Looking for a Form 990 Schedule A Templates? Download it for free!

later. The valuation may be made by

If the valuation is made according to

market value of all assets (minus any

supporting organization employees or by

the above rules, the IRS will continue to

acquisition indebtedness). However, if

any other person even if that person is a

accept it during the 5-year period for which

under the facts and circumstances an

disqualified person. If the IRS accepts the

it applies even if the actual fair market

amount larger than the deemed amount is

valuation, it is valid only for the tax year for

value of the real estate changes during the

necessary to pay expenses and

which it is made. A new valuation is

period.

disbursements, then the organization may

required for the next tax year.

enter the larger amount instead (prorated

Line 1e. If the fair market value of any

in the case of a short tax year). If the

Valuation date. An asset required to be

securities, real estate holdings, or other

organization uses a larger amount, explain

valued annually may be valued as of any

assets reported on lines 1a and 1c reflects

why in Part VI.

day in the supporting organization's tax

a blockage discount, marketability

year, provided the organization values the

discount, or other reduction from full fair

Line 7. Enter the amount of recoveries (if

asset as of that date in all tax years.

market value because of the size of the

any) reportable in Section A, line 2.

However, a valuation of real estate

asset holding or any other factor, enter on

Section C. Distributable

determined on a 5-year basis by a

line 1e the aggregate amount of the

Amount

certified, independent appraisal

discounts claimed. Provide an explanation

(discussed later) may be made as of any

in Part VI that includes the following

The organization’s distributable amount

day in the first tax year of the organization

information for each asset or group of

for the current tax year is ordinarily the

to which the valuation applies.

assets involved:

greater of:

1. A description of the asset or asset

1. 85% of its adjusted net income for

Proration of value of assets held for

group (for example, 20,000 shares of XYZ,

part of year or in a short tax year. The

the prior tax year or

Inc., common stock),

value of an asset held less than a full tax

2. Its minimum asset amount for the

year is prorated by multiplying the value of

2. For securities, the percentage of

prior tax year,

the asset by a fraction, of which the

the total issued and outstanding securities

less income taxes imposed on the

numerator is the number of days the

of the same class that is represented by

organization during the prior tax year. See

organization held the asset during its tax

the organization's holding,

Regulations section

year, and the denominator is 365 (366 if

3. The fair market value of the asset

1.509(a)-4T(i)(5)(ii)(B).

the tax year includes February 29). If the

or asset group before any claimed

supporting organization has a short tax

blockage discount or other reduction,

First tax year. The distributable amount

year, the value of all assets is accordingly

for the first tax year that an organization is

4. The amount of the discount

prorated.

treated as a non-functionally integrated

claimed, and

Type III supporting organization is zero

5-year valuation for real estate. A

5. An explanation of the reason for the

rather than the amount as ordinarily

written, certified, and independent

discount.

determined. Such organization should

appraisal of the fair market value of any

check the box on line 7. However, an

real estate, including any improvements,

In the case of securities, there are

organization that was a non-functionally

may be determined on a 5-year basis by a

certain limitations on the size of the

integrated Type III supporting organization

qualified person. The qualified person may

reduction in value that can be claimed.

in its tax year beginning in 2012 and/or

not be a disqualified person with respect

The organization may reduce the fair

2013 (or was treated as meeting such

to the supporting organization or an

market value of securities only to the

requirements because it met the

employee of the supporting organization.

extent that it can establish that the

requirements of Regulations section

securities could only be liquidated in a

Commonly accepted valuation

1.509(a)-4(i)(3)(iii) as in effect prior to

reasonable period of time at a price less

methods must be used in making the real

December 28, 2012) cannot check the

than the fair market value because:

estate appraisal. A valuation based on

box on line 7. Also, the distributable

The securities are such a large block

acceptable methods of valuing property

amount as ordinarily determined applies to

that liquidation would depress the market,

for federal estate tax purposes will be

every organization for purposes of

The securities are in a closely held

considered acceptable.

determining whether the organization has

corporation, or

The real estate appraisal must include

an excess of distributions in its tax year

The sale would result in a forced or

a closing statement that, in the appraiser's

that can be carried over to future years.

distress sale.

opinion, the appraised assets were valued

Thus, the distributable amount as

Any reduction in value of securities may

according to valuation principles regularly

ordinarily determined is reported in

not exceed 10% of the fair market value

employed in making appraisals of such

Sections C and E.

(determined without regard to any

property, using all reasonable valuation

reduction in value).

Emergency temporary reduction. In

methods. The supporting organization

cases of disaster or emergency, the IRS

must keep a copy of the independent

Line 2. Enter the total acquisition

may provide for a temporary reduction in

appraisal for its records. If a valuation is

indebtedness that applies to assets

the distributable amount by publication in

reasonable, the organization may use it for

included on line 1 (prorated in the case of

the Internal Revenue Bulletin. In these

the tax year for which the valuation is

assets held for a portion of the year or in a

cases, the reduced amount should be

made and for each of the four following tax

short tax year). For details on acquisition

reported on line 6 and the reduction noted

years.

indebtedness, see section 514(c)(1).

in Part VI.

Any valuation of real estate by a

Line 4. Supporting organizations may

Section D. Distributions

certified independent appraisal may be

exclude from the minimum asset amount

replaced during the 5-year period by a

the reasonable cash balances necessary

Section D sets forth the supporting

subsequent 5-year certified independent

to cover current administrative expenses

organization’s distributions that count

appraisal or by an annual valuation as

and other normal and current

toward its distribution requirement, and

described earlier. The most recent

disbursements directly connected with the

determines whether the attentiveness

valuation should be used to compute the

charitable, educational, or other similar

requirement is met. The amount of a

organization's minimum asset amount.

activities. The amount of cash that may be

distribution made to a supported

excluded is generally 1.5% of the fair

organization is the amount of cash or fair

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

-15-

Instructions For Schedule A (Form 990 Or 990-Ez) - Public Charity Status And Public Support - 2014 Page 15

Related Articles

Related forms

Related Categories