US Internal Revenue Service: i990pf--1997

8/14/2019 US Internal Revenue Service: i990pf--1997

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1997 Department of the TreasuryInternal Revenue ServiceInstructions for Form990-PFReturn of Private Foundation or Section 4947(a)(1)Nonexempt Charitable Trust Treated as a PrivateFoundationSection references are to the Internal Revenue Code unless otherwise noted.

Contents Page

Changes To Note

q The penalty for failure to makeelectronic deposits of depository taxesusing the Electronic Federal Tax PaymentSystem (EFTPS) has been temporarilywaived for filers who were required to first

Contents Page use EFTPS on or after July 1, 1997, seeGeneral Instruction P on page 5.q Part VII-A on Form 990-PF has a newquestion (1e) and a revised question (1d)dealing with the reimbursement andimposition of tax on political expenditures.q For tax years beginning after December31, 1997, C corporations may receive anincreased charitable deduction for certaingifts of computer technology or equipmentto a private foundation if, within 30 daysfrom the receipt of the gift, the foundationturns it over to an eligible donee andnotifies the donor of the gift. See section170(e)(6) for more information.

How To Get Forms andPublicationsPersonal computer. Visit the IRS'sInternet Web Site atwww.irs.ustreas.gov to get:q Forms and instructionsq Publicationsq IRS press releases and fact sheets.

You can also reach us using:q Telnet at iris.irs.ustreas.govq File Transfer Protocol at

ftp.irs.ustreas.govq Direct Dial (by modem)Dial direct tothe Internal Revenue Information Services(IRIS) by calling 703-321-8020 using yourmodem. IRIS is an on-line informationservice on FedWorld.

CD-ROM. A CD-ROM containing over2,000 tax products (including many prioryear forms) can be purchased from theGovernment Printing Office (GPO). To

order the CD-ROM, call theSuperintendent of Documents at202-512-1800, or go through GPO'sInternet Web Site(www.access.gpo.gov/su_docs).

By phone and in person. To orderforms and publications, call1-800-TAX-FORM (1-800-829-3676)between 7:30 a.m. and 5:30 p.m. onweekdays. You can also get most formsand publications at your local IRS office.

Part IVCapital Gains and Losses forTax on Investment Income . . . . 16

General Instructions

A. Who Must File . . . . . . . . . . 2Part VQualification Under Section

4940(e) for Reduced Tax on NetInvestment Income . . . . . . . . 16

B. Which Parts To Complete . . . . 2

C. Definitions . . . . . . . . . . . . 2

D. Other Forms You May Need To File 2 Part VIExcise Tax on InvestmentIncome . . . . . . . . . . . . . . 16E. Useful Publications . . . . . . . . 3

Part VII-AStatements RegardingActivities . . . . . . . . . . . . . 17

F. Use of Form 990-PF To SatisfyState Reporting Requirements . . 4

Part VII-BActivities for Which Form4720 May Be Required . . . . . . 18

G. Furnishing Copies of Form 990-PFto State Officials . . . . . . . . . 4

Part VIIIInformation About Officers,Directors, Trustees, etc. . . . . . 19

H. Accounting Period . . . . . . . . 4

I. Accounting Methods . . . . . . . 4Part IX-ASummary of Direct

Charitable Activities . . . . . . . . 19J. When and Where To File . . . . 5

K. Extension of Time To File . . . . 5Part IX-BSummary of

Program-Related Investments . . 20L. Amended Return . . . . . . . . . 5

M. Penalty for Failure To FileTimely, Completely, or Correctly . 5

Part XMinimum Investment Return 20

Part XIDistributable Amount . . . 21N. Penalties for Not Paying Tax

on Time . . . . . . . . . . . . . 5 Part XIIQualifying Distributions . . 22

Part XIIIUndistributed Income . . 22O. Figuring and Paying Estimated Tax 5Part XIVPrivate Operating

Foundations . . . . . . . . . . . . 23P. Tax Payment Methods for Domestic

Private Foundations . . . . . . . 5Part XVSupplementary Information 24Q. Public Inspection Requirements . 6Part XVI-AAnalysis of

Income-Producing Activities . . . . 24R. Disclosures Regarding Certain

Information and Services Furnished 7Part XVI-BRelationship of Activities

to the Accomplishment of ExemptPurposes . . . . . . . . . . . . . 25

S. Organizations Organized orCreated in a Foreign Country orU.S. Possession . . . . . . . . . 7

Part XVIIInformation RegardingTransfers To and Transactions andRelationships With NoncharitableExempt Organizations . . . . . . 25

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

U. Filing Requirements DuringSection 507(b)(1)(B) Termination 8

Part XVIIIPublic Inspection . . . . 26V. Special Rules for Section

507(b)(1)(B) Terminations . . . . 8 Signature . . . . . . . . . . . . . . 26

Exclusion Codes . . . . . . . . . . 27W. Rounding, Currency, andAttachments . . . . . . . . . . . 8

Specific Instructions

Completing the Heading . . . . . . 8

Part IAnalysis of Revenue andExpenses . . . . . . . . . . . . . 9

Part IIBalance Sheets . . . . . . 13

Part IIIAnalysis of Changes in NetAssets or Fund Balances . . . . . 15

Cat. No. 11290Y


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General InstructionsPurpose of form. Form 990-PF is usedby private foundations and by section4947(a)(1) nonexempt charitable truststhat are treated as private foundations.These organizations use this form tofigure the tax on net investment incomeand to report charitable distributions andactivities. The form also serves as asubstitute for the section 4947(a)(1)nonexempt charitable trust's income taxreturn, Form 1041, U.S. Income TaxReturn for Estates and Trusts, when thetrust has no taxable income.

A. Who Must File

Form 990-PF is an annual informationreturn that must be filed by:q Exempt private foundations (section6033(a), (b), and (c)).q Taxable private foundations (section6033(d)).q Organizations that agree to privatefoundation status and whose applicationsfor exempt status are pending on the due

date for filing Form 990-PF.q Organizations that made an electionunder section 41(e)(6).q Organizations that are making a section507 termination.q Section 4947(a)(1) nonexemptcharitable trusts that are treated asprivate foundations (section 6033(d)).

