Instructions for Schedule A (Form 990 or 990-EZ) (2007)

IRS Resources

Specific Instructions

Table of Contents

Attach separate sheets on which you follow the same format and sequence as on the printed form, if you need more space for any part or line item.
Show totals on the printed form.
Put the organization's name and employer identification number (EIN) on the attached separate sheets and identify the part or line that the attachments support.
The organization may round off cents to whole dollars on the return and schedules. If the organization does round to whole dollars, it must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

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

Part I. Compensation of the Five Highest Paid Employees Other Than Officers, Directors, and Trustees

Complete Part I for the five non-key employees with the highest annual compensation over $50,000. At the bottom of the table, enter the number of other employees with annual compensation over $50,000 who are not individually listed in Part I.

Do not include employees listed in Part V-A of Form 990 or in Part IV of Form 990-EZ (List of Current Officers, Directors, Trustees, and Key Employees). Also do not include key employees in table one.

In columns (c) through (e), show all cash and noncash forms of compensation for each listed non-key employee whether paid currently or deferred. For purposes of reporting all amounts in columns (c) through (e), either use the organization's tax year, or the calendar year ending within such tax year.

The organization also may provide an attachment to explain the entire year 2007 compensation package for any person listed in Part I.

Column (c)

Enter salary, fees, bonuses, and severance payments received by each listed non-key employee. Include current year payments of amounts reported or reportable as deferred compensation in any prior reporting period.

Column (d)

Include in column (d) all forms of deferred compensation and future severance payments (whether or not funded, whether or not vested, and whether or not the deferred compensation plan is a qualified plan under section 401(a)). Include in this column payments to welfare benefit plans on behalf of the employee. Such plans provide benefits such as medical, dental, life insurance, severance pay, disability, 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 reporting period, but not yet paid by the date the organization files its return.

Column (e)

Enter in column (e) both taxable and nontaxable fringe benefits (other than de minimis fringe benefits described in section 132(e)). Include expense allowances or reimbursements that the recipients must report as income on their separate income tax returns. Examples include:

Amounts for which the recipient did not account to the organization,
Allowances that were more than the payee spent on serving the organization, and
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), as well as any other taxable and nontaxable fringe benefits.

Example.

S is not a key employee. S receives a salary of $35,000 and a $3,000 bonus. S also receives company-paid medical, dental, and life insurance benefits for his family of $12,000. During the year, S received family educational benefits of $5,000. Enter in column (c) $38,000; enter in column (d) $12,000; enter in column (e) $5,000. Total compensation of S is $55,000, even though his salary and bonus is only $38,000. S is listed in Part I as one of the highest paid employees.

See Pub. 525, Taxable and Nontaxable Income, for more information.

Part II-A. Compensation of the Five Highest Paid Independent Contractors for Professional Services

Complete Part II-A for the five highest paid independent contractors (whether individuals or firms) who performed personal services of a professional nature for the organization and, in return, received over $50,000 for the year from the organization.

For purposes of reporting amounts in column (c), either use the organization's tax year, or the calendar year ending within such tax year.

Also show the number of other independent contractors who received more than $50,000 for the year for performing professional services but who are not individually listed in Part II-A.

Independent contractors are persons who are not treated as employees for employment tax purposes. Independent contractors may be individuals or firms. Professional independent contractors generally include attorneys, accountants, auditors, health care professionals, investment advisors, and professional fundraisers.

The organization may, at its discretion, provide an attachment to explain the entire year 2007 compensation package for any person listed in Part II-A.

Fundraising fees exceeding $50,000 are reported in Part II-A, but not reimbursements for amounts paid by the fundraiser to others for printing, paper, envelopes, postage, mailing list rental, etc. Part II-A is intended for the fee portion of payments to contractors, not for any expense reimbursements.

