Form 4720

2012

Department of the Treasury
Internal Revenue Service

Instructions for Form 4720

Return of Certain Excise Taxes Under Chapters 41 and 42 of the
Internal Revenue Code
(Sections 170(f)(10), 664(c)(2), 4911, 4912, 4941, 4942,
4943, 4944, 4945, 4955, 4958, 4959, 4965, 4966, and 4967)
Section references are to the Internal Revenue
Code unless otherwise noted.

Contents

Page

General Instructions . . . . . . . . . .
Purpose of Form . . . . . . . . . . . .
Who Must File . . . . . . . . . . . . .
Where To File . . . . . . . . . . . . . .
When To File . . . . . . . . . . . . . .
Extension . . . . . . . . . . . . . . . .
Name, Address, etc. . . . . . . . . .
Signature and Verification . . . . . .
Attachments . . . . . . . . . . . . . . .
Organizations Organized or
Created in a Foreign Country
or U.S. Possession . . . . . . .
Tax Payments . . . . . . . . . . . . .
Rounding Off to Whole Dollars . . .
Penalties and Interest . . . . . . . . .
Abatement . . . . . . . . . . . . . . . .
Initial Tax Liability . . . . . . . . . . .
Completing the Schedules . . . . .
Amended Return . . . . . . . . . . . .
Specific Instructions for Page 1 . .
Schedule A—Initial Taxes on
Self-Dealing (Section 4941) . .
Schedule B—Initial Tax on
Undistributed Income (Section
4942) . . . . . . . . . . . . . . . .
Schedule C—Initial Tax on Excess
Business Holdings (Section
4943) . . . . . . . . . . . . . . . .
Schedule D—Initial Taxes on
Investments That Jeopardize
Charitable Purpose (Section
4944) . . . . . . . . . . . . . . . .
Schedule E—Initial Taxes on
Taxable Expenditures
(Section 4945) . . . . . . . . . .
Schedule F—Initial Taxes on
Political Expenditures
(Section 4955) . . . . . . . . . .
Schedule G—Tax on Excess
Lobbying Expenditures
(Section 4911) . . . . . . . . . .
Schedule H—Taxes on
Disqualifying Lobbying
Expenditures (Section
4912) . . . . . . . . . . . . . . . .
Schedule I—Initial Taxes on
Excess Benefit Transactions
(Section 4958) . . . . . . . . . .
Schedule J—Taxes on Being a
Party to Prohibited Tax
Shelter Transactions (Section
4965) . . . . . . . . . . . . . . . .
Schedule K—Taxes on Taxable
Distributions of Sponsoring
Organizations Maintaining

.
.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.
.

1
1
1
2
2
3
3
3
3

.
.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.
.

3
3
4
4
4
4
4
4
4

Jan 02, 2013

... 6
... 7
... 7

. . 10
. . 10
. . 11
. . 12

. . 12
. . 12

. . 14

Contents

Page

Donor Advised Funds
(Section 4966) . . . . . . . . .
Schedule L—Taxes on Prohibited
Benefits Distributed From
Donor Advised Funds
(Section 4967) . . . . . . . . .
Schedule M–Tax on Failure to
Meet the Community Health
Needs Assessment
Requirements (Section 501(r)
(3)) . . . . . . . . . . . . . . . . .
Paid Preparer . . . . . . . . . . . . .
Phone Help . . . . . . . . . . . . . .
Photographs of Missing Children
How To Get Forms and
Publications . . . . . . . . . . .
IRS e-Services Makes Taxes
Easier . . . . . . . . . . . . . . .
Index . . . . . . . . . . . . . . . . . .

. . . 14

. . . 15

.
.
.
.

.
.
.
.

.
.
.
.

16
16
16
17

. . . 17
. . . 17
. . . 18

Future Developments

For the latest information about
developments related to Form 4720 and
its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/form4720.

What’s New

In Part I, line 12 is now used to enter the
tax imposed by new section 4959 on a
hospital organization that fails to meet
the community health needs
assessment requirements under new
section 501(r)(3). Also, Schedule M was
added to Form 4720 to enter information
about the hospital facility, the nature of
the failure, and the computation of the
tax.

General Instructions
Purpose of Form

Use Form 4720 to figure and pay:
The initial taxes on private
foundations and self-dealers, under
sections 4941 through 4945 for
self-dealing, failure to distribute income,
excess business holdings, investments
that jeopardize charitable purpose, and
taxable expenditures;
The initial tax on certain supporting
organizations and donor advised funds

Cat. No. 13023Z

for excess business holdings under
section 4943;
The section 4911 tax on excess
lobbying expenditures by public
charities that have elected to be subject
to section 501(h) regarding
expenditures to influence legislation.
(Private foundations and section
4947(a) trusts are not eligible to make
this election);
The section 4912 tax on excess
lobbying expenditures that result in loss
of section 501(c)(3) tax-exempt status;
The section 4955 tax imposed on any
amount paid or incurred by a section
501(c)(3) organization that participates
or intervenes in any political campaign
on behalf of, or in opposition to, any
candidate for public office;
The section 4958 initial taxes on
disqualified persons and organization
managers of section 501(c)(3) (except
private foundations), section 501(c)(4),
and section 501(c)(29) organizations
that engage in excess benefit
transactions;
The section 4959 tax on the failure by
a hospital organization to meet the
community health needs assessment
requirements;
The section 4965 taxes related to
prohibited tax shelter transactions;
The section 4966 taxes on taxable
distributions by sponsoring
organizations maintaining donor
advised funds;
The section 4967 taxes on
distribution of prohibited benefits from
donor advised funds;
The section 170(f)(10) tax on any
premiums paid on a personal benefit
contract in connection with a transfer to
an organization or charitable remainder
trust for which a charitable deduction is
not allowed to the transferor; and
The section 664(c)(2) tax on the
unrelated business taxable income of a
charitable remainder trust.

Who Must File
Private foundations and section
4947(a) trusts. Generally, Form 4720
must be filed by all organizations,
including foreign organizations, that

answered “Yes,” to question 1b, 1c, 2b,
3b, 4a, 4b, 5b, 6b, or 7b in Part VII-B of
Form 990-PF; or “Yes,” to question 75b,
75c, 77b, 78a, 78b, 79b, or 80b in Part
VI-B, and item G on page 1, of Form
5227. A trust described in section
4947(a)(2) is considered a private
foundation insofar as it is subject to
Chapter 42 provisions.
Other organizations owing initial
taxes on excess business holdings.
Supporting organizations described in
section 4943(f)(3) and donor advised
funds described in section 4966(d)(2)
that owe the tax reported on Schedule C
(section 4943(a)).
Public charities making excess lob­
bying expenditures. Public charities
that made the election under section
501(h) and owe tax on excess lobbying
expenditures as figured on Schedule C
(Form 990 or 990-EZ), Part II-A, must
file Form 4720 to report the liability and
pay the tax (Schedule G).
Certain organizations (and possibly
their managers) whose section 501(c)
(3) status is revoked because of excess
lobbying activities are subject to a 5%
excise tax on their lobbying
expenditures.
Organizations making political ex­
penditures. All section 501(c)(3)
organizations that make a political
expenditure must file Form 4720 to
report the liability and pay the tax.
Organization managers may report any
first tier tax they owe on Schedule F of
Form 4720. (See Schedule F
instructions, later, for the definition of
political expenditures.)
Charitable organizations that make
certain premium payments on per­
sonal benefit contracts. Form 4720
must be filed by any organization
described in section 170(c) or section
664(d) that answered “Yes,” to question
7f in Part V of Form 990, question 6b in
Part VII-B of Form 990-PF, question 80b
in Part VI-B of Form 5227, or that
otherwise paid premiums on a personal
benefit contract in connection with a
transfer to an organization for which a
charitable deduction was not allowed to
the transferor.
Sponsoring organizations maintain­
ing donor advised funds. All section
170(c) organizations (excluding private
foundations and government
organizations referred to in sections
170(c)(1) and 170(c)(2)(A)) that
maintain one or more donor advised
funds must file Form 4720 to report the
liability and pay the tax owed on any

taxable distributions under section 4966
(Schedule K).
Certain tax­exempt entities that are a
party to a prohibited tax shelter
transaction (PTST). Certain
tax-exempt entities must file Form 4720
to report the liability and pay the tax due
under section 4965(a)(1). This
requirement applies to entities
described in sections 501(c), 501(d), or
170(c) (other than the United States) or
an Indian tribal government (within the
meaning of section 7701(a)(40)).

TIP

Any entity described in section
4965(c) that is a party to a
PTST must file Form 8886-T.

Managers, self­dealers, disqualified
persons, donors, donor advisors,
and related persons. If you are a
manager, self-dealer, disqualified
person, donor, donor advisor, or related
person who owes tax under Chapter 41
or 42, including entity managers under
section 4965, and you have the same
tax year (or accounting year, as
applicable) of the entity, you may report
the tax you owe on the Form 4720 filed
by the entity. Managers, self-dealers,
and disqualified persons who do this are
responsible for the parts that relate to
taxes they owe and should include their
own check or money order, payable to
the United States Treasury, with the
return.
Managers, self-dealers, disqualified
persons, donors, donor advisors, and
related persons who owe tax under
Chapter 41 or 42, including entity
managers under section 4965, and do
not have the same tax year (or
accounting year, as applicable) or do
not sign the return of the entity, must file
a separate return on Form 4720
showing the tax owed and the name of
the entity for which you owe tax. If you
file a separate Form 4720, enter your
tax year at the top of the form. Enter
your name, address, and taxpayer
identification number in Part II-A.
Complete all the information the form
requires, to the extent possible, that
applies to your liability.
Managers of tax favored
retirement plans, individual
retirement arrangements, and
savings arrangements described in
sections 401(a), 403(a), 403(b), 529,
457(b), 408(a), 220(d), 408(b), 530, or
223(d) must report and pay tax due
under section 4965(a)(2) on Form 5330.

TIP

Charitable remainder trusts. All
charitable remainder trusts described in
section 664 that have unrelated
­2­

business taxable income for the tax year
must file Form 4720 to report the liability
and pay the tax due. Unrelated business
taxable income is figured under section
512 and is determined as if Part III of
subchapter F applies to such trusts.
Hospital organizations failing to
meet the community health needs
assessment requirements (Sections
501(r)(3), 4959). An excise tax is
imposed on the failure by a hospital
organization to meet the community
health needs assessment (“CHNA”)
requirements of section 501(r)(3).

Where To File
If you are located in

Then use the
following address

The United States

Department of the
Treasury
Internal Revenue
Service Center
Ogden, UT
84201-0027

A foreign country or
a U.S. possession

Internal Revenue
Service Center
P.O. Box 409101
Ogden, UT 84409

When To File
Part I taxes. File Form 4720 by the due
date (not including extensions) for filing
the organization's Form 990-PF, Form
990, Form 990-EZ, or Form 5227. If you
are not required to file any of these
forms, file Form 4720 by the 15th day of
the 5th month after the organization's
accounting period ends.
If the regular due date falls on a
Saturday, Sunday, or legal holiday, file
by the next business day.
Affiliated group member. For
members of an affiliated group of
organizations that have different tax
years, and who are filing Form 4720 to
report tax under section 4911, the tax
year of the affiliated group is the
calendar year, unless all members of
the group elect under Regulations
section 56.4911-7(e)(5) to make a
member's year the group's tax year.
Part II taxes. If you are a manager,
self-dealer, disqualified person, donor,
donor advisor, or related person, owing
taxes under Chapter 41 or 42 and filing
a separate Form 4720, and your tax
year ends on the same date as the
organization's tax year, you must file by
the due date for filing Form 990-PF,
Form 5227, Form 990, or Form 990-EZ
of the organization for which you owe

tax. If your tax year ends on a date
different from that of the organization, or
your organization is not required to file a
Form 990, Form 990-EZ, Form 990-PF,
or Form 5227, you must file a Form
4720 by the 15th day of the 5th month
after your tax year ends.
If the regular due date falls on a
Saturday, Sunday, or legal holiday, file
by the next business day.

