Instructions For Form 5227 (Page 5 of 8) in pdf

group, then reduces net gain from the

must complete columns (a) and (b). All

Attached Schedule

25% group.

unitrusts must also complete column (c).

1. In the required schedule, report

2. A net short-term capital loss is first

Enter the end-of-year book value

each loan separately, even if more than

applied to reduce any net long-term

where space is provided to the left of

one loan was made to the same person,

capital gain from the 28% group, then to

column (a) to report receivables and the

or the same terms apply to all loans

reduce net gain from the 25% group, and

related allowance for doubtful accounts or

made.

finally to reduce net gain from any Other

depreciable assets and accumulated

Salary advances and other advances

20% gain in the 20% group and then any

depreciation. Enter the net amounts in

for personal use and benefit, and

qualified 5-year gain in the 20% group.

column (b).

receivables subject to special terms or

arising from transactions not functionally

Ordering Rules

Column (c)

related to the trust’s charitable purposes

The following rules apply to undistributed

In computing the net fair market value

must be reported as separate loans for

long-term capital gains on assets held

(FMV) of the unitrust’s assets, take into

each officer, director, etc.

more than 1 year:

account all assets and liabilities without

2. Receivables that are subject to the

regard to whether particular items are

1. Undistributed pre-1997 long-term

same terms and conditions (including

taken into account in determining the

capital gains are included in the 20%

credit limits and rate of interest) as

income of the trust. The net FMV of the

group.

receivables due from the general public

trust’s assets may be determined on any

2. Undistributed long-term capital

and that arose in connection with an

one date during the taxable year of the

gains and losses realized by the trust in

activity functionally related to the trust’s

trust, or by taking the average of

1997, other than on collectibles, are

charitable purposes may be reported as a

valuations made on more than one date

included in the 20% group.

single total for all the officers, directors,

during the tax year of the trust, so long as

3. Undistributed, unrecaptured section

etc. Travel advances made in connection

the same valuation date or dates and

1250 gain on sales, exchanges, etc., after

with official business of the trust may also

valuation methods are used each year.

May 6, 1997, is included in the 25%

be reported as a single total.

See Regulations section 1.664-3.

group.

For each outstanding loan or other

If, in any tax year of the trust, the trust

Line 25—Cash—Non-Interest-

receivable that must be reported

has both undistributed short-term capital

Bearing

separately, the attached schedule should

gain and undistributed long-term capital

show the following information. Use

Enter the amount of cash on deposit in

gain, the short-term capital gain is

columnar format:

checking accounts, deposits in transit,

•

deemed distributed before any long-term

Borrower’s name and title.

change funds, petty cash funds, or any

•

capital gain. Any long-term capital gains

Original amount.

other non-interest-bearing account. Do

•

are deemed to be distributed in the

Balance due.

not include advances to employees or

•

following order:

Date of note.

officers or refundable deposits paid to

•

Maturity date.

1. The 28% group is deemed

suppliers or others.

•

Repayment terms.

distributed prior to any other group.

•

Line 26—Savings and

Interest rate.

2. The 25% group is deemed

•

Security provided by the borrower.

distributed prior to the 20% group.

Temporary Cash Investments

•

Purpose of the loan.

3. The Other 20% gain within the 20%

•

Enter the total of cash in savings or other

Description and FMV of the

group is deemed distributed next.

interest-bearing accounts and temporary

consideration furnished by the lender.

4. The qualified 5-year gain within the

cash investments, such as money market

The above detail is not required for

20% group is deemed distributed last of

funds, commercial paper, certificates of

receivables or travel advances that may

any group.

deposit, and U.S. Treasury bills or other

be reported as a single total (see

governmental obligations that mature in

instruction 2 above). However, report and

Carryover Rules

less than 1 year.

identify those totals separately in the

1. If the trust has capital losses in

attachment.

Line 27—Accounts Receivable

excess of capital gains for any tax year:

Line 29—Other Notes and

Enter the total accounts receivable

a. The excess of the net short-term

(reduced by the corresponding allowance

Loans Receivable

capital loss over the net long-term capital

for doubtful accounts) that arose from the

gain for that year is a short-term capital

Enter the combined total of notes

sale of goods and/or the performance of

loss carryover to the next tax year.

receivable and net loans receivable.

services. Claims against vendors or

b. The excess of the net long-term

Notes receivable. Enter the amount of

refundable deposits with suppliers or

capital loss over the net short-term capital

all notes receivable not listed on line 28

others may be reported here if not

gain for that year is a long-term capital

and not acquired as investments. Attach a

significant in amount. (Otherwise, report

loss carryover to the next tax year.

schedule similar to that called for in the

them on line 36, Other Assets.) Any

2. If the trust has capital gains in

line 28 instructions. The schedule should

receivables due from officers, directors,

excess of capital losses for any tax year:

also identify the relationship of the

trustees, foundation managers, or other

a. The excess of the net short-term

borrower to any officer, director, trustee,

disqualified persons must be reported on

capital gain over the net long-term capital

or other disqualified person.

line 28. Receivables (including loans and

loss for that year is, to the extent not

advances) due from other employees

For a note receivable from any section

deemed distributed, a short-term capital

should be reported on line 36.

501(c)(3) organization, list only the name

gain carryover to the next tax year.

of the borrower and the balance due on

b. The excess of the net long-term

Line 28—Receivables Due

the required schedule.

capital gain over the net short-term capital

From Officers, Directors,

Loans receivable. Enter the gross

loss for that year is, to the extent not

Trustees, and Other

amount of loans receivable, less the

deemed distributed, a long-term capital

Disqualified Persons

allowance for doubtful accounts, arising

gain carryover to the next tax year.

Enter here (and in an attached schedule

from the normal activities of the trust. An

described below) all receivables due from

itemized list of these loans is not required,

Part IV—Balance Sheet

officers, directors, trustees, and other

but attach a schedule indicating the total

Complete the balance sheet using the

disqualified persons and all secured and

amount of each type of loan outstanding.

accounting method the trust uses in

unsecured loans (including advances) to

Report loans to officers, directors,

keeping its books and records. All filers

such persons.

trustees, or other disqualified persons on

-5-

Instructions For Form 5227 Page 5

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