US Internal Revenue Service: i990pf--1996

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96Department of the TreasuryInternal Revenue Service

Instructions for Form 990-PFReturn of Private Foundation or Section 4947(a)(1)Nonexempt Charitable Trust Treated as a PrivateFoundationSection references are to the Internal Revenue Code unless otherwise noted.

Paperwork ReductionAct NoticeWe ask for the information on this form tocarry out the Internal Revenue laws of theUnited States. You are required to giveus the information. We need it to ensurethat you are complying with these lawsand to allow us to figure and collect theright amount of tax.

You are not required to provide theinformation requested on a form that issubject to the Paperwork Reduction Actunless the form displays a valid OMBcontrol number. Books or records relatingto a form or its instructions must beretained as long as their contents maybecome material in the administration ofany Internal Revenue law.

The time needed to complete and filethis form will vary depending on individualcircumstances. The estimated averagetime is:

If you have comments concerning theaccuracy of these time estimates orsuggestions for making this form simpler,we would be happy to hear from you. Youcan write to the Tax Forms Committee,Western Area Distribution Center, RanchoCordova, CA 95743-0001. DO NOT sendthe tax form to this address. Instead, seeWhen and Where To File on page 4.

Purpose of Form.— Form 990-PF isused by private foundations and bysection 4947(a)(1) nonexempt charitable

trusts that are treated as privatefoundations. These organizations use thisform to figure the tax on net investmentincome and to report charitabledistributions and activities. The form alsoserves as a substitute for the section4947(a)(1) nonexempt charitable trust'sincome tax return, Form 1041, U.S.Income Tax Return for Estates andTrusts, when the trust has no taxableincome.

Contents Page

Changes To Noteq A new entry space (line 1d) has been

added to Part VII-A of the form. Theorganization must now report the amount(if any) of taxes on political expenditures(section 4955) paid for tax yearsbeginning after July 30, 1996.q See General Instruction M for newpenalty amounts for failure to file timely,completely, or correctly.q See General Instruction Q for theincreased penalty amounts for notfollowing the public inspection rules.q If your total deposits of social security,Medicare, and withheld income taxeswere more than $50,000 in 1995, youmust make electronic deposits for alldepository tax liabilities that occur after

June 30, 1997. For details, see GeneralInstruction P.q See General Instruction J for the new filing address for all filers.

How To Get Forms andPublicationsBy computer and modem.— If yousubscribe to an on-line service, ask if IRSinformation is available and, if so, how toaccess it. Tax forms, instructions,publications, and other IRS informationare available through IRIS, the Internal

Part VIII—Information About Officers,Directors, Trustees, etc. ............................. 17

General InstructionsPart IX-A—Summary of Direct CharitableActivities ..................................................... 18A. Who Must File....................................... 2

B. Which Parts To Complete..................... 2 Part IX-B—Summary of Program-RelatedInvestments ................................................ 18C. Definitions ............................................. 2Part X—Minimum Investment Return......... 18D. Other Forms You May Need To File.... 2Part XI—Distributable Amount ................... 20E. Useful Publications ............................... 3Part XII—Qualifying Distributions............... 20F. Use of Form 990-PF To Satisfy State

Reporting Requirements....................... 3 Part XIII—Undistributed Income................. 21

G. Furnishing Copies of Form 990-PF toState Officials........................................ 4

Part XIV—Private Operating Foundations . 22

Part XV—Supplementary Information ........ 22H. Accounting Period................................. 4

Part XVI-A—Analysis of Income-ProducingActivities ..................................................... 22I. Accounting Methods ............................. 4

J. When and Where To File ..................... 4 Part XVI-B—Relationship of Activities tothe Accomplishment of Exempt Purposes. 23K. Extension of Time To File..................... 4Part XVII—Information RegardingTransfers To and Transactions andRelationships With Noncharitable ExemptOrganizations ............................................. 23

L. Amended Return................................... 4

M. Penalty for Failure To File Timely,Completely, or Correctly ....................... 5

N. Penalty for Not Paying Tax on Time .... 5 Part XVIII—Public Inspection..................... 24

O. Figuring and Paying Estimated Taxeson Net Investment Income.................... 5

Signature .................................................... 24Recordkeeping .............. .. 140 hr., 23 min.

Exclusion Codes......................................... 25P. Depository Method of Tax Payment for

Domestic Private Foundations.............. 5Learning about the lawor the form ...................... 27 hr., 23 min.

Q. Public Inspection Requirements........... 6Preparing the form ......... 31 hr., 49 min.

R. Disclosures Regarding Certain

Information and Services Furnished..... 6Copying, assembling,and sending the form tothe IRS............................. 16 min.

S. Organizations Organized or Created ina Foreign Country or U.S. Possession. 6

T. Liquidation, Dissolution, Termination,or Substantial Contraction .................... 7

U. Filing Requirements During Section507(b)(1)(B) Termination ...................... 7

V. Special Rules for Section 507(b)(1)(B)Terminations ......................................... 7

W. Rounding—Currency—Attachments ..... 7

Specific Instructions ................................ 8

Part I—Analysis of Revenue andExpenses .................................................... 8

Part II—Balance Sheets............................. 12

Part III—Analysis of Changes in NetAssets or Fund Balances........................... 14

Part IV—Capital Gains and Losses for Taxon Investment Income................................ 14

Part V—Qualification Under Section4940(e) for Reduced Tax on NetInvestment Income ..................................... 15

Part VI—Excise Tax on InvestmentIncome ........................................................ 15

Part VII-A—Statements RegardingActivities ..................................................... 16

Part VII-B—Activities for Which Form 4720May Be Required ....................................... 16

Cat. No. 11290Y



Revenue Information Services, onFedWorld, a government bulletin board.The IRIS menus offer information onavailable file formats and softwareneeded to read and print files. You mustprint the forms to use them; the forms arenot designed to be filled in on-screen.

IRIS is directly accessible by modemat 703-321-8020. On the Internet, telnetto iris.irs.ustreas.gov or, for file transferprotocol services, connect toftp.irs.ustreas.gov. If you are using the

World Wide Web, connect tohttp://www.irs.ustreas.gov. FedWorld'shelp desk offers technical assistance onaccessing IRIS (not tax help) duringregular business hours at 703-487-4608.

Tax forms, instructions, andpublications are also available onCD-ROM, including prior-year formsstarting with the 1991 tax year. Forordering information and softwarerequirements, connect to the GovernmentPrinting Office's Superintendent ofDocuments (202-512-1800) or FederalBulletin Board (202-512-1387).By phone and in person.— To orderpublications and forms, call

1-800-TAX-FORM (1-800-829-3676). Youcan also get most forms and publicationsat your local IRS offices.

General Instructions

A. Who Must FileForm 990-PF is an annual informationreturn that must be filed by:1. Exempt private foundations (section6033(a), (b), and (c)).2. Taxable private foundations (section6033(d)).3. Organizations that agree to privatefoundation status and whose applications

for exempt status are pending on the duedate for filing Form 990-PF.4. Organizations that made an electionunder section 41(e)(6).5. Organizations that are making asection 507 termination.6. Section 4947(a)(1) nonexemptcharitable trusts that are treated asprivate foundations (section 6033(d)).Note: Section 4947(a)(1) nonexempt charitable trusts that are not treated as private foundations do not file Form 990-PF. However, they may need to file Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.With either of these forms, the trust must also file Schedule A (Form 990),Organization Exempt Under Section 501(c)(3) (Except Private Foundation),and Section 501(e), 501(f), 501(k),501(n), or Section 4947(a)(1) Nonexempt Charitable Trust Supplementary Information. (See Form 990 or Form 990-EZ instructions.)

B. Which Parts To CompleteThe parts of the form listed below do notapply to all filers. If an entire part or amajor portion of a part does not apply,enter “N/A” where appropriate.q Part I, column (c), applies only toprivate operating foundations and tononoperating private foundations thathave income from charitable activities.q Part II, column (c), with the exceptionof line 16, applies only to organizations

having at least $5,000 in assets per booksat some time during the year. Line 16,column (c), applies to all filers.q Part IV does not apply to foreignorganizations.q Parts V and VI do not apply toorganizations making an election undersection 41(e).q Part X does not apply to foreignfoundations that check box D2 on page 1of Form 990-PF unless they claim statusas a private operating foundation.q Parts XI and XIII do not apply to foreignfoundations that check box D2 on page 1of Form 990-PF. However, check the boxat the top of Part XI. Part XI does not

apply to private operating foundations.q Part XIV applies only to privateoperating foundations.q Part XV applies only to organizationshaving assets of $5,000 or more duringthe year. This part does not apply tocertain foreign organizations.

C. Definitionsq A private foundation is a domestic orforeign organization exempt from incometax under section 501(a); described insection 501(c)(3); and is other than anorganization described in sections509(a)(1) through (4).

In general, churches, hospitals,schools, and broadly publicly supportedorganizations are excluded from privatefoundation status by these sections.These organizations may be required tofile Form 990 (or Form 990-EZ) insteadof Form 990-PF.q A nonexempt charitable trust treatedas a private foundation is a trust that isnot exempt from tax under section 501(a)and all of the unexpired interests of whichare devoted to religious, charitable, orother purposes described in section170(c)(2)(B), and for which a deductionwas allowed under a section of the Codelisted in section 4947(a)(1).

q A taxable foundation is anorganization that is no longer exemptunder section 501(a) as an organizationdescribed in section 501(c)(3). Though itmay operate as a taxable entity, it willcontinue to be treated as a privatefoundation until that status is terminatedunder section 507.q A foundation manager is an officer,director, or trustee of a foundation, or anindividual who has powers similar to thoseof officers, directors, or trustees. In the

case of any act or failure to act, the term“foundation manager” may also includeemployees of the foundation who havethe authority to act.q A disqualified person is:1. A substantial contributor (seeinstructions for Part VII-A, line 10, onpage 16);2. A foundation manager;3. A person who owns more than 20%of a corporation, partnership, trust, orunincorporated enterprise which is itselfa substantial contributor;4. A family member of an individualdescribed in 1, 2, or 3 above; or5. A corporation, partnership, trust, orestate in which persons described in 1,2, 3, or 4 above own a total beneficialinterest of more than 35%.6. For purposes of section 4941(self-dealing), a disqualified person alsoincludes certain government officials.(See section 4946(c) and the relatedregulations.)7. For purposes of section 4943(excess business holdings), a disqualifiedperson also includes:

a. A private foundation which iseffectively controlled (directly or indirectly)by the same persons who control theprivate foundation in question, orb. A private foundation to whichsubstantially all of the contributions weremade (directly or indirectly) by one ormore of the persons described in 1, 2, and3 above, or members of their families,within the meaning of section 4946(d).q An organization is controlled by afoundation or by one or more disqualifiedpersons with respect to the foundation ifany of these persons may, by combiningtheir votes or positions of authority,require the organization to make an

expenditure or prevent the organizationfrom making an expenditure, regardlessof the method of control. “Control” isdetermined without regard to theconditions imposed by a foundation on themanner in which the contribution must beused.

D. Other Forms You MayNeed To FileForm W-2, Wage and Tax Statement, andForm W-3,Transmittal of Wage and TaxStatements.Form 941.— Employer's QuarterlyFederal Tax Return. Used to report social

security, Medicare, and income taxeswithheld by an employer and socialsecurity and Medicare taxes paid by anemployer.

If income, social security, and Medicaretaxes that must be withheld are notwithheld or are not paid to the IRS, aTrust Fund Recovery Penalty may apply.The penalty is 100% of such unpaidtaxes.

This penalty may be imposed on allpersons (including volunteers, see below)whom the IRS determines to beresponsible for collecting, accounting for,

Page 2 Form 990-PF Instructions



and paying over these taxes, and whowillfully did not do so.

This penalty does not apply tovolunteer, unpaid members of any boardof trustees or directors of a tax-exemptorganization, if these members:1. Are solely serving in an honorarycapacity,2. Do not participate in the day-to-dayor financial activities of the organization,and3. Do not have actual knowledge of thefailure to collect, account for, and payover these taxes.

However, this exception does not applyif it results in no person being liable for thepenalty.Form 990-T.— Exempt OrganizationBusiness Income Tax Return. Everyorganization exempt from income taxunder section 501(a) that has total grossincome of $1,000 or more from all tradesor businesses that are unrelated to theorganization's exempt purpose must filea return on Form 990-T.Form 990-W.— Estimated Tax onUnrelated Business Taxable Income forTax-Exempt Organizations (and onInvestment Income for PrivateFoundations).Form 1041.— U.S. Income Tax Return forEstates and Trusts. Required of section4947(a)(1) nonexempt charitable truststhat also file Form 990-PF. However, if thetrust does not have any taxable incomeunder the income tax provisions (subtitleA of the Code), it may use the filing ofForm 990-PF to satisfy its Form 1041filing requirement under section 6012. Ifthis condition is met, check the box forquestion 13, Part VII-A, of Form 990-PFand do not file Form 1041.Form 1041-ES.— Estimated Income Taxfor Estates and Trusts.Form 1096.— Annual Summary andTransmittal of U.S. Information Returns.Forms 1099-INT, MISC, OID, and R.—Information returns for reporting certaininterest; miscellaneous income, medicaland health care payments, andnonemployee compensation; originalissue discount; and distributions frompensions, annuities, retirement orprofit-sharing plans, IRAs, insurancecontracts, etc.Form 1120.— U.S. Corporation IncomeTax Return. Filed by nonexempt taxableprivate foundations that have taxableincome under the income tax provisions(subtitle A of the Code). The Form 990-PFannual information return is also filed bythese taxable foundations.Form 1120-POL.— U.S. Income TaxReturn for Certain Political Organizations.Section 501(c) organizations must fileForm 1120-POL if their politicalexpenditures and their net investmentincome both exceed $100 for the year.Form 1128.— Application To Adopt,Change, or Retain a Tax Year.Form 2758.— Application for Extensionof Time To File Certain Excise, Income,Information, and Other Returns.

Form 2220.— Underpayment ofEstimated Tax by Corporations, is usedby corporations and trusts filing Form990-PF to see if the foundation owes apenalty and to figure the amount of thepenalty. Generally, the foundation is notrequired to file this form because the IRScan figure the amount of any penalty andbill the foundation for it. However,complete and attach Form 2220 even ifthe foundation does not owe the penaltyif:q

The annualized income or the adjustedseasonal installment method is used, orq The foundation is a “largeorganization,” computing its first requiredinstallment based on the prior year's tax.

If Form 2220 is attached, check the boxon line 8, Part VI, on page 4 of Form990-PF and enter the amount of anypenalty on this line.Form 4506-A.— Request for PublicInspection or Copy of ExemptOrganization Tax Form.Form 4720.— Return of Certain ExciseTaxes on Charities and Other PersonsUnder Chapters 41 and 42 of the InternalRevenue Code, is primarily used to

determine the excise taxes imposed on:acts of self-dealing between privatefoundations and disqualified persons;failure to distribute income; excessbusiness holdings; investments that

jeopardize the foundation's charitablepurposes; and making political or othernoncharitable expenditures. Certainexcise taxes and penalties also apply tofoundation managers, substantialcontributors, and certain related personsand are reported on this form.Form 5500 or 5500-C/R.— Employerswho maintain pension, profit-sharing, orother funded deferred compensationplans are generally required to file one of

the 5500 series of forms shown below.This requirement applies whether or notthe plan is qualified under the InternalRevenue Code and whether or not adeduction is claimed for the current taxyear.

The forms required to be filed are:Form 5500, Annual Return/Report of

Employee Benefit Plan (With 100 or moreparticipants).

Form 5500-C/R, Return/Report ofEmployee Benefit Plan (With fewer than100 participants).Form 8109.— Federal Tax DepositCoupon.Form 8282.— Donee Information Return.Required of the donee of “charitablededuction property” that sells, exchanges,or otherwise disposes of the propertywithin 2 years after the date it receivedthe property.

Also required of any successor doneethat disposes of charitable deductionproperty within 2 years after the date thatthe donor gave the property to the originaldonee. (It does not matter who gave theproperty to the successor donee. It mayhave been the original donee or anothersuccessor donee.) For successor donees,

the form must be filed only for anyproperty that was transferred by theoriginal donee after July 5, 1988.Form 8275.— Taxpayers and tax returnpreparers should attach Form 8275,Disclosure Statement, to Form 990-PF todisclose items or positions (except thosecontrary to a regulation—see Form8275-R below) that are not otherwiseadequately disclosed on the tax return.The disclosure is made to avoid parts ofthe accuracy-related penalty imposed for

disregard of rules or substantialunderstatement of tax. Form 8275 is alsoused for disclosures relating to preparerpenalties for understatements due tounrealistic positions or for willful orreckless conduct.Form 8275-R.— Use Form 8275-R,Regulation Disclosure Statement, todisclose any item on a tax return for whicha position has been taken that is contraryto Treasury regulations.Form 8300.— Report of Cash PaymentsOver $10,000 Received in a Trade orBusiness. Used to report cash amounts inexcess of $10,000 that were received ina single transaction (or in two or more

related transactions) in the course of atrade or business (as defined in section162).Form 8718.— User Fee for ExemptOrganization Determination LetterRequest. Used by a private foundationthat has completed a section 507termination and seeks a determinationletter that it is now a public charity.Form 8822.— Change of Address.

E. Useful PublicationsIn addition to the publications listedthroughout these instructions, you maywish to get:

Publication 525.— Taxable andNontaxable Income.Publication 578.— Tax Information forPrivate Foundations and FoundationManagers.Publication 583.— Starting a Businessand Keeping Records.Publication 598.— Tax on UnrelatedBusiness Income of ExemptOrganizations.Publication 910.— Guide to Free TaxServices.Publication 1391.— Deductibility ofPayments Made to Charities ConductingFund-Raising Events.

Publications and forms are available at

no charge through IRS offices or bycalling 1-800-TAX-FORM(1-800-829-3676).

F. Use of Form 990-PF ToSatisfy State ReportingRequirementsSome states and local government unitswill accept a copy of Form 990-PF andrequired attachments in place of all or partof their own financial report forms.

Form 990-PF Instructions Page 3



If the organization plans to use Form990-PF to satisfy state or local filingrequirements, such as those from statecharitable solicitation acts, note thefollowing:Determine state filing requirements.—Consult the appropriate officials of allstates and other jurisdictions in which theorganization does business to determinetheir specific filing requirements. “Doingbusiness” in a jurisdiction may include anyof the following: (a) soliciting contributions

or grants by mail or otherwise fromindividuals, businesses, or othercharitable organizations, (b) conductingprograms, (c) having employees withinthat jurisdiction, or (d) maintaining achecking account or owning or rentingproperty there.Monetary tests may differ.— Some orall of the dollar limitations that apply toForm 990-PF when filed with the IRS maynot apply when using Form 990-PFinstead of state or local report forms. IRSdollar limitations that may not meet somestate requirements are the $5,000 totalassets minimum that requires completionof Part II, column (c), and Part XV; and

the $50,000 minimum for listing thehighest paid employees and for listingprofessional fees in Part VIII.Additional information may berequired.— State and local filingrequirements may require attaching toForm 990-PF one or more of thefollowing: (a) additional financialstatements, such as a complete analysisof functional expenses or a statement ofchanges in net assets, (b) notes tofinancial statements, (c) additionalfinancial schedules, (d) a report on thefinancial statements by an independentaccountant, and (e) answers to additionalquestions and other information. Each

jurisdiction may require the additionalmaterial to be presented on forms theyprovide. The additional information doesnot have to be submitted with the Form990-PF filed with the IRS.

