1995 instructions for form 990-pf - internal revenue service · instructions for form 990-pf ......

Cat. No. 11290Y

Instructions forForm 990-PFReturn of Private Foundation or Section4947(a)(1) Nonexempt Charitable TrustTreated as a Private FoundationSection references are to the Internal Revenue Code unless otherwise noted.

Department of the TreasuryInternal Revenue Service

Paperwork ReductionAct NoticeWe ask for the information on this formto carry out the Internal Revenue laws ofthe United States. You are required togive us the information. We need it toensure that you are complying withthese laws and to allow us to figure andcollect the right amount of tax.

The time needed to complete and filethis form will vary depending onindividual circumstances. The estimatedaverage time is:Recordkeeping 140 hr., 23 min.Learning about thelaw or the form 27 hr., 23 min.Preparing the form 31 hr., 49 min.Copying, assembling, andsending the form to the IRS 16 min.

If you have comments concerning theaccuracy of these time estimates orsuggestions for making this formsimpler, we would be happy to hearfrom you. You can write to the TaxForms Committee, Western AreaDistribution Center, Rancho Cordova,CA 95743-0001. DO NOT send the taxform to this address. Instead, see Whenand Where To File on page 4.Purpose of Form.—Form 990-PF isused by private foundations and bysection 4947(a)(1) nonexempt charitabletrusts that are treated as privatefoundations. These organizations usethis form to figure the tax on netinvestment income and to reportcharitable distributions and activities.The form also serves as a substitute forthe section 4947(a)(1) nonexemptcharitable trust’s income tax return,Form 1041, U.S. Income Tax Return forEstates and Trusts, when the trust hasno taxable income.

Contents PageA. Who Must File 2B. Which Parts To Complete 2C. Definitions 2D. Other Forms You May Need To

File 2E. Useful Publications 3F. Use of Form 990-PF To Satisfy

State Reporting Requirements 3G. Furnishing Copies of Form 990-PF

to State Officials 4H. Accounting Period 4I. Accounting Methods 4J. When and Where To File 4K. Extension of Time To File 5L. Amended Return 5M. Penalty for Failure To File Timely,

Completely, or Correctly 5N. Penalty for Not Paying Tax on

Time 5O. Figuring and Paying Estimated

Taxes on Net Investment Income 5P. Depositary Method of Tax

Payment for Domestic PrivateFoundations 5

Q. Public Inspection Requirements 6R. Disclosures Regarding Certain

Information and ServicesFurnished 6

S. Organizations Organized orCreated in a Foreign Country orU.S. Possession 6

T. Liquidation, Dissolution,Termination, or SubstantialContraction 7

U. Filing Requirements DuringSection 507(b)(1)(B) Termination 7

V. Special Rules for Section507(b)(1)(B) Terminations 7

W. Rounding—Currency—Attachments 7

Specific Instructions 8Part I—Analysis of Revenue and

Expenses 8Part II—Balance Sheets 12Part III—Analysis of Changes in

Net Assets or Fund Balances 14

Contents PagePart IV—Capital Gains and Losses

for Tax on Investment Income 15Part V—Qualification Under Section

4940(e) for Reduced Tax onNet Investment Income 15

Part VI—Excise Tax on InvestmentIncome 15

Part VII-A—Statements RegardingActivities 16

Part VII-B—Activities for Which Form4720 May Be Required 17

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

Part IX-A—Summary of DirectCharitable Activities 18

Part IX-B—Summary of Program-Related Investments 19

Part X—Minimum Investment Return 19Part XI—Distributable Amount 20Part XII—Qualifying Distributions 21Part XIII—Undistributed Income 21Part XIV—Private Operating

Foundations 22Part XV—Supplementary Information 23Part XVI-A—Analysis of Income-

Producing Activities 23Part XVI-B—Relationship of Activities

to the Accomplishment of ExemptPurposes 24

Part XVII—Information RegardingTransfers To and Transactions andRelationships With NoncharitableExempt Organizations 24

Part XVIII—Public Inspection 25Signature 25Exclusion Codes 26

Item To NoteYou can use your computer to get taxforms and publications. If you subscribeto an on-line service, ask if IRSinformation is available and, if so, howto access it. You can also getinformation through IRIS, the InternalRevenue Information Service, onFedWorld, a government bulletin board.Tax forms, instructions, publications,and other IRS information are availablethrough IRIS.

IRIS is accessible directly by calling703-321-8020. On the Internet, you cantelnet to fedworld.gov or, for file transferprotocol services, connect toftp.fedworld.gov. If you are using theWorldWide Web, connect tohttp://www.ustreas.gov.

FedWorld’s help desk offers technicalassistance on accessing IRIS (not taxhelp) during regular business hours at703-487-4608. The IRIS menus offerinformation on available file formats andsoftware needed to read and print files.You must print the forms to use them;the forms are not designed to be filledout on-screen.

Tax forms, instructions, andpublications are also available onCD-ROM, including prior-year formsstarting with the 1991 tax year. Forordering information and softwarerequirements, contact the GovernmentPrinting Office’s Superintendent ofDocuments (202-512-1800) or FederalBulletin Board (202-512-1387).

General InstructionsA. 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 whoseapplications for exempt status arepending on the due date for filing Form990-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) nonexemptcharitable trusts that are not treated asprivate foundations do not file Form990-PF. However, they may need to fileForm 990, Return of OrganizationExempt From Income Tax, or Form990-EZ, Short Form Return ofOrganization Exempt From Income Tax.With either of these forms, the trustmust also file Schedule A (Form 990),Organization Exempt Under Section501(c)(3) (Except Private Foundation),and Section 501(e), 501(f), 501(k), orSection 4947(a)(1) Nonexempt CharitableTrust Supplementary Information. (SeeForm 990 or Form 990-EZ instructions.)

B. Which Parts To CompleteThe parts of the form listed below donot apply to all filers. If an entire part ora major portion of a part does not apply,enter “N/A” where appropriate.● Part I, column (c), applies only toprivate operating foundations and to

nonoperating private foundations thathave income from charitable activities.● Part II, column (c), with the exceptionof line 16, applies only to organizationshaving at least $5,000 in assets perbooks at some time during the year.Line 16, column (c), applies to all filers.● Part IV does not apply to foreignorganizations.● Parts V and VI do not apply toorganizations making an election undersection 41(e).● Part X does not apply to foreignfoundations that check box D2 on page1 of Form 990-PF unless they claimstatus as a private operating foundation.● Parts XI and XIII do not apply toforeign foundations that check box D2on page 1 of Form 990-PF. However,check the box at the top of Part XI. PartXI does not apply to private operatingfoundations.● Part XIV applies only to privateoperating foundations.● Part XV applies only to organizationshaving assets of $5,000 or more duringthe year. This part does not apply tocertain foreign organizations.

C. Definitions● 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.● A nonexempt charitable trust treatedas a private foundation is a trust that isnot exempt from tax under section501(a) and all of the unexpired interestsof which are devoted to religious,charitable, or other purposes describedin section 170(c)(2)(B), and for which adeduction was allowed under a sectionof the Code listed in section 4947(a)(1).● 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.● A foundation manager is an officer,director, or trustee of a foundation, or anindividual who has powers similar tothose of officers, directors, or trustees.In the case of any act or failure to act,the term “foundation manager” may alsoinclude employees of the foundationwho have the authority to act.● 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; or

5. 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), adisqualified person also includes:

a. A private foundation which iseffectively controlled (directly orindirectly) by the same persons whocontrol the private foundation inquestion, or

b. A private foundation to whichsubstantially all of the contributions weremade (directly or indirectly) by one ormore of the persons described in 1, 2,and 3 above, or members of theirfamilies, within the meaning of section4946(d).● An organization is controlled by afoundation or by one or moredisqualified persons with respect to thefoundation if any of these persons may,by combining their votes or positions ofauthority, require the organization tomake an expenditure or prevent theorganization from making anexpenditure, regardless of the method ofcontrol. “Control” is determined withoutregard to the conditions imposed by afoundation on the manner in which thecontribution must be used.

D. Other Forms You May Need ToFileForm W-2, Wage and Tax Statement,and Form W-3, Transmittal of Incomeand Tax Statements.Form 941.—Employer’s QuarterlyFederal Tax Return. Used to reportsocial security, Medicare, and incometaxes withheld by an employer andsocial security and Medicare taxes paidby an employer.

If income, social security, andMedicare taxes that must be withheldare not withheld or are not paid to theIRS, a Trust Fund Recovery Penalty mayapply. The penalty is 100% of suchunpaid taxes.

This penalty may be imposed on allpersons (including volunteers) whom theIRS determines to be responsible forcollecting, accounting for, and payingover these taxes, and who willfully didnot do so.

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 Returnfor Estates and Trusts. Required ofsection 4947(a)(1) nonexempt charitabletrusts that also file Form 990-PF.However, if the trust does not have anytaxable income under the income taxprovisions (subtitle A of the Code), itmay use the filing of Form 990-PF tosatisfy its Form 1041 filing requirementunder section 6012. If this condition ismet, check the box for question 13, PartVII-A, of Form 990-PF and do not fileForm 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 Form990-PF annual information return is alsofiled by these taxable foundations.Form 1120-POL.—U.S. Income TaxReturn for Certain PoliticalOrganizations. Section 501(c)organizations must file Form 1120-POL iftheir political expenditures and their netinvestment income both exceed $100 forthe 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 theIRS can figure the amount of anypenalty and bill the foundation for it.However, complete and attach Form2220 even if the foundation does notowe the penalty if:● The annualized income or the adjustedseasonal installment method is used, or

● The foundation is a “largeorganization,” computing its firstrequired installment based on the prioryear’s tax.

If Form 2220 is attached, check thebox on line 8, Part VI, on page 4 ofForm 990-PF and enter the amount ofany penalty 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 theInternal Revenue Code, is primarily usedto determine the excise taxes imposedon: acts of self-dealing between privatefoundations and disqualified persons;failure to distribute income; excessbusiness holdings; investments thatjeopardize 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 ofthe 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 ofEmployee Benefit Plan (With 100 ormore participants).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 theproperty within 2 years after the date itreceived the property.

Also required of any successor doneethat disposes of charitable deductionproperty within 2 years after the datethat the donor gave the property to theoriginal donee. (It does not matter whogave the property to the successordonee. It may have been the originaldonee or another successor donee.) Forsuccessor donees, the form must befiled only for any property that wastransferred by the original donee afterJuly 5, 1988.Form 8275.—Taxpayers and tax returnpreparers should attach Form 8275,Disclosure Statement, to Form 990-PFto disclose items or positions (exceptthose contrary to a regulation—seeForm 8275-R below) that are nototherwise adequately disclosed on thetax return. The disclosure is made to

avoid parts of the accuracy-relatedpenalty imposed for disregard of rules orsubstantial understatement of tax. Form8275 is also used for disclosures relatingto preparer penalties forunderstatements due to unrealisticpositions or for willful or recklessconduct.Form 8275-R.—Use Form 8275-R,Regulation Disclosure Statement, todisclose any item on a tax return forwhich a position has been taken that iscontrary to Treasury regulations.Form 8300.—Report of Cash PaymentsOver $10,000 Received in a Trade orBusiness. Used to report cash amountsin excess of $10,000 that were receivedin a single transaction (or in two or morerelated 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.Form 8842.—For figuring estimated taxpayments under the annualized incomeinstallment method, file Form 8842,Election To Use Different AnnualizationPeriods for Corporate Estimated Tax, foreach year the organization wants toelect one of the annualization periods insection 6655(e)(2)(C). Note: Form 8842 isused by tax-exempt trusts as well ascorporations.

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 atno charge through IRS offices or bycalling 1-800-TAX-FORM(1-800-829-3676).

F. Use of Form 990-PF To SatisfyState Reporting RequirementsSome states and local government unitswill accept a copy of Form 990-PF andrequired attachments in place of all orpart of their own financial report forms.

If the organization plans to use Form990-PF to satisfy state or local filing

requirements, such as those from statecharitable solicitation acts, note thefollowing:Determine state filing requirements.—Consult the appropriate officials of allstates and other jurisdictions in whichthe organization does business todetermine their specific filingrequirements. “Doing business” in ajurisdiction may include any of thefollowing: (a) soliciting contributions orgrants 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 IRSmay not apply when using Form 990-PFinstead of state or local report forms.IRS dollar limitations that may not meetsome state requirements are the $5,000total assets minimum that requirescompletion of Part II, column (c), andPart XV; and the $50,000 minimum forlisting the highest paid employees andfor listing professional 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 toadditional questions and otherinformation. Each jurisdiction mayrequire the additional material to bepresented on forms they provide. Theadditional information does not have tobe submitted with the Form 990-PF filedwith the IRS.

