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

If an entity has an established

2. the sponsoring organization

Tax on sponsoring organization. A

method of accounting other than the

maintaining the donor advised fund

tax of 20% of the amount of each

cash method, the entity may use the

does not exercise expenditure

taxable distribution is imposed on the

cash method to determine the amount

responsibility with respect to such

sponsoring organization.

of the net income and proceeds

distribution in accordance with section

Tax on fund manager. If a tax is

attributable to a prohibited tax shelter

4945(h).

imposed on a taxable distribution of the

transaction.

sponsoring organization, a tax of 5% of

However, a taxable distribution does

the distribution will be imposed on any

Specific Instructions

not include a distribution from a donor

fund manager who agreed to the

advised fund to:

Part I. Complete this part for each

distribution knowing that it was a

transaction if during the tax year, the

taxable distribution. Any fund manager

1. any organization described in

entity received proceeds from or has

who took part in the distribution and is

section 170(b)(1)(A) (other than a

net income attributable to a PTST.

liable for the tax must pay the tax. The

disqualified supporting organization),

maximum amount of tax on all fund

Figure the tax for each transaction

2. the sponsoring organization of

managers for any one taxable

as follows:

such donor advised fund, or

•

distribution is $10,000. If more than one

If column (e) was answered “Yes,”

3. any other donor advised fund.

fund manager is liable for tax on a

then enter the larger of the column (f)

taxable distribution, all such managers

or column (g) amount in column (h).

Sponsoring organization. A

•

are jointly and severally liable for the

If column e was answered “No,” then

sponsoring organization is a section

tax.

multiply the larger of the amount in

170(c) organization that is not a

column (f) or column (g) by 35% (.35)

government organization (as referred to

Specific Instructions

and enter the result in column (h).

in section 170(c)(1) and (2)(A)) or a

private foundation and maintains one or

After the tax has been figured for all

Part I. Complete this part for all

more donor advised funds.

PTSTs entered on Schedule J, then

taxable distributions.

total column (h) and enter the amount

Part II. Enter in column (a) the names

Donor advised fund. A donor

on the Total line and on line 9 of Part I,

of all fund managers who agreed to

advised fund is a fund or account:

page 1.

make the taxable distribution. If more

1. Which is separately identified by

Part II. Enter in column (a) the names

than one fund manager is listed in

reference to contributions of a donor or

of all entity managers who approved

column (a) for one distribution, each is

donors,

the entity as (or otherwise caused the

individually liable for the entire tax in

2. Which is owned and controlled by

entity to be) a party to a PTST at any

connection with that distribution.

a sponsoring organization, and

time during the tax year and who knew

However, the fund managers who are

3. For which the donor (or any

or had reason to know that the

liable for the tax may prorate the

person appointed or designated by the

transaction is a PTST.

payment among themselves. Enter in

donor) has or expects to have advisory

column (c) the tax each manager will

Carry the total amount in column (d)

privileges concerning the distribution or

pay for each distribution for which such

for each manager to page 1, Part II-A,

investment of the funds held in the

manager owes a tax.

column (i).

donor advised funds or accounts

Carry the total amount in column (d)

because of the donor’s status as a

for each fund manager to page 1, Part

donor.

Schedule K—Taxes on

II-A, column (j).

Taxable Distributions of

Exception. A donor advised fund

does not include:

Sponsoring

Schedule L—Taxes on

1. A fund or account that makes

distributions only to a single identified

Organizations

Prohibited Benefits

organization or governmental entity, or

Maintaining Donor

Distributed From Donor

2. Any fund or account for a person

described in 3 above that gives advice

Advised Funds (Section

about which individuals receive grants

4966)

for travel, study, or similar purposes, if;

4967)

a. The person’s advisory privileges

General Instructions

are performed exclusively by such

General Instructions

person in their capacity as a committee

Requirement. Complete Schedule K if

Requirement. All organizations that

member of which all the committee

you answered “Yes” to question 4b in

answered “Yes” in Part III of Schedule

members are appointed by the

Part III of Schedule A (Form 990 or

A (Form 990 or 990-EZ), question 4c,

sponsoring organization.

990-EZ), or if you are a fund manager

must complete Schedule L. Report

b. No combination of persons with

of a sponsoring organization who

each taxable distribution separately.

advisory privileges, described in 3

agreed to the making of a taxable

Complete Parts I, II, and III of Schedule

above, or persons related to those in 3

distribution knowing that it was a

L only in connection with distributions

above, directly or indirectly control the

taxable distribution. Report each

made by a sponsoring organization

committee, or

taxable distribution separately. These

from a donor advised fund which results

c. All grants from the fund or

terms are discussed below.

in a prohibited benefit. (See instructions

account are awarded on an objective

to Schedule K for definitions of the

Taxable distribution. A taxable

and nondiscriminatory basis according

terms sponsoring organization and

distribution is any distribution from a

to a procedure approved in advance by

donor advised fund).

donor advised fund to any natural

the board of directors of the sponsoring

person or to any other person if:

organization. The procedure must be

Prohibited benefit. If any donor,

1. the distribution is for any purpose

designed to ensure that all grants meet

donor advisor, or related party advises

other than one specified in section

the requirements of section 4945(g)(1),

the sponsoring organization about

170(c)(2)(B), or

(2), or (3).

making a distribution which results in a

-14-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2007 Page 14

Related Articles

Related forms

Related Categories