Part II-B. Compensation of the Five Highest Paid Independent Contractors for Other Services

Complete Part II-B for the five highest paid independent contractors (whether individuals or firms) who performed services, that were other than services of a professional nature for the organization and, in return, received over $50,000 for the year from the organization. For a definition of independent contractor, see Part II-A, above.

For purposes of reporting amounts in column (c), either use the organization's tax year, or the calendar year ending within such tax year.

Also show the number of other independent contractors who received more than $50,000 for the year for performing such services but who are not individually listed in Part II-B.

The organization may include an attachment that explains the 2007 compensation package for any person listed in Part II-B.

Part III. Statements About Activities

Line 1. If the organization answered “Yes” on this line, it must complete Part VI-A or VI-B and include the additional information discussed under those parts; otherwise, the return may be considered incomplete.

Enter the total expenses paid or incurred in connection with the lobbying activities described on line 1. The amount of expenses the organization enters must equal the amounts on line 38, Part VI-A, or line i, Part VI-B.

Substantial part test. In general, a section 501(c)(3) organization may not devote a substantial part of its activities to attempts to influence legislation. Under the substantial part test, if such an organization engages in substantial lobbying activities, the organization will lose both its tax-exempt status and its ability to receive tax-deductible charitable contributions. Except for churches, certain church affiliated organizations, and private foundations, an organization that loses its section 501(c)(3) status because it did not meet the substantial part test will owe an excise tax under section 4912 on all of its lobbying expenditures. Managers of the organization may also be jointly and severally liable for this tax.

Expenditure test. As an alternative to the substantial part test, eligible public charities may elect the expenditure test of section 501(h). The expenditure test generally permits higher limits for lobbying expenditures than allowed under the substantial part test. Electing public charities are subject to the lobbying expenditure definitions of section 4911, which are generally more liberal than the definitions under the substantial part test. Section 4911 applies only to public charities that made a valid section 501(h) election by filing Form 5768, Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation.

Electing public charities. If the organization is an electing public charity, it must complete Part VI-A of this form.

Nonelecting public charities. If the organization checked “Yes” but is not an electing public charity, it must complete Part VI-B and attach a statement giving a detailed description of the organization's lobbying activities.

All charities, both electing and nonelecting, are absolutely prohibited from intervening in a political campaign for or against any candidate for an elective public office. If a charity does intervene in a political campaign, it will lose both its tax-exempt status and its eligibility to receive tax-deductible charitable contributions. Both the organization and its managers are subject to the tax on political expenditures under section 4955.

Line 2. See Part IV, Definitions, for the meaning of the term family member.

Lines 2a through 2e. These lines apply to both sides of a listed transaction. Reporting is required, for example, whether the exempt organization is a payer or payee, buyer or seller, lender or borrower.

Line 2d. Compensation or repayment. If the only compensation or repayment relates to amounts the organization reported in Part V-A of Form 990, or Part IV of Form 990-EZ, check “Yes” and write “See Part V-A, Form 990,” or “See Part IV of Form 990-EZ,” on the dotted line to the left of the entry space.

Line 3a. Scholarships, etc. The term qualify in line 3a means that organizations or individuals will use the funds the organization provides for charitable purposes described in sections 170(c)(1) and 170(c)(2).

The term qualify also means that individual recipients belong to a charitable class and the payments are to aid them. Examples include:

Helping the aged poor;
Training teachers and social workers from underdeveloped countries; and
Awarding scholarships to individuals.

Line 3b. Section 403(b) annuity plan. Indicate whether the organization has a section 403(b) annuity plan available for its employees.

Line 3c. Conservation easements. Answer “Yes” if the organization received or held one or more conservation easements during the year. In general, an easement is an interest in the land of another. A conservation easement is an interest in the land of another for purposes that include environmental protection; the preservation of open space; or the preservation of property for historic, educational, or recreational purposes. For more information see Notice 2004-41, 2004-28 I.R.B. 31.

Attached schedule. If “Yes,” the organization must attach a schedule that includes the following information.