If required information is not providedto a state, the organization may be askedby the state to provide it or to submit anamended return, even if the Form 990-PFis accepted by the IRS as complete.Amended returns.— If the organizationsubmits supplemental information or filesan amended Form 990-PF with the IRS,it must also include a copy of theinformation or amended return to anystate with which it filed a copy of Form990-PF.Method of accounting.— Many statesrequire that all amounts be reportedbased on the accrual method ofaccounting.Time for filing may differ.— The time forfiling Form 990-PF with the IRS may differfrom the time for filing state reports.State registration numbers.— Enter theapplicable state or local jurisdictionregistration or identification number in boxB (on page 1) for each jurisdiction inwhich the organization files Form 990-PF

instead of the state or local form. Whenfiling in several jurisdictions, prepare asmany copies as needed with the stateregistration number omitted. Then enterthe applicable registration number on thecopy to be filed with each jurisdiction.

G. Furnishing Copies ofForm 990-PF to StateOfficialsThe foundation managers must furnish a

copy of the annual Form 990-PF to theattorney general (or designee) of (a) eachstate which they are required to list in PartVII-A, line 8a, (b) the state in which theprincipal office of the foundation islocated, and (c) the state in which thefoundation was incorporated or created.The return must be filed at the same timeit is sent to the IRS. The foundationmanagers must also provide a copy of theannual return to the attorney general orother appropriate state official of any otherstate who requests it. The foundationmanagers must also attach to all copiesof the annual return filed with an attorneygeneral a copy of any Form 4720 filed

with the IRS for the year. These rules donot apply to any foreign foundation which,from the date of its creation, has receivedat least 85% of its support (excludinggross investment income) from sourcesoutside the United States. (SeeExceptions in General Instruction Q.)

If the foundation managers submit acopy of Form 990-PF (and Form 4720, ifnecessary) to a state attorney general tosatisfy a state reporting requirement, theydo not have to furnish a second copy tothat attorney general to comply with theInternal Revenue Code requirements. Ifthere is a state reporting requirement thatthe copy of Form 990-PF be filed with a

state official other than the attorneygeneral (such as a secretary of state),then the foundation managers must alsosend a copy of the Form 990-PF to theattorney general of that state.

H. Accounting Period

1. File the 1996 return for the calendaryear 1996 or fiscal year beginning in1996. If the return is for a fiscal year, fillin the tax year space at the top of thereturn.2. The return must be filed on the basisof the established annual accountingperiod of the organization. If theorganization has no established

accounting period, the return should beon the calendar-year basis.3. For initial or final returns or a changein accounting period, the 1996 form mayalso be used as the return for a shortperiod (less than 12 months) endingNovember 30, 1997, or earlier.

In general, to change its accountingperiod the organization must file Form990-PF by the due date for the shortperiod resulting from the change. At thetop of this short period return, write,“Change of Accounting Period.”

If the organization changed itsaccounting period within the10-calendar-year period that includes thebeginning of the short period, and it hada Form 990-PF filing requirement at anytime during that 10-year period, it mustalso attach a Form 1128 to theshort-period return. See Rev. Proc. 85-58,1985-2 C.B. 740.

I. Accounting MethodsGenerally, you should report the financialinformation requested on the basis of theaccounting method the foundationregularly uses to keep its books andrecords.Note: Complete Part I, column (d) on the cash receipts and disbursements method of accounting.

Change in methods of accountingrequired by Statement of FinancialAccounting Standards (SFAS) No.116.— Foundations that are changingtheir methods of accounting for federalincome tax purposes to comply with SFASNo. 116 are not required to file Form3115, Application for Change inAccounting Method. Foundations maychange to the methods described in SFASNo. 116 for federal income tax purposesfor any tax year beginning after December15, 1994, by reflecting the change in themanner described in Notice 96–30,1996–20 I.R.B. 11.

J. When and Where To FileThis return must be filed by the 15th dayof the 5th month following the close of thefoundation's accounting period. If theregular due date falls on a Saturday,Sunday, or legal holiday, file on the nextbusiness day. If the return is filed late, seeGeneral Instruction M.Penalty for Failure

To File Timely, Completely, orCorrectly on page 5.In case of a complete liquidation,

dissolution, or termination, file the returnby the 15th day of the 5th month followingcomplete liquidation, dissolution, ortermination.

Where To File

Note: All 990-PF returns have a new filing address.

File the return (no matter where yourprincipal office is located) using thefollowing address:

Internal Revenue ServiceOgden, Utah 84201–0027

K. Extension of Time To FileA foundation may use Form 2758 torequest an extension of time to file itsreturn.

L. Amended ReturnTo change the organization's return forany year, file an amended return,including attachments, with the correctinformation. The amended return mustprovide all the information required by theform and instructions, not just the new or




corrected information. Write “AmendedReturn” at the top of the return.

If the organization files an amendedreturn to claim a refund of tax paid undersection 4940 or 4948, it must file theamended return within 3 years after thedate the original return was due or filed,or within 2 years from the date the taxwas paid, whichever date is later.Note: A copy of the amended return must also be sent to appropriate state officials.See General Instruction G.

Use Form 4506-A to obtain a copy ofa previously filed return. You can obtainblank forms for prior years by calling,1-800-TAX-FORM (1-800-829-3676).

M. Penalty for Failure To FileTimely, Completely, orCorrectlyAgainst the organization.— If anorganization does not file timely andcompletely, or does not furnish the correctinformation, it must pay $20 for each daythe failure continues ($100 a day if it is alarge organization), unless it can showthat the failure was due to reasonable

cause. Those filing late (after the duedate, including extensions) must attachan explanation to the return. Themaximum penalty for each return will notexceed the smaller of $10,000 ($50,000for a large organization) or 5% of thegross receipts of the organization for theyear.

Large organization. A largeorganization is one that has gross receiptsexceeding $1 million for the tax year.Against the responsible person.— TheIRS will make written demand that thedelinquent return be filed or theinformation furnished within a reasonabletime after the mailing of the notice of the

demand. The person failing to comply withthe demand on or before the datespecified will have to pay $10 for eachday the failure continues, unless there isreasonable cause. The maximum penaltyimposed on all persons for any one returnwill not exceed $5,000. If more than oneperson is liable for any failures, all suchpersons are jointly and severally liable forsuch failures (see section 6652(c)).

To avoid filing an incomplete return orhaving to respond to requests for missinginformation, complete all applicable lineitems; answer “Yes,” “No,” or “N/A” (notapplicable) to each question on the return;make an entry (including a zero when

appropriate) on all total lines; and enter“None” or “N/A” if an entire part does notapply.

Because this return also satisfies thefiling requirements of a tax return undersection 6011 for the tax on investmentincome imposed by section 4940 (or 4948if an exempt foreign organization), thepenalties imposed by section 6651 for notfiling a return (without reasonable cause)also apply.

There are also penalties for willfulfailure to file and for filing fraudulentreturns and statements. See sections7203, 7206, and 7207.

N. Penalty for Not Paying Taxon TimeThere is a penalty for not paying tax whendue (section 6651).The penalty generallyis 1 / 2 of 1% of the unpaid tax for eachmonth or part of a month the tax remains

unpaid, not to exceed 25% of the unpaidtax. If there was reasonable cause for notpaying the tax on time, the penalty canbe waived. However, interest is chargedon any tax not paid on time, at the rateprovided by section 6621.

The section 6655 penalties for failureto pay estimated taxes apply to the taxeson net investment income of domesticprivate foundations and section4947(a)(1) nonexempt charitable trusts.The penalties also apply to any tax onunrelated business income of theseorganizations. For more details, see thediscussion of Form 2220 in Other FormsYou May Need To File in these

instructions.

O. Figuring and PayingEstimated Taxes on NetInvestment IncomeA domestic private foundation must makeestimated tax payments for the excise taxon investment income if it can expect itsestimated tax (section 4940 tax minusallowable credits) to be $500 or more. Thenumber of installment payments it mustmake under the depository method isdetermined at the time during the yearthat it first meets this requirement. Forcalendar-year taxpayers, the first deposit

of estimated taxes for a year generallyshould be made by April 15 of the year.Although Form 990-W is used primarily

to compute the installment payments ofunrelated business income tax, it is alsoused to determine the timing and amountsof installment payments of the section4940 tax on net investment income.

To figure the estimated tax, multiply theestimated investment income by the taxrate (1% or 2%, whichever applies) andenter that amount on line 9a of Form990-W.

The Form 990-W line items andinstructions for large organizations alsoapply to private foundations. For purposes

of paying the estimated tax on netinvestment income, a “large organization”is one that had net investment income of$1 million or more for any of the 3 taxyears immediately preceding the tax yearinvolved.

A foundation that does not pay theproper estimated tax when due may besubject to an underpayment penalty forthe period of the underpayment.Generally, a foundation is subject to thepenalty if its tax liability is $500 or moreand it did not make the required paymentson time. See the 1997 Form 990-W or

1041-ES for information on determiningthe amounts of required payments.

Compute separately any requireddeposits of section 4940 tax andunrelated business income tax. (Seesections 6655(b) and (d) and the Form2220 instructions.)Note: Section 4947(a)(1) nonexempt charitable trusts and taxable foundations that have income subject to tax under section 1 or section 11 should see Form 1120 for the estimated tax rules.

However, section 4947(a)(1) nonexempt charitable trusts should use Form 1041-ES for paying any estimated tax on that income. Taxable foundations should use Form 8109, and darken the 1120 box on that form.

P. Depository Method of TaxPayment for DomesticPrivate FoundationsThe foundation must pay the tax due infull when the return is filed, but no laterthan 41 / 2 months after the end of the taxyear.

If the balance of foundation net

investment income tax due shown on line9, Part VI of Form 990-PF, or line 5c ofForm 2758, is less than $500, enclose acheck or money order, payable to theInternal Revenue Service, with Form990-PF or send the full balance due withForm 2758. Otherwise, if the organizationis not required to (or does not voluntarily)use the Electronic Federal Tax PaymentSystem (EFTPS) described below,deposit foundation net investment incometax payments (estimated tax paymentsand balance of tax due as shown on line9, Part VI of Form 990-PF, or line 5c ofForm 2758) with a Federal Tax DepositCoupon (Form 8109). Do not send

deposits directly to an IRS office. Mail ordeliver the completed Form 8109 with thepayment to a qualified depositary forFederal taxes or to the Federal Reservebank (FRB) servicing the foundation'sgeographic area. Make checks or moneyorders payable to that depositary or FRB.

To help ensure proper crediting to youraccount, write the organization's employeridentification number, the tax period towhich the deposit applies, and “Form990-PF” on the check or money order.Darken the “990-PF” box on the coupon.Records of these deposits will be sent tothe IRS.

A penalty may be imposed if the

deposits are sent to an IRS office insteadof to an authorized depositary or FRB.For more information on deposits, see

the instructions in the coupon booklet(Form 8109) and Pub. 583, Starting aBusiness and Keeping Records.Electronic deposit requirement.— Ifyour total deposits of social security,Medicare, and withheld income taxeswere more than $50,000 in 1995, youmust make electronic deposits for alldepository tax liabilities that occur afterJune 30, 1997. If you were required todeposit by electronic funds transfer in




prior years, continue to do so in 1997. TheEFTPS must be used to make electronicdeposits. If you are required to makedeposits by electronic funds transfer andfail to do so, you may be subject to a 10%penalty. Taxpayers who are not requiredto make electronic deposits mayvoluntarily participate in EFTPS. Forinformation on EFTPS, call1-800-945-8400 or 1-800-555-4477.(These numbers are for EFTPSinformation only.)

Note: Foreign organizations should see the instructions for Part VI, line 9.

Q. Public InspectionRequirements

From the organization

Information reported on Form 990-PF,including all attachments, is available forpublic inspection under section 6104(b).This applies both to information requiredby the form and to voluntary information.Therefore, the return and anyattachments should be reproducible.

Annual returns

Foundation managers must make theannual return available for inspectionduring regular business hours at theprincipal office of the foundation, or maygive a free copy to any person requestinginspection, if the request is made at thetime and in the manner prescribed insection 6104(d) and the relatedregulations.Notice requirements.— A notice that theprivate foundation's annual return isavailable for inspection must be publishedby the due date for filing the annualreturn, including any extensions of timefor filing. The notice must be published ina newspaper with general circulation inthe county in which the principal office ofthe private foundation is located. (Anewspaper or journal that publishes realestate title transfers or other similar legalnotices to satisfy state statutoryrequirements is also considered to havegeneral circulation.) The notice must statethat the annual return of the privatefoundation is available for inspection at itsprincipal office during regular businesshours by any citizen who requestsinspection within 180 days after the datethe notice is published. It must also showthe address and telephone number of theprivate foundation's principal office andthe name of its principal manager. A

private foundation may designate, inaddition to its principal office, any otherlocation where its annual return will bemade available. Another location mayalso be designated if the foundation hasno principal office or none other than theresidence of a substantial contributor orfoundation manager.

To ensure that the return is available forpublic inspection for the full 180-dayperiod as required by law, do not publishthe notice until the return has beencompleted and is available for inspectionupon request.

Attach a copy of the notice to the Form990-PF filed with the Internal RevenueService.Penalties.— If a foundation does notpublish the notice and attach a copy of itto a timely filed return, there is a penaltyof $20 a day, up to a maximum of $10,000for any one return (section 6652(c)). Thepenalty is imposed on the person undera duty to act, but who fails to do sowithout reasonable cause. The penalty isalso imposed on any person who does not

make the return (including all requiredattachments) available for publicinspection according to the section6104(d) provisions discussed aboveunder Annual returns. If more than oneperson is responsible for either failure toact, each person is jointly and severallyliable for the full amount of the penalty.Any person who willfully fails to comply issubject to an additional penalty of $1,000(section 6685). This penalty will increaseto $5,000 60 days after the Treasuryissues certain regulations about publicinspections.Exceptions. A private foundation thathas terminated its status as such under

section 507(b)(1)(A), by distributing all itsnet assets to one or more public charitieswithout keeping any right, title, or interestin those assets, does not have to publishnotice of availability of its annual returnor furnish the return to the public for thetax year in which it terminates(Regulations section 1.507-2(a)(6)).

The notice and public inspectionprovisions discussed above do not applyto any foreign foundation which, from thedate of its creation, has received at least85% of its support (excluding grossinvestment income) from sources outsidethe United States. The requirement tofurnish copies of annual returns to stateofficials also does not apply to suchforeign foundations (see GeneralInstruction G).

Exemption applications

Any section 501(c) organization that filedan application for recognition ofexemption to the Internal RevenueService after July 15, 1987, must makeavailable for public inspection a copy of itsapplication (and any papers submitted insupport of its application) and any letteror other document issued by the IRS inresponse to the application. Anorganization that filed its exemptionapplication on or before July 15, 1987,must comply with this requirement if it had

a copy of its application on July 15, 1987.The copy of the application and relateddocuments must be made available forinspection during regular business hoursat the organization's principal office andat each of its regional or district officeshaving at least three employees.

Any person who does not comply withthe public inspection of applicationrequirement will be charged a penalty of$20 for each day that inspection was notpermitted. There is no limitation. Nopenalty will be imposed if the failure is dueto reasonable cause. If more than one

person is responsible for failure to complywith this requirement, each person is

jointly and severally liable for the fullamount of the penalty. Any person whowillfully fails to comply is subject to anadditional penalty of $1,000. This penaltywill increase to $5,000 60 days after theTreasury issues certain regulations aboutpublic inspections.

From the IRS

Both exempt organization returns and

approved exemption applications may beinspected by the public at IRS districtoffices and at the IRS National Office inWashington, DC.

A request for inspection must be inwriting and must include the name andaddress (city and state) of theorganization that filed the return orapplication. A request to inspect a returnshould indicate the type (number) of thereturn and the year(s) involved. Therequest should be sent to the DistrictDirector (Attention: Disclosure Officer) ofthe district in which the requester wantsto inspect the return or application. If therequester wants the inspection at the IRS

National Office, the request should besent to the following address:Commissioner of Internal RevenueAttention: Freedom of Information

Reading Room1111 Constitution Ave., NWWashington, DC 20224.

Form 4506-A can be used to request acopy or to inspect an exempt organizationreturn at an IRS office. There is a chargefor photocopying.

R. Disclosures RegardingCertain Information andServices Furnished

A section 501(c) organization that offersto sell or solicits money for specificinformation or a routine service to anyindividual that could be obtained by theindividual from a Federal Governmentagency free or for a nominal charge mustdisclose that fact conspicuously whenmaking such offer or solicitation.

Any organization that intentionallydisregards this requirement will be subjectto a penalty for each day the offers orsolicitations are made. The penalty is thegreater of $1,000 or 50% of the total costof the offers and solicitations made onthat day.

S. Organizations Organizedor Created in a ForeignCountry or U.S. PossessionIf you apply any provision of any U.S. taxtreaty to compute the foundation's taxableincome, tax liability, or tax credits in amanner different from the 990-PFinstructions, attach an explanation.

Regulations section 53.4948-1(b)states that sections 507, 508, andChapter 42 (other than section 4948) donot apply to a foreign private foundationwhich from the date of its creation has




received at least 85% of its support (asdefined in section 509(d), other thansection 509(d)(4)) from sources outsidethe United States.

Section 4948(a) imposes a 4% tax onthe gross investment income from U.S.sources (i.e., income from dividends,interest, rents, payments received onsecurities loans (as defined in section512(a)(5)), and royalties not reported onForm 990-T of an exempt foreign privatefoundation. This tax replaces the section

4940 tax on the net investment incomeof a domestic private foundation. To payany tax due, see the instructions for PartVI, line 9.

Taxable foreign private foundations andforeign section 4947(a)(1) nonexemptcharitable trusts are not subject to theexcise taxes under sections 4948(a) and4940, but are subject to income tax undersubtitle A of the Code.

Certain foreign foundations are notrequired to send copies of annual returnsto state officials, or comply with the publicinspection and notice requirements ofannual returns. (See General InstructionsG and Q.)

T. Liquidation, Dissolution,Termination, or SubstantialContractionOrganizations liquidating, etc., mustattach a statement to the return explainingany liquidation, dissolution, termination,or substantial contraction. See GeneralInstruction J for filing dates and locations.

The term “substantial contraction”includes any partial liquidation or anyother significant disposition of assets(other than transfers for full and adequateconsideration or distributions of currentincome).

A “significant disposition” of assetsdoes not include any disposition for a taxyear if:1. The total of the dispositions for thetax year is less than 25% of the fairmarket value of the net assets of theorganization at the beginning of the taxyear, and2. The total of the related dispositionsmade during prior tax years (if adisposition is part of a series of relateddispositions made during these prior taxyears) is less than 25% of the fair marketvalue of the net assets of the organizationat the beginning of the tax year in whichany of the series of related dispositions

was made.The facts and circumstances of the

particular case will determine whether asignificant disposition has occurredthrough a series of related dispositions.Ordinarily, a distribution described insection 170(b)(1)(E)(ii) (relating to privatefoundations making qualifyingdistributions out of corpus equal to 100%of contributions received during thefoundation's tax year) will not be takeninto account as a significant dispositionof assets. See Regulations section1.170A-9(g)(2).

In the case of a complete liquidation ofa corporation or termination of a trust,state whether a final distribution of assetswas made and the date made. Also,attach a certified copy of the resolutionor plan, if any, of liquidation, etc., and allamendments or supplements notpreviously filed, as well as a schedulelisting the names and addresses of allrecipients of assets distributed inliquidation, dissolution, or substantialcontraction, and an explanation of the

nature and fair market value of assetsdistributed to each recipient.Organizations that have terminated

their private foundation status undersection 507(b)(1)(A) do not have tocomply with the notice and publicinspection requirements of their annualreturn for the year of termination (seeExceptions in General Instruction Q).