If required information is not providedto a state, the organization may beasked by the state to provide it or tosubmit an amended return, even if theForm 990-PF is accepted by the IRS ascomplete.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 maydiffer from the time for filing statereports.State registration numbers.—Enter theapplicable state or local jurisdictionregistration or identification number in

box B (on page 1) for each jurisdiction inwhich the organization files Form 990-PFinstead 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 onthe copy to be filed with eachjurisdiction.

G. Furnishing Copies of Form990-PF to State OfficialsThe foundation managers must furnish acopy of the annual Form 990-PF to theattorney general (or designate) of (a)each state which they are required to listin Part VII-A, line 8a, (b) the state inwhich the principal office of thefoundation is located, and (c) the state inwhich the foundation was incorporatedor created. The return must be filed atthe same time it is sent to the IRS. Thefoundation managers must also providea copy of the annual return to theattorney general or other appropriatestate official of any other state whorequests it. The foundation managersmust also attach to all copies of theannual return filed with an attorneygeneral a copy of any Form 4720 filedwith the IRS for the year. These rules donot apply to any foreign foundationwhich, from the date of its creation, hasreceived at least 85% of its support(excluding gross investment income)from sources outside the United States.(See Exceptions in General InstructionQ.)

If the foundation managers submit acopy of Form 990-PF (and Form 4720, ifnecessary) to a state attorney general tosatisfy a state reporting requirement,they do not have to furnish a secondcopy to that attorney general to complywith the Internal Revenue Coderequirements. If there is a state reportingrequirement that the copy of Form990-PF be filed with a state official otherthan the attorney general (such as asecretary of state), then the foundationmanagers must also send a copy of theForm 990-PF to the attorney general ofthat state.

H. Accounting Period1. File the 1995 return for the calendar

year 1995 or fiscal year beginning in1995. 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 thebasis of the established annualaccounting period of the organization. Ifthe organization has no establishedaccounting period, the return should beon the calendar-year basis.

3. For initial or final returns or achange in accounting period, the 1995form may also be used as the return fora short period (less than 12 months)ending November 30, 1996, or earlier.

In general, to change its accountingperiod the organization must file Form

990-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 includesthe beginning of the short period, and ithad a Form 990-PF filing requirement atany time during that 10-year period, itmust also 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 ofthe accounting method the foundationregularly uses to keep its books andrecords.Note: Complete Part I, column (d) on thecash receipts and disbursements methodof accounting.

J. When and Where To FileThis return must be filed by the 15th dayof the 5th month following the close ofthe foundation’s accounting period. Ifthe regular due date falls on a Saturday,Sunday, or legal holiday, file on the nextbusiness day. If the return is filed late,see M. Penalty for Failure To FileTimely, Completely, or Correctly onpage 5.

In case of a complete liquidation,dissolution, or termination, file the returnby the 15th day of the 5th monthfollowing complete liquidation,dissolution, or termination.

Where To File

If the principal officeof the organization

is located in

Use the followingInternal RevenueService Center

addressÄ Ä

Alabama, Arkansas, Florida,Georgia, Louisiana,Mississippi, North Carolina,South Carolina, Tennessee

Atlanta, GA39901-0027

Arizona, Colorado, Kansas,New Mexico, Oklahoma,Texas, Utah, Wyoming

Austin, TX73301-0027

Indiana, Kentucky,Michigan, Ohio, WestVirginia

Cincinnati, OH45999-0027

Alaska, California, Hawaii,Idaho, Nevada, Oregon,Washington

Fresno, CA93888-0027

Connecticut, Maine,Massachusetts, NewHampshire, New York,Rhode Island, Vermont

Holtsville, NY00501-0027

Illinois, Iowa, Minnesota,Missouri, Montana,Nebraska, North Dakota,South Dakota, Wisconsin

Kansas City, MO64999-0027

Delaware, District ofColumbia, Maryland, NewJersey, Pennsylvania,Virginia, any U.S.possession, or foreigncountry

Philadelphia, PA19255-0027

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 bythe form and instructions, not just thenew or corrected information. Write“Amended Return” at the top of thereturn.

If the organization files an amendedreturn to claim a refund of tax paidunder section 4940 or 4948, it must filethe amended return within 3 years afterthe date the original return was due orfiled, or within 2 years from the date thetax was paid, whichever date is later.Note: A copy of the amended returnmust also be sent to appropriate stateofficials. 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, or CorrectlyAgainst the organization.—If anorganization does not file timely andcompletely, or does not furnish thecorrect information, it must pay $10 foreach day the failure continues, unless itcan show that the failure was due toreasonable cause. Those filing late (afterthe due date, including extensions) mustattach an explanation to the return. Themaximum penalty for each return will notexceed the smaller of $5,000 or 5% ofthe gross receipts of the organization forthe year.Against the responsible person.—TheIRS will make written demand that thedelinquent return be filed or theinformation furnished within areasonable time after the mailing of thenotice of the demand. The person failingto comply with the demand on or beforethe date specified will have to pay $10for each day the failure continues,unless there is reasonable cause. Themaximum penalty imposed on allpersons for any one return will notexceed $5,000. If more than one personis liable for any failures, all such personsare jointly and severally liable for suchfailures (see section 6652(c)).

To avoid filing an incomplete return orhaving to respond to requests formissing information, complete allapplicable line items; answer “Yes,”“No,” or “N/A” (not applicable) to eachquestion on the return; make an entry(including a zero when appropriate) onall total lines; and enter “None” or “N/A”if an entire part does not apply.

Because this return also satisfies thefiling requirements of a tax return under

section 6011 for the tax on investmentincome imposed by section 4940 (or4948 if an exempt foreign organization),the penalties imposed by section 6651for not filing a return (without reasonablecause) 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 Tax onTimeThere is a penalty for not paying taxwhen due (section 6651).The penaltygenerally is 1⁄2 of 1% of the unpaid taxfor each month or part of a month thetax remains unpaid, not to exceed 25%of the unpaid tax. If there wasreasonable cause for not paying the taxon time, the penalty can be waived.However, interest is charged on any taxnot paid on time, at the rate provided bysection 6621.

The section 6655 penalties for failureto pay estimated taxes apply to thetaxes on net investment income ofdomestic private foundations andsection 4947(a)(1) nonexempt charitabletrusts. The penalties also apply to anytax on unrelated business income ofthese organizations. For more details,see the discussion of Form 2220 inOther Forms You May Need To File inthese instructions.

O. Figuring and Paying EstimatedTaxes on Net Investment IncomeA domestic private foundation mustmake estimated tax payments for theexcise tax on investment income if it canexpect its estimated tax (section 4940tax minus allowable credits) to be $500or more. The number of installmentpayments it must make under thedepositary method is determined at thetime during the year that it first meetsthis requirement. For calendar-yeartaxpayers, the first deposit of estimatedtaxes for a year generally should bemade by April 15 of the year.

Although Form 990-W is usedprimarily to compute the installmentpayments of unrelated business incometax, it is also used to determine thetiming and amounts of installmentpayments of the section 4940 tax on netinvestment income.

To figure the estimated tax, multiplythe estimated investment income by thetax rate (1% or 2%, whichever applies)and enter that amount on line 9a ofForm 990-W.

The Form 990-W line items andinstructions for large organizations alsoapply to private foundations. Forpurposes of paying the estimated tax onnet investment income, a “largeorganization” is one that had netinvestment income of $1 million or morefor any of the 3 tax years immediatelypreceding the tax year involved.

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 requiredpayments on time. See the 1996 Form990-W or 1041-ES for information ondetermining the amounts of requiredpayments.

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) nonexemptcharitable trusts and taxable foundationsthat have income subject to tax undersection 1 or section 11 should see Form1120 for the estimated tax rules.However, section 4947(a)(1) nonexemptcharitable trusts should use Form1041-ES for paying any estimated tax onthat income. Taxable foundations shoulduse Form 8109, and darken the 1120box on that form.

P. Depositary Method of TaxPayment for Domestic PrivateFoundationsThe 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 netinvestment income tax due shown online 9, Part VI of Form 990-PF, or line 5cof Form 2758, is less than $500, enclosea check or money order, payable to theInternal Revenue Service, with Form990-PF or send the full balance due withForm 2758. Otherwise, if theorganization is not required to (or doesnot voluntarily) use the electronic fundstransfer (EFT) system described below,deposit foundation net investmentincome tax payments (estimated taxpayments and balance of tax due asshown on line 9, Part VI of Form 990-PF,or line 5c of Form 2758) with a FederalTax Deposit Coupon (Form 8109). Donot send deposits directly to an IRSoffice. Mail or deliver the completedForm 8109 with the payment to aqualified depository for Federal taxes orto the Federal Reserve bank (FRB)servicing the foundation’s geographicarea. Make checks or money orderspayable to that depository or FRB.

To help ensure proper crediting toyour account, write the organization’semployer identification number, the taxperiod to which the deposit applies, and“Form 990-PF” on the check or moneyorder. Darken the “990-PF” box on thecoupon. Records of these deposits willbe send to the IRS.

A penalty may be imposed if thedeposits are sent to an IRS officeinstead of to an authorized depository orFRB.

For more information on deposits, seethe instructions in the coupon booklet(Form 8109) and Pub. 583, Starting aBusiness and Keeping Records.

Generally, taxpayers that had totaldeposits of withheld income, socialsecurity, and Medicare taxes duringcalendar year 1993 or 1994 in excess of$47 million are required to deposit alldepository taxes due in 1996 byelectronic funds transfer (EFT).Organizations that were required to usethe EFT system to deposit taxes due in1995 must continue to use the EFTsystem in 1996. TAXLINK, an electronicremittance processing system, must beused to make deposits by EFT.Taxpayers who are not required to makedeposits by EFT may voluntarilyparticipate in TAXLINK. For more detailson TAXLINK, see Rev. Proc. 94-48,1994-2 C.B. 694, and 94-48A, 1994-2C.B. 703. You may also call theTAXLINK HELPLINE at 1-800-829-5469.Note: Foreign organizations should seethe instructions for Part VI, line 9.

Q. Public Inspection Requirements

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 personrequesting inspection, if the request ismade at the time and in the mannerprescribed in section 6104(d) and therelated regulations.Notice requirements.—A notice that theprivate foundation’s annual return isavailable for inspection must bepublished by the due date for filing theannual return, including any extensionsof time for filing. The notice must bepublished in a newspaper with generalcirculation in the county in which theprincipal office of the private foundationis located. (A newspaper or journal thatpublishes real estate title transfers orother similar legal notices to satisfy statestatutory requirements is alsoconsidered to have general circulation.)The notice must state that the annualreturn of the private foundation isavailable for inspection at its principaloffice during regular business hours byany citizen who requests inspectionwithin 180 days after the date the noticeis published. It must also show theaddress and telephone number of theprivate foundation’s principal office andthe name of its principal manager. Aprivate foundation may designate, inaddition to its principal office, any other

location 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 availablefor public inspection for the full 180-dayperiod as required by law, do notpublish the notice until the return hasbeen completed and is available forinspection upon request.

Attach a copy of the notice to theForm 990-PF filed with the InternalRevenue Service.Penalties.—If a foundation does notpublish the notice and attach a copy ofit to a timely filed return, there is apenalty of $10 a day, up to a maximumof $5,000 for any one return (section6652(c)). The penalty is imposed on theperson under a duty to act, but who failsto do so without reasonable cause. Thepenalty is also imposed on any personwho does not make the return (includingall required attachments) available forpublic inspection according to thesection 6104(d) provisions discussedabove under Annual returns. If morethan one person is responsible for eitherfailure to act, each person is jointly andseverally liable for the full amount of thepenalty. Any person who willfully fails tocomply is subject to an additionalpenalty of $1,000 (section 6685).Exceptions. A private foundation thathas terminated its status as such undersection 507(b)(1)(A), by distributing all itsnet assets to one or more publiccharities without keeping any right, title,or interest in those assets, does nothave to publish notice of availability ofits annual return or furnish the return tothe public for the tax year in which itterminates (Regulations section1.507-2(a)(6)).