The number of easements held at the beginning of the year, the acreage of these easements and the number of states where the easements are located.
The number of easements and the acreage of these easements that the organization received or acquired during the year.
The number of easements modified, sold, transferred, released, or terminated during the year and the acreage of these easements. For each easement, explain the reason for the modification, sale, transfer, release or termination. Also, identify the recipient (if any), and show if the recipient was a qualified organization (as defined in section 170(h)(3) and the related regulations at the time of transfer).
Show the number of easements held for each of the following categories:
1. Easements on buildings or structures;
2. Easements that encumber a golf course or portions of a golf course;
3. Easements within or adjacent to residential developments and housing subdivisions, including easements related to the development of property; and
4. Conservation easements that were acquired in a transaction described under Purchase of Real Property from Charitable Organizations in Notice 2004-41 and if the organization acquired any such easements during the year.
The number of easements and the acreage of these easements that were monitored by physical inspection or other means during the tax year.
Total staff hours and a list of expenses devoted to (legal fees, portion of staff salaries, etc.) incurred for monitoring and enforcing new or existing easements during the tax year.
Identify all easements on buildings or structures acquired after August 17, 2006, and show if each easement meets the requirements of section 170(h)(4)(B).

Line 3d. Answer “Yes” if the organization provides any of the following types of credit counseling and/or debt management activities:

Educating and/or counseling consumers, in person, in writing, or using electronic means;
Helping consumers consolidate debts;
Negotiating with creditors on behalf of consumers to lower interest rates, waive fees, adjust balances, or restore acceptable credit ratings;
Offering, selling, or managing debt and/or loan consolidation services and programs or down payment assistance services;
Acting as an escrow agent for debtors; or
Participating in creditor Fair Share arrangements.

Line 4a. Answer “Yes” if the organization is a sponsoring organization under section 4966(d)(1) that maintains one or more donor advised funds as described in section 4966(d)(2).

A sponsoring organization is any organization which:

Is described in section 170(c), except for governmental organizations described in section 170(c)(1) or (2)(A);
Is not a private foundation as defined in section 509(a); and
Maintains one or more donor advised funds.

Under section 4966(d)(2), a donor advised fund is a fund or account:

That is separately identified by reference to contributions of a donor or donors;
That is owned and controlled by a sponsoring organization; and
For which the donor or donor advisor has or reasonably expects to have advisory privileges in the distribution or investment of amounts held in the donor advised funds or accounts because of the donor's status as a donor.

A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account.

Exception. A donor advised fund does not include any fund or account:

That makes distributions only to a single identified organization or governmental entity, or
In which a person described in 3 above gives advice about which individuals receive grants for travel, study, or other similar purposes, if:
1. The person's advisory privileges are performed exclusively by such person in his or her capacity as a committee member in which all of the committee members are appointed by the sponsoring organization;
2. No combination of donors or donor advisors (and related persons as defined below) directly or indirectly control the committee;
3. All grants from the fund or account are awarded on an objective and nondiscriminatory basis following a procedure approved in advance by the board of directors of the sponsoring organization. The procedure must be designed to ensure that all grants meet the requirements of sections 4945(g)(1), (2), or (3); or
That is otherwise excluded from the definition of a donor advised fund pursuant to section 4966(d)(2)(C). For example, see Notice 2006-109, 2006-51 I.R.B. 1121, regarding employer-sponsored disaster relief assistance programs.

A related person is any family member (as defined in section 4958(f)) of the donor or donor advisor and any 35% controlled entity (as defined in section 4958(f)) of the donor or donor advisor.

Funds or accounts meeting one of these exceptions must be reported on lines 4f and 4g.

Line 4b. Answer “Yes” if the organization made any taxable distributions under section 4966.