Other section 4947(a)(1) charitabletrusts. Section 4947(a)(1) nonexemptcharitable trusts that are not treated asprivate foundations do not file Form990-PF. However, they may need to fileForm 990, Return of OrganizationExempt From Income Tax, or Form

990-EZ, Short Form Return ofOrganization Exempt From Income Tax.With either of these forms, the trust mustalso file Schedule A (Form 990),Organization Exempt Under Section501(c)(3) (Except Private Foundation),and Section 501(e), 501(f), 501(k),501(n), or Section 4947(a)(1) NonexemptCharitable Trust SupplementaryInformation. (See Form 990 or Form990-EZ instructions.)

B. Which Parts To Complete

The parts of the form listed below do notapply to all filers. If an entire part or a

major portion of a part does not apply,enter N/A where appropriate.q Part I, column (c), applies only toprivate operating foundations and tononoperating private foundations thathave income from charitable activities.q Part II, column (c), with the exceptionof line 16, applies only to organizationshaving at least $5,000 in assets per booksat some time during the year. Line 16,column (c), applies to all filers.

q Part IV does not apply to foreignorganizations.q Parts V and VI do not apply toorganizations making an election undersection 41(e).q Part X does not apply to foreignfoundations that check box D2 on page 1of Form 990-PF unless they claim statusas a private operating foundation.q Parts XI and XIII do not apply to foreignfoundations that check box D2 on page 1

of Form 990-PF. However, check the boxat the top of Part XI. Part XI does notapply to private operating foundations.Also, if the organization is a privateoperating foundation for any of the yearsshown in Part XIII, do not complete theportions that apply to those years.q Part XIV applies only to privateoperating foundations.q Part XV applies only to organizationshaving assets of $5,000 or more duringthe year. This part does not apply tocertain foreign organizations.

C. Definitions

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

In general, churches, hospitals,schools, and broadly publicly supportedorganizations are excluded from privatefoundation status by these sections.These organizations may be required tofile Form 990 (or Form 990-EZ) insteadof Form 990-PF.q A nonexempt charitable trust treatedas a private foundation is a trust that isnot exempt from tax under section 501(a)and all of the unexpired interests of whichare devoted to religious, charitable, orother purposes described in section170(c)(2)(B), and for which a deductionwas allowed under a section of the Codelisted in section 4947(a)(1).q A taxable private foundation is anorganization that is no longer exemptunder section 501(a) as an organizationdescribed in section 501(c)(3). Though itmay operate as a taxable entity, it willcontinue to be treated as a privatefoundation until that status is terminatedunder section 507.q A private operating foundation is anorganization that is described undersection 4942(j)(3) or (5). It means anyprivate foundation that spends at least85% of the smaller of its adjusted netincome (figured in Part I) or its minimuminvestment return (figured in Part X)directly for the active conduct of theexempt purpose or functions for which thefoundation is organized and operated andthat also meets the assets test, theendowment test, or the support test(discussed in Part XIV).

q A nonoperating private foundation isa private foundation that is not a privateoperating foundation.q A foundation manager is an officer,director, or trustee of a foundation, or anindividual who has powers similar to thoseof officers, directors, or trustees. In thecase of any act or failure to act, the termfoundation manager may also includeemployees of the foundation who havethe authority to act.q

A disqualified person is:1. A substantial contributor (see

instructions for Part VII-A, line 10, onpage 16);

2. A foundation manager;

3. A person who owns more than 20%of a corporation, partnership, trust, orunincorporated enterprise that is itself asubstantial contributor;

4. A family member of an individualdescribed in 1, 2, or 3 above; or

5. A corporation, partnership, trust, orestate in which persons described in 1,2, 3, or 4 above own a total beneficialinterest of more than 35%.

6. For purposes of section 4941(self-dealing), a disqualified person alsoincludes certain government officials.(See section 4946(c) and the relatedregulations.)

7. For purposes of section 4943(excess business holdings), a disqualifiedperson also includes:

a. A private foundation that iseffectively controlled (directly or indirectly)by the same persons who control theprivate foundation in question, or

b. A private foundation to whichsubstantially all of the contributions weremade (directly or indirectly) by one ormore of the persons described in 1, 2, and3 above, or members of their families,within the meaning of section 4946(d).q An organization is controlled by afoundation or by one or more disqualifiedpersons with respect to the foundation ifany of these persons may, by combiningtheir votes or positions of authority,require the organization to make anexpenditure or prevent the organizationfrom making an expenditure, regardlessof the method of control. Control isdetermined without regard to theconditions imposed by a foundation on themanner in which the contribution must be

used.

D. Other Forms You MayNeed To FileForm W-2, Wage and Tax Statement.

Form W-3, Transmittal of Wage and TaxStatements.

Form 941, Employer's Quarterly FederalTax Return. Used to report social security,Medicare, and income taxes withheld byan employer and social security andMedicare taxes paid by an employer.

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

This penalty may be imposed on allpersons (including volunteers, see below)whom the IRS determines to beresponsible for collecting, accounting for,and paying over these taxes, and whowillfully did not do so.

This penalty does not apply to anyvolunteer, unpaid member of any boardof trustees or directors of a tax-exemptorganization, if this member:

1. Is solely serving in an honorarycapacity,

2. Does not participate in theday-to-day or financial activities of theorganization, and

3. Does not have actual knowledgeof the failure to collect, account for, andpay over these taxes.

However, this exception does not applyif it results in no person being liable for the

penalty.Form 990-T, Exempt OrganizationBusiness Income Tax Return. Everyorganization exempt from income taxunder section 501(a) that has total grossincome of $1,000 or more from all tradesor businesses that are unrelated to theorganization's exempt purpose must filea return on Form 990-T.

Form 990-W, Estimated Tax on UnrelatedBusiness Taxable Income for Tax-ExemptOrganizations (and on Investment Incomefor Private Foundations).

Form 1041, U.S. Income Tax Return forEstates and Trusts. Required of section

4947(a)(1) nonexempt charitable truststhat also file Form 990-PF. However, if thetrust does not have any taxable incomeunder the income tax provisions (subtitleA of the Code), it may use the filing ofForm 990-PF to satisfy its Form 1041filing requirement under section 6012. Ifthis condition is met, check the box forquestion 13, Part VII-A, of Form 990-PFand do not file Form 1041.

Form 1041-ES, Estimated Income Tax forEstates and Trusts.

Form 1096, Annual Summary andTransmittal of U.S. Information Returns.

Forms 1099-INT, MISC, OID, and R,

Information returns for reporting certaininterest; miscellaneous income, medicaland health care payments, andnonemployee compensation; originalissue discount; and distributions frompensions, annuities, retirement orprofit-sharing plans, IRAs, insurancecontracts, etc.