Extension

If you cannot file Form 4720 by the due
date, you may request an automatic
3-month extension of time to file by
using Form 8868, Application for
Extension of Time To File an Exempt
Organization Return. The automatic
3-month extension will be granted if you
properly complete this form, file it, and
pay any balance due by the due date for
Form 4720.
Form 8868 is also used to request an
additional extension of time to file;
however, these extensions are not
automatically granted.
It is possible for more than one
person to file Form 4720 and have a
balance due or refund of taxes
pertaining to one or more transactions
involving the same exempt organization.
For example, an exempt organization, a
manager, and a disqualified person may
each be required to file a Form 4720 in
one year, and each have a balance due
of taxes. When this occurs, and
extensions of time are needed to file a
return (by filing Form 8868), each
person should file his, her, or its own
extension, indicating the share of the
balance due or refund for each. This will
avoid potential problems later on with
the IRS in processing of the extensions,
since we will know which persons paid
their share of the tax balance due.

Name, Address, etc.

The name, address, and employer
identification number of the organization
or entity should be the same as shown
on Form 990-PF, Form 5227, Form 990,
Form 990-EZ, and Schedule A (Form
990 or 990-EZ). If you are a self-dealer,
donor, donor advisor, related person,
disqualified person, or manager filing a
separate Form 4720, enter your name,
address, and taxpayer identification
number in Part II-A.

Include the suite, room, or other unit
number after the street address.
If the Post Office does not deliver
mail to the street address, show the
P.O. box number instead of the street
address.

If you want a third party (such as an
accountant or an attorney) to receive
mail for the foundation or charity, enter
on the street address line “C/O”
followed by the third party's name and
street address or P.O. box.

Signature and Verification

If you are a manager, self-dealer,
disqualified person, donor, donor
advisor, or related person, you should
sign only in the spaces that apply,
whether you use the return of the
foundation or organization as your
return, or file separately.
If you are signing on behalf of the
foundation or organization and also
because of personal tax liability, you
must sign twice. You sign:
1. On behalf of the foundation or
organization, and
2. For your own personal tax
liability.

For a corporation (or an association),
the form may be signed by one of the
following: president, vice president,
treasurer, assistant treasurer, chief
accounting officer, or other corporate
officer (such as tax officer).
For a partnership, the form may be
signed by a partner or partners
authorized to sign the partnership
return.
If the return is filed on behalf of a
trust, the authorized trustee(s) must sign
it.
A receiver, trustee, or assignee
required to file any return on behalf of an
individual, a trust, estate, partnership,
association, company, or corporation
must sign the Form 4720 filed for these
taxpayers.
Also, a person with a valid power of
attorney may sign for the organization,
foundation, manager, self-dealer, donor,
donor advisor, or related person.
Include a copy of the power of attorney
with the return.

Attachments

If you need more space, attach separate
sheets showing the same information in
the same order as on the printed form.
Show the totals on the printed form.
Enter the organization's name and
EIN on each sheet. Use sheets that are
the same size as the form and indicate
clearly the line of the printed form to
which the information relates.
­3­

Organizations Organized
or Created in a Foreign
Country or U.S.
Possession

Report all amounts in U.S. currency
(state conversion rate used) and give
information in English. Report items in
total, including amounts and
transactions from both inside and
outside the United States.
Sections 4941 through 4945 and
section 4955 do not apply to foreign
private foundations that receive
substantially all of their support (other
than gross investment income) from
sources outside the United States.
These organizations must complete this
form and file it in the same manner as
other private foundations. However,
these organizations, as well as
foundation managers and self-dealers,
do not have to pay any tax that would
otherwise be due on this return.

Tax Payments

Managers, self-dealers, disqualified
persons, donors, donor advisors, and
related persons, paying tax on the
organization's Form 4720 must pay with
the return the tax that applies to them as
shown in Part II-A. Managers,
self-dealers, disqualified persons,
donors, donor advisors, and related
persons, who file separate Forms 4720
must pay the applicable tax with their
separate returns. When managers do
not sign the organization's Form 4720 to
report their own tax liability, the amount
of tax they owe should not be entered in
Part II-B, line 1.
Payment by a private foundation of
any taxes owed by the foundation
managers or self-dealers will result in
additional taxes under the self-dealing
and taxable expenditure provisions.
Managers and self-dealers should pay
taxes imposed on them with their own
check or money order.
Disqualified persons and entity
managers should pay taxes on excess
benefit transactions that are imposed on
them with their own check or money
order. Any reimbursement of a
disqualified person's tax liability from
excess benefit transactions by the
organization will be treated as an
excess benefit transaction subject to the
tax unless the organization included the
reimbursement in the disqualified
person's compensation and the
disqualified person's total compensation
was reasonable. See the instructions for
Schedule I, later, for information on
excess benefit transactions.

Rounding Off to Whole
Dollars

You may round off cents to whole
dollars on your return and schedules. If
you do round to whole dollars, you must
round all amounts. To round, drop
amounts under 50 cents and increase
amounts from 50 to 99 cents to the next
dollar. For example, $1.39 becomes $1
and $2.50 becomes $3.
If you have to add two or more
amounts to figure the amount to enter
on a line, include cents when adding the
amounts and round off only the total.

Penalties and Interest

There are penalties for failure to file or to
pay tax. There are also penalties for
willful failure to file, supply information or
pay tax, and for filing fraudulent returns
and statements, that apply to public
charities, private foundations,
managers, donors, donor advisors,
related persons, and self-dealers who
are required to file this return. See
sections 6651, 7203, 7206, and 7207.
Also, see section 6684 for penalties that
relate to tax liability under Chapter 42.
Interest at the underpayment rate
established under section 6621 is
charged for any unpaid tax. The interest
on underpayments is in addition to any
penalties.

Abatement

See section 4962 for rules on
abatement, refund, or relief from
payment of first tier taxes under
sections 4942 through 4945, 4955,
4958, 4966, and 4967. To request
abatement, refund, or relief under
section 4962, write “Request for
Abatement Under Section 4962” in the
top margin of Form 4720, page 1.

Initial Tax Liability

If you pay an initial tax on self-dealing or
on investments that jeopardize
charitable purpose (figured on
Schedules A and D of Form 4720,
respectively) for tax year 2012, the
payment may not satisfy the entire tax
liability for an act of self-dealing or a
jeopardy investment. (For the definition
of self-dealing, see the instructions for
Schedule A of this form; for the
definition of jeopardy investment, see
the instructions for Schedule D of this
form.) Paying the tax and filing a Form
4720 are required for each year or part
of a year in the taxable period that
applies to the act or investment.
Generally, the taxable period begins
with the date of the act or investment

and ends with the date corrective action
is completed, a notice of deficiency is
mailed, or the tax is assessed,
whichever comes first.
Similar rules apply for the initial tax
liability resulting from failing to distribute
income (Schedule B) and from acquiring
excess business holdings (Schedule C).
Thus, the initial tax liability for those
taxes continues to accrue until the date
a notice of deficiency is mailed, the
violation is corrected, or the tax is
assessed, whichever comes first.

Completing the Schedules

Before completing any of the schedules
in this return, read the applicable
instructions. If any completed schedule
shows taxes owed, enter them on
page 1 of this return.
The instructions for Schedules A
through M describe acts or transactions
subject to tax under Chapter 42. Also,
go to www.irs.gov/charities/foundations/
index.html and then click on “Private
Foundations” or “Private Foundations
Manual” for a list of exceptions that
eliminate any tax liability that would
otherwise be shown on Schedules A
and E. Do not complete Schedules A
and E if exceptions apply to all the acts
or transactions. In general, question A
on page 1 and Schedules A, B, C, D,
and E do not apply to public charities.
However, Schedule C does apply to
some public charities including donor
advised funds and certain supporting
organizations that are treated as private
foundations for purposes of section
4943. See the instructions for
Schedule C for a description of the
public charities to which section 4943
applies.
Before completing Schedule C,
determine whether the organization or
donor advised fund has excess holdings
in any business enterprise. If the
organization or donor advised fund has
holdings subject to the tax on excess
business holdings, complete
Schedule C for each enterprise.
Before completing Schedule D,
determine whether the investment was
program related. If not, complete
Schedule D for each investment for
which you answered “Yes,” to Form
990-PF, Part VII-B, question 4a or b, or
Form 5227, Part VI-B, question 78a or b.

Amended Return

To correct a previously filed Form 4720,
use the same year form as you are
correcting, then:
Write “Amended Return,” at the top of
page 1.
­4­

Complete the entire return (not just
the part that changed) following the form
and instructions for the amended year.
Include a statement that identifies the
lines and amounts being changed and
the reason for each change.
Write the entity's name and EIN at the
top of each page of the statement.
If the amended return is claiming a
refund or requesting an abatement,
write “Claim for Refund” or “Request for
Abatement,” whichever is applicable,
near the top of the statement discussed
above.
Note. If you are claiming a refund or
requesting an abatement, you may use
Form 843, Claim for Refund and
Request for Abatement, instead of Form
4720.

Specific Instructions for
Page 1
Question B. To avoid additional taxes
and penalties under sections 4941
through 4945, 4955, and 4958, and in
some cases further initial taxes on the
foundation, organization, and related
persons, a foundation, organization,
disqualified person, or manager must
correct the taxable event within the
correction period. The taxable event is
the act, failure to act, or transaction that
resulted in the liability for initial taxes
under these provisions.
Generally, the correction period
begins on the date the event occurs and
ends 90 days after the mailing date of a
notice of deficiency, under section
6212, in connection with the second tier
tax imposed on that taxable event. That
time is extended by:
Any period in which a deficiency
cannot be assessed under section
6213(a) because a petition to the Tax
Court for redetermination of the
deficiency is pending, not extended by
any supplemental proceeding by the
Tax Court under section 4961(b),
regarding whether correction was made,
and
Any other period the IRS determines
is reasonable and necessary to correct
the taxable event.
The taxable event will be treated as
occurring:
For the tax on failure to distribute
income, on the first day of the tax year
for which there was a failure to distribute
income,
For the tax on excess business
holdings, on the first day on which there
were excess business holdings, or

In any other case, on the date the
event occurred.
Generally, the term “correction” has
the following meanings.
1. Section 4941 (Schedule A)
Undoing the transaction to the extent
possible, but in any case placing the
private foundation in a financial position
not worse than that in which it would be
if the disqualified person were dealing
under the highest fiduciary standards.
2. Section 4942 (Schedule B)
Making sufficient qualifying distributions
to compensate for deficient qualifying
distributions for a prior tax year.
3. Section 4943 (Schedule C)
Action that results in the foundation no
longer having excess business holdings
in a business enterprise.
4. Section 4944 (Schedule D)
An investment is considered to be
removed from jeopardy when the
investment is sold or otherwise
disposed of, and the proceeds of such
sale or other disposition are not
investments that jeopardize the carrying
out of the foundation's exempt
purposes.
5. Section 4945 (Schedule E)
a. Recovering part or all of the
expenditure to the extent recovery is
possible, and where full recovery is not
possible, such additional corrective
action as is prescribed by regulations,
or
b. Obtaining or making the report in
question for a case that fails to comply
with section 4945(h)(2) or (3)
(expenditure responsibility).
6. Section 4955 (Schedule F)
Recovering part or all of the expenditure
to the extent recovery is possible,
establishment of safeguards to prevent
future political expenditures, and where
full recovery is not possible, such
additional corrective action as is
prescribed by the regulations.
7. Section 4958 (Schedule I)
Undoing the excess benefit to the extent
possible and taking any additional
measures necessary to place the
organization in a financial position not
worse than that in which it would be if
the disqualified person had been
dealing under the highest fiduciary
standards.
If, when the return is filed, the
foundation, entity, managers,
self-dealers, disqualified persons,
donors, donor advisors, or related
persons have corrected any acts or
transactions resulting in liability for tax
under Chapter 42, answer “Yes,” to

question B and give the following
information separately for each
correction:
Schedule and item number of the act
or transaction that has been corrected,
A description of the act or transaction
that resulted in the tax,
A detailed description of the
correction made,
The amount of any political
expenditure recovered,
Description of safeguards to prevent
future political expenditures, and
The date of correction.
For any acts or transactions the
foundation, entity, managers,
self-dealers, disqualified persons,
donors, donor advisors, or related
persons have not corrected, give the
following information separately for
each act:
Schedule and item number of the act
or transaction that has not been
corrected,
A description of the act or
transaction, and
A detailed explanation of why
correction has not been made and what
steps are being taken to make the
correction.
If you are correcting deficient
distributions under section 4942 where
an election under section 4942(h)(2)
was filed with the IRS, provide a copy of
the election. See the instructions for
Form 990-PF, Part XIII, lines 4b and 4c
for more information.

