Form 990 Schedule A Instructions Page 17

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The sale would result in a forced or
non-functionally integrated Type III
organization(s) free of charge or for
distress sale.
supporting organization (including an
nominal rent. See Regulations section
Any reduction in value of securities may
organization that checked the box on
53.4942(a)-2(c)(3) for further discussion
not exceed 10% of the fair market value
line 7 for the current year). The
of exempt-use assets.
(determined without regard to any
distributable amount as ordinarily
Line 5. Report qualified amounts set
reduction in value).
determined is reported in Sections C
aside for a specific project that
and E.
Line 2. Enter the total acquisition
accomplishes the exempt purposes of a
indebtedness that applies to assets
Emergency temporary reduction. In
supported organization to which the
included on line 1 (prorated in the case
cases of disaster or emergency, the IRS
supporting organization is responsive. A
of assets held for a portion of the year or
may provide for a temporary reduction
qualified set-aside counts toward the
in a short tax year). For details on
in the distributable amount by
distribution requirement in the tax year
acquisition indebtedness, see section
publication in the Internal Revenue
set aside but not again when paid.
514(c)(1).
Bulletin. In these cases, the reduced
Approval required. For each
amount should be reported on line 6
Line 4. Supporting organizations may
set-aside, a supporting organization
and the reduction noted in Part VI.
exclude from the minimum asset
must obtain the written approval of both
Section D. Distributions
amount the reasonable cash balances
the pertinent supported organization(s)
necessary to cover current
and the IRS. The supporting
Section D sets forth the supporting
administrative expenses and other
organization must apply to the IRS for
organization’s distributions that count
normal and current disbursements
approval (using Form 8940) before the
toward its distribution requirement, and
directly connected with the charitable,
end of its tax year in which the amount
determines whether the attentiveness
educational, or other similar activities.
is set aside. Explain in Part VI whether
requirement is met. The amount of a
The amount of cash that may be
the organization has requested and
distribution made to a supported
excluded is generally 1.5% of the fair
obtained the necessary approvals for
organization is the amount of cash or
market value of all assets (minus any
the set-aside. See Regulations section
fair market value of property on the date
acquisition indebtedness). However, if
1.509(a)-4(i)(6)(v) for more information.
of distribution. The organization must
under the facts and circumstances an
use the cash method of accounting for
Line 6. Report any other distributions
amount larger than the deemed amount
this purpose. See Regulations section
not described above that the
is necessary to pay expenses and
1.509(a)-4(i)(6).
organization claims are for the use of its
disbursements, then the organization
supported organizations, and describe
Line 1. Report amounts paid to
may enter the larger amount instead
such distributions in detail in Part VI.
supported organizations to accomplish
(prorated in the case of a short tax
their exempt purposes. Distributions
Lines 8–10. Report on line 8 the
year). If the organization uses a larger
furthering the “exempt” purposes of
amount of distributions reported on
amount, explain why in Part VI.
supported organizations not described
line 1 to supported organizations that
Line 7. Enter the amount of recoveries
in section 501(c)(3) refer solely to
met the attentiveness and
(if any) reportable in Section A, line 2.
distributions for section 501(c)(3)
responsiveness tests discussed later,
Section C. Distributable
purposes.
and provide in Part VI the supplemental
information discussed later.
Amount
Line 2. Report amounts paid to perform
A Type III non-functionally integrated
any activity that directly furthers exempt
The organization’s distributable amount
supporting organization must distribute
purposes of supported organizations
for the current tax year is ordinarily the
at least one-third of its distributable
and that would otherwise normally be
greater of:
amount each tax year to one or more
engaged in by the supported
1. 85% of its adjusted net income
supported organizations that are
organizations, but only to the extent that
for the prior tax year or
“attentive” to its operations and to which
expenses from the activity exceed
2. Its minimum asset amount for the
the supporting organization is
income from the activity. See the
prior tax year,
“responsive” (as described later); thus,
Schedule A, Part IV, Section E, line 2
the line 10 amount must be at least
instructions on “direct furtherance”
less income taxes imposed on the
0.333. Carryovers of excess
activities.
organization during the prior tax year.
distributions from prior years don't count
See Regulations section
Line 3. Report reasonable and
toward the attentiveness requirement.
1.509(a)-4(i)(5)(ii)(B).
necessary administrative expenses paid
If the line 10 amount is less than
to accomplish exempt purposes of
First tax year. The distributable
one-third (that is, the amount of
supported organizations. Don't include
amount for the first tax year that an
distributions to supported organizations
expenses incurred in the production of
organization is treated as a
that met both the attentiveness test and
investment income.
non-functionally integrated Type III
responsiveness test is less than
supporting organization is zero rather
Line 4. Report amounts paid to acquire
one-third of the distributable amount),
than the amount as ordinarily
exempt-use assets. Such assets must
then the organization doesn't qualify as
determined. Such an organization
be used (or held for use) to carry out the
a Type III non-functionally integrated
should check the box on line 7. For
exempt purposes of the supported
supporting organization for the tax year.
purposes of determining whether the
organizations. The assets may be used
See Regulations sections
organization has an excess of
or held by either the supporting
1.509(a)-4(i)(5)(i) and (iii). If the
distributions in its tax year that can be
organization or one or more supported
organization doesn't otherwise qualify
carried over to future years, the
organizations; if the latter, the
as a public charity, then the organization
distributable amount as ordinarily
supporting organization must make the
is a private foundation and must file
determined applies to every
asset available to the supported
Form 990-PF for the tax year.
Instructions for Schedule A (Form 990 or 990-EZ)
-17-

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