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1. Any organization described in

liable for the tax must pay the tax. The

Specific Instructions

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

maximum amount of tax on all fund

Part I. Complete this part for each

disqualified supporting organization),

managers for any one taxable

transaction if during the tax year, the

2. The sponsoring organization of

distribution is $10,000. If more than one

entity received proceeds from or has

such donor advised fund, or

fund manager is liable for tax on a

net income attributable to a PTST.

3. Any other donor advised fund.

taxable distribution, all such managers

are jointly and severally liable for the

Figure the tax for each transaction

Sponsoring organization. A

tax.

as follows:

•

sponsoring organization is a section

If column (e) was answered “Yes,”

Specific Instructions

170(c) organization that is not a

then enter the larger of the column (f)

government organization (as referred to

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

Part I. Complete this part for all

•

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

If column (e) was answered “No,”

taxable distributions.

private foundation and maintains one or

then multiply the larger of the amount in

Part II. Enter in column (a) the names

more donor advised funds.

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

of all fund managers who agreed to

and enter the result in column (h).

Donor advised fund. A donor

make the taxable distribution. If more

advised fund is a fund or account:

After the tax has been figured for all

than one fund manager is listed in

PTSTs entered on Schedule J, then

1. Which is separately identified by

column (a) for one distribution, each is

total column (h) and enter the amount

reference to contributions of a donor or

individually liable for the entire tax in

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

donors,

connection with that distribution.

page 1.

2. Which is owned and controlled by

However, the fund managers who are

a sponsoring organization, and

liable for the tax may prorate the

Part II. Enter in column (a) the names

3. For which the donor (or any

payment among themselves. Enter in

of all entity managers who approved

person appointed or designated by the

column (c) the tax each manager will

the entity as (or otherwise caused the

donor) has or expects to have advisory

pay for each distribution for which such

entity to be) a party to a PTST at any

privileges concerning the distribution or

manager owes a tax.

time during the tax year and who knew

investment of the funds held in the

or had reason to know that the

Carry the total amount in column (d)

donor advised funds or accounts

transaction is a PTST.

for each fund manager to page 1, Part

because of the donor’s status as a

II-A, column (j).

Carry the total amount in column (d)

donor.

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

column (i).

Exception. A donor advised fund

Schedule L—Taxes on

does not include:

Prohibited Benefits

Schedule K—Taxes on

1. A fund or account that makes

distributions only to a single identified

Distributed From Donor

Taxable Distributions of

organization or governmental entity, or

Advised Funds (Section

2. Any fund or account for a person

Sponsoring

described in 3 above that gives advice

4967)

Organizations

about which individuals receive grants

for travel, study, or similar purposes, if;

Maintaining Donor

General Instructions

a. The person’s advisory privileges

are performed exclusively by such

Advised Funds (Section

Requirement. A sponsoring

person in their capacity as a committee

organization of donor advised funds

4966)

member of which all the committee

that answered “Yes” to Form 990, Part

members are appointed by the

V, line 9b, or that otherwise distributed

sponsoring organization.

General Instructions

prohibited benefits under section 4967,

b. No combination of persons with

must complete Schedule L. Report

Requirement. Complete Schedule K if

advisory privileges, described in 3

each taxable distribution separately.

you answered “Yes” to question 9a in

above, or persons related to those in 3

Complete Parts I, II, and III of Schedule

Part V of Form 990, or if you are a fund

above, directly or indirectly control the

L only in connection with distributions

manager of a sponsoring organization

committee, and

made by a sponsoring organization

who agreed to the making of a taxable

c. All grants from the fund or

from a donor advised fund which results

distribution knowing that it was a

account are awarded on an objective

in a prohibited benefit. (See instructions

taxable distribution. Report each

and nondiscriminatory basis according

to Schedule K for definitions of the

taxable distribution separately. These

to a procedure approved in advance by

terms sponsoring organization and

terms are discussed below.

the board of directors of the sponsoring

donor advised fund).

organization. The procedure must be

Taxable distribution. A taxable

Prohibited benefit. If any donor,

designed to ensure that all grants meet

distribution is any distribution from a

donor advisor, or related party advises

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

donor advised fund to any natural

the sponsoring organization about

(2), or (3).

person or to any other person if:

making a distribution which results in a

1. The distribution is for any

donor, donor advisor, or related party

Tax on sponsoring organization. A

purpose other than one specified in

receiving (either directly or indirectly) a

tax of 20% of the amount of each

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

more than incidental benefit, then such

taxable distribution is imposed on the

2. The sponsoring organization

benefit is a prohibited benefit.

sponsoring organization.

maintaining the donor advised fund

Donor advisor. A donor advisor is

Tax on fund manager. If a tax is

does not exercise expenditure

any person appointed or designated by

imposed on a taxable distribution of the

responsibility with respect to such

a donor to advise a sponsoring

sponsoring organization, a tax of 5% of

distribution in accordance with section

organization on the distribution or

the distribution will be imposed on any

4945(h).

investment of amounts held in the

fund manager who agreed to the

donor’s fund or account.

However, a taxable distribution does

distribution knowing that it was a

Related party. A related party

not include a distribution from a donor

taxable distribution. Any fund manager

advised fund to:

who took part in the distribution and is

includes any family member or 35%

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Form 4720 Instructions

Instructions For Form 4720 - Instructions For Return Of Certain Excise Taxes - Department Of The Treasury - 2010 Page 14

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