Part I
Line 8

TIP

If the organization has an entry
on this line, it must also file
Form 8870.

Enter the total of all premiums paid by
the organization on any personal benefit
contract if the payment of premiums is in
connection with a transfer for which a
deduction is not allowed under section
170(f)(10)(A). Also, if there is an
understanding or expectation that any
person will directly or indirectly pay any
premium on a personal benefit contract
for the transferor, include those
premium payments in the amount
entered on this line.
A personal benefit contract is (to the
transferor) any life insurance, annuity, or
endowment contract that benefits
directly or indirectly the transferor, a
member of the transferor's family, or any
other person designated by the
transferor (other than an organization
described in section 170(c)).
­5­

For more information, see Notice
2000-24, which is on page 952 of
Internal Revenue Bulletin 2000-17 at
www.irs.gov/pub/irs-irbs/irb00-17.pdf.

Line 11
Enter the charitable remainder trust's
unrelated business taxable income on
line 11. Charitable remainder trusts
must attach a schedule that shows how
their unrelated business taxable income
was computed. The excise tax imposed
on a charitable remainder trust is equal
to the trust's unrelated business taxable
income.
Attached schedule. Charitable
remainder trusts may use Form 990-T
as the attached schedule. If the trust
uses Form 990-T as the attached
schedule, complete Form 990-T as
follows:
1. Write “ATTACHMENT TO FORM
4720” at the top of page 1.
2. Enter the trust's name under
“Name of organization” and complete
item D and E at the top of page 1.
3. Complete Parts I and II. If a line
does not apply, leave it blank.
4. Complete any of the Schedules
on Form 990-T or other forms or attach
a schedule as required by any line on
which an entry is made for Parts I and II.
Also, attach any schedule as may be
required on any Schedule on Form
990-T or other form that you are
required to complete. However, if
Schedule D (Form 1041) is required, do
not complete Part V of Schedule D
(Form 1041).
5. Enter the amount from line 34 of
Form 990-T on Part I, line 11 of Form
4720. Do not complete Parts III-V or the
signature area of Form 990-T.
If you do not complete a Form 990-T
as the attached schedule, then attach a
schedule with the same information as
Form 990-T and its Schedules (as
discussed above) including all the
information that must be attached to
Form 990-T and its Schedules, such as
other forms and attachments. Be sure to
enter the amount shown as unrelated
business taxable income on Part I,
line 11 of Form 4720.

Part II­A
Columns (a) and (b). List the names,
addresses, and taxpayer identification
numbers of all persons who owe tax in
connection with the foundation or
organization, whether as managers,
self-dealers, disqualified persons,
donors, donor advisors, or related

persons, as shown in Schedules A, D,
E, F, H, I, J, K, and L.
Column (c). For each person listed in
column (a), enter the sum of:
1. Taxes that person owes as a
self-dealer, from Schedule A, Part II,
column (d), and
2. Tax for acts of self-dealing in
which the individual participated as a
manager, from Schedule A, Part III,
column (d).
Column (d). Enter for each person
listed in column (a) the tax on jeopardy
investments from Schedule D, Part II,
column (d), that the individual took part
in as a foundation manager.
Column (e). Enter for each person
listed in column (a) the tax on taxable
expenditures from Schedule E, Part II,
column (d), that the individual took part
in as a foundation manager.
Column (f). Enter for each person
listed in column (a) the tax on political
expenditures from Schedule F, Part II,
column (d), that the individual took part
in as an organization or foundation
manager.
Column (g). Enter for each person
listed in column (a) the tax on
disqualifying lobbying expenditures from
Schedule H, Part II, column (d), that the
individual took part in as an organization
manager.
Column (h). For each person listed in
column (a), enter the sum of:
1. Taxes that person owes as a
disqualified person, from Schedule I,
Part II, column (d), and
2. Tax on excess benefit
transactions in which the organization
manager participated knowing that the
transaction was improper, from
Schedule I, Part III, column (d).
Column (i). Enter for each person
listed in column (a) the tax on the entity
manager who approved or otherwise
caused the entity to be a party to a
prohibited tax shelter transaction from
Schedule J, Part II, column (d).
Column (j). Enter for each person
listed in column (a) the tax on taxable
distributions from sponsoring
organizations maintaining donor
advised funds from Schedule K, Part II,
column (d) that the individual took part
in as a manager.
Column (k). For each person listed in
column (a), enter the:

1. Tax imposed on a donor, donor
advisor, or related person, from
Schedule L, Part II, column (d), and
2. Tax on each fund manager who
agreed to the making of a distribution of
a prohibited benefit from Schedule L,
Part III, column (d) that the individual
took part in as a manager.
Liability for tax. A person's liability
for tax as a manager, self-dealer,
disqualified person, donor, donor
advisor, or related person, under
sections 4912, 4941, 4944, 4945, 4955,
4958, 4966, and 4967 is joint and
several. Therefore, if more than one
person owes tax on an act as a
manager, self-dealer, disqualified
person, donor, donor advisor, or related
person, they may apportion the tax
among themselves. However, when all
managers, self-dealers, donors, donor
advisors, related persons, or
disqualified persons who are liable for
tax on a particular transaction under
sections 4912, 4941, 4944, 4945, 4955,
4958, 4966, or 4967 pay less than the
total tax due on that transaction, then
the IRS may charge the amount owed to
one or more of them regardless of the
tax apportionment shown on this return.

Part II­B
Line 2. If there is more than one signer
for this return, see Tax Payments,
earlier.
Line 3. List total payments here,
including amounts paid on extension(s)
with Form 8868. See the discussion on
Extensions, earlier, for details on
amounts paid with extensions.
Line 4. Enter the tax due on this line.
(Make check(s) or money order(s)
payable to the United States Treasury.)
Line 5. This is your refund. If various
persons (individuals or organizations)
have overpaid their taxes, please have
each person request only his, her, or its
legal share of the refund. This can be
shown on an attachment to the Form
4720. Only persons with a legal right to
a refund should file a refund request
here.

Schedule A—Initial Taxes
on Self­Dealing (Section
4941)
General Instructions
Requirement. All organizations that
answered “Yes,” to question 1b or 1c in
Part VII-B of Form 990-PF, or “Yes,” to
question 75b or 75c in Part VI-B of Form
­6­

5227, must complete Schedule A.
Complete Parts I, II, and III of
Schedule A only in connection with acts
that are subject to the tax on
self-dealing.
Paying the tax and filing a Form 4720
is required for each year or part of a
year in the taxable period that applies to
the act of self-dealing. Generally, the
taxable period begins with the date on
which the self-dealing occurs and ends
on the earliest of:
The date a notice of deficiency is
mailed under section 6212, in
connection with the initial tax imposed
on the self-dealer,
The date the initial tax on the
self-dealer is assessed, or
The date correction of the act of
self-dealing is completed.
Self­dealing. Self-dealing includes any
direct or indirect:
Sale, exchange, or leasing of
property between a private foundation
and a disqualified person (see
definitions in Form 990-PF instructions),
Lending of money or other extension
of credit between a private foundation
and a disqualified person,
Furnishing of goods, services, or
facilities between a private foundation
and a disqualified person,
Payment of compensation (or
payment or reimbursement of
expenses) by a private foundation to a
disqualified person,
Transfer to, or use by or for the
benefit of, a disqualified person of the
income or assets of a private
foundation, and
Agreement by a private foundation to
make any payment of money or other
property to a government official other
than an agreement to employ or make a
grant to that individual for any period
after the end of government service if
that individual will be ending
government service within a 90-day
period.
Exceptions to self-dealing. Go to
http://www.irs.gov/irm/part7/
irm_07-027-015.html#d0e272 for a
description of acts that are not
considered self-dealing.
Initial taxes on self­dealer. An initial
tax of 10% of the amount involved is
charged for each act of self-dealing
between a disqualified person and a
private foundation for each year or part
of a year in the taxable period. Any
disqualified person (other than a
foundation manager acting only as
such) who takes part in the act of
self-dealing must pay the tax.

Initial taxes on foundation manag­
ers. When a tax is imposed on a
foundation manager for an act of
self-dealing, the tax will be 5% of the
amount involved in the act of
self-dealing for each year or part of a
year in the taxable period. However, the
total tax imposed for all years in the
taxable period is limited to $20,000 for
each act of self-dealing. The tax is
imposed on any foundation manager
who took part in the act knowing that it
was self-dealing except those
foundation managers whose
participation was not willful and was due
to reasonable cause. Any foundation
manager who took part in the act of
self-dealing must pay the tax.

Specific Instructions
Part I. List each act of self-dealing in
Part I. Enter in column (d) the number
designation from Form 990-PF, Part
VII-B, question 1a, or Form 5227, Part
VI-B, question 75a, that applies to the
act. For example, “1a(1)” or “1a(4).”
Part II. Enter in column (a) the names
of all disqualified persons who took part
in the acts of self-dealing listed in Part I.
If more than one disqualified person
took part in an act of self-dealing, each
is individually liable for the entire tax in
connection with the act. But the
disqualified persons who are liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each disqualified person.
Carry the total amount in column (d)
for each self-dealer to Part II-A,
column (c).
Part III. Enter in column (a) the names
of all foundation managers who took
part in the acts of self-dealing listed in
Part I, and who knew that they were acts
of self-dealing (except for foundation
managers whose participation was not
willful and was due to reasonable
cause).
If more than one foundation manager
took part in the act of self-dealing,
knowing that it was such an act, and
participation was willful and not due to
reasonable cause, each is individually
liable for the entire tax in connection
with the act. But the foundation
managers liable for the tax may prorate
the payment among themselves. Enter
in column (c) the tax to be paid by each
foundation manager.
Carry the total amount in column (d)
for each foundation manager to Part
II-A, column (c).

Schedule B—Initial Tax on
Undistributed Income
(Section 4942)

Complete Schedule B if you answered
“Yes,” to Form 990-PF, Part VII-B,
question 2b.