The notice and public inspectionprovisions discussed above do not applyto any foreign foundation which, fromthe date of its creation, has received atleast 85% of its support (excludinggross investment income) from sourcesoutside the United States. Therequirement to furnish copies of annualreturns to state officials also does notapply to such foreign foundations (seeGeneral Instruction 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 ofits application (and any paperssubmitted in support of its application)and any letter or other document issuedby the IRS in response to theapplication. An organization that filed itsexemption application on or before July15, 1987, must comply with thisrequirement if it had a copy of itsapplication on July 15, 1987. The copyof the application and related

documents 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$10 for each day that inspection wasnot permitted. There is no limitation. Nopenalty will be imposed if the failure isdue to reasonable cause. If more thanone person is responsible for failure tocomply with this requirement, eachperson is jointly and severally liable forthe full amount of the penalty. Anyperson who willfully fails to comply issubject to an additional penalty of$1,000.

From the IRS

Both exempt organization returns andapproved exemption applications maybe inspected 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. Ifthe requester wants the inspection atthe IRS National Office, the requestshould be sent to the Commissioner ofInternal Revenue, Attention: Freedom ofInformation Reading Room, 1111Constitution Ave., NW, Washington, DC20224.

Form 4506-A can be used to requesta copy or to inspect an exemptorganization return at an IRS office.There is a charge for photocopying.

R. Disclosures Regarding CertainInformation and ServicesFurnishedA 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 chargemust disclose that fact conspicuouslywhen making such offer or solicitation.

Any organization that intentionallydisregards this requirement will besubject to a penalty for each day theoffers or solicitations are made. Thepenalty is the greater of $1,000 or 50%of the total cost of the offers andsolicitations made on that day.

S. Organizations Organized orCreated in a Foreign Country orU.S. PossessionIf you apply any provision of any U.S.tax treaty to compute the foundation’s

taxable income, tax liability, or taxcredits in a manner different from the990-PF instructions, attach anexplanation.

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 hasreceived 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 section4940 tax on the net investment incomeof a domestic private foundation. To payany tax due, see the instructions for PartVI, line 9.

Taxable foreign private foundationsand foreign section 4947(a)(1)nonexempt charitable trusts are notsubject to the excise taxes undersections 4948(a) and 4940, but aresubject to income tax under subtitle A ofthe Code.

Certain foreign foundations are notrequired to send copies of annualreturns to state officials, or comply withthe public inspection and noticerequirements of annual returns. (SeeGeneral Instructions G and Q.)

T. Liquidation, Dissolution,Termination, or SubstantialContractionOrganizations liquidating, etc., mustattach a statement to the returnexplaining any liquidation, dissolution,termination, or substantial contraction.See General Instruction J for filing datesand locations.

The term “substantial contraction”includes any partial liquidation or anyother significant disposition of assets(other than transfers for full andadequate consideration or distributionsof current income).

A “significant disposition” of assetsdoes not include any disposition for atax year 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, and

2. 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 fairmarket value of the net assets of theorganization at the beginning of the taxyear in which any of the series of relateddispositions was made.

The facts and circumstances of theparticular 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 to100% of contributions received duringthe foundation’s tax year) will not betaken into account as a significantdisposition of assets. See Regulationssection 1.170A-9(g)(2).

In the case of a complete liquidationof a corporation or termination of a trust,state whether a final distribution ofassets was made and the date made.Also, attach a certified copy of theresolution or plan, if any, of liquidation,etc., and all amendments orsupplements not previously filed, as wellas a schedule listing the names andaddresses of all recipients of assetsdistributed in liquidation, dissolution, orsubstantial contraction, and anexplanation of the nature and fair marketvalue of assets distributed to eachrecipient.

Organizations that have terminatedtheir 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 Requirements DuringSection 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 foreach year in the 60-month terminationperiod, if that period has not expiredbefore the due date of the return.

Regulations under section 507(b)(1)(B)(iii) specify that within 90 days afterthe end of the termination period theorganization must supply information toits key district director establishing thatit has terminated its private foundationstatus and, therefore, qualifies as apublic charity. 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 thekey district has not confirmed that the

organization has terminated its privatefoundation status by the time the returnfor the final year of the termination isdue (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)but not previously filed if it is laterdetermined that the organization did notterminate its private foundation status.Interest on any tax due will be chargedfrom the original due date of the Form990-PF, but penalties under sections6651 and 6652 will not be assessed ifthe Form 990-PF is filed within theperiod allowed by the key district.

V. Special Rules for Section507(b)(1)(B) TerminationsIf the organization is terminating itsprivate foundation status under the60-month provisions of section507(b)(1)(B), special rules apply. (SeeGeneral Instructions T and U.) Underthese rules the organization may fileForm 990-PF without paying the tax onnet investment income if it filed aconsent under section 6501(c)(4) with itsnotification to the district director of itsintention to begin a section 507(b)(1)(B)termination. The consent provides thatthe period of limitation on theassessment of excise tax under section4940 or 4948 on investment income forany tax year in the 60-month period willnot expire until at least 1 year after theperiod for assessing a deficiency for thelast tax year in the 60-month periodwould normally expire. Any foundationnot paying the tax when it files Form990-PF must attach a copy of thesigned 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 theorganization must supply informationestablishing that it qualified as a publiccharity for the period for which it paidthe 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 nexthigher dollar.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 nameand employer identification number,

3. Follow the format and linesequence of 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,please use it. If the name or address onthe label is wrong, make corrections onthe label. The address used must bethat of the principal office of thefoundation.

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 numberinstead of the street address.A. Employer Identification Number.—The organization should have only oneemployer identification number. If it hasmore than one number, notify theInternal Revenue 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 theorganization’s principal office. The IRSwill then advise which number to use.D2. Foreign Organizations.—Check thebox in D2 on page 1 of Form 990-PF ifthe organization meets the 85% test ofRegulations section 53.4948-1(b). Attachthe computation of the 85% test toForm 990-PF.Note: If the foundation meets the 85%test, do not fill in Parts XI and XIII, butcheck the box at the top of Part XI. Ifthe foundation meets the 85% test, donot fill in Part X unless it is claimingstatus as a private operating foundation.E. Section 507(b)(1)(A) Terminations.—A private foundation that has terminatedits status as such under section507(b)(1)(A), by distributing all its netassets to one or more public charitieswithout keeping any right, title, orinterest in those assets, should checkthe box in E on page 1 of Form 990-PF.See General Instructions T and Q.F. 60-Month Termination UnderSection 507(b)(1)(B).—Check the box inF on page 1 of Form 990-PF if theorganization is terminating its privatefoundation status under the 60-monthprovisions of section 507(b)(1)(B) during

the period covered by this return. Tobegin such a termination, a privatefoundation must have given advancenotice to its key district director andprovided 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 ineffect 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 thetrust is a nonexempt charitable trusttreated as a private foundation. Allothers, check the “Other taxable privatefoundation” box.I. Fair Market Value of All Assets.—Inblock I on page 1 of Form 990-PF, enterthe fair market value of all assets thefoundation held at the end of the taxyear.Note: This amount should be the sameas the figure reported in Part II, column(c), line 16.

Part I—Analysis of Revenueand ExpensesNote: The amounts in column (a) are therevenue and expenses shown in thebooks and records of the foundation.The total of amounts in columns (b),(c), and (d) may not necessarily equalthe amounts in column (a). In PartXVI-A, analyze amounts entered incolumn (a) and on line 5b.

Column (a)—Revenue andExpenses per BooksEnter 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,and 8 or expenses included in cost ofgoods sold on line 10b.

Column (b)—Net InvestmentIncomeAll domestic private foundations(including section 4947(a)(1) nonexemptcharitable trusts) are required to pay anexcise tax each tax year on their netinvestment income.

Exempt foreign foundations aresubject to an excise tax on their grossinvestment income from U.S. sources.These foreign organizations shouldcomplete lines 3, 4, 5, 11, 12, and 27bof column (b) and report only incomederived from U.S. sources. No otherincome should be included. Noexpenses are allowed as deductions.

Gross investment income means thetotal amount of investment income thatwas received by a private foundationfrom all sources. However, it does notinclude any income subject to theunrelated business income tax. Itincludes interest, dividends, rents,payments with respect to securitiesloans (as defined in section 512(a)(5)),royalties received from assets devotedto charitable activities, income fromnotional principal contracts (as definedin Regulations section 1.863-7)), andother substantially similar income fromordinary and routine investmentsexcluded by section 512(b)(1). Therefore,interest received on a student loan isincludible in the gross investmentincome of a private foundation makingthe 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, ifthe debt/basis percentage of adebt-financed property is 80%, only80% of the gross income (andexpenses) for that property is used tofigure the section 511 tax on Form990-T. The remaining 20% of the grossincome (and expenses) of that propertyis used to figure the section 4940 tax onnet investment income on Form 990-PF.(See Form 990-T and its instructions formore information.)

Include in column (b) all ordinary andnecessary expenses paid or incurred toproduce or collect investment incomefrom: interest, dividends, rents, amountsreceived from payments on securitiesloans (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 ofproperty held for the production ofincome that is taxable under section4940.

If any of the expenses listed in column(a) are paid or incurred for bothinvestment and charitable purposes,they must be allocated on a reasonablebasis between the investment activitiesand the charitable activities so that onlyexpenses from investment activitiesappear in column (b). Examples ofallocation methods are given in theinstructions for Part IX-A.Note: The deduction for expenses paidor incurred in any tax year for producinggross investment income earned incidentto a charitable function cannot be morethan the amount of income earned fromthe function which is includible as grossinvestment income for the year.

For example, if rental income isincidentally realized in 1995 from historicbuildings held open to the public,deductions for amounts paid or incurredin 1995 for the production of this incomemay not be more than the amount ofrental income includible as grossinvestment income in column (b) for1995.Note: Do not include on lines 13–23 ofcolumn (b) any expenses paid orincurred that are allocable to tax-exemptinterest that is excluded from lines 3and 4.

Column (c)—Adjusted Net IncomeNote: See 1 below under NonoperatingPrivate Foundations to see if you arerequired 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 expensesin figuring adjusted net income.

For column (c), include income fromcharitable functions, investmentactivities, short-term capital gains frominvestments, amounts set aside, andunrelated trade or business activities. Donot include gifts, grants, orcontributions, or long-term capital gainsor losses. Nonoperating privatefoundations should follow the specialrules that apply.Note: In completing column (c), includeon each line only that portion of theamount from column (a) that isapplicable to the adjusted net incomecomputation.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 tothe general rules for income andexpenses that apply to this column, thespecific line instructions for lines 3–27c,and Special Rule 3 and Examples 1 and2 given below.

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 orline 11 of Part I, it does not have tomake any entries 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) incolumn (c).

3. The expenses attributable to eachspecific charitable activity, limited by theamount of income from the activity,must be reported in column (c) on lines13–26. If the expenses of any charitableactivity exceed the income generated bythat activity, only the excess of theseexpenses over the income should bereported in column (d).

Examples. 1 A charitable activitygenerated $5,000 of income and $4,000of expenses. Report all of the incomeand expenses 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) andthe excess expenses of $1,000 incolumn (d).

Deductible expenses include the partof a private foundation’s operatingexpenses that is paid or incurred toproduce or collect gross incomereported on lines 3–11 of column (c). Ifonly part of the property producesincome includible in column (c),deductions such as interest, taxes, andrent must be divided between thecharitable and noncharitable uses of theproperty. If the deductions for propertyused for a charitable, educational, orother similar purpose are more than theincome from the property, the excesswill not be allowed as a deduction butmay be treated as a qualifyingdistribution in Part I, column (d). SeeExamples 1 and 2 above.

Column (d)—Disbursements forCharitable PurposesNote: For amounts entered in column(d), use the cash receipts anddisbursements method of accounting,regardless of the method of accountingused in keeping the books of thefoundation.

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 administrative

expenses, paid by the foundation forreligious, charitable, scientific, literary,educational, or other public purposes, orfor the prevention of cruelty to childrenor animals.

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 section509(a)), are qualifying distributions,provided that the granting foundationdoes not control the 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 nameand address of the person and theamount and date of each gift madeduring the year.

To determine whether a person hascontributed $5,000 or more, total onlygifts of $1,000 or more from eachperson. Separate and independent giftsneed not be totaled if less than $1,000.If a contribution is in the form ofproperty, describe the property andinclude its fair market value.

The term “person” includesindividuals, fiduciaries, partnerships,corporations, associations, trusts, andexempt organizations.

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.Report contributions only on lines 1and 2.

Generally, a donor making a charitablecontribution of $250 or more will not be

allowed 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 wasmade or the due date, includingextensions, for filing that return.However, see section 170(f)(8) and therelated temporary regulations forexceptions to this 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)a description and a good-faith estimateof the value of any goods or services thefoundation gave in return for thecontribution, unless the goods andservices have insubstantial value orunless a statement is included thatthese goods and services consist solelyof intangible religious benefits.