If the organization has ceased to exist,write “Final Return” at the top of page 1of the return.

If the organization is terminating itsprivate foundation status under section507(b)(1)(B), see General Instructions Uand V below.

U. Filing RequirementsDuring Section 507(b)(1)(B)TerminationAlthough an organization terminating itsprivate foundation status under section507(b)(1)(B) may be regarded as a publiccharity for certain purposes, it is stillconsidered a private foundation forpurposes of the filing requirements andmust file an annual return on Form990-PF. The return must be filed for eachyear in the 60-month termination period,if that period has not expired before thedue date of the return.

Regulations under section 507(b)(1)(B)(iii) specify that within 90 days after theend of the termination period theorganization must supply information to itskey district director establishing that it hasterminated its private foundation statusand, therefore, qualifies as a publiccharity. If information is furnishedestablishing a successful termination,then, for the final year of the terminationperiod, the organization should complywith the filing requirements for the typeof public charity it has become. See theInstructions for Form 990 and ScheduleA (Form 990) for details on filingrequirements. This applies even if the key

district has not confirmed that theorganization has terminated its privatefoundation status by the time the returnfor the final year of the termination is due(or would be due if a return wererequired).

The organization will be allowed areasonable period of time to file anyprivate foundation returns required (forthe last year of the termination period) butnot previously filed if it is later determinedthat the organization did not terminate itsprivate foundation status. Interest on anytax due will be charged from the original

due date of the Form 990-PF, butpenalties under sections 6651 and 6652will not be assessed if the Form 990-PFis filed within the period allowed by thekey district.

V. Special Rules for Section507(b)(1)(B) TerminationsIf the organization is terminating itsprivate foundation status under the60-month provisions of section

507(b)(1)(B), special rules apply. (SeeGeneral Instructions T and U.) Underthese rules the organization may file Form990-PF without paying the tax on netinvestment income if it filed a consentunder section 6501(c)(4) with itsnotification to the district director of itsintention to begin a section 507(b)(1)(B)termination. The consent provides that theperiod of limitation on the assessment ofexcise tax under section 4940 or 4948 oninvestment income for any tax year in the60-month period will not expire until atleast 1 year after the period for assessinga deficiency for the last tax year in the60-month period would normally expire.Any foundation not paying the tax whenit files Form 990-PF must attach a copyof the signed consent.

If the foundation did not file theconsent, the tax must be paid in thenormal manner as explained in GeneralInstructions O and P. The organizationmay file a claim for refund aftercompleting termination or during thetermination period. The claim for refundmust be filed on time and the organizationmust supply information establishing thatit qualified as a public charity for theperiod for which it paid the tax.

W. Rounding—Currency—

AttachmentsRounding Off to Whole-DollarAmounts.— You may show the moneyitems on the return and accompanyingschedules as whole-dollar amounts. Todo so, drop any amount less than 50cents and increase any amount from 50cents through 99 cents to the next higherdollar.Currency and LanguageRequirements.— Report all amounts inU.S. dollars (state conversion rate used).Report all items in total, includingamounts from both U.S. and non-U.S.sources. All information must be inEnglish.

Attachments.— Use the schedules onForm 990-PF. If you need more spaceuse attachments that are the same sizeas the printed forms. On each sheet:1. Write “Form 990-PF,” the tax year,and the corresponding schedule numberor letter,2. Include the organization's name andemployer identification number,3. Follow the format and line sequenceof the printed form,4. Include the information required bythe form, and




5. Show totals on the printed forms.

Specific InstructionsName and Address.— If the organizationreceived a Form 990-PF Package fromthe IRS with a preaddressed label, pleaseuse it. If the name or address on the labelis wrong, make corrections on the label.The address used must be that of theprincipal office of the foundation.

Include the suite, room, or other unitnumber after the street address. If thePost Office does not deliver mail to thestreet address and the organization hasa P.O. box, show the box number insteadof the street address.A. Employer Identification Number.—The organization should have only oneemployer identification number. If it hasmore than one number, notify the InternalRevenue Service Center at theappropriate address shown underGeneral Instruction J. Explain whatnumbers the organization has, the nameand address to which each number wasassigned, and the address of the

organization's principal office. The IRS willthen advise which number to use.D2. Foreign Organizations.— Check thebox in D2 on page 1 of Form 990-PF if theorganization meets the 85% test ofRegulations section 53.4948-1(b). Attachthe computation of the 85% test to Form990-PF.Note: If the foundation meets the 85% test, do not fill in Parts XI and XIII, but check the box at the top of Part XI. If the foundation meets the 85% test, do not fill in Part X unless it is claiming status as a private operating foundation.

E. Section 507(b)(1)(A) Terminations.—A private foundation that has terminated

its status as such under section507(b)(1)(A), by distributing all its netassets to one or more public charitieswithout keeping any right, title, or interestin those assets, should check the box inE on page 1 of Form 990-PF. SeeGeneral Instructions T and Q.F. 60-Month Termination Under Section507(b)(1)(B).— Check the box in F onpage 1 of Form 990-PF if the organizationis terminating its private foundation statusunder the 60-month provisions of section507(b)(1)(B) during the period covered bythis return. To begin such a termination,a private foundation must have givenadvance notice to its key district director

and provided the information outlined inRegulations section 1.507-2(b)(3). SeeGeneral Instruction U for informationregarding filing requirements during asection 507(b)(1)(B) termination.

See General Instruction V forinformation regarding payment of the taxon investment income (computed in PartVI) during a section 507(b)(1)(B)termination.H. Type of Organization.— Check thebox for “Section 501(c)(3) exempt privatefoundation” if the foundation has a rulingor determination letter from the IRS in

effect that recognizes its exemption fromFederal income tax as an organizationdescribed in section 501(c)(3) or if theorganization's exemption application ispending with the IRS.

Check the “Section 4947(a)(1)nonexempt charitable trust” box if the trustis a nonexempt charitable trust treated asa private foundation. All others, check the“Other taxable private foundation” box.I. Fair Market Value of All Assets.— Inblock I on page 1 of Form 990-PF, enter

the fair market value of all assets thefoundation held at the end of the tax year.Note: This amount should be the same as the figure reported in Part II, column (c), line 16.

Part I—Analysis of Revenueand ExpensesNote: The amounts in column (a) are the revenue and expenses shown in the books and records of the foundation. The total of amounts in columns (b), (c),and (d) may not necessarily equal the amounts in column (a). In Part XVI-A,analyze amounts entered in column (a)

and on line 5b.

Column (a)—Revenue andExpenses per Books

Enter in column (a) all items of revenueand expense shown in the books andrecords that increased or decreased thenet assets of the organization. However,do not include the value of servicesdonated to the foundation, or items suchas the free use of equipment or facilities,in contributions received. Also, do notinclude any expenses used to computecapital gains and losses on lines 6, 7, and8 or expenses included in cost of goodssold on line 10b.

Column (b)—Net InvestmentIncome

All domestic private foundations (includingsection 4947(a)(1) nonexempt charitabletrusts) are required to pay an excise taxeach tax year on their net investmentincome.

Exempt foreign foundations are subjectto an excise tax on their gross investmentincome from U.S. sources. These foreignorganizations should complete lines 3, 4,5, 11, 12, and 27b of column (b) andreport only income derived from U.S.sources. No other income should beincluded. No expenses are allowed as

deductions.Gross investment income means the

total amount of investment income thatwas received by a private foundation fromall sources. However, it does not includeany income subject to the unrelatedbusiness income tax. It includes interest,dividends, rents, payments with respectto securities loans (as defined in section512(a)(5)), royalties received from assetsdevoted to charitable activities, incomefrom notional principal contracts (asdefined in Regulations section 1.863-7)),and other substantially similar income

from ordinary and routine investmentsexcluded by section 512(b)(1). Therefore,interest received on a student loan isincludible in the gross investment incomeof a private foundation making the loan.

Net investment income is the amountby which the sum of gross investmentincome and the capital gain net incomeexceeds the allowable deductionsdiscussed later. Tax-exempt interest ongovernmental obligations and relatedexpenses are excluded.

Include in column (b) all or part of anyamount from column (a) that applies toinvestment income. However, do notinclude in column (b) any interest,dividends, rents or royalties (and relatedexpenses) that were reported on Form990-T.

For example, investment income fromdebt-financed property unrelated to theorganization's charitable purpose andcertain rents (and related expenses)treated as unrelated trade or businessincome should be reported on Form990-T. Income from debt-financedproperty that is not taxed under section511 is taxed under section 4940. Thus, if

the debt/basis percentage of adebt-financed property is 80%, only 80%of the gross income (and expenses) forthat property is used to figure the section511 tax on Form 990-T. The remaining20% of the gross income (and expenses)of that property is used to figure thesection 4940 tax on net investmentincome on Form 990-PF. (See Form990-T and its instructions for moreinformation.)

Include in column (b) all ordinary andnecessary expenses paid or incurred toproduce or collect investment incomefrom: interest, dividends, rents, amountsreceived from payments on securities

loans (as defined in section 512(a)(5)),royalties, income from notional principalcontracts, and other substantially similarincome from ordinary and routineinvestments excluded by section512(b)(1); or for the management,conservation, or maintenance of propertyheld for the production of income that istaxable under section 4940.

If any of the expenses listed in column(a) are paid or incurred for bothinvestment and charitable purposes, theymust be allocated on a reasonable basisbetween the investment activities and thecharitable activities so that only expensesfrom investment activities appear incolumn (b). Examples of allocationmethods are given in the instructions forPart IX-A.Note: The deduction for expenses paid or incurred in any tax year for producing gross investment income earned incident to a charitable function cannot be more than the amount of income earned from the function which is includible as gross investment income for the year.

For example, if rental income isincidentally realized in 1996 from historicbuildings held open to the public,deductions for amounts paid or incurred




in 1996 for the production of this incomemay not be more than the amount ofrental income includible as grossinvestment income in column (b) for 1996.Note: Do not include on lines 13–23 of column (b) any expenses paid or incurred that are allocable to tax-exempt interest that is excluded from lines 3 and 4.

Column (c)—Adjusted Net Income

Note: See 1 below under Nonoperating Private Foundations to see if you are

required to make any entries in column (c).

In general, adjusted net income is theamount of a private foundation's grossincome that is more than the expensesof earning the income. The modificationsand exclusions explained below areapplied to gross income and expenses infiguring adjusted net income.

For column (c), include income fromcharitable functions, investment activities,short-term capital gains from investments,amounts set aside, and unrelated tradeor business activities. Do not include gifts,grants, or contributions, or long-termcapital gains or losses. Nonoperating

private foundations should follow thespecial rules that apply.Note: In completing column (c), include on each line only that portion of the amount from column (a) that is applicable to the adjusted net income computation.

Private Operating Foundations.— Allorganizations that claim status as privateoperating foundations under section4942(j)(3) or (5) must complete all linesof column (c) that apply, according to thegeneral rules for income and expensesthat apply to this column, the specific lineinstructions for lines 3–27c, and SpecialRule 3 and Examples 1 and 2 givenbelow.

Nonoperating Private Foundations.—The following special rules andexamples apply to nonoperating privatefoundations.1. If a nonoperating private foundationhas no income from charitable activitiesthat would be reportable on line 10 or line11 of Part I, it does not have to make anyentries in column (c).2. If a nonoperating private foundationhas income from charitable activities, itmust report that income only on lines 10and/or 11 in column (c). Thesefoundations do not need to report otherkinds of income and expenses (such asinvestment income and expenses) in

column (c).3. The expenses attributable to eachspecific charitable activity, limited by theamount of income from the activity, mustbe reported in column (c) on lines 13–26.If the expenses of any charitable activityexceed the income generated by thatactivity, only the excess of theseexpenses over the income should bereported in column (d).

Examples.

1. A charitable activity generated

$5,000 of income and $4,000 ofexpenses. Report all of the income andexpenses in column (c) and none incolumn (d).2. A charitable activity generated$5,000 of income and $6,000 ofexpenses. Report $5,000 of income and$5,000 of expenses in column (c) and theexcess expenses of $1,000 in column (d).

Deductible expenses include the partof a private foundation's operatingexpenses that is paid or incurred to

produce or collect gross income reportedon lines 3–11 of column (c). If only partof the property produces incomeincludible in column (c), deductions suchas interest, taxes, and rent must bedivided between the charitable andnoncharitable uses of the property. If thedeductions for property used for acharitable, educational, or other similarpurpose are more than the income fromthe property, the excess will not beallowed as a deduction but may betreated as a qualifying distribution in PartI, column (d). See Examples 1 and 2above.

Column (d)—Disbursements forCharitable Purposes

Note: For amounts entered in column (d),use the cash receipts and disbursements method of accounting, regardless of the method of accounting used in keeping the books of the foundation.

Do not include in column (d) anyamount or part of an amount that isincluded in column (b) or (c).

Expenses entered in column (d) relateto activities that constitute the charitablepurpose of the foundation. Include onlines 13–25 all expenses, includingnecessary and reasonable administrativeexpenses, paid by the foundation for

religious, charitable, scientific, literary,educational, or other public purposes, orfor the prevention of cruelty to children oranimals.

For any expense amount entered incolumn (a), enter only the part allocableto the charitable purposes of thefoundation in column (d).

Example. An educational seminarproduced $1,000 in income which wasreportable in columns (a) and (c).Expenses attributable to this charitableactivity were $1,900. Only $1,000 ofexpense should be reported in column (c)and the remaining $900 in expenseshould be reported in column (d).

The total of the expenses anddisbursements on line 26 is used in PartXII to figure qualifying distributions.

Generally, gifts and grants toorganizations described in section501(c)(3), that have been determined tobe publicly supported charities (i.e.,organizations that are not privatefoundations as defined in section 509(a)),are qualifying distributions, provided thatthe granting foundation does not controlthe public charity.

For purposes of column (d), include adistribution of property at the fair marketvalue on the date the distribution wasmade.

If you want to provide an analysis ofdisbursements that is more detailed thancolumn (d), you may attach a scheduleinstead of completing lines 13–25. Theschedule must include all the specificitems of lines 13–25, and the total fromthe schedule must be entered in column(d), line 26.

Line 1—Contributions, gifts, grants,etc., received.— Enter the total of grosscontributions, gifts, grants, and similaramounts received. If money, securities,or other property valued at $5,000 ormore was received directly or indirectlyfrom any one person during the year,attach a schedule showing the name andaddress of the person and the amountand date of each gift made during theyear.

To determine whether a person hascontributed $5,000 or more, total only giftsof $1,000 or more from each person.Separate and independent gifts need notbe totaled if less than $1,000. If a

contribution is in the form of property,describe the property and include its fairmarket value.Note: If the private foundation changed its accounting method for tax purposes to conform with SFAS 116 and part or all of its net asset adjustment (section 481(a)adjustment) represents contributions, then include in the list of contributors that is attached to the return any contributor of an amount that is included in the adjustment and meets the requirements above. Report the contributors that meet these requirements in the year of the change.

The term “person” includes individuals,

fiduciaries, partnerships, corporations,associations, trusts, and exemptorganizations.

Contributions from split-interest trustsshould be entered on both line 1 ofcolumn (a) and line 2 of column (b). Theyare a part of the amount on line 1. Reportcontributions only on lines 1 and 2.

Generally, a donor making a charitablecontribution of $250 or more will not beallowed a Federal income tax deductionunless the donor obtains a writtenacknowledgment from the doneeorganization by the earlier of the date onwhich the donor files a tax return for thetax year in which the contribution was

made or the due date, includingextensions, for filing that return. However,see section 170(f)(8) and the relatedtemporary regulations for exceptions tothis rule.

The acknowledgment the foundationprovides to the donor must show (a) theamount of cash contributed, (b) adescription of any property contributed,(c) whether the foundation provided anygoods or services to the donor, and (d) adescription and a good-faith estimate ofthe value of any goods or services thefoundation gave in return for the




contribution, unless the goods andservices have insubstantial value orunless a statement is included that thesegoods and services consist solely ofintangible religious benefits.

Generally, if a charitable organizationsolicits or receives a contribution of morethan $75 for which it gives the donorsomething in return (a quid pro quocontribution), the organization must informthe donor, by written statement, that theamount of the contribution deductible for

Federal income tax purposes is limited tothe amount by which the contributionexceeds the value of the goods orservices received by the donor. Thewritten statement must also provide thedonor with a good-faith estimate of thevalue of goods or services given in returnfor the contribution.

An organization that does not make therequired disclosure for each quid pro quocontribution will incur a penalty of $10 foreach failure, not to exceed $5,000 for aparticular fundraising event or mailing,unless it can show reasonable cause fornot providing the disclosure.

An organization must keep records,

required by the regulations under section170, for all its charitable contributions.Donors must file Form 8283, Noncash

Charitable Contributions, if their deductionfor all noncash gifts is more than $500.Line 2—Certain contributions from“split-interest” trusts described insection 4947(a)(2).— The income portionof distributions from split-interest truststhat was earned on amounts placed intrust after May 26, 1969 is treated asinvestment income. Include only theincome portion of these distributions online 2. That same figure is a part of line1.Line 3—Interest on savings and

temporary cash investments.—Incolumn (a), enter the total amount ofinterest income from investments of thetype reportable in Balance Sheets, Part II,line 2. These include savings or otherinterest-bearing accounts and temporarycash investments, such as money marketfunds, commercial paper, certificates ofdeposit, and U.S. Treasury bills or othergovernment obligations that mature inless than 1 year.

In column (b), enter the amount ofinterest income shown in column (a). Donot include interest on tax-exemptgovernment obligations.

In column (c), enter the amount of

interest income shown in column (a).Include interest on tax-exemptgovernment obligations.Line 4—Dividends and interest fromsecurities.—In column (a), enter theamount of dividend and interest incomefrom securities (stocks and bonds) of thetype reportable in Balance Sheets, Part II,line 10. Include amounts received frompayments on securities loans, as definedin section 512(a)(5). Do not include anycapital gain dividends reportable on line6. Report income from program-related

investments on line 11. For debtinstruments with an original issuediscount, report the original issue discountratably over the life of the bond on line 4.See section 1272 for more information.

In column (b), enter the amount ofdividend and interest income, andpayments on securities loans from column(a). Do not include interest on tax-exemptgovernment obligations.

In column (c), enter the amount ofdividends and interest income, and

payments on securities loans from column(a). Include interest on tax-exemptgovernment obligations.Line 5a—Gross rents.—In column (a),enter the gross rental income for the yearfrom investment property reportable online 11 of Part II.

In columns (b) and (c), enter the grossrental income from column (a).Line 5b—Net rental income or (loss).—Figure the net rental income or (loss) forthe year and enter that amount on theentry line to the left of column (a).

Report rents from other sources on line11, Other income. Enter any expensesattributable to the rental income reportedon line 5, such as interest anddepreciation, on lines 13–23.Line 6—Net gain or (loss) from sale ofassets.— Enter the net gain or (loss) perbooks from all asset sales not includedon line 10.

For assets sold and not included in PartIV, attach a schedule showing: (a) dateacquired, manner of acquisition, datesold, and to whom sold, (b) gross salesprice, (c) cost, other basis or value at timeof acquisition if donated (state whichbasis), (d) expense of sale and cost ofimprovements made subsequent toacquisition, and (e) depreciation sinceacquisition, if depreciable property.Line 7—Capital gain net income.—Enter the capital gain net income fromPart IV, line 2. See Part IV instructions.Line 8—Net short-term capital gain.—Note: Only private operating foundations should figure their short-term capital gains and report them on line 8.

