Instructions For Form 990 And Form 990-Ez - 2003 Page 43
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For a complete liquidation of a corporation
candidate), amounts paid or incurred for the
Description and fair market value of the
or termination of a trust, check the “Final
following purposes are political expenditures:
consideration furnished by the lender (e.g.,
•
Return” box in the heading of the return. On
Remuneration to such individual (a
cash — $1,000; or 100 shares of XYZ, Inc.,
the attached statement, show whether the
candidate or prospective candidate) for
common stock — $9,000).
assets have been distributed and the date.
speeches or other services;
The above detail is not required for
•
Also attach a certified copy of any resolution,
Travel expenses of such individual;
receivables or travel advances that may be
•
or plan of liquidation or termination, etc., with
Expenses of conducting polls, surveys, or
reported as a single total. However, report and
all amendments or supplements not already
other studies, or preparing papers or other
identify those totals separately in the
filed. In addition, attach a schedule listing the
material for use by such individual;
attachment.
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names and addresses of all persons who
Expenses of advertising, publicity, and
Line 39 — Section 501(c)(7)
received the assets distributed in liquidation or
fundraising for such individual; and
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termination; the kinds of assets distributed to
Any other expense that has the primary
Organizations
each one; and each asset’s fair market value.
effect of promoting public recognition or
Gross receipts test. A section 501(c)(7)
otherwise primarily accruing to the benefit of
A “substantial contraction” is a partial
organization may receive up to 35% of its
such individual.
liquidation or other major disposition of assets
gross receipts, including investment income,
An organization is effectively controlled by a
except transfers for full consideration or
from sources outside its membership and
candidate or prospective candidate only if such
distributions from current income.
remain tax-exempt. Part of the 35% (up to 15%
individual has a continuing, substantial
of gross receipts) may be from public use of a
A “major disposition of assets” means any
involvement in the day-to-day operations or
social club’s facilities.
disposition for the tax year that is:
management of the organization.
1. At least 25% of the fair market value of
Gross receipts are the club’s income from
A determination of whether the primary
the organization’s net assets at the beginning
its usual activities and include:
purpose of an organization is promoting the
•
of the tax year; or
Charges,
candidacy or prospective candidacy of an
•
2. One of a series of related dispositions
Admissions,
individual for public office is made on the basis
begun in earlier years that add up to at least
•
Membership fees,
of all the facts and circumstances. See section
25% of the net assets the organization had at
•
Dues,
4955 and Regulations section 53.4955.
the beginning of the tax year when the first
•
Assessments, and
disposition in the series was made. Whether a
•
Use Form 4720 to figure and report these
Investment income (such as dividends,
major disposition of assets took place through
excise taxes.
rents, and similar receipts), and normal
a series of related dispositions depends on the
recurring capital gains on investments.
facts in each case.
Line 38 — Loans To or From Officers,
Directors, Trustees, and Key
See Regulations section 1.6043-3 for
Gross receipts do not include:
Employees
special rules and exceptions.
•
Capital contributions (see Regulations
Enter the end-of-year unpaid balance of
Line 37 — Expenditures for Political
section 1.118-1),
secured and unsecured loans made to or
•
Purposes
Initiation fees, or
received from officers, directors, trustees, and
•
Unusual amounts of income (such as the
Political organizations described in section
key employees. For example, if the
sale of the clubhouse).
527 are not required to answer this
organization borrowed $1,000 from one officer
question.
and loaned $500 to another, none of which has
Note: College fraternities or sororities or other
been repaid, report $1,500 on line 38b.
A political expenditure is one intended to
organizations that charge membership initiation
influence the selection, nomination, election, or
fees, but not annual dues, do include initiation
For loans outstanding at the end of the
appointment of anyone to a Federal, state, or
fees in their gross receipts.
year, attach a schedule as described below.
local public office, or office in a political
Report any interest expense on line 16 and any
If the 35% and 15% limits do not affect the
organization, or the election of Presidential or
interest income on line 2, 4, or 8, depending on
club’s exempt status, include the income
Vice Presidential electors. It does not matter
shown on line 39b on the club’s Form 990-T.
the nature of the receivable that created the
whether the attempt succeeds.
interest income.
Investment income earned by a section
An expenditure includes a payment,
When loans should be reported separately.
501(c)(7) organization is not tax-exempt
distribution, loan, advance, deposit, or gift of
In the required schedule, report each loan
income unless it is set aside for:
money, or anything of value. It also includes a
•
separately, even if more than one loan was
Religious,
contract, promise, or agreement to make an
•
made to or received from the same person, or
Charitable,
expenditure, whether or not legally
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the same terms apply to all loans made. Salary
Scientific,
enforceable.
•
advances and other advances for the personal
Literary,
All section 501(c) organizations. An exempt
•
use and benefit of the recipient, and
Educational purposes, or
organization that is not a political organization
•
receivables subject to special terms or arising
Prevention of cruelty to children or animals.
must file Form 1120-POL if it is treated as
from nontypical transactions, must be reported
If the combined amount of an
having political organization taxable income
as separate loans for each officer, director,
organization’s gross investment income and
under section 527(f)(1).
trustee, and key employee.
other unrelated business income exceeds
If a section 501(c) organization establishes
$1,000, it must report the investment income
When loans should be reported as a single
and maintains a section 527(f)(3) separate
and other unrelated business income on Form
total. In the required schedule, report
segregated fund, see the specific instructions
990-T.
receivables that are subject to the same terms
for line 81, Form 990.
and conditions (including credit limits and rate
Nondiscrimination policy. A section
Section 501(c)(3) organizations. A section
of interest) as receivables due from the general
501(c)(7) organization is not exempt from
501(c)(3) organization will lose its tax-exempt
public (occurring in the normal course of the
income tax if any written policy statement,
status if it engages in political activity.
organization’s operations) as a single total for
including the governing instrument and bylaws,
A section 501(c)(3) organization must pay a
all the officers, directors, trustees, and key
allows discrimination on the basis of race,
section 4955 excise tax for any amount paid or
employees. Report travel advances for official
color, or religion.
incurred on behalf of, or in opposition to, any
business of the organization as a single total.
candidate for public office. The organization
However, section 501(i) allows social clubs
Schedule format. For each outstanding loan
must pay an additional excise tax if it fails to
to retain their exemption under section
or other receivable that must be reported
correct the expenditure timely.
501(c)(7) even though their membership is
separately, the attached schedule should show
limited (in writing) to members of a particular
A manager of a section 501(c)(3)
the following information (preferably in
religion, if the social club:
organization who knowingly agrees to a
columnar form):
•
political expenditure must pay a section 4955
1. Is an auxiliary of a fraternal beneficiary
Borrower’s name and title,
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excise tax, unless the agreement is not willful
society exempt under section 501(c)(8), and
Original amount,
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and there is reasonable cause. A manager who
2. Limits its membership to the members
Balance due,
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does not agree to a correction of the political
of a particular religion; or the membership
Date of note,
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expenditure may have to pay an additional
limitation is:
Maturity date,
•
excise tax.
Repayment terms,
a. A good-faith attempt to further the
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When an organization promotes a
Interest rate,
teachings or principles of that religion, and
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b. Not intended to exclude individuals of a
candidate for public office (or is used or
Security provided by the borrower,
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controlled by a candidate or prospective
Purpose of the loan, and
particular race or color.
-43-
Specific Instructions for Form 990-EZ
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