Generally, if a charitable organizationsolicits or receives a contribution ofmore than $75 for which it gives thedonor something in return (a quid proquo contribution), the organization mustinform the donor, by written statement,that the amount of the contributiondeductible for Federal income taxpurposes is limited to the amount bywhich the contribution exceeds thevalue of the goods or services receivedby the donor. The written statementmust also provide the donor with agood-faith estimate of the value ofgoods or services given in return for thecontribution.

An organization that does not makethe required disclosure for each quid proquo contribution will incur a penalty of$10 for each failure, not to exceed$5,000 for a particular fundraising eventor mailing, unless it can showreasonable cause for not providing thedisclosure.

An organization must keep records,required by the regulations undersection 170, for all its charitablecontributions.

Donors must file Form 8283, NoncashCharitable Contributions, if theirdeduction for all noncash gifts is morethan $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 ofline 1.Line 3—Interest on savings andtemporary cash investments.—Incolumn (a), enter the total amount ofinterest income from investments of thetype reportable in Balance Sheets, PartII, line 2. These include savings or other

interest-bearing accounts and temporarycash investments, such as moneymarket funds, commercial paper,certificates of deposit, and U.S. Treasurybills or other government obligations thatmature in less 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 ofinterest 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, PartII, line 10. Include amounts receivedfrom payments on securities loans, asdefined in section 512(a)(5). Do notinclude any capital gain dividendsreportable on line 6. Report income fromprogram-related investments on line 11.For debt instruments with an originalissue discount, report the original issuediscount ratably over the life of the bondon line 4. See section 1272 for moreinformation.

In column (b), enter the amount ofdividend and interest income, andpayments on securities loans fromcolumn (a). Do not include interest ontax-exempt government obligations.

In column (c), enter the amount ofdividends and interest income, andpayments on securities loans fromcolumn (a). Include interest ontax-exempt government obligations.Line 5a—Gross rents.—In column (a),enter the gross rental income for theyear from investment property reportableon line 11 of Part II.

In columns (b) and (c), enter thegross rental 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 online 11, Other income. Enter anyexpenses attributable to the rentalincome reported on line 5, such asinterest and depreciation, 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 inPart IV, attach a schedule showing:(a) date acquired, manner of acquisition,date sold, and to whom sold, (b) grosssales price, (c) cost, other basis or valueat time of acquisition if donated (statewhich basis), (d) expense of sale andcost of improvements made subsequentto acquisition, 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 foundationsshould figure their short-term capitalgains and report them on line 8.

Include only net short-term capitalgain for the year (assets sold orexchanged that were held not more than1 year). Do not include a net long-termcapital gain or a net loss in column (c).

Do not include a net gain from thesale or exchange of depreciableproperty, or land used in a trade orbusiness (section 1231) and held formore than 1 year on line 8. However,include a net loss from such property online 23 as an Other expense.

In general, organizations may carry thenet short-term capital gain reported inPart IV, line 3, to line 8. However, if thefoundation had any short-term capitalgain from sales of debt-financedproperty, add it to the amount reportedon Part IV, line 3, to figure the amountto include on line 8. For definition of“debt-financed property,” see theinstructions for Form 990-T.Line 9—Income modifications.—Include on this line:● Amounts received or accrued asrepayments of amounts taken intoaccount as qualifying distributions (seethe instructions for Part XII for anexplanation of qualifying distributions) forany year.● Amounts received or accrued from thesale or other disposition of property tothe extent that the acquisition of theproperty was considered a qualifyingdistribution for any tax year.● Any amount set aside for a specificproject (see explanation in theinstructions for Part XII) that was notnecessary for the purposes for which itwas set aside.● Income received from an estate, butonly if the estate was consideredterminated for income tax purposes dueto a prolonged administration period.● Amounts treated in an earlier tax yearas qualifying distributions to:

a. A private foundation, which is not aprivate operating foundation, if theamounts were not redistributed by thegrantee organization by the close of itstax year following the year in which itreceived the funds, or

b. 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 of

special events and activities. Theseinventory items are the ones theorganization either makes to sell toothers or 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 online 6.

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 totype of inventory sold (such as books,tapes, other educational or religiousmaterial, etc.). The totals from theschedule should agree with the entrieson lines 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 thetotal of all the foundation’s other incomefor the year. Include all income notreported on lines 1 through 10c. Refer tothe instructions for Part XVI-A, line 11.Include imputed interest on certaindeferred payments figured under section483, and any investment income notreportable on lines 3 through 5,including income from program-relatedinvestments (defined in the instructionsfor Part IX-B). However, do not includeunrealized gains and losses oninvestments carried at market value.Report those as fund balance or netasset adjustments in Part III. Attach aschedule showing the description andamount of the income.

In column (b), enter the amount ofinvestment 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 theyear of all officers, directors, andtrustees. If none was paid, enter zero.Complete line 1 of Part VIII to show thecompensation of officers, directors,trustees, and foundation 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 compensationincluded in column (a) that was paid or

incurred to produce or collect incomeincluded in column (c).Line 14—Other employee salaries andwages.—Enter the salaries and wagesof all employees other than thoseincluded 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 ofcontributions to employee benefitprograms (such as insurance, health,and welfare programs) that are not anincidental part of a pension plan.Complete the return/report of the Form5500 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 theyear, but only those that are imposed onthe organization 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 professionalfees.—On the appropriate line(s), enterthe amount of legal, accounting,auditing, and other professional fees(such as fees for fundraising orinvestment services) charged by outsidefirms and individuals who are notemployees of the foundation.

Attach a schedule for lines 16a, b, andc. Show the type of service and amountof expense for each. If the same personprovided more than one of theseservices, include an allocation of thoseexpenses. Report any fines, penalties, orjudgments imposed against thefoundation as a result of legalproceedings 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;and any income tax. Do not enter anytaxes included on line 15. Attach aschedule listing the type and amount ofeach tax reported on line 18.

In column (b), enter only those taxesincluded in column (a) that are related toinvestment income taxable under section4940. Do not include the section 4940tax paid or incurred on net investmentincome or the section 511 tax onunrelated business income. Sales taxesmay not be deducted separately, butmust be treated as a part of the cost ofacquired property, or as a reduction of

the amount realized on disposition of theproperty.

In column (c), enter only those taxesincluded in column (a) that relate toincome included in column (c). Do notinclude any excise tax paid or incurredon the net investment income (as shownin Part VI), or any tax reported on Form990-T.

In column (d), do not include anyexcise tax paid on investment income(as reported in Part VI of this return orthe equivalent part of a return for prioryears) unless the organization is claimingstatus as a private operating foundationand completes 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) depreciationallowed or allowable in prior years,(e) method of computation, (f) rate (%)or life (years), and (g) depreciation thisyear. On a separate line on theschedule, show the amount ofdepreciation included in cost of goodssold and not included on line 19.

In columns (b) and (c), a deductionfor depreciation is allowed only forproperty used in the production ofincome reported in the column, and onlyusing the straight line method ofcomputing depreciation. A deduction fordepletion is allowed but must be figuredonly using the cost depletion 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,that relate only to gain or loss ondispositions for purposes of the tax onnet investment income.Line 20—Occupancy.—Enter theamount paid or incurred for the use ofoffice space or other facilities. If thespace is rented or leased, enter theamount of rent. If the space is owned,enter the amount of mortgage interest,real estate taxes, and similar expenses,but not depreciation (reportable on line19). In either case, include the amountfor utilities and related expenses, e.g.,heat, lights, water, power, telephone,sewer, trash removal, outside janitorialservices, and similar services. Do notinclude any salaries of the organization’sown employees that are reportable online 14.Line 21—Travel, conferences, andmeetings.—Enter the expenses forofficers, employees or others during theyear 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 include

any compensation paid to those whoparticipate.

In column (b), only 50% of theexpense for business meals, etc., paidor incurred in connection with travel,meetings, etc., relating to the productionof investment income, may be deductedin figuring net investment income(section 274 (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. Alsoinclude the cost of subscriptions to, orpurchases of, 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:● Description of the amortizedexpenses;● Date acquired, completed, orexpended;● Amount amortized;● Deduction for prior years;● Amortization period (number ofmonths);● Current-year amortization; and● 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 isallowed but only for assets used for theproduction of income reported in column(c).Line 25—Contributions, gifts, grantspaid.—Enter the total of allcontributions, gifts, grants, and similaramounts paid (or accrued) for the year.List each contribution, gift, grant, etc., inPart XV, or attach a schedule of theitems included on line 25 and list:(a) each class of activity, (b) separatetotal for each activity, (c) name andaddress of donee, (d) relationship ofdonee, if related by blood, marriage,adoption, or employment (includingchildren 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 ofany indigent person who received one ormore gifts or grants from the foundationunless that individual is a disqualifiedperson or one who received a total of

more than $1,000 from the foundationduring the year.

Activities should be classifiedaccording to purpose and in greaterdetail than merely classifying them ascharitable, educational, religious, orscientific activities. For example, useidentification such as: payments fornursing service, for fellowships, or forassistance to indigent families.

Foundations may include, as a singleentry on the schedule, the total ofamounts paid as grants for which thefoundation exercised expenditureresponsibility. Attach a separate reportfor each grant.

When the fair market value of theproperty at the time of disbursement isthe measure of a contribution, theschedule must also show: (a) descriptionof the contributed property, (b) bookvalue of the contributed property, (c) themethod used to determine the bookvalue, (d) the method used to determinethe fair market value, and (e) the date ofthe gift. The difference between fairmarket value and book value should beshown in the books of account and as anet asset adjustment in Part III.

In column (d), enter all contributions,gifts, and grants the foundation paidduring the year on line 25.● Do not include contributions toorganizations controlled by thefoundation or by a disqualified person(see General Instruction C fordefinitions). Do not include contributionsto nonoperating foundations unless thedonees are exempt from tax undersection 501(c)(3), they redistribute thecontributions, and they maintainsufficient evidence of redistributionsaccording to the regulations undersection 4942(g).● Do not reduce the amount of grantspaid in the current year by the amountof grants paid in a prior year that wasreturned or recovered in the currentyear. Report those repayments incolumn (c), line 9, and in Part XI, line 4a.● 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) inthe year of the set-aside regardless ofwhen paid.● Do not include current year’swrite-offs of prior years’ program-relatedinvestments. All program-relatedinvestments are included in qualifyingdistributions (Part XII, line 1b) in the yearthe investment is made.● Do not include any payments that arenot qualifying distributions as defined insection 4942(g)(1).

Net AmountsLine 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 FundBalances.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 privatefoundations (domestic organizations—1% (section 4940(e)), 2% (section4940(a) or (b)), exempt foreignorganizations—4% (section 4948)) ascomputed in Part VI. However, if theorganization is a domestic organizationand line 26 is more than line 12 (i.e.,expenses exceed income), enter zero(not a negative amount).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),show the fair market value at the end ofthe year. Attached schedules must showthe end-of-year value for each assetlisted in columns (b) and (c).● Foundations whose books of accountincluded total assets of $5,000 or moreat any time during the year mustcomplete all of columns (a), (b), and (c).● 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).Line 1—Cash—Non-interest-bearing.—Enter the amount of cash ondeposit in checking accounts, depositsin transit, change funds, petty cashfunds, or any other non-interest-bearingaccount. Do not include advances toemployees or officers or refundabledeposits paid to suppliers or others.Line 2—Savings and temporary cashinvestments.—Enter the total of cash insavings or other interest-bearingaccounts and temporary cashinvestments, such as money marketfunds, commercial paper, certificates ofdeposit, and U.S. Treasury bills or othergovernmental obligations that mature inless 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 ofgoods and/or the performance ofservices. In columns (a), (b), and (c),enter net amounts (total accountsreceivable reduced by the correspondingallowance for doubtful accounts). Claimsagainst vendors or refundable depositswith suppliers or others may be reportedhere if not significant in amount.

(Otherwise, report them on line 15, Otherassets.) Any receivables due fromofficers, directors, trustees, foundationmanagers, or other disqualified personsmust be reported on line 6. Reportreceivables (including loans andadvances) due from other employees online 15.Line 4—Pledges receivable.—On thedashed lines to the left of column (a),enter the year-end figures for totalpledges 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 fromgovernmental agencies, foundations,and other organizations as of thebeginning and end of 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 General InstructionC.

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 tospecial terms or arising fromtransactions not functionally related tothe foundation’s charitable purposesmust be reported as separate loans foreach 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 tothe foundation’s charitable purposesmay be reported as a single total for allthe officers, directors, etc. Traveladvances made for official business ofthe organization may also be reported asa single total.

