applied to 2013, in both the Corpus column and the 2013 column. Apply the oldest excess qualifying distributions first. Thus, the organization will apply any excess qualifying distributions carried forward from 2008 before those from later years.

Line 6a.   Add lines 3f, 4c, and 4e. Subtract line 5 from the total. Enter the net total in the Corpus column.

Line 6c.   Enter only the undistributed income from 2011 and prior years for which either a notice of deficiency under section 6212(a) has been mailed for the section 4942(a) first-tier tax, or on which the first-tier tax has been assessed because the organization filed a Form 4720 for a tax year that began before 2012.

Lines 6d and 6e.   These amounts are taxable under the provisions of section 4942(a), except for any part that is due solely to improper valuation of assets to which the provisions of section 4942(a)(2) are being applied (see Part VII-B, line 2b). Report the taxable amount on Form 4720. If the exception applies, attach an explanation.

Line 6f.   In the 2013 column, enter the amount by which line 1 is more than the total of lines 4d and 5. This is the undistributed income for 2013. The organization must distribute the amount shown by the end of its 2014 tax year so that it will not be liable for the tax on undistributed income.

Line 7. Distributions out of corpus for 2013 pass-through distributions.   If the foundation is the donee and receives a contribution from another private foundation, the donor foundation may treat the contribution as a qualifying distribution only if the donee foundation makes a distribution equal to the full amount of the contribution and the distribution is a qualifying distribution that is treated as a distribution of corpus. The donee foundation must, no later than the close of the first tax year after the tax year in which it receives the contributions, distribute an amount equal in value to the contributions received in the prior tax year and have no remaining undistributed income for the prior year. For example, if private Foundation X received $1,000 in tax year 2012 from Foundation Y, Foundation X would have to distribute the $1,000 as a qualifying distribution out of corpus by the end of 2013 and have no remaining undistributed income for 2012.

  If a private foundation receives a contribution from an individual or a corporation and the individual is seeking the 50% contribution base limit on deductions for the tax year (or the individual or corporation is not applying the limit imposed on deductions for contributions to the foundation of capital gain property), the foundation must comply with certain distribution requirements.

  By the 15th day of the 3rd month after the end of the tax year in which the foundation received the contributions, the donee foundation must distribute as qualifying distributions out of corpus:

  a. An amount equal to 100% of all contributions received during the year in order for the individual contributor to receive the benefit of the 50% limit on deductions, and

  b. Distribute all contributions of property only so that the individual or corporation making the contribution is not subject to the section 170(e)(1)(B)(ii) limitations.

  If the organization is applying excess distributions from prior years (for instance, any part of the amount in Part XIII, line 3f) to satisfy the distribution requirements of section 170(b)(1)(F) or 4942(g)(3), it must make the election under Regulations section 53.4942(a)-3(c)(2) by attaching a statement in accordance with that section. Also, see Regulations section 1.170A-9(h)(2).

  Enter on line 7 the total distributions out of corpus made to satisfy the restrictions on amounts received from donors described above.

Line 8. Outdated excess distributions carryover.   Because of the 5-year carryover limitation under section 4942(i)(2), the organization must reduce any excess distributions carryover by any amounts from 2008 that were not applied in 2013.

Line 9. Excess distributions carryover to 2014.   Enter the amount by which line 6a is more than the total of lines 7 and 8. This is the amount the organization may apply to 2014 and following years. Line 9 can never be less than zero.

Line 10. Analysis of line 9.   In the space provided for each year, enter the amount of excess distributions carryover from that year that has not been applied as of the end of the 2013 tax year. If there is an amount on the line for 2009, it must be applied by the end of the 2014 tax year since the 5-year carryover period for 2009 ends in 2014.

Part XIV. Private Operating Foundations

All organizations that claim status as private operating foundations under section 4942(j)(3) or (5) for 2013 must complete Part XIV.

Certain elderly care facilities (section 4942(j)(5)).   For purposes of section 4942 only, certain elderly care facilities may be classified as private operating foundations. To be so classified, they must be operated and maintained for the principal purpose explained in section 4942(j)(5) and also meet the endowment test described below.

   If the foundation is a section 4942(j)(5) organization, complete only lines 1a, 1b, 2c, 2d, 2e, and 3b. Enter “N/A” on all other lines in the Total column for Part XIV.

Private operating foundation (section 4942(j)(3)).   The term “private operating foundation means any private foundation that spends at least 85% of the smaller of its adjusted net income or its minimum investment return directly for the active conduct of the exempt purpose or functions for which the foundation is organized and operated (the Income Test) and that also meets one of the three tests below.
  1. 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.

  2. 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.