Form 1120, U.S. Corporation Income TaxReturn. Filed by nonexempt taxableprivate foundations that have taxableincome under the income tax provisions(subtitle A of the Code). The Form 990-PF

annual information return is also filed bythese taxable foundations.

Form 1120-POL, U.S. Income Tax Returnfor Certain Political Organizations.Section 501(c) organizations must fileForm 1120-POL if their politicalexpenditures and their net investmentincome both exceed $100 for the year.

Form 1128, Application To Adopt,Change, or Retain a Tax Year.

Form 2758, Application for Extension of

Time To File Certain Excise, Income,Information, and Other Returns.

Form 2220, Underpayment of EstimatedTax by Corporations, is used bycorporations and trusts filing Form 990-PFto see if the foundation owes a penaltyand to figure the amount of the penalty.Generally, the foundation is not requiredto file this form because the IRS canfigure the amount of any penalty and billthe foundation for it. However, completeand attach Form 2220 even if thefoundation does not owe the penalty if:q The annualized income or the adjustedseasonal installment method is used, orq

The foundation is a largeorganization, (see General Instruction O)computing its first required installmentbased on the prior year's tax.

If Form 2220 is attached, check the boxon line 8, Part VI, on page 4 of Form990-PF and enter the amount of anypenalty on this line.

Form 4506-A, Request for PublicInspection or Copy of ExemptOrganization Tax Form.

Form 4720, Return of Certain ExciseTaxes on Charities and Other PersonsUnder Chapters 41 and 42 of the InternalRevenue Code, is primarily used to

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

jeopardize the foundation's charitablepurposes; and making political or othernoncharitable expenditures. Certainexcise taxes and penalties also apply tofoundation managers, substantialcontributors, and certain related personsand are reported on this form.

Form 5500 or 5500-C/R, employers whomaintain pension, profit-sharing, or otherfunded deferred compensation plans aregenerally required to file one of the 5500series of forms shown below. Thisrequirement applies whether or not theplan is qualified under the InternalRevenue Code and whether or not adeduction is claimed for the current taxyear.

The forms required to be filed are:

Form 5500, Annual Return/Report ofEmployee Benefit Plan (With 100 or moreparticipants).

Form 5500-C/R, Return/Report ofEmployee Benefit Plan (With fewer than100 participants).

Form 8109, Federal Tax Deposit Coupon.

Form 8282, Donee Information Return.Required of the donee of charitablededuction property that sells, exchanges,or otherwise disposes of the propertywithin 2 years after the date it receivedthe property.

Also required of any successor doneethat disposes of charitable deductionproperty within 2 years after the date thatthe donor gave the property to the original

donee. (It does not matter who gave theproperty to the successor donee. It mayhave been the original donee or anothersuccessor donee.) For successor donees,the form must be filed only for anyproperty that was transferred by theoriginal donee after July 5, 1988.

Form 8275, taxpayers and tax returnpreparers should attach Form 8275,Disclosure Statement, to Form 990-PF todisclose items or positions (except thosecontrary to a regulationsee Form8275-R below) that are not otherwiseadequately disclosed on the tax return.The disclosure is made to avoid parts ofthe accuracy-related penalty imposed for

disregard of rules or substantialunderstatement of tax. Form 8275 is alsoused for disclosures relating to preparerpenalties for understatements due tounrealistic positions or for willful orreckless conduct.

Form 8275-R, use Form 8275-R,Regulation Disclosure Statement, todisclose any item on a tax return for whicha position has been taken that is contraryto Treasury regulations.

Form 8300, Report of Cash PaymentsOver $10,000 Received in a Trade orBusiness. Used to report cash amounts inexcess of $10,000 that were received in

a single transaction (or in two or morerelated transactions) in the course of atrade or business (as defined in section162).

Form 8718, User Fee for ExemptOrganization Determination LetterRequest. Used by a private foundationthat has completed a section 507termination and seeks a determinationletter that it is now a public charity.

Form 8822, Change of Address.

E. Useful Publications

In addition to the publications listedthroughout these instructions, you maywish to get:Publication 525, Taxable andNontaxable Income.

Publication 578, Tax Information forPrivate Foundations and FoundationManagers.

Publication 583, Starting a Business andKeeping Records.

Publication 598, Tax on UnrelatedBusiness Income of ExemptOrganizations.

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Publication 910, Guide to Free TaxServices.

Publication 1391, Deductibility ofPayments Made to Charities ConductingFund-Raising Events.

Publications and forms are available atno charge through IRS offices or bycalling 1-800-TAX-FORM(1-800-829-3676).

F. Use of Form 990-PF To

Satisfy State ReportingRequirements

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

If the organization plans to use Form990-PF to satisfy state or local filingrequirements, such as those from statecharitable solicitation acts, note thefollowing:

Determine state filing requirements.Consult the appropriate officials of allstates and other jurisdictions in which the

organization does business to determinetheir specific filing requirements. Doingbusiness in a jurisdiction may include anyof the following:q Soliciting contributions or grants by mailor otherwise from individuals, businesses,or other charitable organizations,q Conducting programs,q Having employees within that

jurisdiction, orq Maintaining a checking account orowning or renting property there.

Monetary tests may differ. Some or allof the dollar limitations that apply to Form990-PF when filed with the IRS may not

apply when using Form 990-PF insteadof state or local report forms. IRS dollarlimitations that may not meet some staterequirements are the $5,000 total assetsminimum that requires completion of PartII, column (c), and Part XV; and the$50,000 minimum for listing the highestpaid employees and for listingprofessional fees in Part VIII.

Additional information may berequired. State and local filingrequirements may require attaching toForm 990-PF one or more of thefollowing:q Additional financial statements, such

as a complete analysis of functionalexpenses or a statement of changes innet assets,q Notes to financial statements,q Additional financial schedules,q A report on the financial statements byan independent accountant, andq Answers to additional questions andother information.Each jurisdiction may require theadditional material to be presented onforms they provide. The additional

information does not have to be submittedwith the Form 990-PF filed with the IRS.

If required information is not providedto a state, the organization may be askedby the state to provide it or to submit anamended return, even if the Form 990-PFis accepted by the IRS as complete.

Amended returns. If the organizationsubmits supplemental information or filesan amended Form 990-PF with the IRS,it must also include a copy of the

information or amended return to anystate with which it filed a copy of Form990-PF.

Method of accounting. Many statesrequire that all amounts be reportedbased on the accrual method ofaccounting.