Include only net short-term capital gainfor the year (assets sold or exchangedthat were held not more than 1 year). Donot include a net long-term capital gainor a net loss in column (c).

Do not include a net gain from the saleor exchange of depreciable property, orland used in a trade or business (section

1231) and held for more than 1 year online 8. However, include a net loss fromsuch property on line 23 as an Otherexpense.

In general, organizations may carry thenet short-term capital gain reported in PartIV, line 3, to line 8. However, if thefoundation had any short-term capital gainfrom sales of debt-financed property, addit to the amount reported on Part IV, line3, to figure the amount to include on line8. For definition of “debt-financedproperty,” see the instructions for Form990-T.

Line 9—Income modifications.—Include on this line:q Amounts received or accrued asrepayments of amounts taken intoaccount as qualifying distributions (seethe instructions for Part XII for anexplanation of qualifying distributions) forany year.q Amounts received or accrued from thesale or other disposition of property to theextent that the acquisition of the propertywas considered a qualifying distribution

for any tax year.q Any amount set aside for a specificproject (see explanation in the instructionsfor Part XII) that was not necessary for thepurposes for which it was set aside.q Income received from an estate, butonly if the estate was consideredterminated for income tax purposes dueto a prolonged administration period.q Amounts treated in an earlier tax yearas qualifying distributions to:1. A private foundation, which is not aprivate operating foundation, if theamounts were not redistributed by thegrantee organization by the close of its taxyear following the year in which it received

the funds, or2. An organization controlled by thedistributing foundation or a disqualifiedperson if the amounts were notredistributed by the grantee organizationby the close of its tax year following theyear in which it received the funds.

Lines 10a, b, c—Gross profit fromsales of inventory.— Enter the grosssales (less returns and allowances), costof goods sold, and gross profit or (loss)from the sale of all inventory items,including those sold in the course ofspecial events and activities. Theseinventory items are the ones theorganization either makes to sell to othersor buys for resale.

Do not report any sales or exchangesof investments on line 10.

Do not include any profit or (loss) fromthe sale of capital items such assecurities, land, buildings, or equipmenton line 10. Enter these amounts on line6.

Do not include any business expensessuch as salaries, taxes, rent, etc., on line10. Include them on lines 13–23.

Attach a schedule showing thefollowing items: Gross sales, Cost ofgoods sold, Gross profit or (loss). Theseitems should be classified according to

type of inventory sold (such as books,tapes, other educational or religiousmaterial, etc.). The totals from theschedule should agree with the entries onlines 10a–10c.

In column (c), enter the gross profit or(loss) from sales of inventory shown incolumn (a), line 10c.Line 11—Other income.— Enter the totalof all the foundation's other income for theyear. Include all income not reported onlines 1 through 10c. Refer to theinstructions for Part XVI-A, line 11.Include imputed interest on certain




deferred payments figured under section483, and any investment income notreportable on lines 3 through 5, includingincome from program-related investments(defined in the instructions for Part IX-B).However, do not include unrealized gainsand losses on investments carried atmarket value. Report those as fundbalance or net asset adjustments in PartIII. Attach a schedule showing thedescription and amount of the income.

In column (b), enter the amount of

investment income included in line 11,column (a). Include dividends, interest,rents, and royalties derived from assetsdevoted to charitable activities, such asinterest on student loans.

In column (c), include all other itemsincludible in adjusted net income notcovered elsewhere in column (c).Line 12—Total.—In column (b),domestic organizations should enter thetotal of lines 2–11. Exempt foreignorganizations, enter the total of lines 3,4, 5, and 11 only.Line 13—Compensation of officers,directors, trustees, etc.—In column (a),enter the total compensation for the year

of all officers, directors, and trustees. Ifnone was paid, enter zero. Complete line1 of Part VIII to show the compensationof officers, directors, trustees, andfoundation managers.

In columns (b), (c), and (d), enter theportion of the compensation included incolumn (a) that is applicable to thecolumn. For example, in column (c) enterthe portion of the compensation includedin column (a) that was paid or incurred toproduce or collect income included incolumn (c).Line 14—Other employee salaries andwages.— Enter the salaries and wagesof all employees other than those included

on line 13.Line 15—Contributions to employeepension plans and other benefits.—Enter the employer's share of thecontributions the organization paid toqualified and nonqualified pension plansand the employer's share of contributionsto employee benefit programs (such asinsurance, health, and welfare programs)that are not an incidental part of a pensionplan. Complete the return/report of theForm 5500 series appropriate for theorganization's plan. (See the Instructionsfor Form 5500 for information aboutemployee welfare benefit plans requiredto file that form.)

Also include the amount of Federal,state, and local payroll taxes for the year,but only those that are imposed on theorganization as an employer. Thisincludes the employer's share of socialsecurity and Medicare taxes, FUTA tax,state unemployment compensation tax,and other state and local payroll taxes.Do not include taxes withheld fromemployees' salaries and paid over to thevarious governmental units (such asFederal and state income taxes and theemployee's share of social security andMedicare taxes).

Lines 16a, b, and c—Legal, accounting,and other professional fees.— On theappropriate line(s), enter the amount oflegal, accounting, auditing, and otherprofessional fees (such as fees forfundraising or investment services)charged by outside firms andindividuals who are not employees of thefoundation.

Attach a schedule for lines 16a, b, andc. Show the type of service and amountof expense for each. If the same person

provided more than one of these services,include an allocation of those expenses.Report any fines, penalties, or judgmentsimposed against the foundation as aresult of legal proceedings on line 23,Other expenses.Line 18—Taxes.— Enter the taxes paid(or accrued) during the year. Include alltypes of taxes recorded on the books,including real estate tax not reported online 20; the tax on investment income; andany income tax. Do not enter any taxesincluded on line 15. Attach a schedulelisting the type and amount of each taxreported on line 18.

In column (b), enter only those taxes

included in column (a) that are related toinvestment income taxable under section4940. Do not include the section 4940 taxpaid or incurred on net investment incomeor the section 511 tax on unrelatedbusiness income. Sales taxes may not bededucted separately, but must be treatedas a part of the cost of acquired property,or as a reduction of the amount realizedon disposition of the property.

In column (c), enter only those taxesincluded in column (a) that relate toincome included in column (c). Do notinclude any excise tax paid or incurred onthe net investment income (as shown inPart VI), or any tax reported on Form

990-T.In column (d), do not include anyexcise tax paid on investment income (asreported in Part VI of this return or theequivalent part of a return for prior years)unless the organization is claiming statusas a private operating foundation andcompletes Part XIV.Line 19—Depreciation anddepletion.—In column (a), enter theexpense recorded in the books for theyear.

For depreciation, attach a scheduleshowing: (a) description of the property,(b) date acquired, (c) cost or other basis(exclude any land), (d) depreciation

allowed or allowable in prior years, (e)method of computation, (f) rate (%) or life(years), and (g) depreciation this year.On a separate line on the schedule, showthe amount of depreciation included incost of goods sold and not included online 19.

In columns (b) and (c), a deduction fordepreciation is allowed only for propertyused in the production of income reportedin the column, and only using the straightline method of computing depreciation. Adeduction for depletion is allowed but

must be figured only using the costdepletion method.

The basis used in figuring depreciationand depletion is the basis determinedunder normal basis rules, without regardto the special rules for using the fairmarket value on December 31, 1969, thatrelate only to gain or loss on dispositionsfor purposes of the tax on net investmentincome.Line 20—Occupancy.— Enter theamount paid or incurred for the use of

office space or other facilities. If the spaceis rented or leased, enter the amount ofrent. If the space is owned, enter theamount of mortgage interest, real estatetaxes, and similar expenses, but notdepreciation (reportable on line 19). Ineither case, include the amount for utilitiesand related expenses, e.g., heat, lights,water, power, telephone, sewer, trashremoval, outside janitorial services, andsimilar services. Do not include anysalaries of the organization's ownemployees that are reportable on line 14.Line 21—Travel, conferences, andmeetings.— Enter the expenses forofficers, employees or others during the

year for travel, attending conferences,meetings, etc. Include transportation(including fares, mileage allowance, orautomobile expenses), meals andlodging, and related costs whether paidon the basis of a per diem allowance oractual expenses incurred. Do not includeany compensation paid to those whoparticipate.

In column (b), only 50% of theexpense for business meals, etc., paid orincurred in connection with travel,meetings, etc., relating to the productionof investment income, may be deductedin figuring net investment income (section274(n)).

In column (c), enter the total amountof expenses paid or incurred by officers,employees, or others for travel,conferences, meetings, etc., related toincome included in column (c).Line 22—Printing and publications.—Enter the expenses for printing orpublishing and distributing anynewsletters, magazines, etc. Also includethe cost of subscriptions to, or purchasesof, magazines, newspapers, etc.Line 23—Other expenses.— Enter allother expenses for the year. Include allexpenses not reported on lines 13–22.Attach a schedule showing the type andamount of each expense.

If a deduction is claimed foramortization, attach a schedule showing:q Description of the amortized expenses;q Date acquired, completed, orexpended;q Amount amortized;q Deduction for prior years;q Amortization period (number ofmonths);q Current-year amortization; andq Total amount of amortization.




In column (c), in addition to theapplicable portion of expenses fromcolumn (a), include any net loss from thesale or exchange of land or depreciableproperty that was held for more than 1year and used in a trade or business.

A deduction for amortization is allowedbut only for assets used for the productionof income reported in column (c).Line 25—Contributions, gifts, grantspaid.— Enter the total of all contributions,gifts, grants, and similar amounts paid (or

accrued) for the year. List eachcontribution, gift, grant, etc., in Part XV,or attach a schedule of the items includedon line 25 and list: (a) each class ofactivity, (b) separate total for each activity,(c) name and address of donee, (d)relationship of donee, if related by blood,marriage, adoption, or employment(including children of employees) to anydisqualified person (see GeneralInstruction C for definitions), and (e) theorganizational status of donee (forexample, public charity—an organizationdescribed in section 509(a)(1), (2), or (3)).You do not have to give the name of anyindigent person who received one or more

gifts or grants from the foundation unlessthat individual is a disqualified person orone who received a total of more than$1,000 from the foundation during theyear.

Activities should be classified accordingto purpose and in greater detail thanmerely classifying them as charitable,educational, religious, or scientificactivities. For example, use identificationsuch as: payments for nursing service,for fellowships, or for assistance toindigent families.

Foundations may include, as a singleentry on the schedule, the total ofamounts paid as grants for which the

foundation exercised expenditureresponsibility. Attach a separate report foreach grant.

When the fair market value of theproperty at the time of disbursement is themeasure of a contribution, the schedulemust also show: (a) description of thecontributed property, (b) book value of thecontributed property, (c) the method usedto determine the book value, (d) themethod used to determine the fair marketvalue, and (e) the date of the gift. Thedifference between fair market value andbook value should be shown in the booksof account and as a net asset adjustmentin Part III.

In column (d), enter all contributions,gifts, and grants the foundation paidduring the year on line 25.q Do not include contributions toorganizations controlled by the foundationor by a disqualified person (see GeneralInstruction C for definitions). Do notinclude contributions to nonoperatingfoundations unless the donees areexempt from tax under section 501(c)(3),they redistribute the contributions, andthey maintain sufficient evidence ofredistributions according to theregulations under section 4942(g).

q Do not reduce the amount of grantspaid in the current year by the amount ofgrants paid in a prior year that wasreturned or recovered in the current year.Report those repayments in column (c),line 9, and in Part XI, line 4a.q Do not include any payments ofset-asides (see instructions for Part XII,line 3) taken into account as qualifyingdistributions in the current year or anyprior year. All set-asides are included inqualifying distributions (Part XII, line 3) in

the year of the set-aside regardless ofwhen paid.q Do not include current year's write-offsof prior years' program-relatedinvestments. All program-relatedinvestments are included in qualifyingdistributions (Part XII, line 1b) in the yearthe investment is made.q Do not include any payments that arenot qualifying distributions as defined insection 4942(g)(1).

Net Amounts

Line 27a—Excess of revenue overexpenses.— Subtract line 26, column (a),from line 12, column (a). Enter the result.

Generally, the amount shown in column(a) on this line is also the amount bywhich net assets (or fund balances) haveincreased or decreased for the year. Seethe instructions for Part III, Analysis ofChanges in Net Assets or Fund Balances.Line 27b—Net investment income.—Domestic organizations, subtract line 26from line 12. Enter the result. Exemptforeign organizations, enter the amountshown on line 12.

The amount entered is subject to theexcise tax imposed on private foundations(domestic organizations— 1% (section4940(e)), 2% (section 4940(a) or (b)),exempt foreign organizations—4%

(section 4948)) as computed in Part VI.However, if the organization is adomestic organization and line 26 is morethan line 12 (i.e., expenses exceedincome), enter zero (not a negativeamount).Line 27c—Adjusted net income.—Subtract line 26, column (c) from line 12,column (c) and enter the result.

Part II—Balance SheetsFor column (b), show the book value atthe end of the year. For column (c), showthe fair market value at the end of theyear. Attached schedules must show theend-of-year value for each asset listed incolumns (b) and (c).q Foundations whose books of accountincluded total assets of $5,000 or moreat any time during the year must completeall of columns (a), (b), and (c).q Foundations with less than $5,000 oftotal assets per books at all times duringthe year must complete all of columns (a)and (b), and only line 16 of column (c).Note: A foundation that is changing its method of accounting to comply with SFAS No. 116 should not restate its beginning of year statement of financial

position (balance sheet) to reflect any prior period adjustments. See Part III—Analysis of Changes in Net Assets or Fund Balances to find where to show any adjustment required by section 481(a).

Line 1—Cash—Non-interest-bearing.— Enter the amount of cash ondeposit in checking accounts, deposits intransit, change funds, petty cash funds,or any other non-interest-bearing account.Do not include advances to employeesor officers or refundable deposits paid to

suppliers or others.Line 2—Savings and temporary cashinvestments.— Enter the total of cash insavings or other interest-bearing accountsand temporary cash investments, such asmoney market funds, commercial paper,certificates of deposit, and U.S. Treasurybills or other governmental obligationsthat mature in less than 1 year.Line 3—Accounts receivable.— On thedashed lines to the left of column (a),enter the year-end figures for totalaccounts receivable and allowance fordoubtful accounts from the sale of goodsand/or the performance of services. Incolumns (a), (b), and (c), enter net

amounts (total accounts receivablereduced by the corresponding allowancefor doubtful accounts). Claims againstvendors or refundable deposits withsuppliers or others may be reported hereif not significant in amount. (Otherwise,report them on line 15, Other assets.) Anyreceivables due from officers, directors,trustees, foundation managers, or otherdisqualified persons must be reported online 6. Report receivables (including loansand advances) due from other employeeson line 15.Line 4—Pledges receivable.— On thedashed lines to the left of column (a),enter the year-end figures for total

pledges receivable and allowance fordoubtful accounts (pledges estimated tobe uncollectable). In columns (a), (b), and(c), enter net amounts (total pledgesreceivable reduced by the correspondingallowance for doubtful accounts).Line 5—Grants receivable.— Enter thetotal grants receivable from governmentalagencies, foundations, and otherorganizations as of the beginning and endof the year.Line 6—Receivables due from officers,directors, trustees, and otherdisqualified persons.— Enter here (andon an attached schedule describedbelow) all receivables due from officers,

directors, trustees, foundation managers,and other disqualified persons and allsecured and unsecured loans (includingadvances) to such persons. “Disqualifiedperson” is defined in GeneralInstruction C.

Attached schedules.—(a) On therequired schedule, report each loanseparately, even if more than one loanwas made to the same person, or thesame terms apply to all loans made.

Salary advances and other advancesfor the personal use and benefit of therecipient and receivables subject to




special terms or arising from transactionsnot functionally related to the foundation'scharitable purposes must be reported asseparate loans for each officer, director,etc.

(b) Receivables that are subject to thesame terms and conditions (includingcredit limits and rate of interest) asreceivables due from the general publicfrom an activity functionally related to thefoundation's charitable purposes may bereported as a single total for all the

officers, directors, etc. Travel advancesmade for official business of theorganization may also be reported as asingle total.

For each outstanding loan or otherreceivable that must be reportedseparately, the attached schedule shouldshow the following information (preferablyin columnar form):1. Borrower's name and title.2. Original amount.3. Balance due.4. Date of note.5. Maturity date.6. Repayment terms.

7. Interest rate.8. Security provided by the borrower.9. Purpose of the loan.10. Description and fair market valueof the consideration furnished by thelender (for example, cash—$1,000; or100 shares of XYZ, Inc., common stock—$9,000).

The above detail is not required forreceivables or travel advances that maybe reported as a single total (see (b) above); however, report and identify thosetotals separately on the attachment.Line 7—Other notes and loansreceivable.— On the dashed lines to theleft of column (a), enter the combined total

year-end figures for notes receivable andloans receivable and the allowance fordoubtful accounts.

Notes receivable.— In columns (a),(b), and (c), enter the amount of all notesreceivable not listed on line 6 and notacquired as investments. Attach aschedule similar to the one for line 6. Theschedule should also identify therelationship of the borrower to any officer,director, trustee, foundation manager, orother disqualified person.

For a note receivable from any section501(c)(3) organization, list only the nameof the borrower and the balance due onthe required schedule.

Loans receivable.— In columns (a),(b), and (c), enter the gross amount ofloans receivable, minus the allowance fordoubtful accounts, from the normalactivities of the filing organization (suchas scholarship loans). An itemized list ofthese loans is not required but attach aschedule showing the total amount ofeach type of outstanding loan. Reportloans to officers, directors, trustees,foundation managers, or other disqualified

persons on line 6 and loans to otheremployees on line 15.Line 8—Inventories for sale or use.—Enter the amount of materials, goods, andsupplies purchased or manufactured bythe organization and held for sale or usein some future period.Line 9—Prepaid expenses anddeferred charges.— Enter the amountof short-term and long-term prepaymentsof expenses attributable to one or morefuture accounting periods. Examples

include prepayments of rent, insurance,and pension costs, and expensesincurred in connection with a solicitationcampaign to be conducted in a futureaccounting period.Lines 10a, b, and c—Investments—government obligations, corporatestocks and bonds.— Enter the bookvalue (which may be market value) ofthese investments.

Attach a schedule that lists eachsecurity held at the end of the year andshows whether the security is listed atcost (including the value recorded at thetime of receipt in the case of donatedsecurities) or end-of-year market value.

Do not include amounts shown on line 2.Governmental obligations reported on line10a are those that mature in 1 year ormore. Debt securities of the U.S.Government may be reported as a singletotal rather than itemized. Obligations ofstate and municipal governments mayalso be reported as a lump-sum total. Donot combine U.S. Government obligationswith state and municipal obligations onthis schedule.Line 11—Investments—land, buildings,and equipment.— On the dashed linesto the left of column (a), enter theyear-end book value (cost or other basis)and accumulated depreciation of all land,

buildings, and equipment held forinvestment purposes, such as rentalproperties. In columns (a) and (b), enterthe book value of all land, buildings, andequipment held for investment lessaccumulated depreciation. In column (c),enter the fair market value of theseassets. Attach a schedule listing theseinvestment fixed assets held at the endof the year and showing, for each item orcategory listed, the cost or other basis,accumulated depreciation, and bookvalue.Line 12—Investments—mortgageloans.— Enter the amount of mortgageloans receivable held as investments but

do not include program-relatedinvestments (see instructions for line 15).Line 13—Investments—other.— Enterthe amount of all other investmentholdings not reported on lines 10 through12. Attach a schedule listing anddescribing each of these investments heldat the end of the year. Show the bookvalue for each and indicate whether theinvestment is listed at cost or end-of-yearmarket value. Do not includeprogram-related investments (seeinstructions for line 15).