For each outstanding loan or otherreceivable that must be reportedseparately, the attached scheduleshould show the following information(preferably in 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., commonstock— $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 identifythose totals separately on theattachment.Line 7—Other notes and loansreceivable.—On the dashed lines to theleft of column (a), enter the combinedtotal year-end figures for notesreceivable and loans receivable and theallowance for doubtful 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.The schedule should also identify therelationship of the borrower to anyofficer, director, trustee, foundationmanager, or other 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 of loansreceivable, 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 otherdisqualified persons on line 6 and loansto other employees on line 15.Line 8—Inventories for sale or use.—Enter the amount of materials, goods,and supplies purchased or manufacturedby the organization and held for sale oruse in some future period.Line 9—Prepaid expenses anddeferred charges.—Enter the amount ofshort-term and long-term prepaymentsof expenses attributable to one or morefuture accounting periods. Examplesinclude 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 line2. Governmental obligations reported online 10a are those that mature in 1 yearor more. 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.Do not combine U.S. Governmentobligations with state and municipalobligations on this 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 allland, 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 itemor category listed, the cost or otherbasis, accumulated depreciation, andbook value.Line 12—Investments—mortgageloans.—Enter the amount of mortgageloans receivable held as investments butdo not include program-relatedinvestments (see instructions for line 15).Line 13—Investments—other.—Enterthe amount of all other investmentholdings not reported on lines 10through 12. Attach a schedule listingand describing each of theseinvestments held at the end of the year.Show the book value for each andindicate whether the investment is listedat cost or end-of-year market value. Donot include program-related investments(see instructions for line 15).Line 14—Land, buildings, andequipment.—On the dashed lines to theleft of column (a), enter the year-endbook value (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, andequipment not held for investment lessaccumulated depreciation. In column (c),enter the fair market value of theseassets. Include any property, plant, andequipment owned and used by theorganization to conduct its charitableactivities. Attach a schedule listing thesefixed assets held at the end of the yearand showing the cost or other basis,accumulated depreciation, and bookvalue of each item or category listed.Line 15—Other assets.—List and showthe book value of each category ofassets not reportable on lines 1 through14. Attach a separate schedule if morespace is needed.

One type of asset reportable on line15 is program-related investments.These are investments made primarily toaccomplish a charitable purpose of thefiling 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 alltimes during the year need not completelines 1 through 15 of column (c).Line 17—Accounts payable andaccrued expenses.—Enter the total ofaccounts payable to suppliers andothers and accrued expenses, such assalaries payable, accrued payroll taxes,and interest payable.Line 18—Grants payable.—Enter theunpaid portion of grants and awards thatthe organization has made acommitment to pay other organizationsor individuals, whether or not thecommitments have been communicatedto 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 disqualifiedpersons. For loans outstanding at theend of the year, attach a schedule thatshows (for each loan) the name and titleof the lender and the information listedin items 2 through 10 of the instructionsfor line 6 on page 13.Line 21—Mortgages and other notespayable.—Enter the amount ofmortgages and other notes payable atthe beginning and end of the year.Attach a schedule showing, as of theend of the year, the total amount of allmortgages payable and, for eachnonmortgage note payable, the name ofthe lender and the other informationspecified in items 2 through 10 of theinstructions for line 6. The scheduleshould also identify the relationship ofthe lender to any officer, director,trustee, foundation manager, or otherdisqualified person.Line 22—Other liabilities.—List andshow the amount of each liability notreportable on lines 17 through 21.Attach a separate schedule if morespace is needed.

Lines 24 Through 30—Net Assetsor Fund BalancesThe Financial Accounting StandardsBoard issued Statement of FinancialAccounting Standards (SFAS) 117,Financial Statements of Not-for-ProfitOrganizations, in June 1993, effective forfiscal years beginning after December15, 1994.

There is an optional 1-year delay toimplement SFAS 117 for smallorganizations (less than $5 million intotal assets and less than $1 million inannual expenses).

SFAS 117 provides standards forexternal financial statements certified byan independent accountant for certaintypes of nonprofit organizationsincluding private foundations.

While some states may requirereporting in accordance with SFAS 117(see General Instruction F), IRS doesnot. However, a Form 990-PF returnprepared in accordance with SFAS 117will be acceptable to IRS.Organizations that follow SFAS 117.—If the organization follows SFAS 117,check the box above line 24. Classifyand report 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 boarddesignations or appropriations.Line 25—Temporarily restricted.—Enter the balances per books of thetemporarily restricted class of netassets. Donors’ temporary restrictionsmay require that resources be used in alater period or after a specified date(time restrictions), or that resources beused for a specified purpose (purposerestrictions), or both.Line 26—Permanently restricted.—Enter the total of the balances for thepermanently restricted class of netassets. Permanently restricted netassets are (a) assets, such as land orworks of art, donated with stipulationsthat they be used for a specifiedpurpose, be preserved, and not be soldor (b) assets donated with stipulationsthat they be invested to provide apermanent source of income. The latterresult from gifts and bequests thatcreate permanent endowment 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 totalliabilities and 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 statedvalue (or for stock with no par or statedvalue, total amount received uponissuance) of all classes of stock issuedand, as yet, uncancelled. For trusts,

enter the amount in the trust principal orcorpus account. For organizationscontinuing to use the fund method ofaccounting, enter the fund balances forthe organization’s current restricted andunrestricted funds.Line 28—Paid-in or capital surplus, orland, bldg., and equipment fund.—Enter the balance per books for allpaid-in capital in excess of par or statedvalue for all stock issued anduncancelled. If stockholders or othersgave donations that the organizationrecords as paid-in capital, include themhere. Report any current-year donationsyou included on line 28 in Part I, line 1.The fund balance for the land, building,and equipment fund would be enteredhere.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,enter the balance per books in theaccumulated income or similar account.For organizations using fund accounting,enter the total of the fund balances forthe permanent and term endowmentfunds as well as balances of any otherfunds not reported 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 mustequal the amount for total assetsreported on line 16 for both thebeginning and end of the year.

Part III—Analysis ofChanges in Net Assets orFund BalancesGenerally, 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 anychanges in net assets that were notcaused by the receipts or expensesshown in Part I, column (a). Forexample, if an asset is shown in theending balance sheet at a higher valuethan in the beginning balance sheetbecause of an increased market value,include the increase in Part III, line 3.Also, if the organization uses astepped-up basis to determine gains onsales of assets included in Part I,column (a), then include the amount ofstep-up in basis in Part III. If you entereda contribution, gift, or grant of propertyvalued at fair market value on line 25 of

Part I, column (a), the differencebetween fair market value and bookvalue should be shown in the books ofaccount 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.● Part IV does not apply to foreignorganizations.● Nonoperating private foundations maynot have to figure their short-termcapital gain or loss on line 3. See therules for Nonoperating PrivateFoundations on page 9.

Private foundations must report gainsand losses from the sale or otherdisposition 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 partthat is not included in the computationof unrelated 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 propertyfor its 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 purposesand (other than incidentally) forinvestment purposes, include in thecomputation of tax on net investmentincome the part of the gain or loss fromthe sale or disposition of the propertythat is allocable to the investment use ofthe property.

Do not include gains or losses fromthe sale or exchange of program-relatedinvestments as defined in theinstructions for 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 duringthe same tax year but only to the extentof the gains. If losses are more than

gains, the excess may not be subtractedfrom gross investment income, nor maythe losses be carried back or forward toother tax years.Basis.—The basis for determining gainfrom the sale or other disposition ofproperty is the larger of:

1. The fair market value of theproperty on December 31, 1969, plus orminus all adjustments after December31, 1969, and before the date ofdisposition, if the foundation held theproperty on that date and continuouslyafter that date until disposition; or

2. The basis of the property on thedate of disposition under normal basisrules (actual basis). See Code sections1011–1021.

The rules that generally apply toproperty dispositions reported in thispart are:● Section 1011, Adjusted basis fordetermining gain or loss.● Section 1012, Basis of property—cost.● Section 1014, Basis of propertyacquired from a decedent.● Section 1015, Basis of propertyacquired by gifts and transfers in trust.● 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 anexample of a sale of investment propertyin which the gain was computed usingthe donor’s basis under the rules ofsection 1015(a).

Part V—Qualification UnderSection 4940(e) for ReducedTax on Net InvestmentIncomeThis part is used by exempt domesticprivate foundations to determinewhether they qualify for the reduced 1%tax under section 4940(e) on netinvestment income rather than the 2%tax on net investment income undersection 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 forthe first year it is treated as a privatefoundation.

A separate computation must bemade for each year in which thefoundation wants to qualify for thereduced tax.Line 1, column (b).—Enter the amountof adjusted qualifying distributions madefor each year shown. The amounts in

column (b) are taken from Part XIII, line8, of the 1990 Form 990-PF and fromPart XII, line 6, for 1991–94.Line 1, column (c).—Enter the net valueof noncharitable-use assets for eachyear. The amounts in column (c) aretaken from Part IX, line 5, of the 1990Form 990-PF and from Part X, line 5, for1991–94.

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 onnet investment income under section4940(a). However, certain exemptoperating foundations described insection 4940(d)(2) may not owe any taxand certain private foundations thatmeet the requirements of section4940(e) may qualify for a reduced tax of1% (see the Part V instructions).

Domestic section 4947(a)(1)nonexempt charitable trusts and taxableprivate foundations are subject to amodified 2% tax on net investmentincome 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 applyto an organization making an electionunder section 41(e)(6). Enter “N/A” inPart 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 payestimated taxes on its net investmentincome. See General Instruction O formore information.

Tax ComputationLine 1a.—Note: Line 1a only applies todomestic exempt operating foundationsthat are described in section 4940(d)(2)and that have a ruling letter from IRSestablishing exempt operating foundationstatus. If your organization does nothave this letter, skip line 1a. If yourorganization qualifies, check the box andenter the date of the ruling letter on line1a and enter “N/A” on line 1. Leave therest of Part Vl blank. For the first year,the organization must attach a copy ofthe ruling letter establishing exemptoperating foundation status. As long asthe organization retains this status, writethe date of the ruling letter in the spaceon line 1a. If the organization no longerqualifies under section 4940(d)(2), leave

the date line blank and compute thesection 4940 tax in the normal manner.

To qualify as an exempt operatingfoundation for a tax year, anorganization must meet the followingrequirements of section 4940(d)(2):

1. It is an operating foundationdescribed in section 4942(j)(3),

2. It has been publicly supported forat least 10 tax years or was a privateoperating foundation on January 1,1983, or for its last tax year endingbefore January 1, 1983,

3. Its governing body, at all timesduring the tax year, consists ofindividuals less than 25% of whom aredisqualified individuals, and is broadlyrepresentative of the general public, and

4. 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) isnot liable 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 tothe tax figured under section 4940(a) (online 1) the tax which would have beenimposed under section 511 for the taxyear if it had been exempt from taxunder section 501(a). If the domesticsection 4947(a)(1) nonexempt charitabletrust or taxable private foundation hasunrelated business taxable income thatwould have been subject to the taximposed by section 511, thecomputation of tax must be shown in anattachment. Form 990-T may be used asthe attachment. All other filers, enterzero.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 on line 1.

Line 6—Credits/Payments.—

Note: Line 6a applies only to domesticorganizations.Line 6a.—Enter the amount of 1995estimated tax payments, and any 1994overpayment of taxes that theorganization specified on its 1994 returnto be credited toward payment of 1995estimated taxes.