  3. 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.

  See regulations under section 4942 for the meaning of “directly for the active conduct” of exempt activities for purposes of these tests.

Complying with these tests.

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.

Part XV. Supplementary Information

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.

Line 2.   In the space provided (or in an attachment, if necessary), furnish the required information about the organization's grant, scholarship, fellowship, loan, etc., programs. In addition to restrictions or limitations on awards by geographical areas, charitable fields, and kinds of recipients, indicate any specific dollar limitations or other restrictions applicable to each type of award the organization makes. This information benefits the grant seeker and the foundation. The grant seekers will be aware of the grant eligibility requirements, and the foundation should receive only applications that adhere to these grant application requirements.

  If the foundation only makes contributions to preselected charitable organizations and does not accept unsolicited applications for funds, check the box on line 2.

Line 3.   If necessary, attach a schedule for lines 3a and 3b that lists separately amounts given to individuals and amounts given to organizations.

  

Foundation Status of Recipient

Use the following codes:
NC Non-charity (not 501(c)(3))
PF Private non-operating foundation (section 509(a))
POF Private operating foundation (section 4942(j)(3)) other than an EOF
EOF Exempt operating foundation (section 4940(d))
PC Public charity described in section 509(a)(1) or (2)
SO-DP Type I, type II, or type III functionally integrated supporting organization if a disqualified person of the private foundation controls the supporting organization or a supported organization (sections 509(a)(3) and 4942(g)(4))
SO I Type I supporting organization (sections 509(a)(3) and 509(a)(3)(B)(i)) other than an SO-DP
SO II Type II supporting organization (sections 509(a)(3) and 509(a)(3)(B)(ii)) other than an SO-DP
SO III FI Functionally integrated type III supporting organization (sections 509(a)(3), 509(a)(3)(B)(iii), and 4943(f)(5)(B)) other than an SO-DP
SO III NFI Non-functionally integrated type III supporting organization (sections 509(a)(3), 509(a)(3)(B)(iii), and 4943(f)(5)(B))
TPS Testing for public safety organization (section 509(a)(4))

  See Regulations section 1.509(a)-4, Notice 2006-109, and Rev. Proc. 2011-33 for guidance on determining whether a grantee is a type I, type II, type III functionally integrated, or type III non-functionally integrated supporting organization.

Purpose of grant or contribution.

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.

Entries such as “grant” or “contribution” under the column titled Purpose of grant or contribution are unacceptable.

Line 3a. Paid during year.

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.

Line 3b. Approved for future payment.

List all contributions, grants, etc., approved during the year but not paid by the end of the year, including the unpaid portion of any current year set-aside. Do not report contributions and grants approved or set aside in a prior tax year but still unpaid as of the end of the tax year.

Part XVI-A. Analysis of Income-Producing Activities

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.

Columns (a) and (c).   In column (a), enter a 6-digit business code, from the list in the Instructions for Form 990-T, to identify any income reported in column (b). In column (c), enter an exclusion code, from the list later, to identify any income reported in column (d). If more than one exclusion code is applicable to a particular revenue item, select the lowest numbered exclusion code that applies. Also, if nontaxable revenues from several sources are reportable on the same line in column (d), use the exclusion code that applies to the largest revenue source.

Columns (b), (d), and (e).   For amounts reported in Part XVI-A on lines 1–11, enter in column (b) any income earned that is unrelated business income (see section 512). In column (d), enter any income earned that is excluded from the computation of unrelated business taxable income by section 512, 513, or 514. In column (e), enter any related or exempt function income; that is, any income earned that is related to the organization's purpose or function which constitutes the basis for the organization's exemption.

  Also enter in column (e) any income specifically excluded from gross income other than by section 512, 513, or 514, such as interest on state and local bonds that is excluded from tax by section 103. You must explain in Part XVI-B any amount shown in column (e).

Comparing Part XVI-A with Part I.   The sum of the amounts entered on each line of lines 1–11 of columns (b), (d), and (e) of Part XVI-A should equal corresponding amounts entered on Part I, lines 3–11, column (a), and on line 5b as shown below:
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 1. Program service revenue.   On lines 1a–g, list each revenue-producing program service activity of the organization. For each program service activity listed, enter the gross revenue earned for each activity, as well as identifying business and exclusion codes, in the appropriate columns. For line 1g, enter amounts that are payments for services rendered to governmental units. Do not include governmental grants that are reportable on Part I, line 1.

  Report the total of lines 1a–g on line 11 of Part I, along with any other income reportable on line 11.

  Program services are mainly those activities that the reporting organization was created to conduct and that, along with any activities begun later, form the basis of the organization's current exemption from tax.