Line 14—Land, buildings, andequipment.— On the dashed lines to theleft of column (a), enter the year-end bookvalue (cost or other basis) andaccumulated depreciation of all land,buildings, and equipment owned by theorganization and not held for investment.In columns (a) and (b), enter the bookvalue of all land, buildings, and equipmentnot held for investment less accumulateddepreciation. In column (c), enter the fairmarket value of these assets. Include any

property, plant, and equipment ownedand used by the organization to conductits charitable activities. Attach a schedulelisting these fixed assets held at the endof the year and showing the cost or otherbasis, accumulated depreciation, andbook value of each item or category listed.Line 15—Other assets.— List and showthe book value of each category of assetsnot reportable on lines 1 through 14.Attach a separate schedule if more spaceis needed.

One type of asset reportable on line 15is program-related investments. Theseare investments made primarily toaccomplish a charitable purpose of the

filing organization rather than to produceincome.Line 16—Total assets.— All filers mustcomplete line 16 of columns (a), (b), and(c). These entries represent the totals oflines 1 through 15 of each column.However, organizations that have assetsof less than $5,000 per books at all timesduring the year need not complete lines1 through 15 of column (c).Line 17—Accounts payable andaccrued expenses.— Enter the total ofaccounts payable to suppliers and othersand accrued expenses, such as salariespayable, accrued payroll taxes, andinterest payable.

Line 18—Grants payable.— Enter theunpaid portion of grants and awards thatthe organization has made a commitmentto pay other organizations or individuals,whether or not the commitments havebeen communicated to the grantees.Line 19—Deferred revenue.— Includerevenue that the organization hasreceived but not yet earned as of thebalance sheet date under its method ofaccounting.Line 20—Loans from officers,directors, trustees, and otherdisqualified persons.— Enter the unpaidbalance of loans received from officers,directors, trustees, and other disqualified

persons. For loans outstanding at the endof the year, attach a schedule that shows(for each loan) the name and title of thelender and the information listed in items2 through 10 of the instructions for line 6on page 13.Line 21—Mortgages and other notespayable.— Enter the amount ofmortgages and other notes payable at thebeginning and end of the year. Attach aschedule showing, as of the end of theyear, the total amount of all mortgagespayable and, for each nonmortgage notepayable, the name of the lender and the




other information specified in items 2through 10 of the instructions for line 6.The schedule should also identify therelationship of the lender to any officer,director, trustee, foundation manager, orother disqualified person.Line 22—Other liabilities.— List andshow the amount of each liability notreportable on lines 17 through 21. Attacha separate schedule if more space isneeded.

Lines 24 Through 30—Net Assetsor Fund Balances

The Financial Accounting StandardsBoard issued Statement of FinancialAccounting Standards (SFAS) 117,Financial Statements of Not-for-ProfitOrganizations. SFAS 117 providesstandards for external financialstatements certified by an independentaccountant for certain types of nonprofitorganizations including privatefoundations.

While some states may requirereporting in accordance with SFAS 117(see General Instruction F), IRS does not.However, a Form 990-PF return prepared

in accordance with SFAS 117 will beacceptable to IRS.Organizations that follow SFAS 117.—If the organization follows SFAS 117,check the box above line 24. Classify andreport net assets in three groups—unrestricted, temporarily restricted, andpermanently restricted—based on theexistence or absence of donor-imposedrestrictions and the nature of thoserestrictions. Show the sum of the threeclasses of net assets on line 30. On line31, add the amounts on lines 23 and 30to show total liabilities and net assets.This figure should be the same as thefigure for Total assets on line 16.

Line 24—Unrestricted.— Enter thebalances per books of the unrestrictedclass of net assets. Unrestricted netassets are neither permanently restrictednor temporarily restricted bydonor-imposed stipulations. All fundswithout donor-imposed restrictions mustbe classified as unrestricted, regardlessof the existence of any board designationsor appropriations.Line 25—Temporarily restricted.—Enter the balances per books of thetemporarily restricted class of net assets.Donors' temporary restrictions mayrequire that resources be used in a laterperiod or after a specified date (time

restrictions), or that resources be used fora specified purpose (purpose restrictions),or both.Line 26—Permanently restricted.—Enter the total of the balances for thepermanently restricted class of net assets.Permanently restricted net assets are (a)assets, such as land or works of art,donated with stipulations that they beused for a specified purpose, bepreserved, and not be sold or (b) assetsdonated with stipulations that they beinvested to provide a permanent sourceof income. The latter result from gifts and

bequests that create permanentendowment funds.Organizations that do not follow SFAS117.— If the organization does not followSFAS 117, check the box above line 27and report account balances on lines 27through 29. Report net assets or fundbalances on line 30. Also complete line31 to report the sum of the total liabilitiesand net assets/fund balances.Line 27—Capital stock, trust principal,or current funds.— For corporations,

enter the balance per books for capitalstock accounts. Show par or stated value(or for stock with no par or stated value,total amount received upon issuance) ofall classes of stock issued and, as yet,uncancelled. For trusts, enter the amountin the trust principal or corpus account.For organizations continuing to use thefund method of accounting, enter the fundbalances for the organization's currentrestricted and unrestricted funds.Line 28—Paid-in or capital surplus, orland, bldg., and equipment fund.—Enter the balance per books for all paid-incapital in excess of par or stated value forall stock issued and uncancelled. If

stockholders or others gave donationsthat the organization records as paid-incapital, include them here. Report anycurrent-year donations you included online 28 in Part I, line 1. The fund balancefor the land, building, and equipment fundwould be entered here.Line 29—Retained earnings,accumulated income, endowment, orother funds.— For corporations, enterthe balance in the retained earnings, orsimilar account, minus the cost of anycorporate treasury stock. For trusts, enterthe balance per books in the accumulatedincome or similar account. Fororganizations using fund accounting,

enter the total of the fund balances for thepermanent and term endowment funds aswell as balances of any other funds notreported on lines 27 and 28.Line 30—Total assets or fundbalances.— For organizations that followSFAS 117, enter the total of lines 24through 26. For all other organizations,enter the total of lines 27 through 29.Enter the beginning-of-year figure incolumn (a) on line 1, Part III. Theend-of-year figure in column (b) mustagree with the figure in Part III, line 6.Line 31—Total liabilities and netassets/fund balances.— Enter the totalof lines 23 and 30. This amount must

equal the amount for total assets reportedon line 16 for both the beginning and endof the year.

Part III—Analysis of Changesin Net Assets or FundBalancesGenerally, the excess of revenue overexpenses accounts for the differencebetween the net assets at the beginningand end of the year. On line 2, Part III,re-enter the figure from Part I, line 27(a),column (a). On lines 3 and 5, list any

changes in net assets that were notcaused by the receipts or expensesshown in Part I, column (a). For example,if an asset is shown in the ending balancesheet at a higher value than in thebeginning balance sheet because of anincreased market value, include theincrease in Part III, line 3.

If an organization changes itsaccounting method for tax purposes toconform with the method provided inSFAS 116, it should report any increase

required by section 481(a) on line 3 andidentify the adjustment as the effect ofchanging to the methods provided inSFAS 116.

If the organization uses a stepped-upbasis to determine gains on sales ofassets included in Part I, column (a), theninclude the amount of step-up in basis inPart III. If you entered a contribution, gift,or grant of property valued at fair marketvalue on line 25 of Part I, column (a), thedifference between fair market value andbook value should be shown in the booksof account and as a net asset adjustmentin Part III.

Part IV—Capital Gains andLosses for Tax onInvestment IncomeUse Part IV to figure the amount of netcapital gain to report on lines 7 and 8 ofPart I.q Part IV does not apply to foreignorganizations.q Nonoperating private foundations maynot have to figure their short-term capitalgain or loss on line 3. See the rules forNonoperating Private Foundations onpage 9.

Private foundations must report gainsand losses from the sale or other

disposition of property used to produceinterest, dividends, rents, royalties, orunrelated income. If the foundationdisposes of property that is used toproduce income subject to the unrelatedbusiness income tax, include any gain orloss from the sale of that property in netinvestment income, but only the part thatis not included in the computation ofunrelated business taxable income.

Property is treated as held forinvestment purposes if the property is ofa type that generally produces interest,dividends, rents or royalties, even if thefoundation disposes of the property assoon as it receives it.

Do not include any gain or loss fromdisposing of property used for thefoundation's charitable purposes in thecomputation of tax on net investmentincome. If the foundation uses property forits charitable purposes, but alsoincidentally derives income from theproperty that is subject to the netinvestment income tax, any gain or lossfrom the sale or other disposition of theproperty is not subject to the tax.

However, if the foundation usesproperty both for charitable purposes and(other than incidentally) for investment




purposes, include in the computation oftax on net investment income the part ofthe gain or loss from the sale ordisposition of the property that is allocableto the investment use of the property.

Do not include gains or losses from thesale or exchange of program-relatedinvestments as defined in the instructionsfor Part IX-B.

All of the capital gains reported on line2, both short term and long term, aretaxed at the same rate.

For details, see section 4940(c)(4).Losses.— If the disposition of investmentproperty results in a loss, that loss maybe subtracted from capital gains realizedfrom the disposition of property during thesame tax year but only to the extent of thegains. If losses are more than gains, theexcess may not be subtracted from grossinvestment income, nor may the lossesbe carried back or forward to other taxyears.Basis.— The basis for determining gainfrom the sale or other disposition ofproperty is the larger of:1. The fair market value of the propertyon December 31, 1969, plus or minus alladjustments after December 31, 1969,and before the date of disposition, if thefoundation held the property on that dateand continuously after that date untildisposition; or2. The basis of the property on the dateof disposition under normal basis rules(actual basis). See Code sections1011–1021.

The rules that generally apply toproperty dispositions reported in this partare:q Section 1011, Adjusted basis fordetermining gain or loss.q Section 1012, Basis of property—cost.q

Section 1014, Basis of propertyacquired from a decedent.q Section 1015, Basis of propertyacquired by gifts and transfers in trust.q Section 1016, Adjustments to basis.

To figure a loss, basis on the date ofdisposition is determined under normalbasis rules.

See Chapter IV of Pub. 578 forexamples on how to determine gain orloss. The completed Form 990-PF inPackage 990-PF, Returns for PrivateFoundations or Section 4947(a)(1)Nonexempt Charitable Trusts Treated asPrivate Foundations, contains an exampleof a sale of investment property in which

the gain was computed using the donor'sbasis under the rules of section 1015(a).

Part V—Qualification UnderSection 4940(e) for ReducedTax on Net InvestmentIncomeThis part is used by exempt domesticprivate foundations to determine whetherthey qualify for the reduced 1% tax undersection 4940(e) on net investment income

rather than the 2% tax on net investmentincome under section 4940(a).

Do not complete Part V if this is theorganization's first year. A privatefoundation cannot qualify under section4940(e) for its first year of existence, norcan a former public charity qualify for thefirst year it is treated as a privatefoundation.

A separate computation must be madefor each year in which the foundationwants to qualify for the reduced tax.

Line 1, column (b).— Enter the amountof adjusted qualifying distributions madefor each year shown. The amounts incolumn (b) are taken from Part XIII, line8, of the 1991 Form 990-PF and from PartXII, line 6, for 1992–95.Line 1, column (c).— Enter the net valueof noncharitable-use assets for each year.The amounts in column (c) are taken fromPart X, line 5, for 1991–95.

Part VI—Excise Tax onInvestment Income (Section4940(a), 4940(b), 4940(e), or4948)Rules for tax on investment income.—Generally, domestic exempt privatefoundations are subject to a 2% tax on netinvestment income under section 4940(a).However, certain exempt operatingfoundations described in section4940(d)(2) may not owe any tax andcertain private foundations that meet therequirements of section 4940(e) mayqualify for a reduced tax of 1% (see thePart V instructions).

Domestic section 4947(a)(1)nonexempt charitable trusts and taxableprivate foundations are subject to amodified 2% tax on net investment

income under section 4940(b). However,they must first compute the tax undersection 4940(a) as if that tax applied tothem.

The section 4940 tax does not apply toan organization making an election undersection 41(e)(6). Enter “N/A” in Part VI.

Under section 4948, exempt foreignprivate foundations are subject to a 4%tax on their gross investment incomederived from U.S. sources.

Other foreign organizations that filedForm 1040NR, U.S. Nonresident AlienIncome Tax Return, or Form 1120-F, U.S.Income Tax Return of a ForeignCorporation, enter “N/A” in Part VI.

Note: A private foundation must pay estimated taxes on its net investment income. See General Instruction O for more information.

Tax Computation

Line 1a.—

Note: Line 1a only applies to domestic exempt operating foundations that are described in section 4940(d)(2) and that have a ruling letter from IRS establishing exempt operating foundation status. If

your organization does not have this letter, skip line 1a.

If your organization qualifies, check thebox and enter the date of the ruling letteron line 1a and enter “N/A” on line 1.Leave the rest of Part Vl blank. For thefirst year, the organization must attach acopy of the ruling letter establishingexempt operating foundation status. Aslong as the organization retains thisstatus, write the date of the ruling letter inthe space on line 1a. If the organization

no longer qualifies under section4940(d)(2), leave the date line blank andcompute the section 4940 tax in thenormal manner.

To qualify as an exempt operatingfoundation for a tax year, an organizationmust meet the following requirements ofsection 4940(d)(2):1. It is an operating foundationdescribed in section 4942(j)(3),2. It has been publicly supported for atleast 10 tax years or was a privateoperating foundation on January 1, 1983,or for its last tax year ending beforeJanuary 1, 1983,3. Its governing body, at all times

during the tax year, consists of individualsless than 25% of whom are disqualifiedindividuals, and is broadly representativeof the general public, and4. It has no officer who was adisqualified individual at any time duringthe tax year.

A domestic exempt private foundationthat qualifies as an exempt operatingfoundation under section 4940(d)(2) is notliable for any tax on net investmentincome on this return.Line 2—Section 511 tax.— Undersection 4940(b), a domestic section4947(a)(1) nonexempt charitable trust ortaxable private foundation must add to the

tax figured under section 4940(a) (on line1) the tax which would have beenimposed under section 511 for the taxyear if it had been exempt from tax undersection 501(a). If the domestic section4947(a)(1) nonexempt charitable trust ortaxable private foundation has unrelatedbusiness taxable income that would havebeen subject to the tax imposed bysection 511, the computation of tax mustbe shown in an attachment. Form 990-Tmay be used as the attachment. All otherfilers, enter zero.Line 4—Subtitle A tax.— Domesticsection 4947(a)(1) nonexempt charitabletrusts and taxable private foundations,

enter the amount of subtitle A (income)tax for the year reported on Form 1041or Form 1120. All other filers, enter zero.Line 5—Tax on investment income.—Subtract line 4 from line 3 and enter thedifference (but not less than zero) on line5. Any overpayment entered on line 10that is the result of a negative amountshown on line 5 will not be refunded.Unless the organization is a domesticsection 4947(a)(1) nonexempt charitabletrust or taxable private foundation, theamount on line 5 is the same as online 1.




Line 6—Credits/Payments.—

Note: Line 6a applies only to domestic organizations.Line 6a.— Enter the amount of 1996estimated tax payments, and any 1995overpayment of taxes that theorganization specified on its 1995 returnto be credited toward payment of 1996estimated taxes.Note: A trust may treat any part of estimated taxes it paid as taxes paid by

the beneficiary. If the filing organization received the benefit of such a payment from a trust, include the amount on line 6a of Part VI, and write, “includes section 643(g) payment.” See section 643(g) for more information about estimated tax payments treated as paid by a beneficiary.Line 6b.— Exempt foreign foundationsmust enter the amount of tax withheld atthe source.Line 6d.— Enter the amount of anybackup withholding erroneously withheld.Recipients of interest or dividendpayments must generally certify theircorrect tax identification number to the

bank or other payer on Form W-9,Request for Taxpayer IdentificationNumber and Certification. If the payerdoes not get this information, it mustwithhold part of the payments as “backupwithholding.” If the organization files Form990-PF and was subject to erroneousbackup withholding because the payer didnot realize the payee was an exemptorganization and not subject to thiswithholding, the organization can claimcredit for the amount withheld.Line 8—Penalty.— Enter any penalty forunderpayment of estimated tax shown onForm 2220. Form 2220 is used by bothcorporations and trusts.

Line 9—Tax due.— Domesticfoundations should see GeneralInstruction P for the depository method ofpayment. Domestic foundations owingless than $500 and all foreignorganizations should enclose a check ormoney order (in U.S. funds), madepayable to the Internal Revenue Service,with Form 990-PF.

Part VII-A—StatementsRegarding ActivitiesEach question in this section must beanswered “Yes,” “No,” or “N/A” (notapplicable).Line 1.— Political purposes include, butare not limited to: directly or indirectlyaccepting contributions or makingpayments to influence the selection,nomination, election, or appointment ofany individual to any Federal, state, orlocal public office or office in a politicalorganization, or the election ofpresidential or vice presidential electors,whether or not the individual or electorsare actually selected, nominated, elected,or appointed.

Line 1d. Organizations do not haveto complete line 1d unless their tax yearbegan after July 30, 1996.

Line 3.— A “conformed” copy of anorganizational document is one thatagrees with the original document and allits amendments. If copies are not signed,attach a written declaration signed by anofficer authorized to sign for theorganization, certifying that they arecomplete and accurate copies of theoriginal documents.Line 6.— For a private foundation to beexempt from income tax, its governinginstrument must include provisions that

require it to act or refrain from acting soas not to engage in an act of self-dealing(section 4941), or subject the foundationto the taxes imposed by sections 4942(failure to distribute income), 4943(excess business holdings), 4944(investments which jeopardize charitablepurpose), and 4945 (taxableexpenditures). A private foundation maysatisfy these section 508(e) requirementseither by express language in itsgoverning instrument or by application ofstate law which imposes the aboverequirements on the foundation or treatsthese requirements as being contained inthe governing instrument. If anorganization claims it satisfies therequirements of section 508(e) byoperation of state law, the provisions ofstate law must effectively impose thesection 508(e) requirements on theorganization. See Rev. Rul. 75-38, 1975-1C.B.161, for a list of states with legislationthat satisfies the requirements of section508(e).

However, if the state law does not applyto a governing instrument which containsmandatory directions conflicting with anyof its requirements and the organizationhas such mandatory directions in itsgoverning instrument, then theorganization has not satisfied therequirements of section 508(e) by theoperation of that legislation.Line 8a.— In the space provided list allstates:1. To which the organization reports inany way about its organization, assets,or activities; and2. With which the organization hasregistered (or which it has otherwisenotified in any manner) that it intends tobe, or is, a charitable organization or thatit is, or intends to be, a holder of propertydevoted to a charitable purpose.

Attach a separate list if you need morespace.Line 9.— If the organization claims status

as an operating foundation for 1996 and,in fact, meets the operating foundationrequirements for that year (as reflected inPart XIV), any excess distributionscarryover from 1995 or prior years maynot be carried over to any year after 1996in which it does not meet the operatingfoundation requirements. See theinstructions for Part XIII.Line 10—Substantial contributors.— Ifyou answer “Yes,” attach a schedulelisting the names and addresses of allpersons who became substantialcontributors during the year.