Time for filing may differ. The time forfiling Form 990-PF with the IRS may differfrom the time for filing state reports.

State registration numbers. Enter theapplicable state or local jurisdictionregistration or identification number in boxB (on page 1) for each jurisdiction inwhich the organization files Form 990-PF

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

G. Furnishing Copies ofForm 990-PF to StateOfficials

The foundation managers must furnish acopy of the annual return Form 990-PF(and Form 4720 (if applicable)) to theattorney general of:

1.Each state required to be listed inPart VII-A, line 8a,

2. The state in which the foundation'sprincipal office is located, and

3. The state in which the foundationwas incorporated or created.A copy of the annual return must be sent

to the attorney general at the same timethe annual return is filed with the IRS.

Other requirements. If the attorneygeneral or other appropriate state officialof any state requests a copy of the annualreturn, the foundation managers mustgive them a copy of the annual return.

Exceptions. These rules do not apply to

any foreign foundation which, from thedate of its creation, has received at least85% of its support (excluding grossinvestment income) from sources outsidethe United States. (See Exceptions inGeneral Instruction Q for other exceptionsthat affect this type of organization.)

Coordination with state reportingrequirements. If the foundationmanagers submit a copy of Form 990-PFand Form 4720 (if applicable) to a stateattorney general to satisfy a statereporting requirement, they do not have

to furnish a second copy to that attorneygeneral to comply with the InternalRevenue Code requirements discussed inthis section.

If there is a state reporting requirementto file a copy of Form 990-PF with a stateofficial other than the attorney general(such as the secretary of state), then thefoundation managers must also send acopy of the Form 990-PF and Form 4720(if applicable) to the attorney general ofthat state.

H. Accounting Period

1. File the 1997 return for the calendaryear 1997 or fiscal year beginning in1997. If the return is for a fiscal year, fillin the tax year space at the top of thereturn.

2. The return must be filed on thebasis of the established annualaccounting period of the organization. Ifthe organization has no establishedaccounting period, the return should beon the calendar-year basis.

3. For initial or final returns or a

change in accounting period, the 1997form may also be used as the return fora short period (less than 12 months)ending November 30, 1998, or earlier.

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

If the organization changed itsaccounting period within the10-calendar-year period that includes thebeginning of the short period, and it hada Form 990-PF filing requirement at any

time during that 10-year period, it mustalso attach a Form 1128 to theshort-period return. See Rev. Proc. 85-58,1985-2 C.B. 740.

I. Accounting Methods

Generally, you should report the financialinformation requested on the basis of theaccounting method the foundationregularly uses to keep its books andrecords.

Exception. Complete Part I, column (d)on the cash receipts and disbursementsmethod of accounting.

Change required by Statement ofFinancial Accounting Standards(SFAS) No. 116. Foundations that arechanging their methods of accounting forFederal income tax purposes to complywith SFAS No. 116 are not required to fileForm 3115, Application for Change inAccounting Method. Foundations maychange to the methods described in SFASNo. 116 for Federal income tax purposesfor any tax year beginning after December15, 1994, by reflecting the change in themanner described in Notice 96-30, 1996-1C.B. 378.



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J. When and Where To File

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

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

To file the return, mail or deliver it tothe:

Internal Revenue Service CenterOgden, UT 842010027

K. Extension of Time To File

A foundation may use Form 2758 torequest an extension of time to file itsreturn.

L. Amended Return

To change the organization's return forany year, file an amended return,including attachments, with the correctinformation. The amended return mustprovide all the information required by theform and instructions, not just the new orcorrected information. Write AmendedReturn at the top of the return.

If the organization files an amendedreturn to claim a refund of tax paid undersection 4940 or 4948, it must file theamended return within 3 years after thedate the original return was due or filed,or within 2 years from the date the taxwas paid, whichever date is later.

State reporting requirements. SeeAmended returns under GeneralInstruction F.

Need a copy of an old return or form?Use Form 4506-A to obtain a copy of apreviously filed return. You can obtainblank forms for prior years by calling,1-800-TAX-FORM (1-800-829-3676).

M. Penalty for Failure To FileTimely, Completely, orCorrectlyAgainst the organization. If anorganization does not file timely andcompletely, or does not furnish the correct

information, it must pay $20 for each daythe failure continues ($100 a day if it is alarge organization), unless it can showthat the failure was due to reasonablecause. Those filing late (after the duedate, including extensions) must attachan explanation to the return. Themaximum penalty for each return will notexceed the smaller of $10,000 ($50,000for a large organization) or 5% of the

gross receipts of the organization for theyear.

Large organization. A largeorganization is one that has gross receiptsexceeding $1 million for the tax year.

Against the responsible person. TheIRS will make written demand that thedelinquent return be filed or theinformation furnished within a reasonabletime after the mailing of the notice of thedemand. The person failing to comply with

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

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

None or N/A if an entire part does notapply.

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

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

N. Penalties for Not PayingTax on Time

There is a penalty for not paying tax whendue (section 6651). The penalty generallyis 1/2 of 1% of the unpaid tax for eachmonth or part of a month the tax remainsunpaid, not to exceed 25% of the unpaidtax. If there was reasonable cause for notpaying the tax on time, the penalty canbe waived. However, interest is chargedon any tax not paid on time, at the rateprovided by section 6621.

Estimated tax penalty. The section6655 penalty for failure to pay estimated

tax applies to the tax on net investmentincome of domestic private foundationsand section 4947(a)(1) nonexemptcharitable trusts. The penalty also appliesto any tax on unrelated business incomeof a private foundation. Generally, if aprivate foundation's tax liability is $500 ormore and it did not make the requiredpayments on time, then it is subject to thepenalty.

For more details, see the discussionof Form 2220 in General Instruction D.

O. Figuring and PayingEstimated Tax

A domestic private foundation must makeestimated tax payments for the excise taxbased on investment income if it canexpect its estimated tax (section 4940 taxminus allowable credits) to be $500 ormore. The number of installmentpayments it must make under thedepository method is determined at thetime during the year that it first meets thisrequirement. For calendar-year taxpayers,the first deposit of estimated taxes for ayear generally should be made by May15 of the year.

Although Form 990-W is used primarilyto compute the installment payments ofunrelated business income tax, it is alsoused to determine the timing and amountsof installment payments of the section4940 tax based on investment income.Compute separately any requireddeposits of excise tax based oninvestment income and unrelatedbusiness income tax.

