Instructions For Form 5227 (Page 10 of 15) in pdf

Line 77a. A private foundation is not treated as having

Part VII. Questionnaire for Charitable

excess business holdings in any enterprise if, together

Lead Trusts, Pooled Income Funds,

with related foundations, it owns 2% or less of the voting

stock and 2% or less in value of all outstanding shares of

and Charitable Remainder Trusts

all classes of stock. A similar exception applies to a

beneficial or profits interest in any business enterprise

Section A—All Trusts

that is a trust or partnership.

All trusts are required to answer questions 81 and 82.

Line 78. In general, an investment which jeopardizes

any of the charitable purposes of a trust is one in which a

Section B—Charitable Lead Trusts

foundation manager did not exercise ordinary business

care in making the investment to provide for the long-

Line 83. The information on this line is used to

and short-term financial needs of the trust in carrying out

determine whether sections 4943 and 4944 apply for

its charitable purposes.

2007.

For more information on investments which jeopardize

Line 85. Enter the amount for payments described in

charitable purposes, see Regulations section 53.4944-1.

sections 170(f)(2)(B), 2055(e)(2)(B), and 2522(c)(2)(B).

Line 79. Grants by a trust to a public charity are not

taxable expenditures if the grants are not earmarked for

Section C—Pooled Income Funds

use for any of the activities described on lines 79a(1)

Line 87. Upon termination of the income interest

through (5) and there is no oral or written agreement by

retained or created by a donor, the trustee is required to

which the trust may cause the public charity to engage in

sever from the fund an amount equal to the value of the

any such prohibited activity or to select the grant

remainder interest in the property upon which the income

recipient.

interest is based. The amount severed from the fund

Grants made to exempt operating foundations (as

must either be paid to, or retained for the use of, the

defined in section 4940(d)(2)) are not subject to the

designated public charity, as provided in the governing

expenditure responsibility provisions of section 4945. If

instrument. See Regulations section 1.642(c)-5(b)(8) for

the trust made grants to such organizations, you do not

valuation procedures.

have to file Form 4720 for those grants. See the section

4945 regulations for more information.

Section D—Charitable Remainder Trusts

Line 79b. If you answered “Yes” to any of the questions

Line 91. If a charitable remainder annuity trust or certain

in 79a, you should answer “Yes” to 79b unless all of the

charitable remainder unitrusts pay the annuity or unitrust

transactions engaged in were “excepted” transactions.

amount after the close of the tax year, and:

Excepted transactions are described in Regulations

1. The payment is made within a reasonable time

section 53.4945 or appear in Notices published in the

after the close of the tax year, and

Internal Revenue Bulletin, relating to disaster assistance.

2. To the extent the payment is characterized as

At the time this form went to print, there were no notices

corpus from a property distribution (other than cash), the

currently in effect relating to disaster assistance for

trustee treats any income generated by the distribution as

“excepted” transactions to taxable expenditures.

occurring on the last day of the tax year for which the

Line 80a. A personal benefit contract is, in general, any

annuity or unitrust amount is due, then, the annuity trust

life insurance, annuity, or endowment contract that

or certain unitrusts will not be deemed to have:

benefits, directly or indirectly, a transferor, a transferor’s

•

family member, or a transferor designee that is not an

Engaged in self-dealing (section 4941),

•

organization described in section 170(c).

Unrelated debt-financed income (section 514),

•

Line 80b. Enter the total of all premiums paid by the

Received an additional contribution (Regulations

split-interest trust on any personal benefit contract if the

section 1.664-2(b) and 1.664-3(b)), or

•

payment of premiums is in connection with a transfer for

Failed to function exclusively as a charitable remainder

which a deduction is not allowed under section

trust (Regulations section 1.664-1(a)(4)).

170(f)(10)(A). Also, if there is an understanding or

See Regulations sections 1.664-2(a)(1) and

expectation that any person will directly or indirectly pay

1.664-3(a)(1) for more information.

any premium on a personal benefit contract for the

transferor, include those premium payments in the

Under Regulations section 1.664-1(d)(5), a distribution

amount entered on this line. For more information, see

of property (other than cash) is treated as a sale by the

the Instructions for Form 8870.

trust.

Note. You must report income (gain) generated by the

property distribution (discussed above) on Part I of Form

5227 for the current tax year.

Trusts created before December 10, 1998. The

election in Regulations sections 1.664-2(a)(1)(i)(a)(2) and

1.664-3(a)(1)(i)(g)(2) does not apply to charitable

remainder annuity trusts and certain charitable remainder

unitrusts whose annuity or unitrust amount is 15% or

less.

Line 95. Check the “Yes” box and enter the name of the

foreign country if either (1) or (2) on page 11 applies.

-10-

Instructions For Form 5227 Page 10

Related Articles

Related forms

Related Categories