Generally, the start-up period consists of the four tax years after the tax year in which the foundation was created (or otherwise became a private foundation). For this purpose, a foundation is considered created in the tax year in which its distributable amount first exceeds $500. The start-up period minimum amount - the amount that a private foundation must actually distribute during its start-up period - is not less than the sum of: 20 percent of its distributable amount for the first tax year of the start-up period, 40 percent of its distributable amount for the second year of the period, 60 percent of its distributable amount for the third year of the period and 80 percent of its distributable amount for the fourth year of the period. The sum of these amounts must be distributed before the end of the start-up period. No part must be distributed in any particular tax year of the start-up period. In general, only a distribution actually made during the start-up period is taken into account in determining whether the foundation has distributed the start-up period minimum amount. However a distribution actually made during the tax year in which the foundation was created (the year immediately preceding the foundation's start-up period) may be treated as made during the start-up period. Also, a distribution actually made within 5-1/2 months after the end of the start-up period will be treated as made during the start-up period if (a) the foundation was unable to determine its distributable amount for the fourth tax year of the start-up period until after the end of the period and (b) the foundation actually made distributions before the end of the start-up period based on a reasonable estimate of its distributable amount for that fourth tax year.