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

The Form 990-W line items andinstructions for large organizations alsoapply to private foundations. For purposesof paying the estimated tax on netinvestment income, a large organizationis one that had net investment income of$1 million or more for any of the 3 taxyears immediately preceding the tax yearinvolved.

Special rules.

Section 4947(a)(1) nonexempt

charitable trustsshould use Form1041-ES for paying any estimated tax onincome subject to tax under section 1.Form 1041-ES also contains theestimated tax rules for paying the tax onthat income.

Taxable foundationsshould use Form8109, and darken the 1120 box on thatform for paying any estimated tax onincome subject to tax under section 11.Form 1120-W contains the estimated taxrules for paying the tax on that income.

Penalty. A foundation that does not paythe proper estimated tax when due maybe subject to the estimated tax penalty for

the period of the underpayment. (Seesections 6655(b) and (d) and the Form2220 instructions.)

P. Tax Payment Methods forDomestic PrivateFoundations

Whether the foundation uses thedepository method of tax payment or thespecial option for small foundations, itmust pay the tax due (see Part VI) in full



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by 15th day of the 5th month after the endof its tax year.

Depository Method of Tax Payment

Some foundations (described below) arerequired to electronically deposit alldepository taxes, including their taxpayments for the excise tax based oninvestment income.

Electronic Deposit Requirement

The foundation must make electronicdeposits of all depository tax liabilities thatoccur after 1997 if:q It was required to electronically deposittaxes in prior years,q It deposited more than $50,000 in socialsecurity, Medicare, or withheld incometaxes in 1996, orq It did not deposit social security,Medicare, or withheld income taxes in1995 or 1996, but deposited more than$50,000 in other taxes under section 6302(such as the excise tax based oninvestment income) in either year.

For details, see Regulations section

31.6302-1(h).The Electronic Federal Tax PaymentSystem (EFTPS) must be used to makeelectronic deposits. If the foundation isrequired to make deposits electronicallyand fails to do so, it may be subject to a10% penalty. However, no penalty willbe imposed prior to July 1, 1998, if thefoundation was first required to useEFTPS on or after July 1, 1997.Foundations that are not required to makeelectronic deposits may voluntarilyparticipate in EFTPS. To enroll in EFTPS,call 1-800-945-8400 or 1-800-555-4477.For general information about EFTPS, call1-800-829-1040.

Deposits With Form 8109

If the foundation does not use EFTPS,deposit estimated tax payments and anybalance due for the excise tax based oninvestment income with Form 8109,Federal Tax Deposit Coupon. Do not senddeposits directly to an IRS office. Mail ordeliver the completed Form 8109 with thepayment to a qualified depositary forFederal taxes or to the Federal Reservebank (FRB) servicing the foundation'sgeographic area. Make checks or moneyorders payable to that depositary or FRB.To help ensure proper crediting, write the

foundation's employer identificationnumber (EIN), the tax period to which thedeposit applies, and Form 990-PF onthe check or money order. Be sure todarken the 990-PF box on the coupon.Records of these deposits will be sent tothe IRS.

A penalty may be imposed if thedeposits are mailed or delivered to an IRSoffice rather than to an authorizeddepositary or FRB. For more informationon deposits, see the instructions in thecoupon booklet (Form 8109) and Pub.

583, Starting a Business and KeepingRecords.

Special Payment Option for SmallFoundations

A private foundation may enclose a checkor money order, payable to the InternalRevenue Service, with the Form 990-PFor Form 2758, if it meets all of thefollowing requirements.

1. The foundation must not be

required to use EFTPS.2. The tax based on investment

income shown on line 5, Part VI of Form990-PF is less than $500.

3. If Form 2758 is used, the amountentered on line 5a must be less than $500and it must be the full balance due.

Please write 1997 Form 990-PF andthe foundation's EIN on its check ormoney order. Also, include thefoundation's name and address on thecheck or money order if it is notpreprinted.

Caution: Foreign organizations shouldsee the instructions for Part VI, line 9.

Q. Public InspectionRequirements

From the organization

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

Annual Returns

Foundation managers must make theannual return available for inspectionduring regular business hours at theprincipal office of the foundation, or maygive a free copy to any person requestinginspection, if the request is made at thetime and in the manner prescribed insection 6104(d) and the relatedregulations.

Notice requirements. A notice that theprivate foundation's return is available forinspection must be published. The noticemust:q Be published by the due date (includingextensions) for filing the return,q Be published in a newspaper withgeneral circulation in the county in whichthe private foundation's principal office islocated,q State that the private foundation'sreturn is available for inspection at itsprincipal office during regular businesshours by any citizen who requestsinspection within 180 days after the noticeis published,q Show the address and telephonenumber of the private foundation'sprincipal office, and

q Show the name of the privatefoundation's principal manager.

If the foundation has no principal officeor none other than the residence of afoundation manager or substantialcontributor, then another appropriatelocation may be designated or thefoundation may furnish a copy free of anycharges to the person requesting aninspection in the time and mannerdiscussed above.

Also, a private foundation maydesignate, in addition to its principaloffice, any other location where its returnwill be available.

Attachment. A copy of the newspapernotice must be attached to the Form990-PF that the foundation files with theInternal Revenue Service.

Newspaper with general circulation.A newspaper or journal that publishes realestate title transfers or other similar legalnotices to satisfy state law requirementsis considered to have general circulation.

180-day inspection period. Toensure that the return is available for

public inspection for the full 180-dayperiod, do not publish the notice until thereturn has been completed and isavailable for inspection upon request.

Penalties. If a foundation does notpublish the notice and attach a copy of itto a timely filed return, there is a penaltyof $20 a day, up to a maximum of $10,000for any one return (section 6652(c)). Thepenalty is imposed on the person undera duty to act, but who fails to do sowithout reasonable cause. The penalty isalso imposed on any person who does notmake the return (including all requiredattachments) available for publicinspection according to the section

6104(d) provisions discussed aboveunder Annual returns. If more than oneperson is responsible for either failure toact, each person is jointly and severallyliable for the full amount of the penalty.Any person who willfully fails to comply issubject to an additional penalty of $1,000(section 6685). This penalty will increaseto $5,000, 60 days after the Treasuryissues certain regulations about publicinspections.

Exceptions. A private foundation thathas terminated its status as such undersection 507(b)(1)(A), by distributing all itsnet assets to one or more public charities

without keeping any right, title, or interestin those assets, does not have to publishnotice of availability of its annual returnor furnish the return to the public for thetax year in which it terminates(Regulations section 1.507-2(a)(6)).

