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The adjusted basis for purposes of

the expenses must be apportioned

Dual-use property. When property is

determining loss is only the amount

between exempt and non-exempt use on

used for both charitable and other

described in item 2 above.

a reasonable basis.

purposes, the property is considered used

Do not deduct the following:

entirely for charitable purposes if 95% or

Line 2. Recoveries of prior-year

more of its total use is for that purpose. If

Net losses from a related business or

distributions include the following:

less than 95% of its total use is for

other charitable activity that produces

Repayments received of amounts

charitable purposes, a reasonable

gross income (no deduction in excess of

which were taken into account as a

allocation must be made between

the income from such activity).

distribution counting toward the

charitable and non-charitable use.

Charitable contributions under sections

distribution requirement in a prior tax year.

170 or 642.

Proceeds from the sale or disposition of

Excluded property. Certain assets (in

Net operating loss carrybacks and

property to the extent that acquisition of

addition to exempt-use assets) are

carryovers under section 172.

such property was taken into account as a

excluded entirely from the computation of

Dividends under section 241 and the

distribution counting toward the

the minimum asset amount. These include

sections following it (the

distribution requirement in a prior tax year.

charitable pledges and interests in an

dividends-received deductions for

An amount set aside and taken into

estate or trust (created and funded by

corporations).

account as a distribution counting toward

another person) prior to distribution to the

Net capital losses (short-term or

the distribution requirement in a prior tax

supporting organization.

long-term).

year to the extent it is determined that

Line 1a. Report on line 1a the average

Expenses and interest relating to

such amount is not necessary for the

monthly fair market value of securities

tax-exempt income under section 265 are

purposes for which it was set aside.

(such as common and preferred stock,

deductible.

Line 3. Report all other gross income.

bonds, and mutual fund shares) for which

Section B. Minimum Asset

Gross income includes all amounts

market quotations are readily available. A

derived from, or in connection with,

Amount

supporting organization may use any

property held by the organization (except

reasonable method to make this

The rules for determining the supporting

as specified otherwise in the instructions

determination if consistently used. For

organization’s minimum asset amount are

for Line 1). Include income from any

example, a value for a particular month

set forth in Regulations sections

related or unrelated trade or business.

might be determined by the closing price

1.509(a)-4T(i)(5)(ii)(C) and

Include income from tax-exempt bonds.

on the first or last trading day of the month

1.509(a)-4T(i)(8), using valuation methods

Do not include the following:

or an average of the closing prices on the

described in Regulations section

Gifts, grants, or contributions received.

first and last trading days of the month.

53.4942(a)-2(c).

Long-term capital gains or losses or net

Market quotations are considered readily

short-term capital losses.

Prior and current year columns. The

available if a security is any of the

organization’s minimum asset amount for

Income received from an estate, unless

following:

the prior tax year is used in determining

the estate is considered terminated due to

Listed on the New York or American

the organization’s distributable amount for

a prolonged period of administration.

Stock Exchange or any city or regional

the current tax year. The form also allows

Distributions from a trust created and

exchange in which quotations appear on a

for reporting the organization’s minimum

daily basis, including foreign securities

funded by another person.

asset amount for the current tax year for

listed on a recognized foreign national or

Certain amounts received by an

use in next year’s calculations; this

regional exchange,

organization in the redemption of stock in

reporting is optional but may be helpful if

a corporate disqualified person in order to

Regularly traded in the national or

the organization anticipates being required

avoid excess business holdings, which

regional over-the-counter market for which

to complete Part V next year.

published quotations are available, or

are treated as not essentially equivalent to

a dividend under section 302(b)(1) (and

Locally traded, for which quotations can

Definition. In figuring the minimum asset

thus as amounts received in exchange for

be readily obtained from established

amount, include only assets of the

the stock, giving rise to long-term capital

brokerage firms.

supporting organization that are not used

gain or loss) if the conditions of

If securities are held in trust for, or on

or held for use by the supporting

Regulations section 53.4942(a)-2(d)(2)(iv)

behalf of, a supporting organization by a

organization (or by a supported

are met.

bank or other financial institution that

organization, if the supporting organization

values those securities periodically using

provides the asset free of charge or at

Line 5. The deduction for depreciation

a computer pricing system, the

nominal rent) to carry out the exempt

under section 167 is allowed, but only on

organization may use that system to

purposes of the supported organization(s).

the basis of the straight-line method. The

determine the value of the securities. The

Assets held for the production of income

deduction for depletion under section 611

system must be acceptable to the IRS for

or for investment are not considered to be

is allowed, but without regard to section

federal estate tax purposes.

used directly for charitable functions even

613 (percentage depletion).

though the income from the assets is used

Line 1b. Compute cash balances on a

Lines 6 and 7. No deduction is allowed

for charitable functions. It is a factual

monthly basis by averaging the amount of

except ordinary and necessary expenses

question whether an asset is held for the

cash on hand on the first and last days of

paid or incurred for the production or

production of income or for investment

each month. Include all cash balances

collection of gross income, or for the

rather than used or held for use directly by

and amounts, even if they may be used for

management, conservation, or

the supporting organization or a supported

charitable purposes (see instructions for

maintenance of property held for the

organization for charitable purposes. For

Line 4, later) or set aside and taken as a

production of income. Such expenses

example, an office building used to

distribution (see instructions for Line 5,

may include operating expenses such as

provide offices for employees engaged in

Section D, later).

compensation of officers and employees,

managing endowment funds for the

interest, rent, and taxes. Where only a

Line 1c. The fair market value of assets

supporting organization or supported

portion of property produces income (or is

other than securities for which market

organization is not considered an asset

held for the production of income) and the

quotations are readily available is

used for charitable purposes.

remainder is used for charitable purposes,

determined annually except as described

Instructions for Schedule A (Form 990 or 990-EZ)

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Instructions For Schedule A (Form 990 Or 990-Ez) - Public Charity Status And Public Support - 2014 Page 14

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