An initial excise tax of 30% is
imposed on a private foundation's
undistributed income on the first day of
the second or any succeeding tax year
after the tax year in connection with
which income remains undistributed.
Use the 2012 Form 4720 to report
the initial tax on undistributed income for
tax years beginning in 2011 or earlier
that remains undistributed at the end of
the foundation's current tax year
beginning in 2012. The initial tax will not
apply to a private foundation's
undistributed income:
For any tax year it is an operating
foundation (as defined in section 4942(j)
(3) and related regulations or in section
4942(j)(5)), or
To the extent it did not distribute an
amount solely because of an incorrect
valuation of assets, provided the
foundation satisfies the requirements of
section 4942(a)(2), or
For any year for which the initial tax
was previously assessed or a notice of
deficiency was issued.
Do not complete Schedule B for any
year for which any of the above
provisions apply to the undistributed
income.

Schedule C—Initial Tax on
Excess Business Holdings
(Section 4943)
General Instructions

Private foundations are generally not
permitted to hold more than a 20%
interest in an unrelated business
enterprise. They may be subject to an
excise tax on the amount of any excess
holdings. For purposes of section 4943,
donor advised funds and certain
supporting organizations are considered
private foundations. For more
information on the applicability of
Schedule C to such organizations, see
General rules on the permitted holdings
of donor advised funds and certain
supporting organizations in a business
enterprise, later.

Requirement. If you answered “Yes,”
to Form 990-PF, Part VII-B, question 3b;
Form 990, Part V, question 8; or Form
5227, Part VI-B, question 77b, or
otherwise had excess business
­7­

holdings, complete a Schedule C for
each business enterprise in which the
foundation had excess business
holdings for its tax year beginning in
2012.
Taxes. A private foundation that has
excess holdings in a business
enterprise may become liable for an
excise tax based on the amount of
holdings. The initial tax is 10% of the
value of the excess holdings and is
imposed on the last day of each tax year
that ends during the taxable period. The
excess holdings are determined on the
day during the tax year when they were
the largest.
If the foundation keeps the excess
business holdings after the initial tax
has been imposed, it becomes liable for
an additional tax of 200% of the
remaining excess business holdings
unless it disposes of them within the
taxable period. However, if the
foundation disposes of its excess
business holdings during the correction
period, the additional tax will not be
assessed or, if assessed, will be abated
and if collected, will be credited or
refunded. For information on the
correction period, go to http://
www.irs.gov/irm/part7/
irm_07-027-017.html#d0e680.
Business enterprise. In general, this
means the active conduct of a trade or
business, including any activity regularly
conducted to produce income from
selling goods or performing services,
that is an unrelated trade or business
described in section 513.
The term “business enterprise” does
not include a functionally related
business as defined in section 4942(j)
(4). In addition, business holdings do
not include program-related
investments (such as investments in
small businesses in economically
depressed areas or in corporations to
assist in neighborhood renovations) as
defined in section 4944(c) and related
regulations. Also, business enterprise
does not include a trade or business at
least 95% of the gross income of which
comes from passive sources. For more
information, go to http://www.irs.gov/
irm/part7/irm_07-027-017.html#d0e77.
Excess business holdings. Excess
business holdings is the amount of
stock or other interest in a business
enterprise that the foundation would
have to dispose of to a person other
than a disqualified person in order for
the foundation's remaining holdings in
the enterprise to be permitted holdings
(section 4943(c)(1)). Go to http://

www.irs.gov/irm/part7/
irm_07-027-017.html#d0e179 for more
information.
Sole proprietorships. In general, a
private foundation may not have any
permitted holdings in a business
enterprise that is a sole proprietorship.
For exceptions, go to http://www.irs.gov/
irm/part7/irm_07-027-017.html#d0e77.
For a definition of sole proprietorship,
see Regulations section 53.4943-10(e).
Corporate voting stock. This stock
entitles a person to vote for the election
of directors. Treasury stock and stock
that is authorized but unissued is not
voting stock for these purposes. See
Regulations sections 53.4943-3(b)(1)(ii)
and 53.4943-3(b)(2)(ii).
For a partnership (including a limited
partnership) or joint venture, the term
“profits interest” should be substituted
for “voting stock.” For any
unincorporated business enterprise that
is not a partnership, joint venture, or
sole proprietorship, the term “beneficial
interest” should be substituted for
“voting stock.” See Regulations section
53.4943-3(c).
Nonvoting stock. Corporate equity
interests that do not have voting power
should be classified as nonvoting stock.
Evidences of indebtedness (including
convertible indebtedness), warrants,
and other options or rights to acquire
stock should not be considered equity
interests. See Regulations section
53.4943-3(b)(2).
For a partnership (including a limited
partnership) or joint venture, the term
“capital interest” should be substituted
for “nonvoting stock.” For any
unincorporated business that is not a
partnership, joint venture, or sole
proprietorship, references to nonvoting
stock do not apply for computation of
permitted holdings. See Regulations
section 53.4943-3(c)(4).
Attribution of business holdings. In
determining the holdings in a business
enterprise of either a private foundation
or a disqualified person, any stock or
other interest owned directly or
indirectly by or for a corporation,
partnership, estate, or trust is
considered owned proportionately by or
for its shareholders, partners, or
beneficiaries. In general, this rule does
not apply to certain income interests or
remainder interests of a private
foundation in a split-interest trust
described in section 4947(a)(2). See
Regulations section 53.4943-8.

Taxable period. The taxable period
begins on the first day the foundation
has excess business holdings and ends
on the earliest of:
The mailing date of a notice of
deficiency, under section 6212, in
connection with the initial tax on excess
business holdings related to those
holdings,
The date the excess is eliminated, or
The date the initial tax on excess
business holdings related to those
holdings is assessed.
When a notice of deficiency is not
mailed because the restrictions on
assessment and collection are waived
or because the deficiency is paid, the
date of filing the waiver or the date of
paying the tax, respectively, will be
treated as the end of the taxable period.
See Regulations section 53.4943-9.

Exceptions to Tax on Excess
Business Holdings
2% de minimis rule. A private
foundation will not be treated as having
excess business holdings in any
enterprise in which it, together with
related foundations as described in the
instructions for Form 990-PF (under the
definition for “disqualified person” in the
General Instructions), owns not more
than 2% of the voting stock and not
more than 2% in value of all outstanding
shares of all classes of stock.
Disposition of excess business hold­
ings within 90 days. Generally, when
a private foundation acquires excess
business holdings other than as a result
of purchase by the foundation (such as
an acquisition by a disqualified person),
the foundation will not be taxed on those
excess holdings if it disposes of enough
of them so that it no longer has an
excess. To avoid the tax, the disposition
must take place within 90 days from the
date the foundation knew, or had reason
to know, of the event that caused it to
have excess business holdings. That
90-day period will be extended to
include the period during which federal
or state securities laws prevent the
foundation from disposing of those
excess business holdings. See
Regulations section 53.4943-2(a).
General rules on the permitted hold­
ings of a private foundation in a
business enterprise. No excess
business holdings tax is imposed (a) if a
private foundation and all disqualified
persons together hold no more than
20% of the voting stock of a business
enterprise or (b) on nonvoting stock, if
all disqualified persons together do not
­8­

own more than 20% of the voting stock
of the business enterprise.
If the private foundation and all
disqualified persons together do not
own more than 35% of the enterprise's
voting stock, and effective control is in
one or more persons who are not
disqualified persons in connection with
the foundation, then 35% may be
substituted for 20% wherever it appears
in the preceding paragraph. See
sections 4943(c)(2) and 4943(c)(3).
If a private foundation and all
disqualified persons together had
holdings in a business enterprise of
more than 20% of the voting stock on
May 26, 1969, substitute that
percentage for 20% and for 35% (if the
holding is greater than 35%), using the
principles of section 4943(c)(4) that
apply. However, the percentage
substituted may not be more than 50%.
The percentage substituted under
the preceding paragraph is (a) subject
to reductions and limitations (see
sections 4943(c)(4)(A)(ii) and 4943(c)
(4)(D)) and (b) applicable, both in
connection with the voting stock and,
separately, in connection with the value
of all outstanding shares of all classes of
stock (see section 4943(c)(4)(A)(iii)).
Interests held by a private founda­
tion (other than donor advised funds
and supporting organizations) on
May 26, 1969. For private foundations,
other than donor advised funds and
supporting organizations considered to
be private foundations for purposes of
section 4943, that had business
holdings on May 26, 1969 (or holdings
acquired by trust or will as described
below), that were more than the current
limits permit, there are transitional rules
that permit the foundation to dispose of
the excess over time without being
subject to the tax on excess business
holdings.
During the first phase, no excess
business holdings tax was imposed on
a private foundation for interests held
since May 26, 1969, if the foundation
had excess holdings on that date. The
first phase is:
A 20-year period beginning on May
26, 1969, if on that date the foundation
and all disqualified persons held more
than a 95% voting interest in the
enterprise (the 20-year first phase
expired on May 25, 1989);
A 15-year period beginning on May
26, 1969, if on that date the foundation
and all disqualified persons together
had more than a 75% voting stock
interest (or more than a 75% profits or

beneficial interest of any unincorporated
business), or more than a 75% interest
in the value of all outstanding shares of
all classes of stock (or more than a 75%
capital interest of a partnership or joint
venture) in the enterprise (the 15-year
first phase expired on May 25, 1984);
and
A 10-year period beginning on May
26, 1969, in all other cases in which the
foundation had excess business
holdings on May 26, 1969. The 10-year
first phase expired on May 25, 1979.
During the second phase (the
15-year period after the first phase), if
the foundation's disqualified persons
hold more than 2% of the enterprise's
voting stock, the foundation will be liable
for tax if the foundation holds more than
25% of the voting stock or if the
foundation and its disqualified persons
together hold more than 50% of the
voting stock.
However, during the second phase, if
a foundation's disqualified persons
purchase voting stock in a business
enterprise after July 18, 1984, causing
the combined holdings of the
disqualified persons to exceed 2% of
the enterprise's voting stock, the
foundation has 5 years to reduce its
holdings in the enterprise to below its
second phase limit before the increase
will be treated as held by the foundation.
See sections 4943(c)(4)(D) and 4943(c)
(6).
The first-phase periods may be
suspended pending the outcome of any
judicial proceeding the private
foundation brings regarding reform or
other procedure to excuse it from
compliance with its governing
instrument or similar instrument in effect
on May 26, 1969. See section 4943(c)
(4)(C) and Regulations section
53.4943-4.
Holdings acquired by trust or will.
Holdings acquired under the terms of a
trust that was irrevocable on May 26,
1969, or under the terms of a will
executed by that date, are treated as
held by the foundation on May 26, 1969,
except that the 15- and 10-year periods
of the first phase for the holdings start
on the date of distribution under the trust
or will instead of on May 26, 1969. See
section 4943(c)(5) and Regulations
section 53.4943-5. See section 4943(d)
(1) and Regulations section 53.4943-8
for rules relating to constructive
holdings held in a corporation,
partnership, estate, or trust for the
benefit of the foundation.