  Program services can also include the organization's unrelated trade or business activities. Program service revenue also includes income from program-related investments (such as interest earned on scholarship loans) as defined in the instructions for Part IX-B.

Line 11.   On lines 11a–e, list each “Other revenue” activity not reported on lines 1 through 10. Report the sum of the amounts entered for lines 11a–e, columns (b), (d), and (e), on Part I, line 11.

Line 13.   On line 13, enter the total of columns (b), (d), and (e) of line 12.

  You may use the following worksheet to verify your calculations.
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)  

Part XVI-B. Relationship of Activities to the Accomplishment of Exempt Purposes

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 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 section 103.

Part XVII. Information Regarding Transfers To and Transactions and Relationships With Noncharitable Exempt Organizations

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.

Line 1. Reporting of certain transfers and transactions.   Generally, report on line 1 any transfer to or transaction with a noncharitable exempt organization even if the transfer or transaction constitutes the only connection with the noncharitable exempt organization.

Related organizations.

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.

Unrelated organizations.

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.

Line 1a. Transfers.   Answer “Yes” to lines 1a(1) and 1a(2) if the reporting organization made any direct or indirect transfers of any value to a noncharitable exempt organization.

  A “transfer” is any transaction or arrangement whereby one organization transfers something of value (cash, other assets, services, use of property, etc.) to another organization without receiving something of more than nominal value in return. Contributions, gifts, and grants are examples of transfers.

  If the only transfers between the two organizations were contributions and grants made by the noncharitable exempt organization to the reporting organization, answer “No.

Line 1b. Other transactions.   Answer “Yes” for any transaction described on line 1b(1)–(6), regardless of its amount, if it is with a related or affiliated organization.

Unrelated organizations.

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.

Exception.

If a transaction with an unrelated noncharitable exempt organization was for adequate consideration and the amount involved was $500 or less, answer “No” for that transaction.

Line 1b(3).   Answer “Yes” for transactions in which the reporting organization was either the lessor or the lessee.

Line 1b(4).   Answer “Yes” if either organization reimbursed expenses incurred by the other.

Line 1b(5).   Answer “Yes” if either organization made loans to the other or if the reporting organization guaranteed the other's loans.

Line 1b(6).   Answer “Yes” if either organization performed services or membership or fundraising solicitations for the other.

Line 1c.   Complete line 1c regardless of whether the noncharitable exempt organization is related to or closely affiliated with the reporting organization. For purposes of this line, “facilities” includes office space and any other land, building, or structure whether owned or leased by, or provided free of charge to, the reporting organization or the noncharitable exempt organization.

Line 1d.   Use this schedule to describe the transfers and transactions for which “Yes” was entered on lines 1a–c above. You must describe each transfer or transaction for which the answer was “Yes.” You may combine all of the cash transfers (line 1a(1)) to each organization into a single entry. Otherwise, make a separate entry for each transfer or transaction.

Column (a).

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).

Column (d).

If you need more space, write “see attached” in column (d) and use an attached sheet for the description. If making more than one entry on line 1d, specify on the attached sheet which transfer or transaction you are describing.

Line 2. Reporting of certain relationships.   Enter on line 2 each noncharitable exempt organization that the reporting organization is related to or affiliated with, as defined above. If the control factor or the historic and continuing relationship factor (or both) is present at any time during the year, identify the organization on line 2 even if neither factor is present at the end of 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.

Column (b).

Enter the exempt category of the organization; for example, “501(c)(4).

Column (c).

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.

Signature

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.

Note.

A paid preparer must sign original or amended return by rubber stamp, mechanical device, or computer software program.

Paid Preparer

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.

The paid preparer must:

  • 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, in addition to the copy to be filed with the IRS.

Enter the paid preparer's PTIN, not his or her Social Security number (SSN), in the “PTIN” box in the paid preparer's block. Because this form is publicly disclosable, any information entered in this block will be publicly disclosed. For more information about PTINs, visit the IRS website at www.irs.gov/ptin.

Paid Preparer Authorization

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 2014 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.

How To Get Forms and Publications

Internet

You can access the IRS website at IRS.gov 24 hours a day, 7 days a week to:

  • E-file returns, including Form 990-PF.

  • Download forms, including talking tax forms, instructions, and publications.

  • Order IRS products online.

  • Research your tax questions.

  • Search publications online by topic or keyword.

  • Use the Internal Revenue Code, regulations, or other official guidance.

  • View Internal Revenue Bulletins (IRBs) published in the last few years.

  • Sign up to receive local and national tax news by email.

  • Get information on starting and operating a private foundation.

By Phone and In Person

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.


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