A taxable distribution is any distribution occurring in any tax year beginning after August 17, 2006, from a donor advised fund to any:

Natural person, or
Any other person, if:
1. The distribution is for any purpose other than the promotion of religious, charitable, scientific, literary or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals; or
2. The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility in the distribution in accordance with section 4945(h).

Exception. A taxable distribution does not include a distribution from a donor advised fund to:

Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization),
The sponsoring organization of the donor advised fund,
Any other donor advised fund, or
Payments with respect to certain educational grants described in Notice 2006-109.

Section 4966(d)(4) defines a disqualified supporting organization as a Type III supporting organization that is not functionally integrated and any Type I, Type II, or functionally integrated Type III supporting organization where the donor or donor advisor (and any related person) directly or indirectly controls a supported organization of the supporting organization. See Notice 2006-109 and instructions for line 13 for more information on supporting organizations.

Line 4c. Answer “Yes” if the organization made any distributions to a donor, donor advisor, or related person (as defined in the instructions for line 4a).

Lines 4d and 4e. For a definition of donor advised funds, see the instructions for line 4a.

Lines 4f and 4g. Enter the number of separate funds or accounts on line 4f (other than those reported on line 4d) where donors have the right to provide advice on the distribution or investment of amounts held in such funds or accounts. Figure the number of funds or accounts owned at the end of the tax year. If line 4f is a number other than zero also complete line 4g. If the organization does not maintain any such accounts, enter zero on lines 4f and 4g.

Part IV. Reason for Non-Private Foundation Status

Definitions

The following terms are used in more than one item in Part IV. The definitions given below generally apply.

Support (for lines 10, 11, and 12 of Part IV), with certain qualified exceptions described below, is all forms of support including (but not limited to):

Support includes . . .	Part IV-A line
Gifts, grants, contributions, membership fees	15 and 16
Any amounts an organization receives from the exercise or performance of its charitable, educational, or other purpose or function constituting the basis for its exemption*.		17
Net income from unrelated business activities, whether or not such activities are carried on regularly as a trade or business	18 and 19
Gross investment income, such as interest, dividends, rents, and royalties		18
Tax revenues levied for the benefit of an organization and either paid to or expended on behalf of such organization; and		20
The value of services or facilities (exclusive of those generally furnished to the public without charge) furnished by a governmental unit referred to in Code section 170(c)(1) to an organization without charge		21
*Note.The amounts on line 17 are included as support only for those organizations that checked the box on line 12. Otherwise, the amounts on line 17 are not included in support.

Support does not include . . .	Part IV-A line
Any amounts an organization receives from the exercise or performance of its charitable, educational, or other purpose or function constituting the basis for its exemption*		17
Any gain upon the sale or exchange of property which would be considered under any section of the Code as gain from the sale or exchange of a capital asset.
Contributions of services for which a deduction is not allowable.
*Note.For organizations that checked the box on line 12, the amounts on line 17 of the Support Schedule are included in support.

Support from a governmental unit, with certain exceptions described below, includes:

Any amounts received from a governmental unit, including donations or contributions and amounts received in connection with a contract entered into with a governmental unit for the performance of services or in connection with a government research grant, provided these amounts are not excluded from the term support as amounts received from exercising or performing the organization's charitable purpose or function.

An amount paid by a governmental unit to an organization is not treated as received from exercising or performing its charitable, etc., purpose or function if the payment is to enable the organization to provide a service to, or maintain a facility for, the direct benefit of the public, as for example, to maintain library facilities that are open to the public.
Tax revenues levied for the organization's benefit and either paid to or expended on its behalf.
The value of services or facilities (exclusive of services or facilities generally furnished, without charge, to the public) furnished by a governmental unit to the organization without charge. For example, a city pays the salaries of personnel to guard a museum, art gallery, etc., or provides the use of a building rent free. However, the term does not include the value of any exemption from federal, state, or local tax or any similar benefit.