The notice and public inspectionprovisions discussed above do not applyto any foreign foundation that, from thedate of its creation, has received at least85% of its support (excluding grossinvestment income) from sources outsidethe United States. The requirement to



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furnish copies of annual returns to stateofficials also does not apply to suchforeign foundations (see GeneralInstruction G).

Exemption applications

Any section 501(c) organization that filedan application for recognition ofexemption to the Internal RevenueService after July 15, 1987, must makeavailable for public inspection a copy of itsapplication (and any papers submitted insupport of its application) and any letteror other document issued by the IRS inresponse to the application. Anorganization that filed its exemptionapplication on or before July 15, 1987,must comply with this requirement if it hada copy of its application on July 15, 1987.The copy of the application and relateddocuments must be made available forinspection during regular business hoursat the organization's principal office andat each of its regional or district officeshaving at least three employees.

Any person who does not comply withthe requirement for public inspection of

applications will be charged a penalty of$20 for each day that inspection was notpermitted. There is no limitation. Nopenalty will be imposed if the failure is dueto reasonable cause. If more than oneperson is responsible for failure to complywith this requirement, each person is

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

From the IRS

Both exempt organization returns andapproved exemption applications may beinspected by the public at IRS districtoffices and at the IRS National Office inWashington, DC.

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

to inspect the return or application. If therequester wants the inspection at the IRSNational Office, the request should besent to the following address.

Commissioner of Internal RevenueAttention: Freedom of Information

Reading Room1111 Constitution Ave., NWWashington, DC 20224

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

R. Disclosures RegardingCertain Information andServices Furnished

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

making such offer or solicitation.Any organization that intentionally

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

S. Organizations Organizedor Created in a ForeignCountry or U.S. Possession

If you apply any provision of any U.S. taxtreaty to compute the foundation's taxable

income, tax liability, or tax credits in amanner different from the 990-PFinstructions, attach an explanation.

Regulations section 53.4948-1(b)states that sections 507, 508, andChapter 42 (other than section 4948) donot apply to a foreign private foundationthat from the date of its creation hasreceived at least 85% of its support (asdefined in section 509(d), other thansection 509(d)(4)) from sources outsidethe United States.

Section 4948(a) imposes a 4% tax onthe gross investment income from U.S.sources (i.e., income from dividends,

interest, rents, payments received onsecurities loans (as defined in section512(a)(5)), and royalties not reported onForm 990-T of an exempt foreign privatefoundation. This tax replaces the section4940 tax on the net investment incomeof a domestic private foundation. To payany tax due, see the instructions for PartVI, line 9.

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

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

T. Liquidation, Dissolution,Termination, or SubstantialContraction

If there is a liquidation, dissolution,termination, or substantial contraction

(defined below) of the organization,attach:

1. A statement to the returnexplaining it,

2. A certified copy of the liquidationplan, resolution, etc. (if any) and allamendments or supplements that werenot previously filed,

3. A schedule that lists the names andaddresses of all recipients of assets, and

4. An explanation of the nature and

fair market value of the assets distributedto each recipient.

Additional requirements. For acomplete corporate liquidation or trusttermination, attach a statement as towhether a final distribution of assets wasmade and the date it was made (ifapplicable).

Also, if the organization:q Has ceased to exist, write FinalReturn at the top of page 1 of the return.q Is terminating its private foundationstatus under section 507(b)(1)(B), seeGeneral Instructions U and V.

Relief from public inspectionrequirements. If the organization hasterminated its private foundation statusunder section 507(b)(1)(A), it does nothave to comply with the notice and publicinspection requirements of their return forthe termination year (see Exception inGeneral Instruction Q).

Filing date. See General Instruction J forthe filing date.

Definitions. The term substantialcontraction includes any partialliquidation or any other significantdispositionof assets. However, this doesnot include transfers for full and adequateconsideration or distributions of current

income.A significant disposition of assets

does not include any disposition for a taxyear if:

1. The total of the dispositions for thetax year is less than 25% of the fairmarket value of the net assets of theorganization at the beginning of the taxyear, and

2. The total of the related dispositionsmade during prior tax years (if adisposition is part of a series of relateddispositions made during these prior taxyears) is less than 25% of the fair marketvalue of the net assets of the organization

at the beginning of the tax year in whichany of the series of related dispositionswas made.

The facts and circumstances of theparticular case will determine whether asignificant disposition has occurredthrough a series of related dispositions.Ordinarily, a distribution described insection 170(b)(1)(E)(ii) (relating to privatefoundations making qualifyingdistributions out of corpus equal to 100%of contributions received during thefoundation's tax year) will not be taken



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into account as a significant dispositionof assets. See Regulations section1.170A-9(g)(2).

U. Filing RequirementsDuring Section 507(b)(1)(B)Termination

Although an organization terminating itsprivate foundation status under section507(b)(1)(B) may be regarded as a public

charity for certain purposes, it isconsidered a private foundation for filingrequirement purposes and it must file anannual return on Form 990-PF. The returnmust be filed for each year in the60-month termination period, if that periodhas not expired before the due date of thereturn.

Regulations under section 507(b)(1)(B)(iii) specify that within 90 days after theend of the termination period theorganization must supply information to itskey district director establishing that it hasterminated its private foundation statusand, therefore, qualifies as a publiccharity. If information is furnished

establishing a successful termination,then, for the final year of the terminationperiod, the organization should complywith the filing requirements for the typeof public charity it has become. See theInstructions for Form 990 and ScheduleA (Form 990) for details on filingrequirements. This applies even if the keydistrict has not confirmed that theorganization has terminated its privatefoundation status by the time the returnfor the final year of the termination is due(or would be due if a return wererequired).

The organization will be allowed a

reasonable period of time to file anyprivate foundation returns required (forthe last year of the termination period) butnot previously filed if it is later determinedthat the organization did not terminate itsprivate foundation status. Interest on anytax due will be charged from the originaldue date of the Form 990-PF, butpenalties under sections 6651 and 6652will not be assessed if the Form 990-PFis filed within the period allowed by thekey district.

