Instructions For Form 990 And Form 990-Ez - 2004 Page 43
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46•
Line 36 — Liquidation, Dissolution,
does not agree to a correction of the political
Repayment terms,
•
expenditure may have to pay an additional
Interest rate,
Termination, or Substantial
•
excise tax.
Security provided by the borrower,
Contraction
•
Purpose of the loan, and
When an organization promotes a
If there was a liquidation, dissolution,
•
Description and fair market value of the
candidate for public office (or is used or
termination, or substantial contraction, attach a
consideration furnished by the lender (e.g.,
controlled by a candidate or prospective
statement explaining what took place.
cash — $1,000; or 100 shares of XYZ, Inc.,
candidate), amounts paid or incurred for the
For a complete liquidation of a corporation
common stock — $9,000).
following purposes are political expenditures:
or termination of a trust, check the “Final
•
Remuneration to such individual (a
The above detail is not required for
Return” box in the heading of the return. On
candidate or prospective candidate) for
receivables or travel advances that may be
the attached statement, show whether the
speeches or other services;
reported as a single total. However, report and
assets have been distributed and the date.
•
Travel expenses of such individual;
identify those totals separately in the
Also attach a certified copy of any resolution,
•
Expenses of conducting polls, surveys, or
attachment.
or plan of liquidation or termination, etc., with
other studies, or preparing papers or other
all amendments or supplements not already
Line 39 — Section 501(c)(7)
material for use by such individual;
filed. In addition, attach a schedule listing the
•
Organizations
Expenses of advertising, publicity, and
names and addresses of all persons who
fundraising for such individual; and
Gross receipts test. A section 501(c)(7)
received the assets distributed in liquidation or
•
Any other expense that has the primary
organization may receive up to 35% of its
termination; the kinds of assets distributed to
effect of promoting public recognition or
gross receipts, including investment income,
each one; and each asset’s fair market value.
otherwise primarily accruing to the benefit of
from sources outside its membership and
A “substantial contraction” is a partial
such individual.
remain tax-exempt. Part of the 35% (up to 15%
liquidation or other major disposition of assets
of gross receipts) may be from public use of a
An organization is effectively controlled by a
except transfers for full consideration or
social club’s facilities.
candidate or prospective candidate only if such
distributions from current income.
individual has a continuing, substantial
Gross receipts are the club’s income from
A “major disposition of assets” means any
involvement in the day-to-day operations or
its usual activities and include:
disposition for the tax year that is:
•
management of the organization.
Charges,
•
1. At least 25% of the fair market value of
Admissions,
A determination of whether the primary
•
the organization’s net assets at the beginning
purpose of an organization is promoting the
Membership fees,
•
of the tax year; or
candidacy or prospective candidacy of an
Dues,
•
2. One of a series of related dispositions
Assessments, and
individual for public office is made on the basis
•
begun in earlier years that add up to at least
of all the facts and circumstances. See section
Investment income (such as dividends,
25% of the net assets the organization had at
4955 and Regulations section 53.4955.
rents, and similar receipts), and normal
the beginning of the tax year when the first
recurring capital gains on investments.
Use Form 4720 to figure and report these
disposition in the series was made. Whether a
excise taxes.
major disposition of assets took place through
Gross receipts do not include:
Line 38 — Loans To or From Officers,
a series of related dispositions depends on the
•
Capital contributions (see Regulations
facts in each case.
Directors, Trustees, and Key
section 1.118-1),
Employees
•
See Regulations section 1.6043-3 for
Initiation fees, or
•
Enter the end-of-year unpaid balance of
special rules and exceptions.
Unusual amounts of income (such as the
secured and unsecured loans made to or
sale of the clubhouse).
Line 37 — Expenditures for Political
received from officers, directors, trustees, and
Purposes
College fraternities or sororities or other
key employees. For example, if the
!
organizations that charge membership
organization borrowed $1,000 from one officer
Political organizations described in section
initiation fees, but not annual dues, do
and loaned $500 to another, none of which has
527 are not required to answer this
CAUTION
include initiation fees in their gross receipts.
been repaid, report $1,500 on line 38b.
question.
For loans outstanding at the end of the
If the 35% and 15% limits do not affect the
A political expenditure is one intended to
club’s exempt status, include the income
year, attach a schedule as described below.
influence the selection, nomination, election, or
Report any interest expense on line 16 and any
shown on line 39b on the club’s Form 990-T.
appointment of anyone to a federal, state, or
interest income on line 2, 4, or 8, depending on
local public office, or office in a political
Investment income earned by a section
the nature of the receivable that created the
organization, or the election of Presidential or
501(c)(7) organization is not tax-exempt
interest income.
Vice Presidential electors. It does not matter
income unless it is set aside for:
•
whether the attempt succeeds.
When loans should be reported separately.
Religious,
•
In the required schedule, report each loan
Charitable,
An expenditure includes a payment,
•
separately, even if more than one loan was
Scientific,
distribution, loan, advance, deposit, or gift of
•
made to or received from the same person, or
Literary,
money, or anything of value. It also includes a
•
the same terms apply to all loans made. Salary
Educational purposes, or
contract, promise, or agreement to make an
•
advances and other advances for the personal
Prevention of cruelty to children or animals.
expenditure, whether or not legally
use and benefit of the recipient, and
enforceable.
If the combined amount of an
receivables subject to special terms or arising
organization’s gross investment income and
All section 501(c) organizations. An exempt
from nontypical transactions, must be reported
other unrelated business income exceeds
organization that is not a political organization
as separate loans for each officer, director,
must file Form 1120-POL if it is treated as
$1,000, it must report the investment income
trustee, and key employee.
and other unrelated business income on Form
having political organization taxable income
When loans should be reported as a single
990-T.
under section 527(f)(1).
total. In the required schedule, report
Nondiscrimination policy. A section
If a section 501(c) organization establishes
receivables that are subject to the same terms
501(c)(7) organization is not exempt from
and maintains a section 527(f)(3) separate
and conditions (including credit limits and rate
income tax if any written policy statement,
segregated fund, see the specific instructions
of interest) as receivables due from the general
including the governing instrument and bylaws,
for line 81, Form 990.
public (occurring in the normal course of the
allows discrimination on the basis of race,
Section 501(c)(3) organizations. A section
organization’s operations) as a single total for
color, or religion.
501(c)(3) organization will lose its tax-exempt
all the officers, directors, trustees, and key
status if it engages in political activity.
However, section 501(i) allows social clubs
employees. Report travel advances for official
to retain their exemption under section
A section 501(c)(3) organization must pay a
business of the organization as a single total.
501(c)(7) even though their membership is
section 4955 excise tax for any amount paid or
Schedule format. For each outstanding loan
limited (in writing) to members of a particular
incurred on behalf of, or in opposition to, any
or other receivable that must be reported
religion, if the social club:
candidate for public office. The organization
separately, the attached schedule should show
must pay an additional excise tax if it fails to
1. Is an auxiliary of a fraternal beneficiary
the following information (preferably in
correct the expenditure timely.
society exempt under section 501(c)(8), and
columnar form):
•
2. Limits its membership to the members
A manager of a section 501(c)(3)
Borrower’s name and title,
•
of a particular religion; or the membership
organization who knowingly agrees to a
Original amount,
•
limitation is:
political expenditure must pay a section 4955
Balance due,
•
excise tax, unless the agreement is not willful
Date of note,
a. A good-faith attempt to further the
•
and there is reasonable cause. A manager who
Maturity date,
teachings or principles of that religion, and
-43-
Specific Instructions for Form 990-EZ
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