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that is a reportable transaction. See

distribution in accordance with section

taxable distribution is imposed on the

Regulations sections 1.6011-4(b)(3)

4945(h).

sponsoring organization.

and (4) for more information.

Tax on fund manager. If a tax is

However, a taxable distribution does

imposed on a taxable distribution of the

Specific Instructions

not include a distribution from a donor

sponsoring organization, a tax of 5% of

advised fund to:

Part I. Complete this part for each

the distribution will be imposed on any

1. any organization described in

transaction if during the tax year, the

fund manager who agreed to the

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

entity received proceeds from or has

distribution knowing that it was a

disqualified supporting organization),

net income attributable to a PTST.

taxable distribution. Any fund manager

2. the sponsoring organization of

who took part in the distribution and is

Figure the tax for each transaction

such donor advised fund, or (3) any

liable for the tax must pay the tax. The

as follows:

other donor advised fund.

•

maximum amount of tax on all fund

If column (e) was answered “Yes,”

The tax on taxable distributions

managers for any one taxable

then enter the larger of the column (f)

applies to distributions occurring in tax

distribution is $10,000. If more than one

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

•

years beginning after August 17, 2006.

fund manager is liable for tax on a

If column e was answered “No,” then

taxable distribution, all such managers

multiply the larger of the amount in

Sponsoring organization. A

are jointly and severally liable for the

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

sponsoring organization is a

tax.

and enter the result in column (h).

section170(c) organization that is not a

After the tax has been figured for all

government organization (as referred to

Specific Instructions

PTSTs entered on Schedule J, then

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

Part I. Complete this part for all taxable

total column (h) and enter the amount

private foundation and maintains one or

distributions.

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

more donor advised funds.

page 1.

Part II. Enter in column (a) the names

Donor advised fund. A donor advised

Part II. Enter in column (a) the names

of all fund managers who agreed to

fund is a fund or account:

of all entity managers who approved

make the taxable distribution. If more

1. Which is separately identified by

the entity as (or otherwise caused the

than one fund manager is listed in

reference to contributions of a donor or

entity to be) a party to a PTST at any

column (a) for one distribution, each is

donors,

time during the tax year and who knew

individually liable for the entire tax in

2. Which is owned and controlled by

or had reason to know that the

connection with that distribution.

a sponsoring organization, and

transaction is a PTST.

However, the fund managers who are

3. For which the donor (or any

liable for the tax may prorate the

Carry the total amount in column (d)

person appointed or designated by the

payment among themselves. Enter in

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

donor) has or expects to have advisory

column (c) the tax each manager will

column (i).

privileges concerning the distribution or

pay for each distribution for which such

investment of the funds held in the

manager owes a tax.

donor advised funds or accounts

Schedule K—Taxes on

because of the donor’s status as a

Carry the total amount in column (d)

donor.

for each fund manager to page 1, Part

Taxable Distributions of

II-A, column (j).

Exception. A donor advised fund

Sponsoring

does not include:

Organizations

1. A fund or account that makes

Schedule L—Taxes on

distributions only to a single identified

Maintaining Donor

Prohibited Benefits

organization or governmental entity, or

Advised Funds (Section

2. Any fund or account for a person

Distributed From Donor

described in 3 above that gives advice

4966)

about which individuals receive grants

Advised Funds (Section

for travel, study, or similar purposes, if;

4967)

General Instructions

a. The person’s advisory privileges

are performed exclusively by such

Requirement. Complete Schedule K if

General Instructions

person in their capacity as a committee

you answered “Yes” to question 4b in

member of which all the committee

Part III of Schedule A (Form 990 or

Requirement. All organizations that

members are appointed by the

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

answered “Yes” in Part III of Schedule

sponsoring organization.

of a sponsoring organization who

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

b. No combination of persons with

agreed to the making of a taxable

must complete Schedule L. Report

advisory privileges, described in 3

distribution knowing that it was a

each taxable distribution separately.

above, or persons related to those in 3

taxable distribution. Report each

Complete Parts I, II, and III of Schedule

above, directly or indirectly control the

taxable distribution separately. These

L only in connection with distributions

committee, or

terms are discussed below.

made by a sponsoring organization

c. All grants from the fund or

from a donor advised fund which results

Taxable distribution. A taxable

account are awarded on an objective

in a prohibited benefit. (See instructions

distribution is any distribution from a

and nondiscriminatory basis according

to Schedule K for definitions of the

donor advised fund to any natural

to a procedure approved in advance by

terms sponsoring organization and

person or to any other person if:

the board of directors of the sponsoring

donor advised fund).

1. the distribution is for any purpose

organization. The procedure must be

other than one specified in section

Prohibited benefit. If any donor, donor

designed to ensure that all grants meet

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

advisor, or related party advises the

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

2. the sponsoring organization

sponsoring organization about making

(2), or (3).

maintaining the donor advised fund

a distribution which results in a donor,

does not exercise expenditure

Tax on sponsoring organization. A

donor advisor, or related party receiving

responsibility with respect to such

tax of 20% of the amount of each

(either directly or indirectly) a more than

-14-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2006 Page 14

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