Note: A trust may treat any part ofestimated taxes it paid as taxes paid bythe beneficiary. If the filing organizationreceived the benefit of such a paymentfrom a trust, include the amount on line6a of Part VI, and write, “includessection 643(g) payment.” See section643(g) for more information aboutestimated tax payments treated as paidby a beneficiary.Line 6b.—Exempt foreign foundationsmust enter the amount of tax withheld atthe source.Line 6d.—Enter the amount of anybackup withholding erroneouslywithheld. Recipients of interest ordividend payments must generally certifytheir correct tax identification number tothe 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“backup withholding.” If the organizationfiles Form 990-PF and was subject toerroneous backup withholding becausethe payer did not realize the payee wasan exempt organization and not subjectto this withholding, the organization canclaim credit for the amount withheld.Line 8—Penalty.—Enter any penalty forunderpayment of estimated tax shownon Form 2220. Form 2220 is used byboth corporations and trusts.Line 9—Tax due.—Domesticfoundations should see GeneralInstruction P for the depositary methodof payment. 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 3.—A “conformed” copy of anorganizational document is one thatagrees with the original document andall its amendments. If copies are notsigned, attach a written declarationsigned by an officer authorized to signfor the organization, certifying that theyare complete and accurate copies of theoriginal documents.Line 6.—For a private foundation to beexempt from income tax, its governing

instrument must include provisions thatrequire it to act or refrain from acting soas not to engage in an act ofself-dealing (section 4941), or subjectthe foundation to the taxes imposed bysections 4942 (failure to distributeincome), 4943 (excess businessholdings), 4944 (investments whichjeopardize charitable purpose), and 4945(taxable expenditures). A privatefoundation may satisfy these section508(e) requirements either by expresslanguage in its governing instrument orby application of state law whichimposes the above requirements on thefoundation or treats these requirementsas being contained in the governinginstrument. If an organization claims itsatisfies the requirements of section508(e) by operation of state law, theprovisions of state law must effectivelyimpose the section 508(e) requirementson the organization. See Rev. Rul.75-38, 1975-1 C.B.161, for a list ofstates with legislation that satisfies therequirements of section 508(e).

However, if the state law does notapply to a governing instrument whichcontains mandatory directions conflictingwith any of its requirements and theorganization has such mandatorydirections in its governing instrument,then the organization has not satisfiedthe requirements of section 508(e) bythe operation 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; and

2. With which the organization hasregistered (or which it has otherwisenotified in any manner) that it intends tobe, or is, a charitable organization orthat it is, or intends to be, a holder ofproperty devoted to a charitablepurpose.

Attach a separate list if you needmore space.Line 9.—If the organization claims statusas an operating foundation for 1995 and,in fact, meets the operating foundationrequirements for that year (as reflectedin Part XIV), any excess distributionscarryover from 1994 or prior years maynot be carried over to any year after1995 in which it does not meet theoperating foundation requirements. Seethe instructions 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$5,000 and are more than 2% of thetotal contributions and bequestsreceived by the foundation from itscreation through the close of its taxyear. In the case of a trust, the term

“substantial contributor” also means thecreator of the trust (section 507(d)(2)).

The term “person” includesindividuals, trusts, estates, partnerships,associations, corporations, and otherexempt organizations.

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 laterperiods.

However, a person will cease to be asubstantial contributor with respect toany private foundation if:

1. The person, and all related persons,made no contributions to the foundationduring the 10-year period ending withthe close of the taxable year;

2. The person, or any related person,was never the foundation’s managerduring this 10-year period; and

3. 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” includesany other person who would be adisqualified person because of arelationship with the substantialcontributor (section 4946). When thesubstantial contributor is a corporation,the term also includes any officer ordirector of a corporation. The term“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 fundor other regulated investment companyas well as tax-exempt interest receiveddirectly.

Part VII-B—Activities forWhich 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 shouldanswer “Yes” to 1b unless all of the actsengaged in were “excepted” acts.Excepted acts are described inRegulations sections 53.4941(d)-3 and 4and appear in Notices published in theInternal Revenue Bulletin, relating todisaster assistance. Notices currently ineffect relating to disaster assistanceinclude Notice 95-7, 1995-6 I.R.B. 36,supplemented by Notice 95-16, 1995-16I.R.B. 12, Notice 95-33, 1995-23 I.R.B.10, and Notice 95-47, 1995-35 I.R.B. 17.Line 2—Taxes on failure to distributeincome.—If you answer “No” toquestion 2b, attach a statementexplaining:

1. All the facts regarding the incorrectvaluation of assets, and

2. 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, togetherwith related foundations, it owns 2% orless of the voting stock and 2% or lessin value of all outstanding shares of allclasses of stock. (See “disqualifiedperson” under General Instruction C.) Asimilar exception applies to a beneficialor profits interest in any businessenterprise that is a 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 aprivate foundation is one for which afoundation manager did not exerciseordinary business care to provide for thelong- and short-term financial needs ofthe foundation in carrying out itscharitable purposes. For more details,see Pub. 578 and the regulations undersection 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 taxableexpenditure if the private foundationdoes not earmark the grant for any ofthe activities described in lines 5a(1)–(5),and there is no oral or written agreementby which the grantor foundation maycause the grantee to engage in any suchprohibited activity or to select the grantrecipient.

Grants made to exempt operatingfoundations (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 section501(c)(3) organization must pay an

excise tax for any amount paid orincurred on behalf of or opposing anycandidate for public office. Theorganization must pay an additionalexcise tax if it does not correct theexpenditure 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 willfuland there is reasonable cause. Amanager who does not agree to acorrection of the political expendituremay have to pay an additional excisetax.

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

A political expenditure that is treatedas 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 section4945 for more information.Line 5b.—If you answered “Yes” to anyof the questions in 5a, you shouldanswer “Yes” to 5b unless all of thetransactions engaged in were“excepted” transactions. Exceptedtransactions are described inRegulations section 53.4945 and appearin Notices published in the InternalRevenue Bulletin, relating to disasterassistance. Notices currently in effectrelating to disaster assistance includeNotice 95-7, 1995-1 C.B. 292,supplemented by Notice 95-16, 1995-1C.B. 300, Notice 95-33, 1995-1 C.B.309, and Notice 95-47, 1995-35 I.R.B.17.

Part VIII—Information AboutOfficers, Directors, Trustees,Foundation Managers,Highly Paid Employees, andContractorsLine 1—List of officers, directors,trustees, etc.—List the names,addresses, and other information

requested for those who were officers,directors, and trustees (or any personwho had responsibilities or powerssimilar to those of officers, directors, ortrustees) of the foundation at any timeduring the year. Each must be listedwhether or not they receive anycompensation from the foundation. Givethe preferred address at which officers,etc., want the Internal Revenue Serviceto contact them. Enter zero in columns(c), (d), and (e) if none was paid. Attacha schedule if more space is needed.

Show all forms of compensationearned by each listed officer, etc. Inaddition to completing Part VIII, if youwant to explain the compensation of oneor more officers, directors, and trustees,you may provide an attachmentdescribing the person’s entire 1995compensation package(s).Column (c).—Enter salary, fees,bonuses, and severance paymentsreceived by each person listed. Includecurrent year payments of amountsreported or reportable as deferredcompensation in any prior year.Column (d).—Include all forms ofdeferred compensation and futureseverance payments (whether or notfunded or vested, and whether or notthe deferred compensation plan is aqualified plan under section 401(a)).Include payments to welfare benefitplans (employee welfare benefit planscovered by Part I of Title 1 of ERISA,providing benefits such as medical,dental, life insurance, apprenticeship andtraining, scholarship funds, severancepay, disability, etc.) on behalf of theofficers, etc. Reasonable estimates maybe used if precise cost figures are notreadily 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 (otherthan de minimis fringe benefitsdescribed in section 132(e)). See Pub.525 for more information. Examples ofallowances include amounts for whichthe recipient did not account to theorganization or allowances that weremore than the payee spent on servingthe organization. Include paymentsmade in connection with indemnificationarrangements, the value of the personaluse of housing, automobiles, or otherassets owned or leased by theorganization (or provided for theorganization’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 employees

listed on line 1. Also enter the totalnumber of other employees whoreceived more 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 orher services. See the line 1 instructionsfor more details on includiblecompensation.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 whomthe organization paid more than $50,000for the year to perform personal servicesof a professional nature for theorganization (such as attorneys,accountants, and doctors). Also showthe total number of all other independentcontractors who received more than$50,000 for the year for performingprofessional services.

Part IX-A—Summary ofDirect Charitable ActivitiesList the foundation’s four largestprograms as measured by the direct andindirect expenses attributable to eachthat consist of the direct active conductof charitable activities. Whether anyexpenditure is for the direct activeconduct of a charitable activity isdetermined, generally, by the definitionsand special rules of section 4942(j)(3)and the related regulations, which definea private operating foundation.

Except for significant involvementgrant programs, 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 ofthe grant funds.

Include scholarships, grants, or otherpayments to individuals as part of anactive program in which the foundationmaintains some significantinvolvement. Related administrativeexpenses should also be included.Examples of active programs anddefinitions of the term “significantinvolvement” are provided inRegulations sections 53.4942(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, butbe sure to include qualified set-asidesfor direct charitable activities, reportedon line 3 of Part XII. Also, include in PartIX-A, amounts paid or set aside toacquire assets used in the direct activeconduct of charitable activities.

Expenditures for direct charitableactivities include, among others,amounts paid or set aside to:● Acquire or maintain the operatingassets of a museum, library, or historicsite or to operate the facility.● Provide goods, shelter, or clothing toindigents or disaster victims if thefoundation maintains some significantinvolvement in the activity rather thanmerely making grants to the recipients.● Conduct educational conferences andseminars.● Operate a home for the elderly ordisabled.● Conduct scientific, historic, publicpolicy, or other research withsignificance beyond the foundation’sgrant program that does not constitute aprohibited attempt to influencelegislation.● Publish and disseminate the results ofsuch research, reports of educationalconferences, or similar educationalmaterial.● Support the service of foundation staffon boards or advisory committees ofother charitable organizations or onpublic commissions or task forces.● Provide technical advice or assistanceto a governmental body, a governmentalcommittee, or subdivision of either, inresponse to a written request by thegovernmental body, committee, orsubdivision.● Conduct performing artsperformances.● Provide technical assistance tograntees and other charitableorganizations. This assistance must havesignificance beyond the purposes of thegrants made to the grantees and mustnot consist merely of monitoring oradvising the grantees in their use of thegrant funds. Technical assistanceinvolves the furnishing of expert adviceand related assistance regarding, forexample:

a. Compliance with governmentalregulations;

b. Reducing operating costs orincreasing program accomplishments;

c. Fundraising methods; andd. Maintaining complete and accurate

financial records.Report both direct and indirect

expenses in the expense totals. Directexpenses are those that can bespecifically identified as connected witha particular activity. These include,among others, compensation and travelexpenses 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 in

conducting 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 anactivity; and other applicable generaland administrative expenses, includingthe compensation of top management,to the extent reasonably allocable to aparticular activity.

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

Examples of acceptable allocationmethods include:● Compensation that is allocated on atime basis.● Employee benefits that are allocatedon the basis of direct salary expenses.● Travel, conference, and meetingexpenses that are charged directly tothe activity which incurred the expense.● Occupancy expenses that areallocated on a space-utilized basis.● 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 ofthe foundation and no substantialpurpose of which is to produceinvestment income or a capital gain fromthe sale of the investment. Examples ofprogram-related investments includeeducational loans to individuals andlow-interest loans to other section501(c)(3) organizations.

On lines 1 and 2, list the two largestprogram-related investments made bythe foundation in 1995, whether or notthe investments 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 foundationat the end of 1995.

Investments consisting of loans toindividuals (such as educational loans)are not required to be listed separatelybut may be grouped with otherprogram-related investments of thesame type. Loans to other section501(c)(3) organizations and all other

types of program-related investmentsmust be listed separately on lines 1through 3 or on an attachment. The totalof lines 1 through 3 in the Amountcolumn must equal the amount reportedon line 1b of Part XII.

Part X—MinimumInvestment ReturnAll 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 completePart XIV.

A private foundation that is not aprivate operating foundation must payout, as qualifying distributions, itsminimum investment return. This isgenerally 5% of the total fair marketvalue of its noncharitable assets, subjectto further adjustments as explained inthe instructions for Part XI. The amountof this minimum investment return isfigured in Part X and is used in Part XIto figure the amount that is required tobe paid out (the distributable amount).

In figuring the minimum investmentreturn, include only those assets that arenot actually used or held for use by theorganization for a charitable,educational, or other similar function thatcontributed to the charitable status ofthe foundation. Cash on hand and ondeposit is considered used or held foruse for charitable purposes only to theextent of the reasonable cash balancesreported in Part X, line 4. See theinstructions for lines 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 theproduction of income or for investmentrather than used or held for use directlyby the foundation for charitablepurposes. For example, an officebuilding that is used to provide officesfor employees engaged in managingendowment funds for the foundation isnot considered an asset used forcharitable purposes. However, whenproperty is used both for charitable andother purposes, the property isconsidered used entirely for charitablepurposes if 95% or more of its total useis for that purpose. If less than 95% ofits total use is for charitable purposes, areasonable allocation must be madebetween charitable and noncharitableuse.

