Instructions For Form 990-Pf - Return Of Private Foundation Or Section 4947(A)(1) Nonexempt Charitable Trust Treated As A Private Foundation - 2017 Page 22
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38Part V. Qualification Under
or for its last tax year ending before
Foreign organizations. Under section
January 1, 1983.
Section 4940(e) for
4948, exempt foreign private foundations
Its governing body, at all times during
are subject to a 4% tax on their gross
Reduced Tax on Net
the tax year, consists of individuals, at
investment income derived from U.S.
Investment Income
least 75% of whom aren't disqualified
sources.
individuals (as defined in section 4940(d)
This part is used by domestic private
Under section 871(m) added by
(3)), and is broadly representative of the
foundations (exempt and taxable) to
the Hiring Incentives to Restore
!
general public.
determine whether they qualify for the
Employment Act (HIRE), a
It has no officer who was a disqualified
CAUTION
reduced 1% tax under section 4940(e) on
“dividend equivalent” is treated as a
individual at any time during the tax year.
net investment income rather than the 2%
dividend from U.S. sources for certain
Line 1c. Exempt foreign organizations
tax on net investment income under
purposes, including U.S. withholding tax
shouldn't include net capital gain income
section 4940(a).
rules applicable to foreign organizations.
when figuring the excise tax due under
See section 871(m) for more information.
Don't complete Part V if this is the
section 4948(a).
organization's first year. A private
Taxable foreign private foundations
Line 2. Section 511 tax. Under section
foundation can't qualify under section
that filed Form 1040NR, U.S. Nonresident
4940(b), a domestic section 4947(a)(1)
4940(e) for its first year of existence, nor
Alien Income Tax Return, or Form 1120-F,
nonexempt charitable trust or taxable
can a former public charity qualify for the
U.S. Income Tax Return of a Foreign
private foundation must add to the tax
first year it is treated as a private
Corporation, enter “N/A” in Part VI.
figured under section 4940(a) (on line 1)
foundation.
the tax which would have been imposed
Estimated tax. Domestic exempt and
under section 511 for the tax year if it had
A separate computation must be made
taxable private foundations and section
been exempt from tax under section
4947(a)(1) nonexempt charitable trusts
for each year in which the foundation
501(a). If the domestic section 4947(a)(1)
may have to make estimated tax
wants to qualify for the reduced tax.
nonexempt charitable trust or taxable
payments for the excise tax based on
Line 1, column (b). Enter the amount of
private foundation has unrelated business
investment income. See General
adjusted qualifying distributions made for
taxable income that would have been
Instruction O, earlier, for more information.
each year shown. The amounts in column
subject to the tax imposed by section 511,
Tax Computation
(b) are taken from Part XII, line 6, of the
the computation of tax must be shown in
Form 990-PF for 2012–2016.
an attachment. Form 990-T may be used
Line 1a only applies to domestic
as the attachment. All other filers, enter
Line 1, column (c). Enter the net value
exempt operating foundations
!
zero.
of noncharitable-use assets for each year.
described in section 4940(d)(2)
CAUTION
The amounts in column (c) are taken from
that have a ruling or determination letter
Line 4. Subtitle A (income) tax.
Part X, line 5, for 2012–2016.
Domestic section 4947(a)(1) nonexempt
from the IRS establishing exempt
charitable trusts and taxable private
operating foundation status. If your
Part VI. Excise Tax Based
foundations, enter the amount of subtitle A
organization doesn't have this letter, skip
on Investment Income
line 1a.
(income) tax for the year reported on Form
1041 or Form 1120. All other filers, enter
(Section 4940(a), 4940(b),
Line 1a. A domestic exempt private
zero.
4940(e), or 4948)
foundation that qualifies as an exempt
Line 5. Tax based on investment in-
operating foundation under section
come. Subtract line 4 from line 3 and
General Rules
4940(d)(2) isn't liable for any tax on net
enter the difference (but not less than
investment income on this return.
Domestic exempt private foundations.
zero) on line 5. Any overpayment entered
If your organization qualifies, check the
These foundations are subject to a 2% tax
on line 10 that is the result of a negative
box and enter the date of the ruling or
on net investment income under section
amount shown on line 5 won't be
determination letter on line 1a and enter
4940(a). However, certain exempt
refunded. Unless the organization is a
“N/A” on line 1. Leave the rest of Part Vl
operating foundations described in section
domestic section 4947(a)(1) nonexempt
blank. For the first year, the organization
4940(d)(2) may not owe any tax, and
charitable trust or taxable private
must attach a copy of the ruling or
certain private foundations that meet the
foundation, the amount on line 5 is the
determination letter establishing exempt
requirements of section 4940(e) may
same as on line 1.
operating foundation status. As long as
qualify for a reduced tax of 1% (see the
Line 6a. Enter the amount of 2017
the organization retains this status, enter
Part V instructions).
estimated tax payments and any 2016
the date of the ruling or determination
overpayment of taxes that the organization
Exception. The section 4940 tax
letter in the space on line 1a. If the
specified on its 2016 return to be credited
doesn't apply to an organization making
organization no longer qualifies under
toward payment of 2017 estimated taxes.
an election under section 41(e)(6)(D).
section 4940(d)(2), leave the date line
Enter “N/A” on line 1 in Part VI.
blank and figure the section 4940 tax in
Line 6a applies only to domestic
the normal manner.
foundations.
Domestic taxable private foundations
!
and section 4947(a)(1) nonexempt
Qualification. To qualify as an exempt
CAUTION
charitable trusts. These organizations
operating foundation for a tax year, an
Trust payments treated as
are subject to a modified 2% tax on net
organization must meet the following
beneficiary payments. A trust may treat
investment income under section 4940(b).
requirements of section 4940(d)(2).
any part of estimated taxes it paid as taxes
(See Part V and its instructions to find out
It is an operating foundation described
paid by the beneficiary. If the filing
if they meet the requirements of section
in section 4942(j)(3).
organization was a beneficiary that
4940(e) that allows them to use a modified
It has been publicly supported for at
received the benefit of such a payment
1% tax on net investment income.)
least 10 tax years or was a private
from a trust, include the amount on line 6a
However, they must first figure the tax
operating foundation on January 1, 1983,
of Part VI and write, “Includes section
under section 4940(a) as if that tax applied
643(g) payment.” See section 643(g) for
to them.
Form 990-PF Instructions
-22-
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