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

If the organization is terminating itsprivate foundation status under the60-month provisions of section507(b)(1)(B), special rules apply. (SeeGeneral Instructions T and U.) Underthese rules, the organization may fileForm 990-PF without paying the tax onnet investment income if it filed a consentunder section 6501(c)(4) with itsnotification to the district director of itsintention to begin a section 507(b)(1)(B)termination. The consent provides that the

period of limitation on the assessment ofexcise tax under section 4940 or 4948 oninvestment income for any tax year in the60-month period will not expire until atleast 1 year after the period for assessinga deficiency for the last tax year in whichthe 60-month period would normallyexpire. Any foundation not paying the taxwhen it files Form 990-PF must attach acopy of the signed consent.

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

W. Rounding, Currency, andAttachmentsRounding off to whole-dollar amounts.You may show the money items on the

return and accompanying schedules aswhole-dollar amounts. To do so, drop anyamount less than 50 cents and increaseany amount from 50 cents through 99cents to the next higher dollar.

Currency and language requirements.Report all amounts in U.S. dollars (stateconversion rate used). Report all items intotal, including amounts from both U.S.and non-U.S. sources. All informationmust be in English.

Attachments. Use the schedules onForm 990-PF. If you need more spaceuse attachments that are the same sizeas the printed forms.

On each sheet:1. Write:

Form 990-PF, The tax year, and The corresponding schedule

number or letter,

2. Include the organization's nameand EIN,

3. Follow the format and linesequence of the printed form,

4. Include the information required bythe form, and

5. Show totals on the printed forms.

Specific Instructions

Completing the Heading

The following instructions are keyed toitems in the Form 990-PF heading.

Name and Address

If the organization received a Form990-PF Package from the IRS with apreaddressed label, please use it. If thename or address on the label is wrong,

make corrections on the label. Theaddress used must be that of the principaloffice of the foundation.

Include the suite, room, or other unitnumber after the street address. If thePost Office does not deliver mail to thestreet address and the organization hasa P.O. box, show the box number insteadof the street address.

AEmployer IdentificationNumber

The organization should have only oneemployer identification number. If it hasmore than one number, notify the InternalRevenue Service Center at theappropriate address shown underGeneral Instruction J. Explain whatnumbers the organization has, the nameand address to which each number wasassigned, and the address of theorganization's principal office. The IRS willthen advise which number to use.

D2Foreign Organizations

If the organization meets the 85% test ofRegulations section 53.4948-1(b), then:

1. Check the box in D2 on page 1 ofForm 990-PF,

2. Check the box at the top of Part XI,

3.Do not fill in Parts XI and XIII,

4.Do not fill in Part X unless it isclaiming status as a private operatingfoundation, and

5. Attach the computation of the 85%test to Form 990-PF.

ESection 507(b)(1)(A)Terminations

A private foundation that has terminatedits status as such under section

507(b)(1)(A), by distributing all its netassets to one or more public charitieswithout keeping any right, title, or interestin those assets, should check the box inE on page 1 of Form 990-PF. SeeGeneral Instructions T and Q.

F60-Month Termination UnderSection 507(b)(1)(B)

Check the box in F on page 1 of Form990-PF if the organization is terminatingits private foundation status under the60-month provisions of section507(b)(1)(B) during the period covered bythis return. To begin such a termination,

a private foundation must have givenadvance notice to its key district directorand provided the information outlined inRegulations section 1.507-2(b)(3). SeeGeneral Instruction U for informationregarding filing requirements during asection 507(b)(1)(B) termination.

See General Instruction V forinformation regarding payment of the taxon investment income (computed in PartVI) during a section 507(b)(1)(B)termination.



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HType of Organization

Check the box for Section 501(c)(3)exempt private foundation if thefoundation has a ruling or determinationletter from the IRS in effect thatrecognizes its exemption from Federalincome tax as an organization describedin section 501(c)(3) or if the organization'sexemption application is pending with theIRS.

Check the Section 4947(a)(1)

nonexempt charitable trust box if the trustis a nonexempt charitable trust treated asa private foundation. All others, check theOther taxable private foundation box.

IFair Market Value of All Assets

In block I on page 1 of Form 990-PF,enter the fair market value of all assetsthe foundation held at the end of the taxyear.

Tip! This amount should be the same asthe figure reported in Part II, column (c),line 16.

Part IAnalysis of Revenue

and Expenses

Column Instructions

The total of amounts in columns (b), (c),and (d) may not necessarily equal theamounts in column (a).

The amounts entered in column (a) andon line 5b must be analyzed in PartXVI-A.

Column (a)Revenue and Expensesper Books

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

Column (b)Net Investment Income

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

income.Exempt foreign foundations are subject

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

Definitions.

Gross investment incomemeans thetotal amount of investment income thatwas received by a private foundation fromall sources. However, it does not includeany income subject to the unrelatedbusiness income tax. It includes interest,dividends, rents, payments with respectto securities loans (as defined in section512(a)(5)), royalties received from assetsdevoted to charitable activities, incomefrom notional principal contracts (asdefined in Regulations section 1.863-7),and other substantially similar incomefrom ordinary and routine investmentsexcluded by section 512(b)(1). Therefore,interest received on a student loan isincludible in the gross investment incomeof a private foundation making the loan.

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

Investment income. Include in column

(b) all or part of any amount from column(a) that applies to investment income.However, do not include in column (b) anyinterest, dividends, rents or royalties (andrelated expenses) that were reported onForm 990-T.

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

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

Investment expenses. Include incolumn (b) all ordinary and necessaryexpenses paid or incurred to produce orcollect investment income from: interest,dividends, rents, amounts received frompayments on securities loans (as definedin section 512(a)(5)), royalties, incomefrom notional principal contracts, andother substantially similar income fromordinary and routine investmentsexcluded by section 512(b)(1); or for themanagement, conservation, ormaintenance of property held for theproduction of income that is taxable undersection 4940.

If any of the expenses listed in column(a) are paid or incurred for bothinvestment and charitable purposes, they

must be allocated on a reasonable basisbetween the investment activities and thecharitable activities so that only expensesfrom investment activities appear incolumn (b). Examples of allocationmethods are given in the instructions forPart IX-A.

Limitation. The deduction forexpenses paid or incurred in any tax yearfor producing gross investment incomeearned incident to a charitable functioncannot be more than the amount ofincome earned from the function that isincludible as gross investment income forthe year.

For example, if rental income isincidentally realized in 1997 from historicbuildings held open to the public,deductions for amounts paid or incurredin 1997 for the production of this incomemay not be more than the amount ofrental income includible as grossinvestment income in column (b) for 1997.

Expenses related to tax-exemptinterest. Do not include on lines 1323of column (b) any expenses paid orincurred that are allocable to tax-exempt

interest that is excluded from lines 3and 4.