Indirect contributions from the general public. Indirect contributions are what the organization receives from other organizations that receive a substantial part of their support from general public contributions. An example is the organization's share of the proceeds from an annual community chest drive (such as the United Way or United Fund). These are included on line 15.

Disqualified person. A disqualified person is:

A substantial contributor, who is—
1. Any person who gave an aggregate amount of more than $5,000, if that amount is more than 2% of the total contributions the foundation or organization received from its inception through the end of the year in which that person's contributions were received.
2. The creator of a trust (without regard to the amount of contributions received by the trust from the creator and other persons).
- Any person who is a substantial contributor at any time generally remains a substantial contributor for all future periods even if later contributions by others push that person's contributions below the 2% figure discussed above.
- Gifts from the contributor's spouse are treated as gifts from the contributor.
- Gifts are generally valued at fair market value as of the date the organization received them.
An officer, director, or trustee of the organization or any individual having powers or responsibilities similar to those of officers, directors, or trustees.
An owner of more than 20% of the voting power of a corporation, profits interest of a partnership, or beneficial interest of a trust or an unincorporated enterprise that is a substantial contributor to the organization.
A family member of an individual in the first three categories. A family member includes only a person's spouse, ancestors, children, grandchildren, great grandchildren, and the spouses of children, grandchildren, and great grandchildren.
A corporation, partnership, trust, or estate in which persons described in 1 through 4 above own more than 35% of the voting power, profits interest, or beneficial interest. See section 4946(a)(1).

Normally to satisfy public support test. An organization is considered normally to satisfy the public support test (for lines 10, 11, and 12 of the Support Schedule) for its current tax year and the tax year immediately following its current tax year, if the organization satisfies the applicable support test for the 4 tax years immediately before the current tax year.

If the organization has a material change (other than from unusual grants—see instructions for line 28) in its sources of support during the current tax year, the data ordinarily required in the Support Schedule covering the years 2003 through 2006 must be submitted for the years 2003 through 2007. Prepare and attach a 5-year schedule using the same format as provided in the Support Schedule for lines 15 through 28.

Lines 5 through 14. Reason for Non-Private Foundation Status. Check one of the boxes on these lines to indicate the reason the organization is not a private foundation. The organization's exemption letter states this reason, or the local IRS office can tell the organization the reason.

Line 6. School. Check the box on line 6 for a school whose primary function is the presentation of formal instruction, and which regularly has a faculty, a curriculum, an enrolled body of students, and a place where educational activities are regularly conducted.

A private school, in addition, must have a racially nondiscriminatory policy toward its students. For details about these requirements, see the instructions for Part V.

Line 7. Hospital or Cooperative Hospital Service Organization. Check the box on line 7 for an organization whose main purpose is to provide hospital or medical care. A rehabilitation institution or an outpatient clinic may qualify as a hospital, but the term does not include medical schools, medical research organizations, convalescent homes, homes for the aged, or vocational training institutions for the handicapped.

Check the box on line 7 also for a cooperative hospital service organization described in section 501(e).

Line 9. Hospital Medical Research Organization. Check the box on line 9 for a medical research organization operated in connection with or in conjunction with a hospital. The hospital must be described in section 501(c)(3) or operated by the Federal government, a state or its political subdivision, a U.S. possession or its political subdivision, or the District of Columbia.

Medical research is studies and experiments done to increase or verify information about physical or mental diseases and disabilities and their causes, diagnosis, prevention, treatment, or control. The organization must conduct the research directly and continuously. If it primarily gives funds to other organizations (or grants and scholarships to individuals) for them to do the research, the organization is not a medical research organization.

The organization is not required to be an affiliate of the hospital, but there must be an understanding that there will be close and continuous cooperation in any joint-effort medical research.

Assets test/Expenditure test. An organization qualifies as a medical research organization if its principal purpose is medical research, and it devotes more than half its assets, or spends at least 3.5% of the fair market value of its endowment, in conducting medical research directly.

Either test may be met based on a computation period consisting of the immediately preceding tax year or the immediately preceding 4 tax years.

