Form 990 Schedule A Instructions (Page 18 of 19) in pdf

Attentiveness test. A supported

instructions for Part IV, Section D, Lines

meets the requirements of Regulations

organization is “attentive” to the

2 and 3, with respect to the supported

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

operations of a supporting organization

organization.

prior to December 28, 2013. Under

if, during the tax year, at least one of the

transition rules, X is deemed to meet its

Supplemental information

following requirements is satisfied.

distribution requirement for 2014, but its

required. In Part VI, identify each of the

distributable amount is calculated in the

1. The supporting organization

supported organizations listed in Part I,

ordinary manner to determine its excess

distributes to the supported organization

Line 12g, column (i), that met both of the

distributions. For 2014, X had a

at least 10% of the supported

following conditions for the tax year.

distributable amount, as ordinarily

organization’s total support in its tax

1. The supporting organization was

determined, of $80,000 and

year ending before the beginning of the

responsive to the supported

distributions of $100,000. Accordingly,

supporting organization’s tax year. For

organization, and

X had excess distributions of $20,000.

example, if the supporting organization

For 2015, X had a distributable amount

2. The supported organization was

and the supported organization both

of $95,000 and distributions of $85,000.

attentive to the supporting organization.

use a calendar year, and the supported

X first applied its 2014 excess

With respect to each of the identified

organization has total support of $X in a

distributions carryover of $20,000 to the

supported organizations, set forth the

year, then the supporting organization’s

2015 distributable amount of $95,000.

facts that show how both the

support in the following year must be at

Then, X applied $75,000 of its 2015

attentiveness test and the

least 10% of $X. Where the supporting

distributions of $85,000 to the remaining

responsiveness test were met by the

organization supports a particular

2015 distributable amount. Accordingly,

supporting organization and the

department or school of a university,

X has excess distributions of $10,000

supported organization.

hospital, or church, the department’s or

from 2015 (2015 distributions of

school’s total support is considered

Section E. Distribution

$85,000 minus $75,000 applied to the

instead.

Allocations

2015 distributable amount), which it

2. The amount of support received

may carry over to 2016. For 2016, X has

Section E determines whether the

from the supporting organization is

a distributable amount of $100,000 and

distributable amount for the current tax

necessary to avoid the interruption of a

distributions of $150,000. X applies the

year (and any underdistribution for

particular function or activity of the

$10,000 excess distribution carryover

reasonable cause in a prior year) is

supported organization.

from 2015 to the 2016 distributable

satisfied through current-year

3. The amount of support received

amount. Then, X applies $90,000 of its

distributions and carryovers of

from the supporting organization is a

2016 distributions to the remaining 2016

prior-year excess distributions.

sufficient part of the supported

distributable amount. Section E will

Section E also determines carryovers of

organization’s total support to ensure

show $0 carryovers for 2014 and 2015

excess distributions to future years.

attentiveness, based on all pertinent

(because the excess carryovers for

Several lines in Section E aren't yet

facts, including the number of supported

each of those years were previously

applicable during the phase-in period of

organizations, the length and nature of

applied). In addition, Section E will show

the new regulations for Type III

the relationship between the supporting

excess distributions of $60,000 in 2016

non-functionally integrated supporting

organization and supported

(2016 distributions of $150,000 minus

organizations. Those lines are grayed

organization, and the purpose to which

$90,000 applied to the 2016

out.

the funds are put. The attentiveness of a

distributable amount), which it may carry

In applying distributions, there are

supported organization is normally

over in the next five tax years until

three basic steps.

influenced by the amounts received

applied.

from the supporting organization, but

1. First, apply distributions to

Example 2. Y is a Type III

evidence of actual attentiveness to the

eliminate any underdistribution for

supporting organization that for its tax

operations (including investments) of

reasonable cause in a prior tax year.

year including December 28, 2013,

the supporting organization is of almost

2. Second, apply distributions to

meets the requirements of Regulations

equal importance. Where the supporting

satisfy the distributable amount for the

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

organization supports a particular

current year.

prior to such date, but doesn't meet

department or school of a university,

such requirements in its following 2014

3. Third, carry over to future years

hospital, or church, the department’s or

tax year (because of underdistributions

any remaining excess distributions.

school’s total support is considered

for which the prior regulation didn't

instead of the supported organization’s

expressly provide a reasonable cause

Apply the oldest distributions first.

total support.

exception). Therefore, Y didn't benefit

Carryovers of excess distributions from

from the transition rule for its 2014 tax

Amounts received from a supporting

prior years are always applied in full

year. Y's distributable amount was

organization that are held in a donor

before current-year distributions (unlike

$120,000 for 2014. Y made distributions

advised fund of the supported

the rules for qualifying distributions by

of that amount and had no excess

organization are disregarded in

private foundations), and older

distributions to carry over to 2015. Y

determining attentiveness.

carryovers are applied before newer

calculated that its distributable amount

carryovers. Excess distributions of a

See the examples in Regulations

was $150,000 for 2015 and made

given year can't be carried over for more

section 1.509(a)-4(i)(5)(iii)(D).

distributions of exactly that amount in

than five years.

Responsiveness test. A supporting

2015. Early in its 2016 tax year, Y

Example 1. X is a Type III

organization is “responsive” to the

discovers that its distributable amount

non-functionally integrated supporting

needs and demands of a supported

for 2015 actually was $200,000. Within

organization that for its tax year

organization if it meets the

180 days, Y makes a $110,000

including December 28, 2013, and

responsiveness test set forth in the

distribution ($50,000 to cover the

through its following 2014 tax year

-18-

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

Form 990 Schedule A Instructions Page 18

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