Instructions For Form 990-Pf - Return Of Private Foundation Or Section 4947(A)(1) Nonexempt Charitable Trust Treated As A Private Foundation - Internal Revenue Service - 2010 Page 18
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32and continuously after that date until
reduced 1% tax under section 4940(e) on
Taxable foreign private foundations
disposition, or
net investment income rather than the 2%
that filed Form 1040NR, U.S. Nonresident
•
The basis of the property on the date of
tax on net investment income under
Alien Income Tax Return, or Form
disposition under normal basis rules
section 4940(a).
1120-F, U.S. Income Tax Return of a
(actual basis). See Code sections
Foreign Corporation, enter“N/A” in Part
Do not complete Part V if this is the
1011 – 1022.
VI.
organization’s first year. A private
Estimated tax. Domestic exempt and
The rules that generally apply to
foundation cannot qualify under section
taxable private foundations and section
property dispositions reported in this part
4940(e) for its first year of existence, nor
4947(a)(1) nonexempt charitable trusts
are:
can a former public charity qualify for the
•
may have to make estimated tax
Section 1011, adjusted basis for
first year it is treated as a private
payments for the excise tax based on
determining gain or loss;
foundation.
•
investment income. See General
Section 1012, basis of property-cost;
A separate computation must be made
•
Instruction O for more information.
Section 1014, basis of property
for each year in which the foundation
acquired from a decedent before 2010;
Tax Computation
wants to qualify for the reduced tax.
•
Section 1015, basis of property
Line 1, column (b). Enter the amount of
acquired by gifts and transfers in trust;
Line 1a only applies to domestic
•
Section 1016, adjustments to basis;
adjusted qualifying distributions made for
!
exempt operating foundations
and
each year shown. The amounts in column
described in section 4940(d)(2)
•
CAUTION
Section 1022, basis of property
(b) are taken from Part XII, line 6 of the
that have a ruling or determination letter
acquired from a decedent after 2009.
Form 990-PF for 2005 – 2009.
from the IRS establishing exempt
To figure a loss, basis on the date of
Line 1, column (c). Enter the net value
operating foundation status. If your
disposition is determined under normal
of noncharitable-use assets for each year.
organization does not have this letter,
basis rules.
The amounts in column (c) are taken from
skip line 1a.
Part X, line 5, for 2005 – 2009.
Losses. If the disposition of
Line 1a. A domestic exempt private
investment property results in a loss, that
foundation that qualifies as an exempt
Part VI. Excise Tax Based
loss may be subtracted from capital gains
operating foundation under section
realized from the disposition of property
4940(d)(2) is not liable for any tax on net
on Investment Income
during the same tax year but only to the
investment income on this return.
(Section 4940(a), 4940(b),
extent of the gains. If losses are more
If your organization qualifies, check the
than gains, the excess may not be
4940(e), or 4948)
box and enter the date of the ruling or
subtracted from gross investment income
determination letter on line 1a and enter
nor may the losses be carried back or
“N/A” on line 1. Leave the rest of Part Vl
General Rules
forward to other tax years.
blank. For the first year, the organization
Domestic exempt private foundations.
must attach a copy of the ruling or
Reporting Transactions in Part
These foundations are subject to a 2%
determination letter establishing exempt
IV
tax on net investment income under
operating foundation status. As long as
section 4940(a). However, certain exempt
Publicly traded securities. For sales of
the organization retains this status, write
operating foundations described in
publicly traded securities through a
the date of the ruling or determination
section 4940(d)(2) may not owe any tax,
broker, enter the description “publicly
letter in the space on line 1a. If the
and certain private foundations that meet
traded securities” on line 1, column (a).
organization no longer qualifies under
the requirements of section 4940(e) may
Leave columns (b), (c), and (d) blank.
section 4940(d)(2), leave the date line
qualify for a reduced tax of 1% (see the
Total the gross sales price, the cost or
blank and compute the section 4940 tax
Part V instructions).
other basis, and the expense of sale on
in the normal manner.
all such securities sold. Report these
Exception. The section 4940 tax
Qualification. To qualify as an
lump-sum figures in columns (e) through
does not apply to an organization making
exempt operating foundation for a tax
(l), as appropriate. You must maintain
an election under section 41(e)(6). Enter
year, an organization must meet the
detailed records of each transaction in
“N/A” in Part VI.
following requirements of section
your books and records.
4940(d)(2).
Domestic taxable private foundations
•
It is an operating foundation described
Publicly traded securities are securities
and section 4947(a)(1) nonexempt
in section 4942(j)(3).
that are listed and regularly traded on an
charitable trusts. These organizations
•
It has been publicly supported for at
over-the-counter market or an established
are subject to a modified 2% tax on net
least 10 tax years or was a private
exchange in which market quotations are
investment income under section 4940(b).
operating foundation on January 1, 1983,
published or otherwise readily available.
(See Part V and its instructions to find out
or for its last tax year ending before
Securities include:
if they meet the requirements of section
•
January 1, 1983.
Common and preferred stock,
4940(e) that allows them to use a
•
•
Its governing body, at all times during
Bonds (including governmental
modified 1% tax on net investment
the tax year, consists of individuals less
obligations), and
income.) However, they must first
•
than 25% of whom are disqualified
Mutual fund shares.
compute the tax under section 4940(a) as
individuals and is broadly representative
Other gains and losses. For sales of
if that tax applied to them.
of the general public.
anything other than publicly traded
•
Foreign organizations. Under section
It has no officer who was a disqualified
securities sold, each transaction must be
4948, exempt foreign private foundations
individual at any time during the tax year.
listed and reported separately, completing
are subject to a 4% tax on their gross
Line 1c. Exempt foreign organizations
all appropriate columns in Part IV.
investment income derived from U.S.
should not include net capital gain income
sources.
Part V. Qualification Under
when computing the excise tax due under
section 4948(a).
Under new section 871(m) added
Section 4940(e) for
!
by the Hiring Incentives to Restore
Line 2. Section 511 tax. Under section
Reduced Tax on Net
Employment Act (HIRE), a
4940(b), a domestic section 4947(a)(1)
CAUTION
“dividend equivalent” is treated as a
nonexempt charitable trust or taxable
Investment Income
dividend from U.S. sources for certain
private foundation must add to the tax
This part is used by domestic private
purposes, including U.S. withholding tax
figured under section 4940(a) (on line 1)
foundations (exempt and taxable) to
rules applicable to foreign organizations.
the tax which would have been imposed
determine whether they qualify for the
See section 871(m) for more information.
under section 511 for the tax year if it had
-18-
Form 990-PF Instructions
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