If an organization does not satisfy either the assets test or the expenditure test, it may still qualify as a medical research organization, based on the circumstances involved.

These tests are discussed in Regulations sections 1.170A-9(c)(2)(v) and (vi). Value the organization's assets as of any day in its tax year but use the same day every year. Value the endowment at fair market value, using commonly accepted valuation methods. (See Regulations section 20.2031.)

Line 10. Organization Operated for the Benefit of a Governmental Unit. Check the box on line 10 and complete the Support Schedule if the organization receives and manages property for and expends funds to benefit a college or university that is owned or operated by one or more states or their political subdivisions. The school must be as described in the first paragraph of the instructions for line 6.

Expending funds to benefit a college or university includes acquiring and maintaining the campus, its buildings, and its equipment, granting scholarships and student loans, and making any other payments in connection with the normal functions of colleges and universities.

The organization must meet essentially the same public support test described below for line 11. See Rev. Rul. 82-132, 1982-2 C.B. 107.

Line 11. Organization Meeting the Section 509(a)(1) Public Support Test. Check either box (but not both) on line 11a or 11b and complete the Support Schedule to determine whether the organization meets the section 509(a)(1)/170(b)(1)(A)(vi) public support test described below.

The Support Schedule is completed for an organization that normally (see Part IV, Definitions) receives at least 33⅓% of its support (excluding income received in exercising its charitable, etc., function) from:

Direct or indirect contributions from the general public;
Other publicly supported (section 170(b)(1)(A)(vi)) organizations; or
A governmental unit.

To determine whether the section 509(a)(1)/170(b)(1)(A)(vi) test is met, donor contributions are considered support from direct or indirect contributions from the general public only to the extent that the total amount received from any one donor during the 4-tax-year period is 2% or less of the organization's total support for those 4 tax years as described below.

Any contribution by one individual will be included in full in the total support denominator of the fraction determining the 33⅓%-of-support or the 10%-of-support limitation.
Only the portion of each donor's contribution that is 2% or less of the total support denominator will be included in the numerator.

In applying the 2% limitation, all contributions by any person(s) related to the donor as described in section 4946(a)(1)(C) through (G) (and related regulations) will be treated as if made by the donor.

The 2% limitation does not apply to support from governmental units referred to in section 170(c)(1), or to contributions from publicly supported organizations (section 170(b)(1)(A)(vi)), that check the box on their line 11a or 11b.

Example.

X organization reported the following amounts in its Support Schedule for the 4-year period 2003 through 2006:

Line		(e) Total
15	Gifts, grants & contributions	$300,000
17	Gross receipts from admissions, etc.	100,000
18	Dividends & interest	300,000
24	Line 23 minus line 17	600,000
26a	2% of line 24 (2% limitation)	12,000
b	Total of contributions exceeding the 2% limitation	98,000

The X organization determined whether or not it met the section 509(a)(1)/170(b)(1)(A)(vi) public support test as follows:

Total support (line 24):				$600,000
Direct Contributions:
Total direct contributions from persons who contributed less than 2% of total support				50,000
Total direct contributions from six donors, each of whom gave more than 2% ($12,000) of total support				170,000
Indirect contributions from the general public:
United Fund				40,000
Grant from Y City				40,000
Total gifts, grants & contributions				$300,000
Total direct contributions from six donors, each of whom gave more than 2% of total support			$170,000
2% limitation for six donors: (2% × $600,000 × 6)			72,000
Less: Direct contributions in excess of 2% of total support				98,000
Total public support				202,000
Section 509(a)(1)/170(b)(1)(A)(vi) computation:
Line 26c	Total support			$600,000
Line 26d	Less total of lines:
		18	$300,000
		19	-0-
		22	-0-
		26b	98,000	$398,000
Line 26e	Total public support			$202,000
Line 26f	Public support percentage (line 26e divided by line 26c— $202,000/ $600,000)			33.67%

Since X organization received more than 33⅓% of its total support for the period from public sources, it qualifies as a section 509(a)(1)/170(b)(1)(A)(vi) publicly supported organization. Note that if an organization fails the public support test for 2 consecutive years, it loses its public charity status and becomes a private foundation.

