A qualifying distribution is:
- Any amount (including program-related investments) paid to accomplish religious, charitable, scientific, literary, or other public purposes. Qualifying distributions do not include contributions to organizations controlled by the contributing foundation or by one or more disqualified persons with respect to the foundation or to private nonoperating foundations (except for certain contributions to exempt organizations).
- Any amount paid to buy an asset used (or held for use) directly to carry out a charitable or other public purpose. Depreciation on these assets is not a qualifying distribution, however.
- Any qualifying amount set aside.
In general, a distribution to a public charity described in section 509(a)(1), (2), or (3) to accomplish a religious, charitable, scientific, literary, educational, or other permitted public purpose is a qualifying distribution. See Grants to organizations, for rules on when a private foundation may rely on the public charity status of a grantee.
The amount of a qualifying distribution of property is the fair market value of the property on the date it is made. The amount of a qualifying distribution is determined only under the cash receipts and disbursements method.
A private foundation that bought an asset and claimed a qualifying distribution under paragraph (2) will be allowed a second qualifying distribution for the same asset if the asset is later given to a publicly supported charitable organization that is not controlled by the foundation, and it is donated for a religious, charitable, scientific, literary, educational, or other permitted public purpose.
The amount of the second qualifying distribution will be the difference between the fair market value of the asset on the date of the contribution and the amount of the first qualifying distribution.