Gifts or bequests of business hold­
ings. Except as provided in the
exception regarding Holdings acquired
by trust or will (discussed above), there
is a special rule for private foundations
that have excess business holdings as a
result of a change in holdings after May
26,1969. This rule applies if the change
is other than by purchase by the
foundation or by disqualified persons
(such as through gift or bequest) and
the additional holdings result in the
foundation having excess business
holdings. In that case, the foundation
has 5 years to reduce these holdings or
those of its disqualified persons to
permissible levels to avoid the tax. See
section 4943(c)(6) and Regulations
section 53.4943-6.
A private foundation that received an
unusually large gift or bequest of
business holdings after 1969, and that
has made a diligent effort to dispose of
excess business holdings, may apply
for an additional 5-year period to reduce
its holdings to permissible levels if
certain conditions are met. See section
4943(c)(7).
General rules on the permitted hold­
ings of donor advised funds and cer­
tain supporting organizations in a
business enterprise. Rules similar to
those described above for interests held
by private foundations on May 26, 1969,
will be applied to determine if donor
advised funds or certain supporting
organizations with interests as of August
17, 2006, have any excess business
holdings. However, the date of August
17, 2006, will be substituted for May 26,
1969.
Donor advised fund. In general, a
donor advised fund is a fund or account
separately identified by reference to
contributions of a donor or donors that is
owned and controlled by a sponsoring
organization and for which the donor
has or expects to have advisory
privileges concerning the distribution or
investment of the funds. See
Schedule K for further details.
Sponsoring organization. A
sponsoring organization is any section
170(c) organization other than
governmental entities (described in
section 170(c)(1) and (2)(A)) that is not
a private foundation as defined in
section 509(a)(3) that maintains one or
more donor advised funds.
Supporting organizations. Only
certain supporting organizations are
subject to the excess business holdings
tax under section 4943. These include
(1) Type III supporting organizations that
­9­

are not functionally integrated and (2)
Type II supporting organizations that
accept any gift or contribution from a
person who by himself or in connection
with a related party controls the
supported organization that the Type II
supporting organization supports. (See
the 2012 Instructions for Schedule A
(Form 990 or 990-EZ), Part I, question
11, for help in determining the type of
your supporting organization.)
Readjustments, distributions, or
changes in relative value of different
classes of stock. See Regulations
section 53.4943-4(d)(10) for special
rules whereby increases in the
percentage of value of holdings in a
corporation that result solely from
changes in the relative values of
different classes of stock will not result
in excess business holdings.
See Regulations section
53.4943-6(d) for rules on treatment of
increases in holdings due to
readjustments, distributions, or
redemptions.
See Regulations section 53.4943-7
for special rules for readjustments
involving grandfathered holdings.
Exceptions from self­dealing taxes
on certain dispositions of excess
business holdings. Section 101(I)(2)
(B) of the Tax Reform Act of 1969
provides for a limited exception from
self-dealing taxes for private
foundations that dispose of certain
excess business holdings to disqualified
persons, as long as the sales price
equals or is more than fair market value.
The excess business holdings
involved are interests that are subject to
the section 4941 transitional rules for
May 26, 1969, holdings. These interests
would also be subject to the excess
business holdings tax if they were not
reduced by the required amount.

Specific Instructions

Complete columns (a) and (b) of
Schedule C if sections 4943(c)(4),
4943(c)(3) (using the principles of
4943(c)(4)), or 4943(c)(5) apply.
Complete column (a) and column (c)
(if applicable) if sections 4943(c)(2) or
4943(c)(3) (using the principles of
4943(c)(2)) apply.
Complete Schedule C for that day
during the tax year when the
foundation's excess holdings in the
enterprise were largest.
Line 1. Enter in column (a) the
percentage of voting stock the
foundation holds in the business
enterprise.

If the foundation is using the rules or
principles for determining present
holdings under section 4943(c)(4)(A) or
(D) (or rules similar to that for donor
advised funds and certain supporting
organizations), enter in column (b) the
percentage of value the foundation
holds in all outstanding shares of all
classes of stock.
Do not include in either column (a) or
(b) stock treated as held by disqualified
persons:
Under section 4943(c)(6) or
Regulations sections 53.4943-6 and
53.4943-10(d), or
During the first phase if the first phase
is still in effect (see Regulations
sections 53.4943-4(a), (b), and (c)).

holdings if line 1 is more than line 2 in
column (a) or if the private foundation
holds nonvoting stock and all
disqualified persons together own more
than 20% (or 35%, if applicable) of the
enterprise's voting stock, interest, etc. In
the latter case, enter in column (c) the
value of all nonvoting stock the
foundation holds.

Line 2. If the foundation is using the
rules or principles for determining
present holdings under section 4943(c)
(4) (or rules similar to that for donor
advised funds and certain supporting
organizations), refer to that section and
Regulations section 53.4943-4(d) to
determine which entries to record in
columns (a) and (b). Enter in column (a)
the excess of the substituted combined
voting level over the disqualified person
voting level. Enter in column (b) the
excess of the substituted combined
value level over the disqualified person
value level.
If the foundation is using the rules or
principles for determining permitted
holdings under section 4943(c)(2), refer
to that section to determine which
entries to record in column (a). Enter in
column (a) the percentage, using the
general rule (section 4943(c)(2)(A)) or
the 35% rule (see section 4943(c)(2)
(B)), if applicable, of permitted holdings
the foundation may have in the
enterprise's voting stock. If the
foundation determines the permitted
holdings under section 4943(c)(2)(B),
attach a statement showing effective
control by a third party.

Schedule D—Initial Taxes
on Investments That
Jeopardize Charitable
Purpose (Section 4944)

Line 3. Enter the value of any stock,
interest, etc., in the business enterprise
that the foundation is required to
dispose of so the foundation's holdings
in the enterprise are permitted. See
section 4943 and related regulations.
A private foundation using the
section 4943(c)(4) rules, or a donor
advised fund or supporting organization
using rules similar to that, has excess
holdings if line 1 is more than line 2 in
either column (a) or column (b). Do not
include in column (b) the value of any
voting stock included in column (a).
A private foundation using the
section 4943(c)(2) rules has excess

Line 4. Enter the value of excess
holdings disposed of under the 90-day
rule in Regulations section 53.4943-2(a)
(1)(ii). If other conditions preclude
imposition of tax on excess business
holdings, include the value of the
nontaxable amount on this line and
attach an explanation.

General Instructions
Requirement. Complete Schedule D if
you answered “Yes,” to Form 990-PF,
Part VII-B, question 4a or b, or Form
5227, Part VI-B, question 78a or b.
Report each investment separately.
Paying tax and filing a Form 4720 are
required for each year or part of a year
in the taxable period that applies to the
investments that jeopardize the
foundation's charitable purpose.
Generally, the taxable period begins
with the date of the investment and
ends with the date corrective action is
completed, a notice of deficiency is
mailed, or the initial tax is assessed,
whichever comes first. Therefore, in
addition to investments made in 2012,
include all investments subject to tax
that were made before 2012 if those
investments were not removed from
jeopardy before 2012 and the initial tax
was not assessed before 2012.
Taxable investments. An investment
to be taxed on this schedule is an
investment by a private foundation that
jeopardizes the carrying out of its
exempt purposes (for example, if it is
determined that the foundation
managers, in making the investment,
did not exercise ordinary business care
and prudence, under prevailing facts
and circumstances, in providing for the
long- and short-term financial needs of
the foundation to carry out its exempt
purposes). See Regulations section
53.4944-1(a)(2). An investment is not
taxed on this schedule if it is a
program-related investment; that is, one
whose primary purpose is one or more
of those described in section 170(c)(2)
­10­

(B) (religious, charitable, educational,
etc.). A significant purpose of such an
investment cannot be the production of
income or the appreciation of property.
See section 4944(c) and Regulations
section 53.4944-3.
Initial taxes on foundation. The initial
tax is 10% of the amount invested for
each year or part of a year in the taxable
period.
Initial taxes on foundation manag­
ers. When a tax is imposed on a
jeopardy investment of the foundation,
the tax will be 10% of the investment for
each year or part of a year in the taxable
period, up to $10,000 for any one
investment. It is imposed on all
foundation managers who took part in
the act, knowing that it was such an act,
except for foundation managers whose
participation was not willful and was due
to reasonable cause. Any foundation
manager who took part in making the
investment must pay the tax.

Specific Instructions
Part I. Complete this part for all taxable
investments.
Part II. Enter in column (a) the names
of all foundation managers who took
part in making the investments listed in
Part I. See Initial taxes on foundation
managers above.
If more than one foundation manager
is listed in column (a), each is
individually liable for the entire amount
of tax in connection with the investment.
However, the foundation managers who
are liable for the tax may prorate
payment among themselves. Enter in
column (c) the tax each foundation
manager will pay.
Carry the total amount in column (d)
for each foundation manager to Part
II-A, column (d).

Schedule E—Initial Taxes
on Taxable Expenditures
(Section 4945)
General Instructions
Requirement. Complete Schedule E if
you answered “Yes,” to Form 990-PF,
Part VII-B, question 5b, or Form 5227,
Part VI-B, question 79b. Complete Parts
I and II of Schedule E only for
expenditures that are subject to tax.
Note. Also, see Schedule F, Initial
Taxes on Political Expenditures.

Taxable expenditures. With certain
exceptions, this means any amount a
private foundation pays or incurs:
1. To carry on propaganda or
otherwise influence any legislation
through:
a. An attempt to influence general
public opinion or any segment of it, and
b. Communication with any member
or employee of a legislative body, or
with any other government official or
employee who may take part in
formulating legislation;
2. To influence the outcome of any
specific public election, or to conduct,
directly or indirectly, any voter
registration drive;
3. As a grant to an individual for
travel, study, or other purposes;
4. As a grant to an organization not
described in section 509(a)(1), (2), or
(3) or that is not an exempt operating
foundation (as defined in section
4940(d)(2)). This includes grants to:
a. Type I, Type II, and Type III
functionally integrated supporting
organizations (as described in section
4942(g)(4)(B)) if a disqualified person of
the foundation controls such supporting
organization or the supported
organizations of such supporting
organizations, and
b. Type III supporting organizations
(as described in section 4943(f)(5)(B))
that are not functionally integrated with
its supported organizations; or
5. For any purpose other than
religious, charitable, scientific, literary,
educational, or public purposes, or the
prevention of cruelty to children or
animals.
Exceptions. Section 4945(d)(4)(B)
provides an exception to taxable
expenditures that applies to certain
grants to organizations when the
granting foundation exercises
expenditure responsibility described in
section 4945(h). Additional information
on special rules and exceptions to the
definition of taxable expenditures given
above can be found at http://
www.irs.gov/irm/part7/
irm_07-027-019.html.
Initial tax on foundation. An initial tax
of 20% is imposed on each taxable
expenditure of the foundation.
Initial tax on foundation managers.
When a tax is imposed on a taxable
expenditure of the foundation, a tax of
5% of the expenditure will be imposed
on any foundation manager who agreed
to the expenditure and who knew that it

was a taxable expenditure. Foundation
managers whose participation was not
willful and was due to reasonable cause
are not liable for the tax. Any foundation
manager who took part in the
expenditure and is liable for the tax must
pay the tax. The maximum total amount
of tax on all foundation managers for
any one taxable expenditure is $10,000.
If more than one foundation manager is
liable for tax on a taxable expenditure,
all those foundation managers are
jointly and severally liable for the tax.

Specific Instructions
Part I. Complete this part for all taxable
expenditures. Enter in column (f) the
number designation from Form 990-PF,
Part VII-B, question 5a, or Form 5227,
Part VI-B, question 79a, that applies to
the act; for example, “5a(1).”
Part II. Enter in column (a) the names
of all foundation managers who agreed
to make the taxable expenditure. See
Initial tax on foundation managers
above. If more than one foundation
manager is listed in column (a), each is
individually liable for the entire tax in
connection with the expenditure.
However, the foundation managers who
are liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each foundation
manager will pay.
Carry the total amount in column (d)
for each foundation manager to Part
II-A, column (e).