Facts and circumstances— Public support test. An organization that does not qualify as publicly supported under the test described above may be publicly supported on the basis of the facts in its case if it receives at least 10% of its support from the general public. If the organization believes it is publicly supported according to applicable regulations, attach a detailed statement of the facts upon which the organization bases its conclusion.

Line 12. Organization Meeting the Section 509(a)(2) Public Support Tests. Check the box on line 12 and complete the Support Schedule to determine whether an organization meets both of the following section 509(a)(2) support tests:

The organization normally receives more than one-third of its support for each tax year from:
1. Persons other than disqualified persons (see Part IV, Definitions) with respect to the organization,
2. Governmental units (described in section 170(c)(1)), or
3. Organizations described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)), and such support is received by the organization from any combination of:
  - Gifts, grants, contributions, or membership fees, and
  - Gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity that is not an unrelated trade or business (within the meaning of section 513).
Gross receipts, in any tax year, do not include receipts from any person, bureau, or similar agency of a government unit (described in section 170(c)(1)) to the extent such receipts exceed the greater of $5,000 or 1% of the organization's support in such tax year.
The organization normally receives not more than one-third of its support each tax year from the sum of:
1. Gross investment income (as defined in section 509(e)), and
2. The excess (if any) of the amount of the unrelated business taxable income (as defined in section 512) over the amount of the tax imposed by section 511.

Gross investment income. When determining whether an organization meets the gross investment income test of section 509(a)(2)(B), amounts received from the following organizations retain the character of gross investment income (rather than gifts or contributions) to the extent that these organizations characterize the amounts as gross investment income:

An organization that claims to be described in section 509(a)(3) because it supports a section 509(a)(2) organization; or
A charitable trust, corporation, fund, or association described in section 501(c)(3) (including a nonexempt charitable trust described in section 4947(a)(1)), that is required to distribute, or normally distributes, at least 25% of its adjusted net income (within the meaning of section 4942(f)) to a section 509(a)(2) organization, if the distribution normally comprises at least 5% of the distributee organization's adjusted net income.

If an organization receives an amount from a split-interest trust described in section 4947(a)(2) that is required to distribute, or normally distributes, at least 25% of its adjusted net income to a section 509(a)(2) organization, and the distribution normally comprises at least 5% of the distributee organization's adjusted net income, the amount retains the character of gross investment income if it would be characterized as gross investment income attributable to transfers in trust after May 26, 1969, if the trust were a private foundation.

All income characterized under the rules above as gross investment income in the possession of the distributing organization is considered to be distributed first by the organization and keeps its character as such in the possession of the recipient.

For more details, see Regulations section 1.509(a)-5 that covers special rules of attribution.

If the organization received any amounts from either kind of organization above, attach a statement. Show the amounts received from each organization, including amounts, such as gifts, that are not investment income.

Example.

T organization reported the following amounts in its Support Schedule for the 4-year period 2003 through 2006:

Line		(e) Total
15	Gifts, grants & contributions	$45,000
16	Membership fees	50,000
17	Gross receipts from admissions, merchandise, etc.	25,000
18	Gross income from interest, dividends, etc.	80,000
23	Total of lines 15 through 22	$200,000
27a	Gifts from disqualified persons	$25,000
b	Excess gross receipts from nondisqualified persons	$20,000

T organization determined whether or not it met the one-third tests of section 509(a)(2) in the following computation:

Section 509(a)(2) computation:
Line
27c	Add: Amounts from column (e), lines 15, 16, 17, 20, and 21		$120,000
27d	Total of line 27a	$25,000