Certain assets are excluded entirelyfrom the computation of minimuminvestment return. These includepledges of grants and contributions tobe received in the future and future

interests in estates and trusts. See Pub.578, chapter VII, for more details.Line 1a—Average monthly fair marketvalue of securities.—If marketquotations are readily available, afoundation may use any reasonablemethod to determine the averagemonthly fair market value of securitiessuch as common and preferred stock,bonds, and mutual fund shares, as longas that method is consistently used. Forexample, a value for a particular monthmight be determined by the closingprice on the first or last trading days ofthe month or an average of the closingprices on the first and last trading daysof the month. Market quotations areconsidered readily available if a securityis any of the following:● 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.● Regularly traded in the national orregional over-the-counter market forwhich published quotations areavailable.● Locally traded, for which quotationscan be readily obtained from establishedbrokerage firms.

If securities are held in trust for, or onbehalf of, a foundation by a bank orother financial institution which valuesthose securities periodically using acomputer pricing system, a foundationmay use that system to determine thevalue of the securities. The system mustbe acceptable to the IRS for Federalestate tax 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:● The size of the block of the securities;● The fact that the securities held aresecurities in a closely held corporation;or● 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 theamount of cash on hand on the first andlast days of each month. Include allcash balances and amounts that may beused for charitable purposes (see line 4below) or set aside and taken as aqualifying distribution (see Part XII).Line 1c—Fair market value of all otherassets.—The fair market value of assetsother than securities is determinedannually except as described below. The

valuation may be made by privatefoundation employees or by any otherperson even if that person is adisqualified person. If the IRS acceptsthe valuation, it is valid only for the taxyear for which it is made. A newvaluation is required for the next taxyear.

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 valuationmethods must be used in making theappraisal. A valuation based onacceptable methods of valuing propertyfor Federal estate tax purposes will beconsidered acceptable.

The appraisal must include a closingstatement that, in the appraiser’sopinion, the appraised assets werevalued according to valuation principlesregularly employed in making appraisalsof such property, using all reasonablevaluation methods. The foundation mustkeep a copy of the independentappraisal for its records. If a valuation isreasonable, the foundation may use itfor the tax year for which the valuation ismade and for each of the 4 following taxyears.

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 recentvaluation should be used to computethe foundation’s minimum investmentreturn.

If the valuation is made according tothe 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 bemade 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 an asset heldless than 1 tax year, divide the numberof days the foundation held the asset bythe number of days in the tax year.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, realestate holdings, or other assets reported

on lines 1a and 1c reflects a blockagediscount, marketability discount, or otherreduction from full fair market valuebecause of the size of the asset holdingor because of any other factor, enter online 1e the aggregate amount of thediscounts claimed. Attach anexplanation that includes the followinginformation for each asset or group ofassets involved:

1. A description of the asset or assetgroup (for example, 20,000 shares ofXYZ, Inc., common stock);

2. For securities, the percentage ofthe total issued and outstandingsecurities of the same class that isrepresented by the foundation’s holding;

3. The fair market value of the assetor asset group before any claimedblockage discount or other reduction;

4. The amount of the discountclaimed; and

5. A statement that explains why theclaimed discount is appropriate invaluing the asset or group of assets forsection 4942 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 withthe charitable, educational, or othersimilar activities. The amount of cashthat may be excluded is generally 11⁄2%of the fair market value of all assets(minus any acquisition indebtedness) ascomputed in Part X, line 3. However, ifunder the facts and circumstances anamount larger than the deemed amountis necessary to pay expenses anddisbursements, then you may enter thelarger amount instead of 11⁄2% of the fairmarket value on line 4. If you use alarger amount, attach an explanation.Line 6—Short tax periods.—If thefoundation’s tax period is less than 12months, determine the applicablepercentage by dividing the number ofdays in the short tax period by 365 (or366 in a leap year). Multiply the result by5%. Then multiply the modifiedpercentage by the amount on line 5 andenter the result on line 6.

Part XI—DistributableAmountIf the organization is claiming status as aprivate operating foundation described in

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 instructionsfor more details on private operatingfoundations.

Section 4942(j)(5) organizations areclassified as private operatingfoundations for purposes of section4942 only if they meet the requirementsof Regulations section 53.4942(b)-1(a)(2).

The distributable amount for 1995 isthe amount that the foundation mustdistribute by the end of 1996 asqualifying distributions to avoid the 15%tax on the undistributed portion.Line 4a.—Enter the total of recoveries ofamounts treated as qualifyingdistributions for any year under section4942(g). Include recoveries of part or all(as applicable) of grants previouslymade; 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 thepurposes of the set-aside.Line 4b—Income distributions fromsection 4947(a)(2) trusts.—The incomeportion of distributions from split-interesttrusts on amounts placed in trust afterMay 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),not all of the unexpired interests ofwhich are devoted to charitable,religious, educational, and like purposes,and that has amounts in trust for whicha charitable contributions deduction hasbeen allowed.

If the foundation receives distributionswhich include amounts placed in trustbefore May 27, 1969, and amountsplaced in trust after May 26, 1969, thesedistributions must be allocated betweenthose amounts to determine the extentto which the distributions are included inthe foundation’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 theincome required to be accumulatedmust be subtracted from thedistributable amount beginning with thefirst tax year after the tax year in whichthe judicial proceeding was terminated.(See the instructions for Part VII-A, line6.)

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 taxyear beginning before January 1, 1970,or later borrows money under a writtencommitment binding on December 31,1969, the foundation may elect to treatany repayments of the loan principalafter December 31, 1969, as qualifyingdistributions at the time of repayment,rather than at the earlier time that theborrowed funds were actuallydistributed, only if:

1. The money is used to makeexpenditures for a charitable or similarpurpose; and

2. 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 firsttax year 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:● The lender’s name and address.● The amount borrowed.● The specific use of the borrowedfunds.● 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 thePart IX-B instructions for the definition ofprogram-related investments.Line 3—Amounts set aside.—Amountsset aside may be treated as qualifyingdistributions only if the privatefoundation establishes to the satisfactionof the IRS that the amount will be paidfor the specific project within 60 monthsfrom the date of the first set-aside andmeets 1 or 2 below.

1. The project can be betteraccomplished by a set-aside than by theimmediate payment of funds (suitabilitytest), or

2. 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:● The nature and purposes of thespecific project and the amount of theset-aside for which approval isrequested;● The amounts and approximate datesof any planned additions to theset-aside after its initial establishment;● The reasons why the project can bebetter accomplished by the set-asidethan by the immediate payment offunds;● A detailed description of the project,including estimated costs, sources ofany future funds expected to be usedfor completion of the project, and thelocation or locations (general or specific)of any physical facilities to be acquiredor constructed as part of the project;and● A statement of an appropriatefoundation manager that the amountsset aside will actually be paid for thespecific project within a specified periodof time ending within 60 months afterthe date of the first set-aside; or astatement explaining why the period forpaying the amount set aside should beextended and indicating the extension oftime requested. (Include in thisstatement the reason why the proposedproject could not be divided into two ormore projects covering periods of nomore than 60 months each.)

For any set-aside under 2 above, theorganization must attach a schedule toits annual information return showinghow the requirements are met. Aschedule is required for the year of theset-aside and for each subsequent yearuntil the set-aside amount has beendistributed. See Regulations section53.4942(a)-3(b)(7)(ii) for specificrequirements.Line 5—Reduced tax on investmentincome under section 4940(e).—If theorganization does not qualify for the 1%tax under section 4940(e), enter zero.See Parts V and VI instructions.

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

If the organization is a privateoperating foundation for any of the yearsshown in Part XIII, do not complete theportions of Part XIII that apply to those

years. If there are excess qualifyingdistributions for any tax year, do notcarry them over to a year in which theorganization is a private operatingfoundation or to any later year. Forexample, if a foundation made excessqualifying distributions in 1993 andbecame a private operating foundationin 1995, the excess qualifyingdistributions from 1993 could be appliedagainst the distributable amount for1994 but not to any year after 1994.

The purpose of this part is to enablethe foundation to comply with the rulesfor applying its qualifying distributionsfor the year 1995. In applying thequalifying distributions, there are threebasic steps.

1. First, reduce any undistributedincome for 1994 (but not less than zero).

2. The organization may use any partor all remaining qualifying distributionsfor 1995 to satisfy elections. Forexample, if undistributed incomeremained for any year before 1994, itcould be reduced to zero or, if thefoundation wished, the distributionscould be treated as distributions out ofcorpus.

3. If no elections are involved, applyremaining qualifying distributions to the1995 distributable amount on line 4d. Ifthe remaining qualifying distributions aregreater than the 1995 distributableamount, the excess is treated as adistribution out of corpus on line 4e.

If for any reason the 1995 qualifyingdistributions do not reduce any 1994undistributed income to zero, theamount not distributed is subject to a15% tax. If the 1994 income remainsundistributed at the end of 1996, it couldbe subject again to the 15% tax. Seesection 4942(b) for the circumstancesunder which the second-tier tax couldbe imposed.Line 1—Distributable amount.—Enterthe distributable amount for 1995 fromPart XI, line 7.Line 2—Undistributed income.—Enterthe distributable amount for 1994 andamounts for earlier years that remainedundistributed at the beginning of the1995 tax year.Line 2b.—Enter the amount ofundistributed income for years before1994.Line 3—Excess distributions carryoverto 1995.—If the foundation has madeexcess distributions out of corpus inprior years, which have not been appliedin any year, enter the amount for eachyear. Do not enter an amount for aparticular year if the organization was aprivate operating foundation for any lateryear.Lines 3a through 3e.—Enter theamount of any excess distribution madeon the line for each year listed. Do notinclude any amount that was appliedagainst the distributable amount of anearlier year or that was already used to

meet pass-through distributionrequirements. (See the instructions forline 7.)Line 3f.—This amount can be applied in1995.Line 4—Qualifying distributions.—Enter the total amount of qualifyingdistributions made in 1995 from Part XII,line 4. The total of the amounts appliedon lines 4a through 4e is equal to thequalifying distributions made in 1995.Line 4a.—The qualifying distributions for1995 are first used to reduce anyundistributed income remaining from1994. Enter only enough of the 1995qualifying distributions to reduce the1994 undistributed income to zero.Lines 4b and 4c.—If there are any 1995qualifying distributions remaining afterreducing the 1994 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 1994 or to apply to corpus.To make these elections, theorganization must file a statement withthe IRS or attach a statement, asdescribed in the above regulationssection, to Form 990-PF. An electionmade by filing a separate statement withthe IRS must be made within the yearfor which the election is made.Otherwise, attach a statement to theForm 990-PF filed for the year theelection was made. If the organizationelected to apply all or part of theremaining amount to the undistributedincome remaining from years before1994, enter the amount on line 4b. If theorganization elected to treat thosequalifying distributions as a distributionout of corpus, enter the amount on line4c.Note: Entering an amount on line 4b or4c without submitting the requiredstatement is not considered a validelection.Line 4d.—Treat as a distribution of thedistributable amount for 1995 anyqualifying distributions for 1995 thatremain after reducing the 1994undistributed income to zero and afterelecting to treat any part of theremaining distributions as a distributionout of corpus or as a distribution of aprior year’s undistributed income. Enteronly enough of the remaining 1995qualifying distributions to reduce the1995 distributable amount to zero.Line 4e.—Any 1995 qualifyingdistributions remaining after reducing the1995 distributable amount to zeroshould be treated as an excessdistribution out of corpus. This amountmay be carried over and applied to lateryears.Line 5—Excess qualifying distributionscarryover applied to 1995.—Enter anyexcess qualifying distributions from line3, which were applied to 1995, in boththe Corpus column and the 1995

column. Apply the oldest excessqualifying distributions first. Thus, theorganization will apply any excessqualifying distributions carried forwardfrom 1990 before 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 1993 and prior years forwhich either a notice of deficiency undersection 6212(a) has been mailed for thesection 4942(a) first-tier tax, or on whichthe first-tier tax has been assessedbecause the organization filed a Form4720 for 1994 or an earlier year.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 Form4720. If the exception applies, attach anexplanation.Line 6f.—In the 1995 column, enter theamount by which line 1 is more than thetotal of lines 4d and 5. This is theundistributed income for 1995. Theorganization must distribute the amountshown by the end of its 1996 tax yearso that it will not be liable for the tax onundistributed income.Line 7—Distributions out of corpus for1995 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 distributionthat is treated as a distribution ofcorpus. The donee foundation must, nolater than the close of the first tax yearafter the tax year in which it receives thecontributions, distribute an amount equalin value to the contributions received inthe prior tax year and have no remainingundistributed income for the prior year.For example, if private foundation Xreceived $1,000 in tax year 1994 fromfoundation Y, foundation X would haveto distribute the $1,000 as a qualifyingdistribution out of corpus by the end of1995 and have no remainingundistributed income for 1994.