The term “substantial contributor”means any person whose contributionsor bequests during the current tax yearand prior tax years total more than $5,000and are more than 2% of the totalcontributions and bequests received bythe foundation from its creation throughthe close of its tax year. In the case of atrust, the term “substantial contributor”also means the creator of the trust(section 507(d)(2)).

The term “person” includes individuals,

trusts, estates, partnerships, associations,corporations, and other exemptorganizations.

Each contribution or bequest must bevalued at fair market value on the date itwas received.

Any person who is a substantialcontributor on any date will remain asubstantial contributor for all later periods.

However, a person will cease to be asubstantial contributor with respect to anyprivate foundation if:1. The person, and all related persons,made no contributions to the foundationduring the 10-year period ending with theclose of the taxable year;

2. The person, or any related person,was never the foundation's managerduring this 10-year period; and3. The aggregate contributions madeby the person, and related persons, aredetermined by the IRS to be insignificantcompared to the aggregate amount ofcontributions to the foundation by anyother person and the appreciated valueof contributions held by the foundation.

The term “related person” includes anyother person who would be a disqualifiedperson because of a relationship with thesubstantial contributor (section 4946).When the substantial contributor is acorporation, the term also includes any

officer or director of a corporation. Theterm “substantial contributor,” does notinclude public charities (organizationsdescribed in section 509(a)(1), (2), or (3)).Line 13—Section 4947(a)(1) trusts.—Section 4947(a)(1) nonexempt charitabletrusts that file Form 990-PF instead ofForm 1041 must complete this line. Thetrust should include exempt-interestdividends received from a mutual fund orother regulated investment company aswell as tax-exempt interest receiveddirectly.

Part VII-B—Activities for

Which Form 4720 May BeRequiredThe purpose of these questions is todetermine if there is any initial excise taxdue under sections 4941–4945, andsection 4955. If the answer is “Yes” toquestion 1b, 1c, 2b, 3b, 4a, 4b, or 5b,complete and file Form 4720, unless anexception applies.Line 1—Self-dealing.— The activitieslisted in 1a(1)–(6) are consideredself-dealing under section 4941 unlessone of the exceptions applies. See Pub.578.




The terms “disqualified person” and“foundation manager” are defined inGeneral Instruction C.Line 1b.— If you answered “Yes” to anyof the questions in 1a, you should answer“Yes” to 1b unless all of the acts engagedin were “excepted” acts. Excepted actsare described in Regulations sections53.4941(d)-3 and 4 and appear in Noticespublished in the Internal RevenueBulletin, relating to disaster assistance.Line 2—Taxes on failure to distribute

income.— If you answer “No” to question2b, attach a statement explaining:1. All the facts regarding the incorrectvaluation of assets, and2. The actions taken (or planned) tocomply with section 4942(a)(2)(B), (C),and (D) and the related regulations.Line 3a.— A private foundation is nottreated as having excess businessholdings in any enterprise if, together withrelated foundations, it owns 2% or less ofthe voting stock and 2% or less in valueof all outstanding shares of all classes ofstock. (See “disqualified person” underGeneral Instruction C.) A similarexception applies to a beneficial or profits

interest in any business enterprise that isa trust or partnership.

For more information about excessbusiness holdings, see Pub. 578 and theinstructions for Form 4720.Line 4—Taxes on investments thatjeopardize charitable purposes.— Ingeneral, an investment that jeopardizesany of the charitable purposes of a privatefoundation is one for which a foundationmanager did not exercise ordinarybusiness care to provide for the long- andshort-term financial needs of thefoundation in carrying out its charitablepurposes. For more details, see Pub. 578and the regulations under section 4944.

Line 5—Taxes on taxable expendituresand political expenditures.— In general,payments made for the activitiesdescribed on lines 5a(1)–(5) are taxableexpenditures. See Pub. 578 forexceptions.

A grant by a private foundation to apublic charity is not a taxable expenditureif the private foundation does not earmarkthe grant for any of the activitiesdescribed in lines 5a(1)–(5), and there isno oral or written agreement by which thegrantor foundation may cause the granteeto engage in any such prohibited activityor to select the grant recipient.

Grants made to exempt operating

foundations (as defined in section4940(d)(2) and the instructions to Part VI)are not subject to the expenditureresponsibility provisions of section 4945.

Under section 4955, a section 501(c)(3)organization must pay an excise tax forany amount paid or incurred on behalf ofor opposing any candidate for publicoffice. The organization must pay anadditional excise tax if it does not correctthe expenditure timely.

A manager of a section 501(c)(3)organization who knowingly agrees to apolitical expenditure must pay an excisetax unless the agreement is not willful andthere is reasonable cause. A managerwho does not agree to a correction of thepolitical expenditure may have to pay anadditional excise tax.

A section 501(c)(3) organization willlose its exempt status if it engages inpolitical activity.

A political expenditure that is treated

as an expenditure under section 4955 isnot treated as a taxable expenditureunder section 4945.

For purposes of the section 4955 tax,when an organization promotes acandidate for public office (or is used orcontrolled by a candidate or prospectivecandidate), amounts paid or incurred forthe following purposes are politicalexpenditures:1. Remuneration to the individual (orcandidate or prospective candidate) forspeeches or other services.2. Travel expenses of the individual.3. Expenses of conducting polls,surveys, or other studies, or preparingpapers or other material for use by theindividual.4. Expenses of advertising, publicity,and fundraising for such individual.5. Any other expense which has theprimary effect of promoting publicrecognition or otherwise primarilyaccruing to the benefit of the individual.

See the regulations under section 4945for more information.Line 5b.— If you answered “Yes” to anyof the questions in 5a, you should answer“Yes” to 5b unless all of the transactionsengaged in were “excepted” transactions.Excepted transactions are described in

Regulations section 53.4945 and appearin Notices published in the InternalRevenue Bulletin, relating to disasterassistance.

Part VIII—Information AboutOfficers, Directors, Trustees,Foundation Managers, HighlyPaid Employees, andContractorsLine 1—List of officers, directors,trustees, etc.— List the names,addresses, and other informationrequested for those who were officers,directors, and trustees (or any person whohad responsibilities or powers similar tothose of officers, directors, or trustees) ofthe foundation at any time during the year.Each must be listed whether or not theyreceive any compensation from thefoundation. Give the preferred address atwhich officers, etc., want the InternalRevenue Service to contact them. Enterzero in columns (c), (d), and (e) if nonewas paid. Attach a schedule if more spaceis needed.

Show all forms of compensation earnedby each listed officer, etc. In addition tocompleting Part VIII, if you want to explainthe compensation of one or more officers,directors, and trustees, you may providean attachment describing the person'sentire 1996 compensation package(s).

Column (c).— Enter salary, fees,bonuses, and severance paymentsreceived by each person listed. Includecurrent year payments of amountsreported or reportable as deferred

compensation in any prior year.Column (d).— Include all forms of

deferred compensation and futureseverance payments (whether or notfunded or vested, and whether or not thedeferred compensation plan is a qualifiedplan under section 401(a)). Includepayments to welfare benefit plans(employee welfare benefit plans coveredby Part I of Title 1 of ERISA, providingbenefits such as medical, dental, lifeinsurance, apprenticeship and training,scholarship funds, severance pay,disability, etc.) on behalf of the officers,etc. Reasonable estimates may be usedif precise cost figures are not readily

available.Unless the amounts are reported incolumn (c), report, as deferredcompensation in column (d), salaries andother compensation earned during theperiod covered by the return, but not yetpaid by the date the foundation files itsreturn.

Column (e).— Enter both taxable andnontaxable fringe benefits, expenseaccount and other allowances (other thande minimis fringe benefits described insection 132(e)). See Pub. 525 for moreinformation. Examples of allowancesinclude amounts for which the recipientdid not account to the organization or

allowances that were more than thepayee spent on serving the organization.Include payments made in connectionwith indemnification arrangements, thevalue of the personal use of housing,automobiles, or other assets owned orleased by the organization (or provided forthe organization's use without charge).Line 2—Compensation of fivehighest-paid employees.— Fill in theinformation requested for the fiveemployees (if any) who received thegreatest amount of annual compensationover $50,000. Do not include employeeslisted on line 1. Also enter the totalnumber of other employees who receivedmore than $50,000 in annualcompensation.

Show each listed employee's entirecompensation package for the periodcovered by the return. Include all formsof compensation that each listedemployee received in return for his or herservices. See the line 1 instructions formore details on includible compensation.




Line 3—Five highest-paid independentcontractors for professionalservices.— Fill in the informationrequested for the five highest-paidindependent contractors (if any), whetherindividuals or professional servicecorporations or associations, to whom theorganization paid more than $50,000 forthe year to perform personal services ofa professional nature for the organization(such as attorneys, accountants, anddoctors). Also show the total number of

all other independent contractors whoreceived more than $50,000 for the yearfor performing professional services.

Part IX-A—Summary ofDirect Charitable ActivitiesList the foundation's four largest programsas measured by the direct and indirectexpenses attributable to each that consistof the direct active conduct of charitableactivities. Whether any expenditure is forthe direct active conduct of a charitableactivity is determined, generally, by thedefinitions and special rules of section4942(j)(3) and the related regulations,which define a private operatingfoundation.

Except for significant involvement grantprograms, described below, do notinclude in Part IX-A any grants orexpenses attributable to administeringgrant programs, such as reviewing grantapplications, interviewing or testingapplicants, selecting grantees, andreviewing reports relating to the use of thegrant funds.

Include scholarships, grants, or otherpayments to individuals as part of anactive program in which the foundationmaintains some significant involvement.Related administrative expenses shouldalso be included. Examples of activeprograms and definitions of the term“significant involvement” are providedin Regulations sections53.4942(b)-1(b)(2) and 53.4942(b)-1(d).

Do not include any program-relatedinvestments (reportable in Part IX-B) inthe description and expense totals, but besure to include qualified set-asides fordirect charitable activities, reported on line3 of Part XII. Also, include in Part IX-A,amounts paid or set aside to acquireassets used in the direct active conductof charitable activities.

Expenditures for direct charitableactivities include, among others, amountspaid or set aside to:q Acquire or maintain the operatingassets of a museum, library, or historicsite or to operate the facility.q Provide goods, shelter, or clothing toindigents or disaster victims if thefoundation maintains some significantinvolvement in the activity rather thanmerely making grants to the recipients.q Conduct educational conferences andseminars.q Operate a home for the elderly ordisabled.

q Conduct scientific, historic, publicpolicy, or other research with significancebeyond the foundation's grant programthat does not constitute a prohibitedattempt to influence legislation.q Publish and disseminate the results ofsuch research, reports of educationalconferences, or similar educationalmaterial.q Support the service of foundation staffon boards or advisory committees of othercharitable organizations or on public

commissions or task forces.q Provide technical advice or assistanceto a governmental body, a governmentalcommittee, or subdivision of either, inresponse to a written request by thegovernmental body, committee, orsubdivision.q Conduct performing arts performances.q Provide technical assistance tograntees and other charitableorganizations. This assistance must havesignificance beyond the purposes of thegrants made to the grantees and must notconsist merely of monitoring or advisingthe grantees in their use of the grantfunds. Technical assistance involves the

furnishing of expert advice and relatedassistance regarding, for example:1. Compliance with governmentalregulations;2. Reducing operating costs orincreasing program accomplishments;3. Fundraising methods; and4. Maintaining complete and accuratefinancial records.

Report both direct and indirectexpenses in the expense totals. Directexpenses are those that can bespecifically identified as connected with aparticular activity. These include, amongothers, compensation and travel

expenses of employees and officersdirectly engaged in an activity, the costof materials and supplies utilized inconducting the activity, and fees paid tooutside firms and individuals inconnection with a specific activity.

Indirect (overhead) expenses are thosethat are not specifically identified asconnected with a particular activity butthat relate to the direct costs incurred inconducting the activity. Examples ofindirect expenses include: occupancyexpenses; supervisory and clericalcompensation; repair, rental, andmaintenance of equipment; expenses ofother departments or cost centers (suchas accounting, personnel, and payrolldepartments or units) that service thedepartment or function that incurs thedirect expenses of conducting an activity;and other applicable general andadministrative expenses, including thecompensation of top management, to theextent reasonably allocable to a particularactivity.

No specific method of allocation isrequired. The method used, however,must be reasonable and must be usedconsistently.

Examples of acceptable allocationmethods include:q Compensation that is allocated on atime basis.q Employee benefits that are allocated onthe basis of direct salary expenses.q Travel, conference, and meetingexpenses that are charged directly to theactivity which incurred the expense.q Occupancy expenses that are allocatedon a space-utilized basis.q Other indirect expenses that areallocated on the basis of direct salaryexpenses or total direct expenses.

Part IX-B—Summary ofProgram-RelatedInvestmentsSection 4944(c) and correspondingregulations define a program-relatedinvestment as one that is made primarilyto accomplish a charitable purpose of thefoundation and no substantial purpose ofwhich is to produce investment incomeor a capital gain from the sale of theinvestment. Examples of program-relatedinvestments include educational loans toindividuals and low-interest loans to othersection 501(c)(3) organizations.

On lines 1 and 2, list the two largestprogram-related investments made by thefoundation in 1996, whether or not theinvestments were still held by thefoundation at the end of the year.Combine all other program-relatedinvestments on line 3 and attach aschedule that lists the individualinvestments or groups of investmentsincluded. Include only those investmentsthat were reported in Part XII, line 1b, forthe current year. Do not include anyinvestments made in any prior year evenif they were still held by the foundation atthe end of 1996.

Investments consisting of loans toindividuals (such as educational loans)are not required to be listed separately butmay be grouped with otherprogram-related investments of the sametype. Loans to other section 501(c)(3)organizations and all other types ofprogram-related investments must belisted separately on lines 1 through 3 oron an attachment. The total of lines 1through 3 in the Amount column mustequal the amount reported on line 1b ofPart XII.

Part X—Minimum InvestmentReturnAll domestic foundations must completePart X. Foreign foundations that checkedbox D2 on page 1 do not have tocomplete Part X unless claiming statusas a private operating foundation.

Operating foundations, described insections 4942(j)(3) or 4942(j)(5), mustcomplete Part X in order to complete PartXIV.

A private foundation that is not a privateoperating foundation must pay out, asqualifying distributions, its minimum




investment return. This is generally 5%of the total fair market value of itsnoncharitable assets, subject to furtheradjustments as explained in theinstructions for Part XI. The amount of thisminimum investment return is figured inPart X and is used in Part XI to figure theamount that is required to be paid out (thedistributable amount).

In figuring the minimum investmentreturn, include only those assets that arenot actually used or held for use by the

organization for a charitable, educational,or other similar function that contributedto the charitable status of the foundation.Cash on hand and on deposit isconsidered used or held for use forcharitable purposes only to the extent ofthe reasonable cash balances reported inPart X, line 4. See the instructions forlines 1b and 4 below.

Assets that are held for the productionof income or for investment are notconsidered to be used directly forcharitable functions even though theincome from the assets is used for thecharitable functions. It is a factualquestion whether an asset is held for the

production of income or for investmentrather than used or held for use directlyby the foundation for charitable purposes.For example, an office building that isused to provide offices for employeesengaged in managing endowment fundsfor the foundation is not considered anasset used for charitable purposes.However, when property is used both forcharitable and other purposes, theproperty is considered used entirely forcharitable purposes if 95% or more of itstotal use is for that purpose. If less than95% of its total use is for charitablepurposes, a reasonable allocation mustbe made between charitable andnoncharitable use.

Certain assets are excluded entirelyfrom the computation of minimuminvestment return. These include pledgesof grants and contributions to be receivedin the future and future interests in estatesand trusts. See Pub. 578, chapter VII, formore details.Line 1a—Average monthly fair marketvalue of securities.— If marketquotations are readily available, afoundation may use any reasonablemethod to determine the average monthlyfair market value of securities such ascommon and preferred stock, bonds, andmutual fund shares, as long as thatmethod is consistently used. For example,a value for a particular month might bedetermined by the closing price on thefirst or last trading days of the month oran average of the closing prices on thefirst and last trading days of the month.Market quotations are considered readilyavailable if a security is any of thefollowing:q Listed on the New York or Americanstock exchange or any city or regionalexchange in which quotations appear ona daily basis, including foreign securitieslisted on a recognized foreign national orregional exchange.

q Regularly traded in the national orregional over-the-counter market forwhich published quotations are available.q Locally traded, for which quotations canbe readily obtained from establishedbrokerage firms.

If securities are held in trust for, or onbehalf of, a foundation by a bank or otherfinancial institution which values thosesecurities periodically using a computerpricing system, a foundation may use thatsystem to determine the value of the

securities. The system must beacceptable to the IRS for Federal estatetax purposes.

The foundation may reduce the fairmarket value of securities only to theextent that it can establish that thesecurities could only be liquidated in areasonable period of time at a price lessthan the fair market value because of:q The size of the block of the securities;q The fact that the securities held aresecurities in a closely held corporation;orq The fact that the sale of the securitieswould result in a forced or distress sale.

Any reduction in value allowed underthese provisions may not be more than10% of the fair market value (determinedwithout regard to any reduction in value).

Also, see Regulations sections53.4942(a)-2(c)(4)(i)(b), (c), and (iv)(a).Line 1b—Average of monthly cashbalances.— Compute cash balances ona monthly basis by averaging the amountof cash on hand on the first and last daysof each month. Include all cash balancesand amounts that may be used forcharitable purposes (see line 4 below) orset aside and taken as a qualifyingdistribution (see Part XII).Line 1c—Fair market value of all other

assets.— The fair market value of assetsother than securities is determinedannually except as described below. Thevaluation may be made by privatefoundation employees or by any otherperson even if that person is a disqualifiedperson. If the IRS accepts the valuation,it is valid only for the tax year for which itis made. A new valuation is required forthe next tax year.

A written, certified, and independentappraisal of the fair market value of anyreal estate, including any improvements,may be determined on a 5-year basis bya qualified person.

The person may not be a disqualifiedperson with respect to the privatefoundation or an employee of thefoundation.

Commonly accepted valuation methodsmust be used in making the appraisal. Avaluation based on acceptable methodsof valuing property for Federal estate taxpurposes will be considered acceptable.

The appraisal must include a closingstatement that, in the appraiser's opinion,the appraised assets were valuedaccording to valuation principles regularlyemployed in making appraisals of suchproperty, using all reasonable valuation

methods. The foundation must keep acopy of the independent appraisal for itsrecords. If a valuation is reasonable, thefoundation may use it for the tax year forwhich the valuation is made and for eachof the 4 following tax years.

Any valuation of real estate by acertified independent appraisal may bereplaced during the 5-year period by asubsequent 5-year certified independentappraisal or by an annual valuation asdescribed above. The most recent

valuation should be used to compute thefoundation's minimum investment return.If the valuation is made according to the

above rules, the IRS will continue toaccept it during the 5-year period forwhich it applies even if the actual fairmarket value of the property changesduring the period.

Valuation date.— An asset required tobe valued annually may be valued as ofany day in the private foundation's taxyear, provided the foundation values theasset as of that date in all tax years.However, a valuation of real estatedetermined on a 5-year basis by acertified, independent appraisal may be

made as of any day in the first tax yearof the foundation to which the valuationapplies.