Schedule F—Initial Taxes
on Political Expenditures
(Section 4955)
General Instructions
Requirement. Complete Schedule F if
you answered “Yes,” to question 5a(2)
and 5b of Form 990-PF, Part VII-B.
Complete Schedule F if you entered an
amount on line 2 of Schedule C (Form
990 or 990-EZ), Part 1-A. Complete
Schedule F if you are otherwise a
section 501(c)(3) organization that
made a political expenditure.
Political expenditures. These include
any amount paid or incurred by a
section 501(c)(3) organization that
participates or intervenes in (including
the publication or distribution of
statements) any political campaign on
behalf of, or in opposition to, any
candidate for public office. The tax is
imposed even if the political expenditure
gives rise to a revocation of the
organization's section 501(c)(3) status.
­11­

These taxes apply in the case of both
public charities and private foundations.
When tax is imposed under this
provision in the case of a private
foundation, however, the expenditure in
question will not be treated as a taxable
expenditure under section 4945.
For an organization formed primarily
to promote the candidacy or prospective
candidacy of an individual for public
office (or that is effectively controlled by
a candidate or prospective candidate
and is used primarily for such
purposes), amounts paid or incurred for
any of the following purposes are
deemed political expenditures:
Remuneration to the candidate or
prospective candidate for speeches or
other services;
Travel expenses of the individual;
Expenses of conducting polls,
surveys, or other studies, or preparing
papers or other material for use by the
individual;
Expenses of advertising, publicity,
and fundraising for such individual; and
Any other expense which has the
primary effect of promoting public
recognition or otherwise primarily
accruing to the benefit of the individual.
Initial tax on organization or founda­
tion. The initial tax on the organization
or foundation is 10% of the amount
involved.
Initial tax on organization managers
or foundation managers. An initial tax
of 21 2% of the amount involved (up to
$5,000 of tax on any one expenditure) is
imposed on any manager who agrees to
an expenditure, knowing that it is a
political expenditure, unless the
agreement is not willful and is due to
reasonable cause.
Any manager who agreed to the
expenditure must pay the tax.

Specific Instructions
Part I. Complete this part for all political
expenditures.
Part II. Enter in column (a) the names
of all managers who took part in making
the political expenditures listed in Part I.
See Initial tax on organization managers
or foundation managers above.
If more than one manager is listed in
column (a), each is individually liable for
the entire amount of tax on the
expenditure. However, the managers
who are liable for the tax may prorate
payment among themselves. Enter in
column (c) the tax each manager will
pay.

Carry the total amount in column (d)
for each manager to Part II-A, column
(f).

Schedule G—Tax on
Excess Lobbying
Expenditures (Section
4911)
Requirement. Schedule G must be
completed by eligible section 501(c)(3)
organizations that elected to be subject
to the limitations on lobbying
expenditures under section 501(h) and
that made excess lobbying
expenditures as defined in section
4911(b).
Except as noted below, follow the
line instructions on Schedule G.
Affiliated groups. If you are a
nonelecting member of an affiliated
group, you are not required to file Form
4720.
If you are an electing member of an
affiliated group and are filing a separate
return, enter on line 1 the amount from
Schedule C (Form 990 or 990-EZ), Part
II-A, column (a), line 1h. Enter on line 2
the amount from Schedule C (Form 990
or 990-EZ), Part II-A, column (a), line 1i.
If you are an electing member of an
affiliated group and are included in a
group return, enter on line 1 your share
of the excess grassroot lobbying
expenditures of the affiliated group, and
on line 2 your share of the excess
lobbying expenditures of the affiliated
group. Take these amounts from the
schedule of excess lobbying
expenditures that must be attached to
Schedule C (Form 990 or 990-EZ). See
the instructions for Schedule C (Form
990 or 990-EZ), Part II-A, for a
discussion of the lobbying provisions,
including how to figure the taxable
amount.

the tax on taxable expenditures). These
taxes also are not imposed on any
organization for which a section 501(h)
election was in effect at the time of the
lobbying expenditures or that was not
eligible to make a section 501(h)
election.
Tax on organization. A tax of 5% of
the lobbying expenditures is imposed
on the organization whose section
501(c)(3) status is revoked because of
excess lobbying activities.
Tax on organization managers. A tax
of 5% of the lobbying expenditures is
also imposed on any manager who
willfully and without reasonable cause
consented to the lobbying expenditures,
knowing that they would likely result in
the organization no longer qualifying
under section 501(c)(3).
There is no limit on the amount of this
tax that may be imposed against either
the organization or its managers. Any
organization manager who agreed to
the expenditure must pay the tax.

Specific Instructions
Part I. Complete this part for all
disqualifying lobbying expenditures.
Part II. Enter in column (a) the names
of all organization managers who took
part in making disqualifying lobbying
expenditures listed in Part I. See Tax on
organization managers above.
If more than one organization
manager is listed in column (a), each is
individually liable for the entire amount
of tax in connection with the
expenditure. However, the managers
who are liable for the tax may prorate
payment among themselves. Enter in
column (c) the tax each manager will
pay.
Carry the total amount in column (d)
for each organization manager to Part
II-A, column (g).

Schedule H—Taxes on
Disqualifying Lobbying
Expenditures (Section
4912)

Schedule I—Initial Taxes
on Excess Benefit
Transactions (Section
4958)

General Instructions

General Instructions

Requirement. Schedule H must be
completed by certain organizations
whose section 501(c)(3) status is
revoked because of excess lobbying
activities.

Requirement. Complete Schedule I for
any Excess benefit transaction in which
an Applicable organization provides an
Excess benefit to a Disqualified person.
These terms are discussed below.

Exceptions. These taxes are not
imposed on a private foundation (whose
lobbying expenditures may be subject to

Applicable organization. In
general, an applicable organization is
any section 501(c)(3) (except a private
­12­

foundation), 501(c)(4), or 501(c)(29)
organization.
Also, an applicable organization
includes any organization that was a
section 501(c)(3) (except a private
foundation), 501(c)(4), or 501(c)(29)
organization at any time during a
five-year period ending on the date of
an excess benefit transaction (the
lookback period).
Initial taxes. Excise taxes are imposed
under section 4958 on each excess
benefit transaction. If a manager
receives an excess benefit from an
excess benefit transaction, the manager
may be liable for the tax on disqualified
persons and the tax on the organization
manager. See Abatement, earlier, for
information on abatement, refund, or
relief from this tax.
Tax on disqualified persons. The
tax is 25% of the excess benefit and is
paid by any disqualified person who
improperly benefited from the excess
benefit transaction.
Tax on organization managers. If
tax is imposed on a disqualified person
for any excess benefit transaction, then
tax is also imposed on any manager
who knowingly participated in the
excess benefit transaction. The tax is
10% of the excess, not to exceed
$20,000 for each transaction.
Additional tax on the disqualified
person. If the initial tax is imposed on
an excess benefit transaction and the
transaction is not corrected within the
taxable period, then any disqualified
person involved shall be liable for an
additional tax equal to 200% of the
excess benefit.
This additional tax is abated
(refunded if collected) if the excess
benefit transaction is corrected within
the correction period (defined in
Question B, under Specific Instructions
for Page 1, earlier).
Taxable period. Taxable period
means the period beginning with the
date on which the excess benefit
transaction occurs and ending on the
earlier of:
1. The date a notice of deficiency
was mailed to the disqualified person for
the initial tax on the excess benefit
transaction, or
2. The date on which the initial tax
on the excess benefit transaction for the
disqualified person is assessed.
Excess benefit transaction. An
excess benefit transaction is any
transaction in which:

1. An excess benefit is provided by
the organization, directly or indirectly to,
or for the use of, any disqualified
person, or
2. The amount of any economic
benefit provided to, or for the use of, a
disqualified person is determined in
whole or in part by the revenues of the
organization and violates the private
inurement prohibition rules (to the extent
provided in regulations).
Until final regulations are
issued regarding the special
CAUTION
rules for revenue sharing
transactions described in 2 above,
these transactions will only be subject to
section 4958 liability under the general
rule described in 1 above.

!

Supporting organization
transactions occurring after July 25,
2006. For any supporting organization,
as defined in section 509(a)(3), any
grant, loan, compensation, or other
similar payment provided to a
substantial contributor (defined later),
family member, or 35% controlled entity
will be considered an excess benefit
transaction. The amount of the excess
benefit is the amount of such grant,
loan, compensation, or other similar
payment. Also, any loan provided to a
disqualified person that is not an
organization described in section 509(a)
(1), (2), or (4) or a supported
organization of the supporting
organization exempt under section
501(c)(4), (5), (6) and described in the
last sentence of section 509(a) is
considered an excess benefit
transaction.
Donor advised fund transactions
occurring after August 17, 2006. Any
grant, loan, compensation, or other
similar payment from any donor advised
fund to a donor, donor advisor, family
member, or 35% controlled entity is an
excess benefit transaction. The amount
of the excess benefit is the amount of
such grant, loan, compensation, or
other similar payment.
Excess benefit. Excess benefit
means the excess of the economic
benefit received from the applicable
organization over the consideration
given (including services) by a
disqualified person.
However, an economic benefit will
not be treated as compensation for
services unless the applicable
organization clearly indicates its intent
to treat the economic benefit (when
paid) as compensation for a disqualified
person's services. See Regulations

section 53.4958-4(c) for more
information.
Exception. Generally, section 4958
does not apply to any fixed payment
made to a person under an initial
contract. See Regulations section
53.4958-4(a)(3) for details.
Special rule. The initial and additional
taxes of this section do not apply if the
transaction described in 1 under Excess
benefit transaction was pursuant to a
written contract in effect on September
13, 1995, and at all times after that date
until the time that the transaction
occurs.
However, if a written contract is
materially modified, it is treated as a
new contract entered into as of the date
of the material modification. A material
modification includes amending the
contract to extend its term or to increase
the compensation payable to a
disqualified person.
Disqualified person. For purposes of
this Schedule I, a disqualified person
means:
1. Any person (at any time during
the 5-year period ending on the date of
the transaction) in a position to exercise
substantial influence over the affairs of
the organization,
2. A family member of an individual
described in 1 above, and
3. A 35% controlled entity of a
person described in 1 or 2 above.
Family members. Family members
of a disqualified person described in 1
above include a disqualified person's
spouse, ancestors, children,
grandchildren, great grandchildren, and
brothers and sisters (whether by wholeor half-blood). It also includes the
spouse of the children, grandchildren,
great grandchildren, brothers, or sisters
(whether by whole- or half-blood).
35% controlled entity. The term
35% controlled entity means:
A corporation in which a disqualified
person described in 1 or 2 above owns
more than 35% of the total combined
voting power,
A partnership in which such persons
own more than 35% of the profits
interest, or
A trust or estate in which such
persons own more than 35% of the
beneficial interest.
In determining the holdings of a
business enterprise, any stock or other
interest owned directly or indirectly shall
apply.

­13­

For donor advised funds, sponsor­
ing organizations, and certain sup­
porting organization transactions
occurring after August 17, 2006. The
following persons will be considered
disqualified persons along with certain
family members and 35% controlled
entities associated with them:
Donors of donor advised funds,
Investment advisors of sponsoring
organizations, and
Disqualified persons of a section
509(a)(3) supporting organization for
the organizations that organization
supports.
For certain supporting
organization transactions occurring
after July 25, 2006. Substantial
contributors to supporting organizations
will also be considered disqualified
persons along with their family members
and 35% controlled entities.
Donor advised fund. See the
Schedule K instructions for a definition
of donor advised fund.
Investment advisor. Investment
advisor means for any sponsoring
organization, any person compensated
by such organization (but not an
employee of such organization) for
managing the investment of, or
providing investment advice for assets
maintained in donor advised funds
maintained by such sponsoring
organization.
Sponsoring organization. See the
Schedule K instructions for a definition
of sponsoring organization.
Substantial contributor. In
general, a substantial contributor means
any person who contributed or
bequeathed an aggregate of more than
$5,000 to the organization, if that
amount is more than 2% of the total
contributions and bequests received by
the organization before the end of the
tax year of the organization in which the
contribution or bequest is received by
the organization from such person. A
substantial contributor includes the
grantor of a trust.

