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as of August 17, 2006, have any

to the section 4941 transitional rules for

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

excess business holdings. However,

May 26, 1969, holdings. These

attach a statement showing effective

the date of August 17, 2006, will be

interests would also be subject to the

control by a third party.

substituted for May 26, 1969.

excess business holdings tax if they

Line 3. Enter the value of any stock,

were not reduced by the required

interest, etc., in the business enterprise

Donor advised fund. In general, a

amount.

that the foundation is required to

donor advised fund is a fund or account

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

Complete columns (a) and (b) of

section 4943 and related regulations.

is owned and controlled by a

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

sponsoring organization and for which

A private foundation using the

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

the donor has or expects to have

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

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

advisory privileges concerning the

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

Line 4. Enter the value of excess

advised funds and certain supporting

accept any gift or contribution from a

holdings disposed of under the 90-day

organizations), enter in column (b) the

person who by himself or in connection

rule in Regulations section

percentage of value the foundation

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 2007 Instructions for Schedule A

the nontaxable amount on this line and

(b) stock treated as held by disqualified

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

attach an explanation.

persons:

13, 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

•

Taxes on Investments

During the first phase if the first

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

Charitable Purpose

Line 2. If the foundation is using the

percentage of value of holdings in a

rules or principles for determining

corporation that result solely from

(Section 4944)

present holdings under section

changes in the relative values of

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

different classes of stock will not result

General Instructions

donor advised funds and certain

in excess business holdings.

supporting organizations), refer to that

Requirement. Complete Schedule D if

See Regulations section

section and Regulations section

you answered “Yes” to Form 990-PF,

53.4943-6(d) for rules on treatment of

53.4943-4(d) to determine which entries

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

increases in holdings due to

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

5227, Part VI-B, question 78a or b.

readjustments, distributions, or

in column (a) the excess of the

Report each investment separately.

redemptions.

substituted combined voting level over

Paying tax and filing a Form 4720 are

See Regulations section 53.4943-7

the disqualified person voting level.

required for each year or part of a year

for special rules for readjustments

Enter in column (b) the excess of the

in the taxable period that applies to the

involving grandfathered holdings.

substituted combined value level over

investments that jeopardize the

Exceptions from self-dealing taxes

the disqualified person value level.

foundation’s charitable purpose.

on certain dispositions of excess

If the foundation is using the rules or

Generally, the taxable period begins

business holdings. Section

principles for determining permitted

with the date of the investment and

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

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

ends with the date corrective action is

1969 provides for a limited exception

to that section to determine which

completed, a notice of deficiency is

from self-dealing taxes for private

entries to record in column (a). Enter in

mailed, or the initial tax is assessed,

foundations that dispose of certain

column (a) the percentage, using the

whichever comes first. Therefore, in

excess business holdings to

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

addition to investments made in 2007,

disqualified persons, as long as the

the 35% rule (see section

include all investments subject to tax

sales price equals or is more than fair

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

that were made before 2007 if those

market value.

permitted holdings the foundation may

investments were not removed from

The excess business holdings

have in the enterprise’s voting stock. If

jeopardy before 2007 and the initial tax

involved are interests that are subject

the foundation determines the permitted

was not assessed before 2007.

-9-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2007 Page 9

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