Looking for a Form 4720 Templates? Download it for free!

A private foundation that received an

readjustments, distributions, or

in column (a) the excess of the

unusually large gift or bequest of

redemptions.

substituted combined voting level over

business holdings after 1969, and that

the disqualified person voting level.

See Regulations section 53.4943-7

has made a diligent effort to dispose of

Enter in column (b) the excess of the

for special rules for readjustments

excess business holdings, may apply

substituted combined value level over

involving grandfathered holdings.

for an additional 5-year period to

the disqualified person value level.

Exceptions from self-dealing taxes

reduce its holdings to permissible levels

If the foundation is using the rules or

on certain dispositions of excess

if certain conditions are met. See

principles for determining permitted

business holdings. Section

section 4943(c)(7).

holdings under section 4943(c)(2), refer

101(I)(2)(B) of the Tax Reform Act of

General rules on the permitted

to that section to determine which

1969 provides for a limited exception

holdings of donor advised funds and

entries to record in column (a). Enter in

from self-dealing taxes for private

certain supporting organizations in a

column (a) the percentage, using the

foundations that dispose of certain

business enterprise. Rules similar to

general rule (section 4943(c)(2)(A)) or

excess business holdings to

the 35% rule (see section

those described above for interests

disqualified persons, as long as the

held by private foundations on May 26,

4943(c)(2)(B)), if applicable, of

sales price equals or is more than fair

1969, will be applied to determine if

permitted holdings the foundation may

market value.

donor advised funds or certain

have in the enterprise’s voting stock. If

The excess business holdings

supporting organizations with interests

the foundation determines the permitted

involved are interests that are subject

as of August 17, 2006, have any

holdings under section 4943(c)(2)(B),

to the section 4941 transitional rules for

excess business holdings. However,

attach a statement showing effective

May 26, 1969, holdings. These

control by a third party.

the date of August 17, 2006, will be

interests would also be subject to the

substituted for May 26, 1969.

Line 3. Enter the value of any stock,

excess business holdings tax if they

interest, etc., in the business enterprise

Donor advised fund. In general, a

were not reduced by the required

that the foundation is required to

donor advised fund is a fund or account

amount.

dispose of so the foundation’s holdings

separately identified by reference to

Specific Instructions

in the enterprise are permitted. See

contributions of a donor or donors that

section 4943 and related regulations.

is owned and controlled by a

Complete columns (a) and (b) of

sponsoring organization and for which

Schedule C if sections 4943(c)(4),

A private foundation using the

the donor has or expects to have

4943(c)(3) (using the principles of

section 4943(c)(4) rules, or a donor

advisory privileges concerning the

4943(c)(4)), or 4943(c)(5) apply.

advised fund or supporting organization

distribution or investment of the funds.

Complete column (a) and column (c)

using rules similar to that, has excess

See Schedule K for further details.

(if applicable) if sections 4943(c)(2) or

holdings if line 1 is more than line 2 in

4943(c)(3) (using the principles of

either column (a) or column (b). Do not

Sponsoring organization. A

4943(c)(2)) apply.

include in column (b) the value of any

sponsoring organization is any

voting stock included in column (a).

section170(c) organization other than

Complete Schedule C for that day

governmental entities (described in

during the tax year when the

A private foundation using the

section 170(c)(1) and (2)(A)) that is not

foundation’s excess holdings in the

section 4943(c)(2) rules has excess

a private foundation as defined in

enterprise were largest.

holdings if line 1 is more than line 2 in

section 509(a)(3) that maintains one or

column (a) or if the private foundation

Line 1. Enter in column (a) the

more donor advised funds.

holds nonvoting stock and all

percentage of voting stock the

disqualified persons together own more

Supporting organizations. Only

foundation holds in the business

than 20% (or 35%, if applicable) of the

certain supporting organizations are

enterprise.

enterprise’s voting stock, interest, etc.

subject to the excess business holdings

If the foundation is using the rules or

In the latter case, enter in column (c)

tax under section 4943. These include

principles for determining present

the value of all nonvoting stock the

(1) Type III supporting organizations

holdings under section 4943(c)(4)(A) or

foundation holds.

that are not functionally integrated and

(D) (or rules similar to that for donor

(2) Type II supporting organizations that

advised funds and certain supporting

Line 4. Enter the value of excess

accept any gift or contribution from a

organizations), enter in column (b) the

holdings disposed of under the 90-day

person who by himself or in connection

percentage of value the foundation

rule in Regulations section

with a related party controls the

53.4943-2(a)(1)(ii). If other conditions

holds in all outstanding shares of all

supported organization that the Type II

preclude imposition of tax on excess

classes of stock.

supporting organization supports. (See

business holdings, include the value of

Do not include in either column (a) or

the 2008 Instructions for Schedule A

the nontaxable amount on this line and

(b) stock treated as held by disqualified

(Form 990 or 990-EZ), Part I, question

attach an explanation.

persons:

11, for help in determining the type of

•

Under section 4943(c)(6) or

your supporting organization.)

Regulations sections 53.4943-6 and

Schedule D—Initial

Readjustments, distributions, or

53.4943-10(d), or

•

changes in relative value of different

During the first phase if the first

Taxes on Investments

classes of stock. See Regulations

phase is still in effect (see Regulations

section 53.4943-4(d)(10) for special

That Jeopardize

sections 53.4943-4(a), (b), and (c)).

rules whereby increases in the

Line 2. If the foundation is using the

Charitable Purpose

percentage of value of holdings in a

rules or principles for determining

corporation that result solely from

present holdings under section

(Section 4944)

changes in the relative values of

4943(c)(4) (or rules similar to that for

different classes of stock will not result

donor advised funds and certain

General Instructions

in excess business holdings.

supporting organizations), refer to that

See Regulations section

section and Regulations section

Requirement. Complete Schedule D if

53.4943-6(d) for rules on treatment of

53.4943-4(d) to determine which entries

you answered “Yes” to Form 990-PF,

increases in holdings due to

to record in columns (a) and (b). Enter

Part VII-B, question 4a or b, or Form

-9-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2009 Page 9

Related Articles

Related forms

Related Categories