Specific Instructions
Part I. List each excess benefit
transaction in Part I, column (c). Enter
the date of the transaction in column (b)
and the amount of the excess benefit in
column (d). Compute the tax on the
excess benefit for disqualified persons
and enter it in column (e). Compute any
tax on the excess benefit for

organization managers and enter the
amount in column (f).
For organization managers, the tax is
the lesser of 10% of the excess benefit
or $20,000. This tax is computed on
each transaction.
Part II. Enter in column (a) the names
of all disqualified persons who took part
in the excess benefit transactions. If
more than one disqualified person took
part in an excess benefit transaction,
each is individually liable for the entire
tax on the transaction. But the
disqualified persons who are liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each disqualified person.
Carry the total amount in column (d)
for each disqualified person to Part II-A,
column (h).
Part III. Enter in column (a) the names
of all managers who knowingly took part
in the excess benefit transactions listed
in Part I. If more than one manager
knowingly took part in an excess benefit
transaction, each is individually liable for
the entire tax in connection with the
transaction. But the managers liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each organization
manager.
Carry the total amount in column (d)
for each manager to Part II-A, column
(h).

Schedule J—Taxes on
Being a Party to Prohibited
Tax Shelter Transactions
(Section 4965)
General Instructions
Requirement.
1. Complete Schedule J if you are
an entity described in section 501(c),
501(d), or 170(c) (other than the United
States) or an Indian tribal government
(within the meaning of section 7701(a)
(40)) and you received proceeds from or
have net income attributable to a
prohibited tax shelter transaction
(PTST).
2. Complete Schedule J if you are
an entity manager of such an entity who
approved the entity as (or otherwise
caused the entity to be) a party to a
PTST at any time during the tax year
and who knew (or had reason to know)
that the transaction is a PTST.
See the following guidance and any
future guidance for details.
Notice 2006-65, 2006-31 I.R.B. 102

Notice 2007-18, 2007-9 I.R.B. 608
T.D. 9334, 2007-34 I.R.B. 382
T.D. 9492, 2010-33 I.R.B. 242
Managers of tax favored
retirement plans, individual
retirement arrangements, and
savings arrangements described in
sections 401(a), 403(a), 403(b), 529,
457(b), 408(a), 220(d), 408(b), 530, or
223(d) must report and pay tax due
under 4965(a)(2) on section Form 5330.

TIP

Prohibited tax shelter transaction. In
general, a prohibited tax shelter
transaction means any listed transaction
(including a subsequently listed
transaction) and any prohibited
reportable transaction.
Listed transaction. A listed
transaction includes any transaction that
is the same as or substantially similar to
one of the types of transactions that the
IRS has determined to be a tax
avoidance transaction. These
transactions are identified by notice,
regulation, or other form of published
guidance as a listed transaction. For
existing guidance, see Notice 2009-59,
2009-31 I.R.B. 170.
For updates to this list, go to the IRS
website at www.irs.gov/businesses/
corporations and click on “Abusive Tax
Shelters and Transactions.” The listed
transactions in the above notices and
rulings will also be periodically updated
in future issues of the Internal Revenue
Bulletin.
Subsequently listed transaction.
A subsequently listed transaction is a
transaction that is identified in published
guidance as a listed transaction after
the entity has entered into the
transaction and that was not a
confidential transaction or transaction
with contractual protection at the time
the entity entered into the transaction.
Prohibited reportable transaction. A
prohibited reportable transaction is any
confidential transaction or any
transaction with contractual protection
that is a reportable transaction. See
Regulations sections 1.6011-4(b)(3)
and (4), and the Instructions for Form
8886-T, Disclosure by Tax-Exempt
Entity Regarding Prohibited Tax Shelter
Transaction for more information.
Allocation of net income and pro­
ceeds to a tax year. The net income
and proceeds attributable to a
prohibited tax shelter transaction must
be allocated to a particular tax year in a
manner consistent with the entity's
established method of accounting for
federal income tax purposes. If an entity
­14­

has not established a method of
accounting for federal income tax
purposes, the entity must use the cash
receipts and disbursements method to
determine the amount and timing of net
income and proceeds attributable to a
prohibited tax shelter transaction.
If an entity has an established
method of accounting other than the
cash method, the entity may use the
cash method to determine the amount
of the net income and proceeds
attributable to a prohibited tax shelter
transaction.

Specific Instructions
Part I. Complete this part for each
transaction if during the tax year, the
entity received proceeds from or has net
income attributable to a PTST.
Figure the tax for each transaction as
follows:
If column (e) was answered “Yes,”
then enter the larger of the column (f) or
column (g) amount in column (h).
If column (e) was answered “No,”
then multiply the larger of the amount in
column (f) or column (g) by 35% (.35)
and enter the result in column (h).
After the tax has been figured for all
PTSTs entered on Schedule J, then
total column (h) and enter the amount
on the Total line and on line 9 of Part I.
Part II. Enter in column (a) the names
of all entity managers who approved the
entity as (or otherwise caused the entity
to be) a party to a PTST at any time
during the tax year and who knew or
had reason to know that the transaction
is a PTST.
Carry the total amount in column (d)
for each manager to Part II-A, column
(i).

Schedule K—Taxes on
Taxable Distributions of
Sponsoring Organizations
Maintaining Donor
Advised Funds (Section
4966)
General Instructions
Requirement. Complete Schedule K if
you answered “Yes,” to question 9a in
Part V of Form 990, or if you are a fund
manager of a sponsoring organization
who agreed to the making of a taxable
distribution knowing that it was a taxable
distribution. Report each taxable
distribution separately. These terms are
discussed below.

Taxable distribution. A taxable
distribution is any distribution from a
donor advised fund to any natural
person or to any other person if:
1. The distribution is for any
purpose other than one specified in
section 170(c)(2)(B), or
2. The sponsoring organization
maintaining the donor advised fund
does not exercise expenditure
responsibility with respect to such
distribution in accordance with section
4945(h).
However, a taxable distribution does
not include a distribution from a donor
advised fund to:
1. Any organization described in
section 170(b)(1)(A) (other than a
disqualified supporting organization),
2. The sponsoring organization of
such donor advised fund, or
3. Any other donor advised fund.
Sponsoring organization. A
sponsoring organization is a section
170(c) organization that is not a
government organization (as referred to
in section 170(c)(1) and (2)(A)) or a
private foundation and maintains one or
more donor advised funds.
Donor advised fund. A donor advised
fund is a fund or account:
1. Which is separately identified by
reference to contributions of a donor or
donors,
2. Which is owned and controlled by
a sponsoring organization, and
3. For which the donor (or any
person appointed or designated by the
donor) has or expects to have advisory
privileges concerning the distribution or
investment of the funds held in the
donor advised funds or accounts
because of the donor's status as a
donor.
Exception. A donor advised fund
does not include:
1. A fund or account that makes
distributions only to a single identified
organization or governmental entity, or
2. Any fund or account for a person
described in 3 above that gives advice
about which individuals receive grants
for travel, study, or similar purposes, if:
a. The person's advisory privileges
are performed exclusively by such
person in their capacity as a committee
member of which all the committee
members are appointed by the
sponsoring organization,

b. No combination of persons with
advisory privileges, described in 3
above, or persons related to those in 3
above, directly or indirectly control the
committee, and
c. All grants from the fund or
account are awarded on an objective
and nondiscriminatory basis according
to a procedure approved in advance by
the board of directors of the sponsoring
organization. The procedure must be
designed to ensure that all grants meet
the requirements of section 4945(g)(1),
(2), or (3).
Tax on sponsoring organization. A
tax of 20% of the amount of each
taxable distribution is imposed on the
sponsoring organization.
Tax on fund manager. If a tax is
imposed on a taxable distribution of the
sponsoring organization, a tax of 5% of
the distribution will be imposed on any
fund manager who agreed to the
distribution knowing that it was a taxable
distribution. Any fund manager who took
part in the distribution and is liable for
the tax must pay the tax. The maximum
amount of tax on all fund managers for
any one taxable distribution is $10,000.
If more than one fund manager is liable
for tax on a taxable distribution, all such
managers are jointly and severally liable
for the tax.

Specific Instructions
Part I. Complete this part for all taxable
distributions.
Part II. Enter in column (a) the names
of all fund managers who agreed to
make the taxable distribution. If more
than one fund manager is listed in
column (a) for one distribution, each is
individually liable for the entire tax in
connection with that distribution.
However, the fund managers who are
liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each manager will
pay for each distribution for which such
manager owes a tax.
Carry the total amount in column (d)
for each fund manager to Part II-A,
column (j).

Schedule L—Taxes on
Prohibited Benefits
Distributed From Donor
Advised Funds (Section
4967)
General Instructions
Requirement. A sponsoring
organization of donor advised funds that
answered “Yes,” to Form 990, Part V,
line 9b, or that otherwise distributed
prohibited benefits under section 4967,
must complete Schedule L. Report each
taxable distribution separately.
Complete Parts I, II, and III of
Schedule L only in connection with
distributions made by a sponsoring
organization from a donor advised fund
which results in a prohibited benefit.
(See instructions to Schedule K for
definitions of the terms sponsoring
organization and donor advised fund).
Prohibited benefit. If any donor, donor
advisor, or related party advises the
sponsoring organization about making a
distribution which results in a donor,
donor advisor, or related party receiving
(either directly or indirectly) a more than
incidental benefit, then such benefit is a
prohibited benefit.
Donor advisor. A donor advisor is any
person appointed or designated by a
donor to advise a sponsoring
organization on the distribution or
investment of amounts held in the
donor's fund or account.
Related party. A related party includes
any family member or 35% controlled
entity. See the General Instructions for
Schedule I for a definition of those
terms.
Tax on donor, donor advisor, or rela­
ted person. A tax of 125% of the
benefit resulting from the distribution is
imposed on both the party who advised
as to the distribution (which might be a
donor, donor advisor, or related party)
and the party who received such benefit
(which might be a donor, donor advisor,
or related party). The advisor and the
party who received the benefit are jointly
and severally liable for the tax.
Tax on fund managers. If a tax is
imposed on a prohibited benefit
received by a donor, donor advisor, or
related person, a tax of 10% of the
amount of the prohibited benefit is
imposed on any fund manager who
agreed to the distribution knowing that it
would confer a prohibited benefit. Any
fund manager who took part in the
distribution and is liable for the tax must

­15­

pay the tax. The maximum amount of
tax on all fund managers for any one
taxable distribution is $10,000. If more
than one fund manager is liable for tax
on a taxable distribution, all such
managers are jointly and severally liable
for the tax.
Exception. If a person engaged in an
excess benefit transaction and received
a prohibited benefit for the same
transaction, the person is taxed under
section 4958, and no additional tax is
imposed under section 4967 for the
same transaction.