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 afterthe end of the tax year in which thefoundation received the contributions,

the donee 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, and

b. Distribute all contributions ofproperty only so that the individual orcorporation making the contribution isnot subject to the section 170(e)(1)(B)(ii)limitations.

If the organization is applying excessdistributions from prior years (i.e., anypart 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(d)(2). Also, seeRegulations section 1.170A-9(g)(2).

Enter on line 7 the total distributionsout of corpus made to satisfy therestrictions on amounts received fromdonors described above.Line 8—Outdated excess distributionscarryover.—Because of the 5-yearcarryover limitation under section4942(i)(2), the organization must reduceany excess distributions carryover byany amounts from 1990 that were notapplied in 1995.Line 9—Excess distributions carryoverto 1996.—Enter the amount by whichline 6a is more than the total of lines 7and 8. This is the amount theorganization may apply to 1996 andfollowing 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 1995 tax year. Ifthere is an amount on the line for 1991,it must be applied by the end of the1996 tax year since the 5-year carryoverperiod for 1991 ends in 1996.

Part XIV—Private OperatingFoundationsAll organizations that claim status asprivate operating foundations undersection 4942(j)(3) or (5) for 1995 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 forthe principal purpose explained insection 4942(j)(5) and also meet theendowment test described below. If thefoundation is a section 4942(j)(5)organization, complete only lines 1a, 1b,2c, 2d, 2e, and 3b. Enter “N/A” on allother lines in Part XIV.

The term “private operatingfoundation” means any privatefoundation that spends at least 85% ofthe smaller of its adjusted net income orits minimum investment return directlyfor the active conduct of the exempt

purpose or functions for which thefoundation is organized and operated(the Income Test) and that also meetsone of the 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 itis 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))from the public and from five or moreexempt organizations that are notdescribed in section 4946(a)(1)(H) withrespect to each other or the recipientfoundation. Not more than 25% of thesupport (other than gross investmentincome) normally may be received fromany one of the exempt organizations andnot more than 1⁄2 of the support normallymay be received from gross investmentincome.

See regulations under section 4942 forthe meaning of “directly for the activeconduct” of exempt activities forpurposes of these tests.

A foundation may meet the incometest and either the assets, endowment,or support test by satisfying the tests forany 3 years during a 4-year periodconsisting of the tax year in questionand the 3 immediately preceding taxyears. It may also meet the tests basedon the total of all related amounts ofincome or assets held, received, ordistributed during that 4-year period. Afoundation may not use one method forsatisfying the income test and anotherfor satisfying one of the three alternativetests. Thus, if a foundation meets theincome test on the 3-out-of-4-year basisfor a particular tax year, it may not usethe 4-year aggregation method formeeting one of the three alternativetests for that same year.

In completing line 3c(3) of Part XIVunder the aggregation method, thelargest amount of support from anexempt organization will be based onthe total amount received for the 4-yearperiod from any one exemptorganization.

A new private foundation must use theaggregation method to satisfy the testsfor its first tax year in order to be treatedas an operating foundation from thebeginning of that year. It must continueto use the aggregation method for its

2nd and 3rd tax years to maintain itsstatus for those years.

Part XV—SupplementaryInformation● Complete this part only if thefoundation had assets of $5,000 or moreat any time during the year.● 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, charitablefields, and kinds of recipients, indicateany specific dollar limitations or otherrestrictions applicable to each type ofaward the organization makes. Thisinformation benefits the grant seekerand the foundation. The grant seekerswill be aware of the grant eligibilityrequirements and the foundation shouldreceive only applications that adhere tothese grant application 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 schedulefor lines 3a and 3b that lists separatelyamounts given to individuals andamounts given 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 orany prior year.Line 3b—Approved for futurepayment.—List all contributions, grants,etc., approved during the year but notpaid by the end of the year, includingthe 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 arenot entered in Part XVI-A. Forinformation on unrelated businessincome, see the Instructions for Form990-T and Pub. 598.Columns (a) and (c).—In column (a),enter a business code, from the list inthe Instructions for Form 990-T, toidentify any income reported in column(b). In column (c), enter an exclusion

code, from the list on page 26, toidentify any income reported in column(d). If more than one exclusion code isapplicable to a particular revenue item,select the lowest numbered exclusioncode that applies. Also, if nontaxablerevenues from several sources arereportable on the same line in column(d), use the exclusion code that appliesto 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 anyrelated or exempt function income; thatis, any income earned that is related tothe organization’s purpose or functionwhich constitutes the basis for theorganization’s exemption.

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 bysection 103. You must explain in PartXVI-B any amount shown in column (e).Comparing Part XVI-A with Part I.—The sum of the amounts entered oneach line 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:Amounts in Correspond toPart XVI-A Amounts in Part I,on line (column (a)) on line

1a–g 112 113 34 45 and 6 5b (description column)7 118 69 11 minus any special

event expenses includedon lines 13 through 23of Part I, column (a).

10 10c11a–e 11

Line 1—Program service revenue.—Onlines 1a–g, list each revenue-producingprogram service activity of theorganization. For each program serviceactivity listed, enter the gross revenueearned for each activity, as well asidentifying business and exclusioncodes, in the appropriate columns. Forline 1g, enter amounts that arepayments for services rendered togovernmental units. Do not includegovernmental grants that are reportableon line 1 of Part I. Report the total oflines 1a–g on line 11 of Part I, along withany other 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 orbusiness activities. Program servicerevenue also includes income fromprogram-related investments (such asinterest earned on scholarship loans) asdefined 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 ofthe amounts entered for lines 11a–e,columns (b), (d), and (e), on line 11, PartI.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.

Line 13, Part XVI-AMinus: Line 5b, Part I

Note: If line 5b, PartI, reflects a loss, addthat amount hereinstead ofsubtracting.

Plus: Line 1, Part IPlus: Line 5a, Part IPlus: Expenses of special

events deducted incomputing line 9 ofPart XVI-A

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

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 numberof the amount in column (e) and give abrief description of how each activityreported in column (e) contributedimportantly to the accomplishment ofthe organization’s exempt purposes(other than by providing funds for suchpurposes). Activities that generateexempt-function income are activitiesthat form the basis of the organization’sexemption 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 completePart XVI-B.Example. M, a performing artsassociation, is primarily supported byendowment funds. It raises revenue bycharging admissions to itsperformances. These performances arethe primary means by which theorganization accomplishes its culturaland educational purposes.

M reported admissions income incolumn (e) of Part XVI-A and explainedin Part XVI-B that these performancesare the primary means by which itaccomplishes its cultural andeducational purposes.

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 grossincome by Code section 103.

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

For purposes of these instructions, thesection 501(c)(3) organization completingPart XVII is referred to as the “reportingorganization.”

A noncharitable exempt organization is“related to or affiliated with” thereporting organization if either: (a) thetwo organizations share some elementof common control; or (b) a historic andcontinuing relationship exists betweenthe two 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 theofficers, directors, or trustees of oneorganization are elected or appointed bythe officers, directors, trustees, ormembers of the other. An element ofcommon control is also present whenmore than 25% of the officers, directors,or trustees of one organization serve asofficers, directors, or trustees of theother organization.

A “historic and continuingrelationship” exists when twoorganizations participate in a joint effortto achieve one or more commonpurposes on a continuous or recurringbasis rather than on the basis of one ormore isolated transactions or activities.Such a relationship also exists when twoorganizations share facilities, equipment,or paid personnel during the year,regardless of the length of time thearrangement is in effect.Line 1—Reporting of certain transfersand transactions.—Generally, thereporting organization must report online 1 any transfer to or transaction witha noncharitable exempt organizationeven if the transfer or transactionconstitutes the only connection with thenoncharitable exempt organization.

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

Unrelated organizations.—All transfersfrom the reporting organization to anunrelated noncharitable exemptorganization must be reported on line1a. All transactions between thereporting organization and an unrelatednoncharitable exempt organization mustbe shown on line 1b, unless they meetthe exception in the specific instructionsfor line 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 inreturn. Contributions, gifts, and grantsare examples of transfers.

If the only transfers between the twoorganizations were contributions andgrants made by the noncharitableexempt organization to the reportingorganization, answer “No.”Line 1b—Other transactions.—Answer“Yes” for any transaction described inline 1b(1)–(6), regardless of its amount, ifit is with a related or affiliatedorganization.

Unrelated organizations.—Answer“Yes” for any transaction between thereporting organization and an unrelatednoncharitable exempt organization,regardless of its amount, if the reportingorganization received less than adequateconsideration. There is adequateconsideration where the fair marketvalue of the goods, and other assets orservices furnished by the reportingorganization, is not more than the fairmarket value of the goods, and otherassets or services received from theunrelated noncharitable exemptorganization. The exception describedbelow does not apply to transactions forless than adequate consideration.

Answer “Yes” for any transactionbetween the reporting organization andan unrelated noncharitable exemptorganization if the amount involved ismore than $500. The “amount involved”is the fair market value of the goods,services, or other assets furnished bythe reporting organization.Exception. If a transaction with anunrelated noncharitable exemptorganization was for adequateconsideration and the amount involvedwas $500 or less, answer “No” for thattransaction.Line 1b(3).—Answer “Yes” fortransactions in which the reporting

organization 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 orif the reporting organization guaranteedthe other’s loans.Line 1b(6).—Answer “Yes” if eitherorganization performed services ormembership or fundraising solicitationsfor the other.Line 1c.—Complete line 1c regardless ofwhether the noncharitable exemptorganization is related to or closelyaffiliated with the reporting organization.For the purposes of this line, “facilities”includes office space and any otherland, building, or structure whetherowned or leased by, or provided free ofcharge to, the reporting organization orthe noncharitable 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, enter theline number from line 1a–c. For example,if the answer was “Yes” to line 1b(3),enter “b(3)” in column (a).

Column (d).—If you need more space,write “see attached” in column (d) anduse an attached sheet for thedescription. If making more than oneentry on line 1d, specify on the attachedsheet which transfer or transaction youare describing.Line 2—Reporting of certainrelationships.—Enter on line 2 each

noncharitable 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 ofthe year.

Do not enter unrelated noncharitableexempt organizations on line 2 even iftransfers 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; forexample, “501(c)(4).”

Column (c).—In most cases, a simpledescription, such as “common directors”or “auxiliary of reporting organization”will be sufficient. If you need morespace, write “see attached” in column(c) and use an attached sheet todescribe the relationship. If you areentering more than one organization online 2, identify which organization youare describing on the attached sheet.

Part XVIII—Public InspectionSee General Instruction Q for informationon making the foundation’s annualreturn available for public inspection andpublishing a notice in a newspaperstating that the return is available forpublic inspection. 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 accountingofficer, or other corporate officer (suchas tax officer) who is authorized to sign.A receiver, trustee, or assignee mustsign any return which he or she isrequired to file for a corporation. If thereturn is filed for a trust, it must besigned by the authorized trustee ortrustees. Sign and date the form and fillin the signer’s title.

If an officer or employee of theorganization prepares the return, thePaid Preparer’s space should remainblank. If someone prepares the returnwithout charge, that person should notsign the return.

Generally, anyone who is paid toprepare the organization’s tax returnmust sign the return and fill in the PaidPreparer’s Use Only area.

If you have questions about whether apreparer is required to sign the return,please contact an IRS office.

The paid preparer must complete therequired preparer information and:● Sign it, by hand, in the space providedfor the preparer’s signature. (Signaturestamps and labels are not acceptable.)● 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)nonexempt charitable trust filing Form990-PF instead of Form 1041), the paidpreparer must also enter his or hersocial security number or, if applicable,employer identification number in thespaces provided. Otherwise, do notenter the preparer’s social security oremployer identification 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 IncomeIncome 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 the15% 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 propertyused in research activities described insection 512(b)(7), (8), or (9) (section514(b)(1)(C))

31—

Section 501(c)(3) organization— Incomefrom 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 section 512(b)(5)) andfrom certain inventory property acquiredafter December 31, 1993, from financialinstitutions 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 bythe 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 ExceptionsSection 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 beexempt function income reportable incolumn (e). It would not be so in the caseof a section 501(c)(5) or (6) organization,for example, that acquired the housing asan 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 VEBAsSection 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 conductedby an organization in North Dakota(section 311 of the Deficit Reduction Actof 1984, as amended)

10—

Income from mortgaged real propertyowned 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 Rules

Income 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’ OrganizationsSection 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 Business40— Gross income from an unrelated activity

that 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 ExclusionsDividends, 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—

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