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 - 2004 Page 18
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The rules that generally apply to
the requirements of section 4940(e) may
It is an operating foundation described
property dispositions reported in this part
qualify for a reduced tax of 1% (see the
in section 4942(j)(3).
•
are:
Part V instructions).
It has been publicly supported for at
•
Section 1011, Adjusted basis for
least 10 tax years or was a private
Exception. The section 4940 tax does
determining gain or loss;
operating foundation on January 1, 1983,
not apply to an organization making an
•
Section 1012, Basis of property — cost;
or for its last tax year ending before
election under section 41(e)(6). Enter
•
Section 1014, Basis of property
January 1, 1983.
“N/A” in Part VI.
•
acquired from a decedent;
Its governing body, at all times during
Domestic taxable private foundations
•
Section 1015, Basis of property
the tax year, consists of individuals less
and section 4947(a)(1) nonexempt
acquired by gifts and transfers in trust;
than 25% of whom are disqualified
charitable trusts. These organizations
and
individuals, and is broadly representative
are subject to a modified 2% tax on net
•
Section 1016, Adjustments to basis.
of the general public, and
investment income under section 4940(b).
•
To figure a loss, basis on the date of
It has no officer who was a disqualified
(See Part V and its instructions to find out
disposition is determined under normal
individual at any time during the tax year.
if they meet the requirements of section
basis rules.
4940(e) that allows them to use a
Line 2 — Section 511 tax. Under section
The completed Form 990-PF in
modified 1% tax on net investment
4940(b), a domestic section 4947(a)(1)
Package 990-PF, Returns for Private
income.) However, they must first
nonexempt charitable trust or taxable
Foundations or Section 4947(a)(1)
compute the tax under section 4940(a) as
private foundation must add to the tax
Nonexempt Charitable Trusts Treated as
if that tax applied to them.
figured under section 4940(a) (on line 1)
Private Foundations, contains an example
Foreign organizations. Under section
the tax which would have been imposed
of a sale of investment property in which
4948, exempt foreign private foundations
under section 511 for the tax year if it had
the gain was computed using the donor’s
are subject to a 4% tax on their gross
been exempt from tax under section
basis under the rules of section 1015(a).
investment income derived from U.S.
501(a). If the domestic section 4947(a)(1)
sources.
nonexempt charitable trust or taxable
Part V—Qualification
Taxable foreign private foundations
private foundation has unrelated business
Under Section 4940(e) for
taxable income that would have been
that filed Form 1040NR, U.S. Nonresident
Alien Income Tax Return, or Form
subject to the tax imposed by section 511,
Reduced Tax on Net
1120-F, U.S. Income Tax Return of a
the computation of tax must be shown in
Investment Income
an attachment. Form 990-T may be used
Foreign Corporation, enter “N/A” in Part
VI.
as the attachment. All other filers, enter
This part is used by domestic private
zero.
Estimated tax. Domestic exempt and
foundations (exempt and taxable) to
taxable private foundations and section
determine whether they qualify for the
Line 4 — Subtitle A tax. Domestic
4947(a)(1) nonexempt charitable trusts
reduced 1% tax under section 4940(e) on
section 4947(a)(1) nonexempt charitable
may have to make estimated tax
net investment income rather than the 2%
trusts and taxable private foundations,
payments for the excise tax based on
tax on net investment income under
enter the amount of subtitle A (income)
investment income. See General
section 4940(a).
tax for the year reported on Form 1041 or
Instruction O for more information.
Form 1120. All other filers, enter zero.
Do not complete Part V if this is the
Tax Computation
organization’s first year. A private
Line 5 — Tax based on investment
foundation cannot qualify under section
income. Subtract line 4 from line 3 and
4940(e) for its first year of existence, nor
Line 1a only applies to domestic
enter the difference (but not less than
!
can a former public charity qualify for the
exempt operating foundations that
zero) on line 5. Any overpayment entered
first year it is treated as a private
are described in section
CAUTION
on line 10 that is the result of a negative
foundation.
4940(d)(2) and that have a ruling letter
amount shown on line 5 will not be
from the IRS establishing exempt
A separate computation must be made
refunded. Unless the organization is a
operating foundation status. If your
for each year in which the foundation
domestic section 4947(a)(1) nonexempt
organization does not have this letter,
wants to qualify for the reduced tax.
charitable trust or taxable private
skip line 1a.
Line 1, column (b). Enter the amount of
foundation, the amount on line 5 is the
Line 1a. A domestic exempt private
adjusted qualifying distributions made for
same as on line 1.
foundation that qualifies as an exempt
each year shown. The amounts in column
Line 6a. Enter the amount of 2004
operating foundation under section
(b) are taken from Part XII, line 6 of the
estimated tax payments, and any 2003
4940(d)(2) is not liable for any tax on net
Form 990-PF for 1999 – 2003.
overpayment of taxes that the
investment income on this return.
Line 1, column (c). Enter the net value
organization specified on its 2003 return
If your organization qualifies, check the
of noncharitable-use assets for each year.
to be credited toward payment of 2004
The amounts in column (c) are taken from
box and enter the date of the ruling letter
estimated taxes.
on line 1a and enter “N/A” on line 1.
Part X, line 5, for 1999 – 2003.
Leave the rest of Part Vl blank. For the
Line 6a applies only to domestic
Part VI—Excise Tax Based
first year, the organization must attach a
!
organizations.
copy of the ruling letter establishing
on Investment Income
CAUTION
exempt operating foundation status. As
(Section 4940(a), 4940(b),
long as the organization retains this
Trust payments treated as
status, write the date of the ruling letter in
beneficiary payments. A trust may treat
4940(e), or 4948)
the space on line 1a. If the organization
any part of estimated taxes it paid as
no longer qualifies under section
taxes paid by the beneficiary. If the filing
General Rules
4940(d)(2), leave the date line blank and
organization was a beneficiary that
compute the section 4940 tax in the
Domestic exempt private foundations.
received the benefit of such a payment
normal manner.
These foundations are subject to a 2%
from a trust, include the amount on line
tax on net investment income under
Qualification. To qualify as an
6a of Part VI, and write, “Includes section
section 4940(a). However, certain exempt
exempt operating foundation for a tax
643(g) payment.” See section 643(g) for
operating foundations described in
year, an organization must meet the
more information about estimated tax
section 4940(d)(2) may not owe any tax,
following requirements of section
payments treated as paid by a
and certain private foundations that meet
4940(d)(2).
beneficiary.
-18-
Form 990-PF Instructions
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