Specific Instructions
Part I. Complete this part for all
prohibited benefits.
Part II. Enter in column (a) the names
of all donors, donor advisors, and
related persons who received a
prohibited benefit. If more than one
donor, donor advisor, or related person
is listed in column (a) for one
distribution, each is individually liable for
the entire tax for that distribution.
However, the donors, donor advisors, or
related persons who are liable for the
tax may prorate the payment among
themselves. Enter in column (c) the tax
each manager will pay for each
distribution for which such manager
owes a tax.
Carry the total amount in column (d)
for each donor, donor advisor, or related
person to Part II-A, column (k).
Part III. Enter in column (a) the names
of all fund managers who agreed to
make the distribution conferring the
prohibited benefit. If more than one fund
manager is listed in column (a) for one
distribution, each is individually liable for
the entire tax for that distribution.
However, the fund managers who are
liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each manager will
pay for each distribution for which such
manager owes a tax.
Carry the total amount in column (d)
for each fund manager to Part II-A,
column (k).

Schedule M–Tax on Failure
to Meet the Community
Health Needs Assessment
Requirements (Section
501(r)(3))
General Instructions
Requirements. For tax years
beginning after March 23, 2012, section

4959 imposes an excise tax on hospital
organizations that fail to meet the
section 501(r)(3) requirements in any
tax year.
Section 501(r)(3) requirements
pertain to a hospital organization
conducting a community health needs
assessment (CHNA). The requirements,
which apply separately to each hospital
facility the hospital organization
operates, are as follows.
1. To conduct a CHNA this tax year,
or in either of the two prior tax years.
The CHNA must take into account input
from persons who represent the broad
interests of the community served by
the hospital facility, including people
with special knowledge of or expertise
in public health. The CHNA must be
made widely available to the public.
2. To adopt an implementation
strategy to meet the community health
needs identified through the CHNA.
See Notice 2011-52, 2011-30 I.R.B.
60, and any future related guidance for
details. For additional information on the
CHNA requirements, see Schedule H,
(Form 990), Hospitals, Part V, Section
B.

Specific Instructions
Part I. For each hospital facility, list the
following information in the relevant
column: (b) name of facility, (c)
description of the failure to meet section
501(r)(3), (d) tax year hospital facility
last conducted a CHNA, and (e) tax
year hospital facility last adopted an
implementation strategy.
Part II. On line 1 enter the number of
hospital facilities operated by the
hospital organization that failed to meet
the CHNA requirements of section
501(r)(3). On line 2 enter $50,000
multiplied by line 1 here and on Part I,
line 12. This is the CHNA excise tax
under section 4959.

Paid Preparer
Generally, anyone who is paid to
prepare the return must sign the return
and fill in the other blanks in the Paid
Preparer Use Only area. An employee
of the filing organization is not a paid
preparer.
The paid preparer must:
Sign the return in the space provided
for the preparer's signature,
Enter the preparer information,
Enter the preparer tax identification
number (PTIN), and

­16­

Give a copy of the return to the
organization, in addition to the copy to
be filed with the IRS.
Any paid preparer whose
identifying number must be
CAUTION
listed on Form 990-PF can
apply for and obtain a PTIN. You can
apply for a PTIN online or by filing Form
W-12, IRS Paid Preparer Tax
Identification Number (PTIN)
Application and Renewal. For more
information about applying for a PTIN
online, visit the IRS website at
www.irs.gov/ptin.

!

Paid Preparer Authorization

On the “Sign Here” line, check “Yes,” if
the IRS can contact the paid preparer
who signed the return to discuss the
return. This authorization applies only to
the individual whose signature appears
in the Paid Preparer Use Only section of
Form 4720. It does not apply to the firm,
if any, shown in that section.
By checking “Yes,” to this box, the
organization is authorizing the IRS to
contact the paid preparer to answer any
questions that arise during the
processing of the return. The
organization is also authorizing the paid
preparer to:
Give the IRS any information missing
from the return,
Call the IRS for information about
processing the return, and
Respond to certain IRS notices about
math errors, offsets, and return
preparation.
The organization is not authorizing
the paid preparer to bind the
organization to anything or otherwise
represent the organization before the
IRS.
The authorization will automatically
end no later than the due date
(excluding extensions) for filing of the
organization's 2013 Form 4720. If the
organization wants to expand the paid
preparer's authorization or revoke it
before it ends, see Pub. 947, Practice
Before the IRS and Power of Attorney.
Check “No,” if the IRS should contact
the organization listed on the first page
of the Form 4720, rather than the paid
preparer.

Phone Help

If you have questions and/or need help
completing this form, please call
1-877-829-5500. This toll-free
telephone service is available Monday
through Friday.

Photographs of Missing
Children

The Internal Revenue Service is a proud
partner with the National Center for
Missing and Exploited Children.
Photographs of missing children
selected by the Center may appear in
instructions on pages that would
otherwise be blank. You can help bring
these children home by looking at the
photographs and calling
1-800-THE-LOST (1-800-843-5678) if
you recognize a child.

How To Get Forms and
Publications
Internet. You can access the IRS
website 24 hours a day, 7 days a week,
at IRS.gov to:
Download forms, including talking tax
forms, instructions, and publications.
Order IRS products online.
Research your tax questions online.
Search publications online by topic or
keyword.
Sign up to receive local and national
tax news by email.
DVD for tax products. You can order
Publication 1796, IRS Tax Products
DVD, and obtain:
Current-year forms, instructions, and
publications.
Prior-year forms, instructions, and
publications.
Tax Map: an electronic research tool
and finding aid.
Tax Law frequently asked questions.
Tax Topics from the IRS telephone
response system.
Internal Revenue Code —Title 26 of
the U.S. Code.
Links to other Internet-based tax
research materials.
Fill-in, print, and save features for
most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.
The DVD is released twice during the
year. The first release will ship the
beginning of January 2013. The second
release will ship the beginning of March
2013.
Purchase the DVD from National
Technical Information Service (NTIS) at

Form 4720 Instructions

www.irs.gov/cdorders for $30 (no
handling fee) or call 1-877-233-6767 toll
free to buy the DVD for $30 (plus a $6
handling fee).
By phone and in person. You can
order forms and publications by calling
1-800-TAX-FORMS (1-800-829-3676).
You can also get most forms and
publications at your local IRS office.

IRS e­Services Makes
Taxes Easier

Now more than ever before, businesses
can enjoy the benefits of filing and
paying their federal taxes electronically.
Whether you rely on a tax professional
or handle your own taxes, the IRS offers
you convenient programs to make taxes
easier. Use these electronic options to
make filing and paying easier.
You can e-file your Form 990 or Form
990-PF; Form 940 and 941 employment
tax returns; Forms 1099; and other
information returns. Visit www.irs.gov/
efile for details.
You can pay taxes online or by phone
using the free Electronic Federal Tax
Payment System (EFTPS). Visit
www.eftps.gov or call 1-800-555-4477
for details. Electronic Funds Withdrawal
(EFW) from a checking or savings
account also is available to those who
file electronically.
Privacy Act and Paperwork Reduc­
tion Act Notice.
We ask for the information on this form
to carry out the Internal Revenue laws of
the United States. We need it to ensure
that you are complying with these laws
and to allow us to figure and collect the
right amount of tax. Certain individuals
who owe tax under Chapter 41 or 42 of
the Internal Revenue Code, and who do
not sign the Form 4720 of the
foundation or organization, must file a
separate Form 4720 showing the tax
owed and the name of the foundation or
organization for which they owe tax.
Sections 6001 and 6011 of the Internal
Revenue Code require you to provide
the requested information if the tax
applies to you. Section 6109 requires
you to provide your identifying number.
Routine uses of this information include
disclosing it to the Department of

­17­

Justice for civil and criminal litigation
and to other federal agencies, as
provided by law. We may disclose the
information to cities, states, the District
of Columbia, and U.S. Commonwealths
or possessions to administer their laws.
We may also disclose this information to
other countries under a tax treaty, to
federal and state agencies to enforce
federal nontax criminal laws, or to
federal law enforcement and
intelligence agencies to combat
terrorism. If you do not file this
information, you may be subject to
interest, penalties, and/or criminal
prosecution.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103.
The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
average time is:
. . . . . .

64 hrs., 48 min.

Learning about the law
or the form . . . . . . . . .

16 hrs., 48 min.

Preparing the form . . . .

30 hrs., 10 min.

Copying, assembling,
and sending the form to
the IRS . . . . . . . . . . . .

1 hr., 36 min.

Recordkeeping

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the Internal
Revenue Service, Tax Products
Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111
Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send
the tax form to this address. Instead,
see Where To File, earlier.

Index

To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A
Amended return ........... 4
Attorney ........... ......... 16
C
Charitable Remainder
Trust:
Form 990-T ............... 5
Unrelated business
taxable income ....... 5
Correction Period ......... 4
D
Disqualified person ..... 13
Donor advised
funds ................ 14, 15
E
Excess business holdings:
Exceptions to tax ........ 8
Schedule C ............... 7
Extension .................... 3
F
Filing requirements:
When to file ......... .......
Where to file ..............
Who must file ........ ......
Foreign Organizations or
U.S. Possession ........

2
2
1
3

I
Initial Taxes on Excess
Benefit Transactions:
disqualified person .... 13

donor advised
funds .................
excess benefit
transaction ..........
section 4958 ............
sponsoring
organizations ..... ...
supporting
organizations ..... ...
Initial taxes on
investments that
jeopardize charitable
purpose:
section 4944 ............
Initial taxes on political
expenditures:
section 4955 ............
Initial taxes on taxable
expenditures:
section 4945 ............

13
12
12
13
13

10
11
10

P
Paid Preparer ............. 16
Paid Preparer
Authorization ...... .... 16
Preparer Tax identification
Number (PTIN) ....... 16
Publications:
Pub. 947, Practice Before
the IRS and Power of
Attorney ............. 16
S
Schedule:
Schedule A; Initial Taxes
on Self-Dealing ..... ... 6
Schedule B; Initial Tax on
Undistributed
Income .......... ........ 7

­18­

Schedule C; Initial Tax on
Excess Business
Holdings ......... ....... 7
Schedule D; Initial Taxes
on Investments That
Jeopardize Charitable
Purpose .............. 10
Schedule E; Initial Taxes
on Taxable
Expenditures ........ 10
Schedule F; Initial Taxes
on Political
Expenditures ........ 11
Schedule G; Tax on
Excess Lobbying
Expenditures ........ 12
Schedule H; Taxes on
Disqualifying Lobbying
Expenditures ........ 12
Schedule I; Initial Taxes
on Excess Benefit
Transactions ........ 12
Schedule J; Taxes on
Being a Party to
Prohibited Tax Shelter
Transactions (Section
4965) ................. 14
Schedule K; Taxes on
Taxable Distributions of
Sponsoring
Organizations
Maintaining Donor
Advised Funds ..... 14
Schedule L; Taxes on
Prohibited Benefits
Distributed From Donor
Advised Funds ..... 15
Schedule M; Tax on
Failure to Meet the
Community Health
Needs Assessment

Requirements (Section
501(r)(3)) ............ 16
Signature and
Verification .............. 3
Summary of Taxes ........ 6
T
Taxes on being a party to
Prohibited Tax Shelter
Transactions:
listed transaction ....... 14
section 4965 ............ 14
Taxes on disqualifying
lobbying expenditures:
section 4912 ............ 12
Taxes on Managers,
Self­Dealers, etc. ....... 5
Taxes on Prohibited
Benefits Distributed
From Donor Advised
Funds:
section 4967 ............ 15
Taxes on Taxable
Distributions of
Sponsoring
Organizations
Maintaining Donor
Advised Funds:
section 4966 ............ 14
Tax on excess lobbying
expenditures:
section 4911 ............ 12
Tax Payments .............. 3