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Column (h). For each person listed in

question 75b or 75c in Part VI-B of

part of a year in the taxable period.

column (a), enter the sum of:

Form 5227, must complete Schedule A.

However, the total tax imposed for all

Complete Parts I, II, and III of Schedule

years in the taxable period is limited to

1. Taxes that person owes as a

A only in connection with acts that are

$20,000 for each act of self-dealing.

disqualified person, from Schedule I,

subject to the tax on self-dealing.

The tax is imposed on any foundation

Part II, column (d), and

manager who took part in the act

2. Tax on excess benefit

Paying the tax and filing a Form

knowing that it was self-dealing except

transactions in which the organization

4720 is required for each year or part of

those foundation managers whose

manager participated knowing that the

a year in the taxable period that applies

participation was not willful and was

transaction was improper, from

to the act of self-dealing. Generally, the

due to reasonable cause. Any

Schedule I, Part III, column (d).

taxable period begins with the date on

foundation manager who took part in

which the self-dealing occurs and ends

the act of self-dealing must pay the tax.

Column (i). Enter for each person

on the earliest of:

•

listed in column (a) the tax on the entity

The date a notice of deficiency is

Specific Instructions

manager who approved or otherwise

mailed under section 6212, in

caused the entity to be a party to a

Part I. List each act of self-dealing in

connection with the initial tax imposed

prohibited tax shelter transaction from

Part I. Enter in column (d) the number

on the self-dealer,

•

Schedule J, Part II, column (d).

designation from Form 990-PF, Part

The date the initial tax on the

VII-B, question 1a, or Form 5227, Part

self-dealer is assessed, or

Column (j). Enter for each person

•

VI-B, question 75a, that applies to the

The date correction of the act of

listed in column (a) the tax on taxable

act. For example, “1a(1)” or “1a(4).”

self-dealing is completed.

distributions from sponsoring

Part II. Enter in column (a) the names

organizations maintaining donor

Self-dealing. Self-dealing includes

of all disqualified persons who took part

advised funds from Schedule K, Part II,

any direct or indirect:

•

in the acts of self-dealing listed in Part

column (d) that the individual took part

Sale, exchange, or leasing of

I. If more than one disqualified person

in as a manager.

property between a private foundation

took part in an act of self-dealing, each

and a disqualified person (see

Column (k). For each person listed in

is individually liable for the entire tax in

definitions in Form 990-PF instructions),

column (a), enter the:

•

connection with the act. But the

Lending of money or other extension

1. Tax imposed on a donor, donor

disqualified persons who are liable for

of credit between a private foundation

advisor, or related person, from

the tax may prorate the payment

and a disqualified person,

Schedule L, Part II, column (d), and

•

among themselves. Enter in column (c)

Furnishing of goods, services, or

2. Tax on each fund manager who

the tax to be paid by each disqualified

facilities between a private foundation

agreed to the making of a distribution of

person.

and a disqualified person,

a prohibited benefit from Schedule L,

•

Payment of compensation (or

Carry the total amount in column (d)

Part III, column (d) that the individual

payment or reimbursement of

for each self-dealer to page 1, Part II-A,

took part in as a manager.

expenses) by a private foundation to a

column (c).

disqualified person,

Part III. Enter in column (a) the names

Liability for tax. A person’s liability

•

Transfer to, or use by or for the

of all foundation managers who took

for tax as a manager, self-dealer,

benefit of, a disqualified person of the

part in the acts of self-dealing listed in

disqualified person, donor, donor

income or assets of a private

Part I, and who knew that they were

advisor, or related person, under

foundation, and

acts of self-dealing (except for

sections 4912, 4941, 4944, 4945, 4955,

•

Agreement by a private foundation to

foundation managers whose

4958, 4966, and 4967 is joint and

make any payment of money or other

participation was not willful and was

several. Therefore, if more than one

property to a government official (go to

due to reasonable cause).

person owes tax on an act as a

manager, self-dealer, disqualified

If more than one foundation

article/0,,id=137679,00.html for more

person, donor, donor advisor, or related

manager took part in the act of

information), other than an agreement

person, they may apportion the tax

self-dealing, knowing that it was such

to employ or make a grant to that

among themselves. However, when all

an act, and participation was willful and

individual for any period after the end of

managers, self-dealers, donors, donor

not due to reasonable cause, each is

government service if that individual will

advisors, related persons, or

individually liable for the entire tax in

be ending government service within a

disqualified persons who are liable for

connection with the act. But the

90-day period.

tax on a particular transaction under

foundation managers liable for the tax

Exceptions to self-dealing. Go to

sections 4912, 4941, 4944, 4945,

may prorate the payment among

4955,4958, 4966, or 4967 pay less than

themselves. Enter in column (c) the tax

html for a description of acts that are

the total tax due on that transaction,

to be paid by each foundation manager.

not considered self-dealing.

then the IRS may charge the amount

Carry the total amount in column (d)

owed to one or more of them

Initial taxes on self-dealer. An initial

for each foundation manager to page 1,

regardless of the tax apportionment

tax of 10% of the amount involved is

Part II-A, column (c).

shown on this return.

charged for each act of self-dealing

between a disqualified person and a

private foundation for each year or part

Schedule B—Initial Tax

Schedule A—Initial

of a year in the taxable period. Any

on Undistributed Income

disqualified person (other than a

Taxes on Self-Dealing

foundation manager acting only as

(Section 4942)

such) who takes part in the act of

(Section 4941)

self-dealing must pay the tax.

Complete Schedule B if you answered

“Yes” to Form 990-PF, Part VII-B,

Initial taxes on foundation managers.

General Instructions

question 2b.

When a tax is imposed on a foundation

Requirement. All organizations that

manager for an act of self-dealing, the

An initial excise tax of 30% is

answered “Yes” to question 1b or 1c in

tax will be 5% of the amount involved in

imposed on a private foundation’s

Part VII-B of Form 990-PF, or “Yes” to

the act of self-dealing for each year or

undistributed income on the first day of

-6-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2007 Page 6

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