Assets held for less than a tax year.— To determine the value of anasset held less than 1 tax year, divide thenumber of days the foundation held theasset by the number of days in the taxyear. Multiply the result by the fair marketvalue of the asset.Line 1e—Reduction claimed forblockage or other factors.— If the fairmarket value of any securities, real estateholdings, or other assets reported on lines1a and 1c reflects a blockage discount,marketability discount, or other reduction

from full fair market value because of thesize of the asset holding or because ofany other factor, enter on line 1e theaggregate amount of the discountsclaimed. Attach an explanation thatincludes the following information for eachasset or group of assets involved:1. A description of the asset or assetgroup (for example, 20,000 shares ofXYZ, Inc., common stock);2. For securities, the percentage of thetotal issued and outstanding securities ofthe same class that is represented by thefoundation's holding;3. The fair market value of the assetor asset group before any claimed

blockage discount or other reduction;4. The amount of the discount claimed;and5. A statement that explains why theclaimed discount is appropriate in valuingthe asset or group of assets for section4942 purposes.

In the case of securities, there arecertain limitations on the size of thereduction in value that can be claimed.See the discussion of reduction of fairmarket value of securities in theinstructions for Part X, line 1a.




Line 2—Acquisition indebtedness.—Enter the total acquisition indebtednessthat applies to assets included on line 1.For details, see section 514(c)(1).Line 4—Cash deemed held forcharitable activities.— Foundations mayexclude from the assets used in theminimum investment return computationthe reasonable cash balances necessaryto cover current administrative expensesand other normal and currentdisbursements directly connected with the

charitable, educational, or other similaractivities. The amount of cash that maybe excluded is generally 11 / 2% of the fairmarket value of all assets (minus anyacquisition indebtedness) as computed inPart X, line 3. However, if under the factsand circumstances an amount larger thanthe deemed amount is necessary to payexpenses and disbursements, then youmay enter the larger amount instead of11 / 2% of the fair market value on line 4. Ifyou use a larger amount, attach anexplanation.Line 6—Short tax periods.— If thefoundation's tax period is less than 12months, determine the applicable

percentage by dividing the number ofdays in the short tax period by 365 (or 366in a leap year). Multiply the result by 5%.Then multiply the modified percentage bythe amount on line 5 and enter the resulton line 6.

Part XI—DistributableAmountIf the organization is claiming status asa private operating foundation describedin section 4942(j)(3) or (j)(5) or if it is aforeign foundation that checked box D2on page 1, check the box in the headingfor Part XI. You do not need to completethis part. See the Part XIV instructions formore details on private operatingfoundations.

Section 4942(j)(5) organizations areclassified as private operating foundationsfor purposes of section 4942 only if theymeet the requirements of Regulationssection 53.4942(b)-1(a)(2).

The distributable amount for 1996 is theamount that the foundation must distributeby the end of 1997 as qualifyingdistributions to avoid the 15% tax on theundistributed portion.Line 4a.— Enter the total of recoveriesof amounts treated as qualifyingdistributions for any year under section4942(g). Include recoveries of part or all(as applicable) of grants previously made;proceeds from the sale or otherdisposition of property whose cost wastreated as a qualifying distribution whenthe property was acquired; and anyamount set aside under section 4942(g)to the extent it is determined that thisamount is not necessary for the purposesof the set-aside.Line 4b—Income distributions fromsection 4947(a)(2) trusts.— The incomeportion of distributions from split-interesttrusts on amounts placed in trust after

May 26, 1969, must be added to thedistributable amount, subject to thelimitation of Regulations section53.4942(a)-2(b)(2)(iii).

A “split-interest trust” is defined insection 4947(a)(2) as a trust that is notexempt from tax under section 501(a), notall of the unexpired interests of which aredevoted to charitable, religious,educational, and like purposes, and thathas amounts in trust for which a charitablecontributions deduction has been allowed.

If the foundation receives distributionswhich include amounts placed in trustbefore May 27, 1969, and amounts placedin trust after May 26, 1969, thesedistributions must be allocated betweenthose amounts to determine the extent towhich the distributions are included in thefoundation's distributable amount.Line 6—Deduction from distributableamount.— If the foundation wasorganized before May 27, 1969, and itsgoverning instrument or any otherinstrument continues to require theaccumulation of income after a judicialproceeding to reform the instrument hasterminated, then the amount of the

income required to be accumulated mustbe subtracted from the distributableamount beginning with the first tax yearafter the tax year in which the judicialproceeding was terminated. (See theinstructions for Part VII-A, line 6.)

Part XII—QualifyingDistributions“Qualifying distributions” are amountsspent or set aside for religious,educational, or similar charitablepurposes. The total amount of qualifyingdistributions for any year is used toreduce the distributable amount forspecified years to arrive at theundistributed income (if any) for thoseyears.Line 1a—Borrowed funds.— If thefoundation borrowed money in a tax yearbeginning before January 1, 1970, or laterborrows money under a writtencommitment binding on December 31,1969, the foundation may elect to treatany repayments of the loan principal afterDecember 31, 1969, as qualifyingdistributions at the time of repayment,rather than at the earlier time that theborrowed funds were actually distributed,only if:1. The money is used to makeexpenditures for a charitable or similarpurpose; and2. Repayment on the loan did not startuntil a year beginning after 1969.

On these loans, deduct any interestpayment from gross income to computeadjusted net income in the year paid.

To make this election, attach astatement to Form 990-PF for the first taxyear beginning after 1969 in which arepayment of loan principal is made andfor each tax year after that in which anyrepayment of loan principal is made. Thestatement should show:

q The lender's name and address.q The amount borrowed.q The specific use of the borrowed funds.q The private foundation's election totreat repayments of loan principal asqualifying distributions.

If this provision applies, add the totalof the repayments during the year to theamount from Part I, column (d), line 26.Enter this total in Part XII, line 1a. If itdoes not apply, enter the total from PartI, column (d), line 26.Line 1b—Program-relatedinvestments.— Enter the total of theAmount column in Part IX-B. See the PartIX-B instructions for the definition ofprogram-related investments.Line 3—Amounts set aside.— Amountsset aside may be treated as qualifyingdistributions only if the private foundationestablishes to the satisfaction of the IRSthat the amount will be paid for thespecific project within 60 months from thedate of the first set-aside and meets 1 or2 below.1. The project can be betteraccomplished by a set-aside than by the

immediate payment of funds (suitabilitytest), or2. The foundation meets therequirements of section 4942(g)(2)(B)(ii)(cash distribution test).

For a set-aside under 1 above, theorganization must apply for IRS approvalby the end of the tax year in which theamount is set aside. Write to the InternalRevenue Service, AssistantCommissioner (Employee Plans/ExemptOrganizations), CP:E:EO, 1111Constitution Avenue, NW, Washington,DC 20224.

The application for approval must giveall of the following information:

q The nature and purposes of the specificproject and the amount of the set-asidefor which approval is requested;q The amounts and approximate datesof any planned additions to the set-asideafter its initial establishment;q The reasons why the project can bebetter accomplished by the set-aside thanby the immediate payment of funds;q A detailed description of the project,including estimated costs, sources of anyfuture funds expected to be used forcompletion of the project, and the locationor locations (general or specific) of anyphysical facilities to be acquired orconstructed as part of the project; and

q A statement of an appropriatefoundation manager that the amounts setaside will actually be paid for the specificproject within a specified period of timeending within 60 months after the date ofthe first set-aside; or a statementexplaining why the period for paying theamount set aside should be extended andindicating the extension of timerequested. (Include in this statement thereason why the proposed project couldnot be divided into two or more projectscovering periods of no more than 60months each.)




For any set-aside under 2 above, theorganization must attach a schedule to itsannual information return showing howthe requirements are met. A schedule isrequired for the year of the set-aside andfor each subsequent year until theset-aside amount has been distributed.See Regulations section53.4942(a)-3(b)(7)(ii) for specificrequirements.Line 5—Reduced tax on investmentincome under section 4940(e).— If the

organization does not qualify for the 1%tax under section 4940(e), enter zero. SeeParts V and VI instructions.

Part XIII—UndistributedIncomeIf you checked box D2 on page 1, do notfill in this part.

If the organization is a private operatingfoundation for any of the years shown inPart XIII, do not complete the portions ofPart XIII that apply to those years. If thereare excess qualifying distributions for anytax year, do not carry them over to a yearin which the organization is a private

operating foundation or to any later year.For example, if a foundation made excessqualifying distributions in 1994 andbecame a private operating foundation in1996, the excess qualifying distributionsfrom 1994 could be applied against thedistributable amount for 1995 but not toany year after 1995.

The purpose of this part is to enable thefoundation to comply with the rules forapplying its qualifying distributions for theyear 1996. In applying the qualifyingdistributions, there are three basic steps.1. First, reduce any undistributedincome for 1995 (but not less than zero).2. The organization may use any part

or all remaining qualifying distributions for1996 to satisfy elections. For example, ifundistributed income remained for anyyear before 1995, it could be reduced tozero or, if the foundation wished, thedistributions could be treated asdistributions out of corpus.3. If no elections are involved, applyremaining qualifying distributions to the1996 distributable amount on line 4d. Ifthe remaining qualifying distributions aregreater than the 1996 distributableamount, the excess is treated as adistribution out of corpus on line 4e.

If for any reason the 1996 qualifyingdistributions do not reduce any 1995

undistributed income to zero, the amountnot distributed is subject to a 15% tax. Ifthe 1995 income remains undistributed atthe end of 1997, it could be subject againto the 15% tax. See section 4942(b) forthe circumstances under which thesecond-tier tax could be imposed.Line 1—Distributable amount.— Enterthe distributable amount for 1996 fromPart XI, line 7.Line 2—Undistributed income.— Enterthe distributable amount for 1995 andamounts for earlier years that remained

undistributed at the beginning of the 1996tax year.Line 2b.— Enter the amount ofundistributed income for years before1995.Line 3—Excess distributions carryoverto 1996.— If the foundation has madeexcess distributions out of corpus in prioryears, which have not been applied in anyyear, enter the amount for each year. Donot enter an amount for a particular yearif the organization was a private operating

foundation for any later year.Lines 3a through 3e.— Enter the amountof any excess distribution made on theline for each year listed. Do not includeany amount that was applied against thedistributable amount of an earlier year orthat was already used to meetpass-through distribution requirements.(See the instructions for line 7.)Line 3f.— This amount can be applied in1996.Line 4—Qualifying distributions.—Enter the total amount of qualifyingdistributions made in 1996 from Part XII,line 4. The total of the amounts appliedon lines 4a through 4e is equal to the

qualifying distributions made in 1996.Line 4a.— The qualifying distributions for1996 are first used to reduce anyundistributed income remaining from1995. Enter only enough of the 1996qualifying distributions to reduce the 1995undistributed income to zero.Lines 4b and 4c.— If there are any 1996qualifying distributions remaining afterreducing the 1995 undistributed incometo zero, one or more elections can bemade under Regulations section53.4942(a)-3(d)(2) to apply all or part ofthe remaining qualifying distributions toany undistributed income remaining fromyears before 1995 or to apply to corpus.

To make these elections, the organizationmust file a statement with the IRS orattach a statement, as described in theabove regulations section, to Form990-PF. An election made by filing aseparate statement with the IRS must bemade within the year for which theelection is made. Otherwise, attach astatement to the Form 990-PF filed for theyear the election was made. If theorganization elected to apply all or partof the remaining amount to theundistributed income remaining fromyears before 1995, enter the amount online 4b. If the organization elected to treatthose qualifying distributions as a

distribution out of corpus, enter theamount on line 4c.Note: Entering an amount on line 4b or 4c without submitting the required statement is not considered a valid election.

Line 4d.— Treat as a distribution of thedistributable amount for 1996 anyqualifying distributions for 1996 thatremain after reducing the 1995undistributed income to zero and afterelecting to treat any part of the remainingdistributions as a distribution out of corpus

or as a distribution of a prior year'sundistributed income. Enter only enoughof the remaining 1996 qualifyingdistributions to reduce the 1996distributable amount to zero.Line 4e.— Any 1996 qualifyingdistributions remaining after reducing the1996 distributable amount to zero shouldbe treated as an excess distribution outof corpus. This amount may be carriedover and applied to later years.Line 5—Excess qualifying distributions

carryover applied to 1996.— Enter anyexcess qualifying distributions from line3, which were applied to 1996, in both theCorpus column and the 1996 column.Apply the oldest excess qualifyingdistributions first. Thus, the organizationwill apply any excess qualifyingdistributions carried forward from 1991before those from later years.Line 6a.— Add lines 3f, 4c, and 4e.Subtract line 5 from the total. Enter thenet total in the Corpus column.Line 6c.— Enter only the undistributedincome from 1994 and prior years forwhich either a notice of deficiency undersection 6212(a) has been mailed for the

section 4942(a) first-tier tax, or on whichthe first-tier tax has been assessedbecause the organization filed a Form4720 for a tax year that began before1995.Lines 6d and 6e.— These amounts aretaxable under the provisions of section4942(a), except for any part that is duesolely to misvaluation of assets to whichthe provisions of section 4942(a)(2) arebeing applied (see Part VII-B, line 2b).Report the taxable amount on Form 4720.If the exception applies, attach anexplanation.Line 6f.— In the 1996 column, enter theamount by which line 1 is more than the

total of lines 4d and 5. This is theundistributed income for 1996. Theorganization must distribute the amountshown by the end of its 1997 tax year sothat it will not be liable for the tax onundistributed income.Line 7—Distributions out of corpus for1996 pass-through distributions.—1. If the foundation is the donee andreceives a contribution from anotherprivate foundation, the donor foundationmay treat the contribution as a qualifyingdistribution only if the donee foundationmakes a distribution equal to the fullamount of the contribution and thedistribution is a qualifying distribution that

is treated as a distribution of corpus. Thedonee foundation must, no later than theclose of the first tax year after the tax yearin which it receives the contributions,distribute an amount equal in value to thecontributions received in the prior tax yearand have no remaining undistributedincome for the prior year. For example, ifprivate foundation X received $1,000 intax year 1995 from foundation Y,foundation X would have to distribute the$1,000 as a qualifying distribution out ofcorpus by the end of 1996 and have noremaining undistributed income for 1995.




2. If a private foundation receives acontribution from an individual or acorporation and the individual is seekingthe 50% contribution base limit ondeductions for the tax year (or theindividual or corporation is not applyingthe limit imposed on deductions forcontributions to the foundation of capitalgain property), the foundation mustcomply with certain distributionrequirements.

By the 15th day of the 3rd month after

the end of the tax year in which thefoundation received the contributions, thedonee foundation must distribute asqualifying distributions out of corpus:a. An amount equal to 100% of allcontributions received during the year inorder for the individual contributor toreceive the benefit of the 50% limit ondeductions, andb. Distribute all contributions ofproperty only so that the individual orcorporation making the contribution is notsubject to the section 170(e)(1)(B)(ii)limitations.

If the organization is applying excessdistributions from prior years (i.e., any part

of the amount in Part XIII, line 3f) tosatisfy the distribution requirements ofsection 170(b)(1)(E) or 4942(g)(3), it mustmake the election under Regulationssection 53.4942(a)-3(c)(2). Also, seeRegulations section 1.170A-9(g)(2).

Enter on line 7 the total distributions outof corpus made to satisfy the restrictionson amounts received from donorsdescribed above.Line 8—Outdated excess distributionscarryover.— Because of the 5-yearcarryover limitation under section4942(i)(2), the organization must reduceany excess distributions carryover by anyamounts from 1991 that were not applied

in 1996.Line 9—Excess distributions carryoverto 1997.— Enter the amount by which line6a is more than the total of lines 7 and 8.This is the amount the organization mayapply to 1997 and following years.Line 10—Analysis of line 9.— In thespace provided for each year, enter theamount of excess distributions carryoverfrom that year that has not been appliedas of the end of the 1996 tax year. If thereis an amount on the line for 1992, it mustbe applied by the end of the 1997 tax yearsince the 5-year carryover period for 1992ends in 1997.

Part XIV—Private OperatingFoundationsAll organizations that claim status asprivate operating foundations undersection 4942(j)(3) or (5) for 1996 mustcomplete Part XIV.

For purposes of section 4942 only,certain elderly care facilities may beclassified as private operatingfoundations. To be so classified, theymust be operated and maintained for theprincipal purpose explained in section4942(j)(5) and also meet the endowment

test described below. If the foundation isa section 4942(j)(5) organization,complete only lines 1a, 1b, 2c, 2d, 2e, and3b. Enter “N/A” on all other lines in PartXIV.

The term “private operating foundation”means any private foundation that spendsat least 85% of the smaller of its adjustednet income or its minimum investmentreturn directly for the active conduct of theexempt purpose or functions for which thefoundation is organized and operated (the

Income Test) and that also meets one ofthe three tests below.1. Assets test.—65% or more of thefoundation's assets are devoted directlyto those activities or functionally relatedbusinesses, or both. Or 65% or more ofthe foundation's assets are stock of acorporation that is controlled by thefoundation, and substantially all of theassets of the corporation are devoted tothose activities or functionally relatedbusinesses.2. Endowment test.—The foundationnormally makes qualifying distributionsdirectly for the active conduct of theexempt purpose or functions for which it

is organized and operated in an amountthat is 2 / 3 or more of its minimuminvestment return.3. Support test.—The foundationnormally receives 85% or more of itssupport (other than gross investmentincome as defined in section 509(e)) fromthe public and from five or more exemptorganizations that are not described insection 4946(a)(1)(H) with respect to eachother or the recipient foundation. Notmore than 25% of the support (other thangross investment income) normally maybe received from any one of the exemptorganizations and not more than 1 / 2 of thesupport normally may be received from

gross investment income.See regulations under section 4942 forthe meaning of “directly for the activeconduct” of exempt activities for purposesof these tests.

A foundation may meet the income testand either the assets, endowment, orsupport test by satisfying the tests for any3 years during a 4-year period consistingof the tax year in question and the 3immediately preceding tax years. It mayalso meet the tests based on the total ofall related amounts of income or assetsheld, received, or distributed during that4-year period. A foundation may not useone method for satisfying the income test

and another for satisfying one of the threealternative tests. Thus, if a foundationmeets the income test on the3-out-of-4-year basis for a particular taxyear, it may not use the 4-yearaggregation method for meeting one ofthe three alternative tests for that sameyear.

In completing line 3c(3) of Part XIVunder the aggregation method, the largestamount of support from an exemptorganization will be based on the totalamount received for the 4-year periodfrom any one exempt organization.

A new private foundation must use theaggregation method to satisfy the tests forits first tax year in order to be treated asan operating foundation from thebeginning of that year. It must continue touse the aggregation method for its 2ndand 3rd tax years to maintain its status forthose years.

Part XV—SupplementaryInformation

q Complete this part only if the foundationhad assets of $5,000 or more at any timeduring the year.q This part does not apply to a foreignfoundation which during its entire periodof existence received substantially all(85% or more) of its support (other thangross investment income) from sourcesoutside the United States.Line 2.— In the space provided (or in anattachment, if necessary), furnish therequired information about theorganization's grant, scholarship,fellowship, loan, etc., programs. Inaddition to restrictions or limitations onawards by geographical areas, charitable

fields, and kinds of recipients, indicate anyspecific dollar limitations or otherrestrictions applicable to each type ofaward the organization makes. Thisinformation benefits the grant seeker andthe foundation. The grant seekers will beaware of the grant eligibility requirementsand the foundation should receive onlyapplications that adhere to these grantapplication requirements.

If the foundation only makescontributions to preselected charitableorganizations and does not acceptunsolicited applications for funds, checkthe box on line 2.Line 3.— If necessary, attach a schedule

for lines 3a and 3b that lists separatelyamounts given to individuals and amountsgiven to organizations.Line 3a—Paid during year.— List allcontributions, grants, etc., actually paidduring the year, including grants orcontributions that are not qualifyingdistributions under section 4942(g).Include current year payments ofset-asides treated as qualifyingdistributions in the current tax year or anyprior year.Line 3b—Approved for futurepayment.— List all contributions, grants,etc., approved during the year but notpaid by the end of the year, including the

unpaid portion of any current yearset-aside.

Part XVI-A—Analysis ofIncome-Producing ActivitiesIn Part XVI-A, analyze revenue items thatare also entered in Part I, column (a),lines 3–11, and on line 5b. Contributionsreported on lines 1 and 2 of Part I are notentered in Part XVI-A. For information onunrelated business income, see theInstructions for Form 990-T and Pub. 598.




Columns (a) and (c).— In column (a),enter a business code, from the list in theInstructions for Form 990-T, to identifyany income reported in column (b). Incolumn (c), enter an exclusion code, fromthe list on page 26, to identify any incomereported in column (d). If more than oneexclusion code is applicable to a particularrevenue item, select the lowest numberedexclusion code that applies. Also, ifnontaxable revenues from severalsources are reportable on the same line

in column (d), use the exclusion code thatapplies to the largest revenue source.Columns (b), (d), and (e).— For amountsreported in Part XVI-A on lines 1–11,enter in column (b) any income earnedthat is unrelated business income (seesection 512). In column (d), enter anyincome earned that is excluded from thecomputation of unrelated businesstaxable income by Code section 512, 513,or 514. In column (e), enter any relatedor exempt function income; that is, anyincome earned that is related to theorganization's purpose or function whichconstitutes the basis for the organization'sexemption.

Also enter in column (e) any incomespecifically excluded from gross incomeother than by Code section 512, 513, or514, such as interest on state and localbonds that is excluded from tax by section103. You must explain in Part XVI-B anyamount shown in column (e).Comparing Part XVI-A with Part I.—The sum of the amounts entered on eachline of lines 1–11 of columns (b), (d), and(e) of Part XVI-A should equalcorresponding amounts entered on lines3–11 of Part I, column (a), and on line 5bas shown below:

Line 1—Program service revenue.—On lines 1a–g, list eachrevenue-producing program service

activity of the organization. For eachprogram service activity listed, enter thegross revenue earned for each activity,as well as identifying business andexclusion codes, in the appropriatecolumns. For line 1g, enter amounts thatare payments for services rendered togovernmental units. Do not includegovernmental grants that are reportableon line 1 of Part I. Report the total of lines1a–g on line 11 of Part I, along with anyother income reportable on line 11.

Program services are mainly thoseactivities that the reporting organizationwas created to conduct and that, alongwith any activities begun later, form thebasis of the organization's currentexemption from tax.

Program services can also include theorganization's unrelated trade or businessactivities. Program service revenue alsoincludes income from program-relatedinvestments (such as interest earned onscholarship loans) as defined in the

instructions for Part IX-B.Line 11.— On lines 11a–e, list each“Other revenue” activity not reported onlines 1 through 10. Report the sum of theamounts entered for lines 11a–e, columns(b), (d), and (e), on line 11, Part I.Line 13.— On line 13, enter the total ofcolumns (b), (d), and (e) of line 12.

You may use the following worksheetto verify your calculations.

Part XVI-B—Relationship ofActivities to theAccomplishment of ExemptPurposesTo explain how each amount in column

(e) of Part XVI-A was related or exemptfunction income, show the line number ofthe amount in column (e) and give a briefdescription of how each activity reportedin column (e) contributed importantly tothe accomplishment of the organization'sexempt purposes (other than by providingfunds for such purposes). Activities thatgenerate exempt-function income areactivities that form the basis of theorganization's exemption from tax.

Also, explain any income entered incolumn (e) that is specifically excludedfrom gross income other than by Codesection 512, 513, or 514. If no amount isentered in column (e), do not complete

Part XVI-B.Example. M, a performing arts

association, is primarily supported byendowment funds. It raises revenue bycharging admissions to its performances.These performances are the primarymeans by which the organizationaccomplishes its cultural and educationalpurposes.

M reported admissions income incolumn (e) of Part XVI-A and explained inPart XVI-B that these performances are

the primary means by which itaccomplishes its cultural and educationalpurposes.

Because M also reported interest fromstate bonds in column (e) of Part XVI-A,M explained in Part XVI-B that suchinterest was excluded from gross incomeby Code section 103.

Part XVII—InformationRegarding Transfers To and

Transactions andRelationships WithNoncharitable ExemptOrganizationsPart XVII is used to report direct andindirect transfers to (line 1a) and directand indirect transactions with (line 1b) andrelationships with (line 2) any othernoncharitable exempt organization. A“noncharitable exempt organization” is anorganization exempt under section 501(c)(that is not exempt under section501(c)(3)), or a political organizationdescribed in section 527.

For purposes of these instructions, the

section 501(c)(3) organization completingPart XVII is referred to as the “reportingorganization.”

A noncharitable exempt organization is“related to or affiliated with” the reportingorganization if either: (a) the twoorganizations share some element ofcommon control; or (b) a historic andcontinuing relationship exists between thetwo organizations. A noncharitableexempt organization is unrelated to thereporting organization if the twoorganizations share no element ofcommon control and a historic andcontinuing relationship does not existbetween the two organizations.

An “element of common control” ispresent when one or more of the officers,directors, or trustees of one organizationare elected or appointed by the officers,directors, trustees, or members of theother. An element of common control isalso present when more than 25% of theofficers, directors, or trustees of oneorganization serve as officers, directors,or trustees of the other organization.

A “historic and continuing relationship”exists when two organizations participatein a joint effort to achieve one or morecommon purposes on a continuous orrecurring basis rather than on the basisof one or more isolated transactions or

activities. Such a relationship also existswhen two organizations share facilities,equipment, or paid personnel during theyear, regardless of the length of time thearrangement is in effect.Line 1—Reporting of certain transfersand transactions.— Generally, thereporting organization must report on line1 any transfer to or transaction with anoncharitable exempt organization evenif the transfer or transaction constitutesthe only connection with the noncharitableexempt organization.

Line 13, Part XVI-A.............................

Minus: Line 5b, Part I .......................Note: If line 5b, Part I,reflects a loss, add that amount here instead of

subtracting.

Plus: Line 1, Part I.........................

Plus: Line 5a, Part I.......................

Plus: Expenses of special eventsdeducted in computing line 9of Part XVI-A.........................

Equal: Line 12, column (a), of Part I.

Amounts inPart XVI-Aon line

Correspond toAmounts in Part I,(column (a))

1a–g ...................................... 112 ............................................ 113 ............................................ 34 ............................................ 45 and 6.................................. 5b (description

column)7 ............................................ 118 ............................................ 69 ............................................ 11 minus any special

event expensesincluded on lines 13through 23 of Part I,column (a).

10 .......................................... 10c11a–e .................................... 11




Related organizations.— If thenoncharitable exempt organization isrelated to or affiliated with the reportingorganization, the reporting organizationmust report all direct and indirect transfersand transactions except for contributionsand grants it received.

Unrelated organizations.— Alltransfers from the reporting organizationto an unrelated noncharitable exemptorganization must be reported on line 1a.All transactions between the reporting

organization and an unrelatednoncharitable exempt organization mustbe shown on line 1b, unless they meet theexception in the specific instructions forline 1b.Line 1a—Transfers.— Answer “Yes” tolines 1a(1) and 1a(2) if the reportingorganization made any direct or indirecttransfers of any value to a noncharitableexempt organization.

A “transfer” is any transaction orarrangement whereby one organizationtransfers something of value (cash, otherassets, services, use of property, etc.) toanother organization without receivingsomething of more than nominal value in

return. Contributions, gifts, and grants areexamples of transfers.If the only transfers between the two

organizations were contributions andgrants made by the noncharitable exemptorganization to the reporting organization,answer “No.”Line 1b—Other transactions.— Answer“Yes” for any transaction described in line1b(1)–(6), regardless of its amount, if it iswith a related or affiliated organization.

Unrelated organizations.— Answer“Yes” for any transaction between thereporting organization and an unrelatednoncharitable exempt organization,regardless of its amount, if the reporting

organization received less than adequateconsideration. There is adequateconsideration where the fair market valueof the goods, and other assets or servicesfurnished by the reporting organization, isnot more than the fair market value of thegoods, and other assets or servicesreceived from the unrelated noncharitableexempt organization. The exceptiondescribed below does not apply totransactions for less than adequateconsideration.

Answer “Yes” for any transactionbetween the reporting organization andan unrelated noncharitable exemptorganization if the amount involved is

more than $500. The “amount involved”is the fair market value of the goods,services, or other assets furnished by thereporting organization.

Exception. If a transaction with anunrelated noncharitable exemptorganization was for adequateconsideration and the amount involved

was $500 or less, answer “No” for thattransaction.Line 1b(3).— Answer “Yes” fortransactions in which the reportingorganization was either the lessor or thelessee.Line 1b(4).— Answer “Yes” if eitherorganization reimbursed expensesincurred by the other.Line 1b(5).— Answer “Yes” if eitherorganization made loans to the other or ifthe reporting organization guaranteed the

other's loans.Line 1b(6).— Answer “Yes” if eitherorganization performed services ormembership or fundraising solicitationsfor the other.Line 1c.— Complete line 1c regardlessof whether the noncharitable exemptorganization is related to or closelyaffiliated with the reporting organization.For the purposes of this line, “facilities”includes office space and any other land,building, or structure whether owned orleased by, or provided free of charge to,the reporting organization or thenoncharitable exempt organization.Line 1d.— Use this schedule to describethe transfers and transactions for which“Yes” was entered on lines 1a–c above.You must describe each transfer ortransaction for which the answer was“Yes.” You may combine all of the cashtransfers (line 1a(1)) to each organizationinto a single entry. Otherwise, make aseparate entry for each transfer ortransaction.

Column (a).— For each entry, enterthe line number from line 1a–c. Forexample, if the answer was “Yes” to line1b(3), enter “b(3)” in column (a).

Column (d).— If you need more space,write “see attached” in column (d) and usean attached sheet for the description. Ifmaking more than one entry on line 1d,specify on the attached sheet whichtransfer or transaction you are describing.Line 2—Reporting of certainrelationships.— Enter on line 2 eachnoncharitable exempt organization whichthe reporting organization is related to oraffiliated with, as defined above. If thecontrol factor or the historic andcontinuing relationship factor (or both) ispresent at any time during the year,identify the organization on line 2 even ifneither factor is present at the end of theyear.

Do not enter unrelated noncharitableexempt organizations on line 2 even if

transfers to or transactions with thoseorganizations were entered on line 1. Forexample, if a one-time transfer to anunrelated noncharitable exemptorganization was entered on line 1a(2),do not enter the organization on line 2.

Column (b).— Enter the exemptcategory of the organization; for example,“501(c)(4).”

Column (c).— In most cases, a simpledescription, such as “common directors”or “auxiliary of reporting organization” willbe sufficient. If you need more space,write “see attached” in column (c) and usean attached sheet to describe therelationship. If you are entering more thanone organization on line 2, identify whichorganization you are describing on theattached sheet.

Part XVIII—Public Inspection

See General Instruction Q for informationon making the foundation's annual returnavailable for public inspection andpublishing a notice in a newspaper statingthat the return is available for publicinspection. All domestic privatefoundations (including section 4947(a)(1)nonexempt charitable trusts treated asprivate foundations) are subject to thepublic inspection and notice provisions.

SignatureThe return must be signed by thepresident, vice president, treasurer,assistant treasurer, chief accounting

officer, or other corporate officer (such astax officer) who is authorized to sign. Areceiver, trustee, or assignee must signany return which he or she is required tofile for a corporation. If the return is filedfor a trust, it must be signed by theauthorized trustee or trustees. Sign anddate the form and fill in the signer's title.

If an officer or employee of theorganization prepares the return, the PaidPreparer's space should remain blank. Ifsomeone prepares the return withoutcharge, that person should not sign thereturn.

Generally, anyone who is paid toprepare the organization's tax return must

sign the return and fill in the PaidPreparer's Use Only area.If you have questions about whether a

preparer is required to sign the return,please contact an IRS office.

The paid preparer must complete therequired preparer information and:q Sign it, by hand, in the space providedfor the preparer's signature. (Signaturestamps and labels are not acceptable.)q Give the organization a copy of thereturn in addition to the copy to be filedwith the IRS.

If the box for question 13 of Part VII-Ais checked (section 4947(a)(1) nonexemptcharitable trust filing Form 990-PF instead

of Form 1041), the paid preparer mustalso enter his or her social securitynumber or, if applicable, employeridentification number in the spacesprovided. Otherwise, do not enter thepreparer's social security or employeridentification number.




Exclusion Codes

Real property rental income that does notdepend on the income or profits derivedby the person leasing the property and isexcluded by section 512 (b)(3)

16—

General Exceptions Debt-Financed Income

Income exempt from debt- financed(section 514) provisions because at least85% of the use of the property is for theorganization’s exempt purposes. (Note:This code is only for income from the 15% or less non-exempt purpose use.)(section 514(b)(1)(A))

Income from an activity that is notregularly carried on (section 512(a)(1))

01— 30—

Income from an activity in which labor isa material income-producing factor andsubstantially all (at least 85%) of the workis performed with unpaid labor (section513(a)(1))

02—

17— Rent from personal property leased withreal property and incidental (10% or less)in relation to the combined income fromthe real and personal property (section512(b)(3))

Gross income from mortgaged property

used in research activities described insection 512(b)(7), (8), or (9) (section514(b)(1)(C))

31—Section 501(c)(3) organization— Income

from an activity carried on primarily forthe convenience of the organization’smembers, students, patients, visitors,officers, or employees (hospital parkinglot or museum cafeteria, for example)(section 513(a)(2))

03—

18— Proceeds from the sale of investmentsand other non-inventory property (capitalgains excluded by sect ion 512(b)(5)) andfrom certain inventory property acquiredafter December 31, 1993, from financial

institutions that are in conservatorship orreceivership

19— Gains and losses from the lapse ortermination of options to buy or sellsecurities and on options and deposits inconnection with investment real estate(section 512(b)(5))

Gross income from mortgaged propertyused in any activity described in section513(a)(1), (2), or (3) (section 514(b)(1)(D))

32—

20— Income from research for the UnitedStates; its agencies or instrumentalities;or any state or political subdivision(section 512(b)(7))

Section 501(c)(4) local association ofemployees organized before May 27,1969— Income from the sale ofwork-related clothes or equipment anditems normally sold through vendingmachines; food dispensing facilities; orsnack bars for the convenience ofassociation members at their usual placesof employment (section 513(a)(2))

04— Income from mortgaged property(neighborhood land) acquired for exemptpurpose use within 10 years (section514(b)(3))

33—

21— Income from research conducted by acollege, university, or hospital (section512(b)(8))

Income from mortgaged propertyacquired by bequest or devise (applies toincome received within 10 years from thedate of acquisition) (section 514(c)(2)(B))

34—

22— Income from research conducted by anorganization whose primary activity isconducting fundamental research, theresults of which are freely available to thegeneral public (section 512(b)(9))

Income from the sale of merchandise,substantially all of which (at least 85%)was donated to the organization (section513(a)(3))

05— Income from mortgaged propertyacquired by gift where the mortgage wasplaced on the property more than 5 yearspreviously and the property was held by

the donor for more than 5 years (appliesto income received within 10 years fromthe date of gift (section 514(c)(2)(B))

35—

23— Income from services provided underlicense issued by a federal regulatoryagency and conducted by a religiousorder or school operated by a religiousorder, but only if the trade or businesshas been carried on by the organizationsince before May 27, 1959 (section 512(b)(15))

Specific Exceptions

Section 501(c)(3), (4), or (5) organizationconducting an agricultural or educationalfair or exposition— Qualified publicentertainment activity income (section513(d)(2))

06— Income from property received in returnfor the obligation to pay an annuitydescribed in section 514(c)(5)

36—

Income from mortgaged property thatprovides housing to low and moderateincome persons, to the extent themortgage is insured by the FederalHousing Administration (section 514(c)(6)).(Note: In many cases, this would be exempt function income reportable in column (e). It would not be so in the case of a section 501(c)(5) or (6) organization,for example, that acquired the housing as an investment or as a charitable activity.)

37—

Foreign Organizations

Section 501(c)(3), (4), (5), or (6)organization—Qualified convention andtrade show activity income (section513(d)(3))

07—

Foreign organizations only—Income froma trade or business NOT conducted in theUnited States and NOT derived fromUnited States sources (patrons) (section512(a)(2))

24—Income from hospital services describedin section 513(e)

08—

Income from noncommercial bingo gamesthat do not violate state or local law(section 513(f))

09—

Social Clubs and VEBAs

Section 501(c)(7), (9), or (17)organization—Non-exempt functionincome set aside for a charitable, etc.,purpose specified in section 170(c)(4)(section 512(a)(3)(B)(i))

25—

Income from games of chance conducted

by an organization in North Dakota(section 311 of the Deficit Reduction Actof 1984, as amended)

10— Income from mortgaged real property

owned by: a school described in section170(b)(1)(A)(ii); a section 509(a)(3) affiliatedsupport organization of such a school; asection 501(c)(25) organization; or by apartnership in which any of the aboveorganizations owns an interest if therequirements of section 514(c)(9)(B)(vi) aremet (section 514(c)(9))

38—

Section 501(c)(7), (9), or (17)organization—Proceeds from the sale ofexempt function property that was or willbe timely reinvested in similar property(section 512(a)(3)(D))

26—

Section 501(c)(12) organization—Qualified pole rental income (section513(g))

11—

Income from the distribution of low-costarticles in connection with the solicitationof charitable contributions (section 513(h))

12—

Section 501(c)(9) or (17) organization—Non-exempt function income set aside forthe payment of life, sick, accident, orother benefits (section 512(a)(3)(B)(ii))

27—

Special RulesIncome from the exchange or rental ofmembership or donor list with anorganization eligible to receive charitablecontributions by a section 501(c)(3)organization; by a war veterans’organization; or an auxiliary unit or societyof, or trust or foundation for, a warveterans’ post or organization (section513(h))

13—Section 501(c)(5) organization—Farmincome used to finance the operation andmaintenance of a retirement home,hospital, or similar facility operated by theorganization for its members on propertyadjacent to the farm land (section1951(b)(8)(B) of Public Law 94-455)

39—

Veterans’ Organizations

Section 501(c)(19) organization—Payments for life, sick, accident, or healthinsurance for members or theirdependents that are set aside for thepayment of such insurance benefits or fora charitable, etc., purpose specified insection 170(c)(4) (section 512(a)(4))

28—

Trade or Business

41— Gross income from an unrelated activitythat is regularly carried on but, in light ofcontinuous losses sustained over anumber of tax periods, cannot beregarded as being conducted with themotive to make a profit (not a trade orbusiness)

Modifications and Exclusions

Dividends, interest, payments withrespect to securities loans, annuities,income from notional principal contracts,other substantially similar income fromordinary and routine investments, andloan commitment fees, excluded bysection 512(b)(1)

14—

Section 501(c)(19) organization— Incomefrom an insurance set-aside (see code 28above) that is set aside for payment ofinsurance benefits or for a charitable,etc., purpose specified in section170(c)(4) (Regs. 1.512(a)–4(b)(2))

29—

Royalty income excluded by section512(b)(2)

15—

Annual dues, not exceeding $100 (subjectto inflation), paid to a section 501(c)(5)agricultural or horticultural organization(section 512(d))

40—

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