Column (c)Adjusted Net Income

Tip! Nonoperating private foundationsshould see1 below underNonoperatingprivate foundationsto see if they shouldcomplete column (c).

Private operating foundations. Allorganizations that claim status as privateoperating foundations under section4942(j)(3) or (5) must complete all linesof column (c) that apply, according to thegeneral rules for income and expensesthat apply to this column, the specific line

instructions for lines 327c, the Specialrule and Examples 1 and 2 below.

General rules. In general, adjusted netincome is the amount of a privatefoundation's gross income that is morethan the expenses of earning the income.The modifications and exclusionsexplained below are applied to grossincome and expenses in figuring adjustednet income.

For income and expenses, include oneach line of column (c) only that portionof the amount from column (a) that isapplicable to the adjusted net incomecomputation.

Income. For column (c), includeincome from charitable functions,investment activities, short-term capitalgains from investments, amounts setaside, and unrelated trade or businessactivities. Do not include gifts, grants, orcontributions, or long-term capital gainsor losses.

Expenses. Deductible expensesinclude the part of a private foundation'soperating expenses that is paid orincurred to produce or collect grossincome reported on lines 311 of column



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(c). If only part of the property producesincome includible in column (c),deductions such as interest, taxes, andrent must be divided between thecharitable and noncharitable uses of theproperty. If the deductions for propertyused for a charitable, educational, or othersimilar purpose are more than the incomefrom the property, the excess will not beallowed as a deduction but may betreated as a qualifying distribution in PartI, column (d). See Examples 1 and 2below.Special rule. The expenses attributableto each specific charitable activity, limitedby the amount of income from the activity,must be reported in column (c) on lines1326. If the expenses of any charitableactivity exceed the income generated bythat activity, only the excess of theseexpenses over the income should bereported in column (d).

Examples.

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

column (d).2. A charitable activity generated

$5,000 of income and $6,000 ofexpenses. Report $5,000 of income and$5,000 of expenses in column (c) and theexcess expenses of $1,000 in column (d).

Nonoperating private foundations. Thefollowing rules apply to nonoperatingprivate foundations.

1. If a nonoperating private foundationhas no income from charitable activitiesthat would be reportable on line 10 or line11 of Part I, it does not have to make anyentries in column (c).

2. If a nonoperating private foundationhas income from charitable activities, itmust report that income only on lines 10and/or 11 in column (c). Thesefoundations do not need to report otherkinds of income and expenses (such asinvestment income and expenses) incolumn (c).

3. If a nonoperating private foundationhas income that it reports on lines 10and/or 11, report any expenses relating tothis income following the general rulesand the special rule. See Examples 1 and2 above.

Column (d)Disbursements for

Charitable PurposesExpenses entered in column (d) relate toactivities that constitute the charitablepurpose of the foundation.

For amounts entered in column (d):q Use the cash receipts anddisbursements method of accounting nomatter what accounting method is used inkeeping the books of the foundation.q Do not include any amount or part ofan amount that is included in column (b)or (c).

q Include on lines 1325 all expenses,including necessary and reasonableadministrative expenses, paid by thefoundation for religious, charitable,scientific, literary, educational, or otherpublic purposes, or for the prevention ofcruelty to children or animals.q Include a distribution of property at thefair market value on the date thedistribution was made.q Include only the part entered in column

(a) that is allocable to the charitablepurposes of the foundation.

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

Qualifying distributions. Generally,gifts and grants to organizationsdescribed in section 501(c)(3), that havebeen determined to be publicly supportedcharities (i.e., organizations that are not

private foundations as defined in section509(a)), are qualifying distributions,provided that the granting foundationdoes not control the public charity.

Tip! The total of the expenses anddisbursements on line 26 is also enteredon line 1a in Part XII to figure qualifyingdistributions.

Alternative to completing lines 1325.If you want to provide an analysis ofdisbursements that is more detailed thancolumn (d), you may attach a scheduleinstead of completing lines 1325. Theschedule must include all the specificitems of lines 1325, and the total fromthe schedule must be entered in column(d), line 26.

Line Instructions

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

To determine whether a person has

contributed $5,000 or more, total only giftsof $1,000 or more from each person.Separate and independent gifts need notbe totaled if less than $1,000. If acontribution is in the form of property,describe the property and include its fairmarket value.

The term person includes individuals,fiduciaries, partnerships, corporations,associations, trusts, and exemptorganizations.

An organization must keep records,required by the regulations under section170, for all its charitable contributions.

Change in accounting method toconform with SFAS 116. If the privatefoundation changed its accountingmethod for tax purposes to conform withSFAS 116 and part or all of its net assetadjustment (section 481(a) adjustment)represents contributions, then include inthe list of contributors that is attached tothe return any contributor of an amountthat is included in the adjustment andmeets the requirements above. Reportthe contributors that meet theserequirements in the year of the change.

Split-interest trusts. Contributionsfrom split-interest trusts should be enteredon both line 1 of column (a) and line 2 ofcolumn (b). They are a part of the amounton line 1. Report contributions only onlines 1 and 2.

Substantiation requirements.Generally, a donor making a charitablecontribution of $250 or more will not beallowed a Federal income tax deductionunless the donor obtains a written

acknowledgment from the doneeorganization by the earlier of the date onwhich the donor files a tax return for thetax year in which the contribution wasmade or the due date, includingextensions, for filing that return. However,see section 170(f)(8) and the relatedtemporary regulations for exceptions tothis rule.

The written acknowledgment thefoundation provides to the donor mustshow:

1. The amount of cash contributed,

2. A description of any propertycontributed,

3. Whether the foundation providedany goods or services to the donor, and

4. A description and a good-faithestimate of the value of any goods orservices the foundation gave in return forthe contribution, unless:

a. The goods and services haveinsubstantial value, or

b. A statement is included that thesegoods and services consist solely ofintangible religious benefits.

Generally, if a charitable organizationsolicits or receives a contribution of morethan $75 for which it gives the donor

something in return (a quid pro quocontribution), the organization must informthe donor, by written statement, that theamount of the contribution deductible forFederal income tax purposes is limited tothe amount by which the contributionexceeds the value of the goods orservices received by the donor. Thewritten statement must also provide thedonor with a good-faith estimate of thevalue of goods or services given in returnfor the contribution.



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Penalties. An organization that doesnot make the required disclosure for eachquid pro quo contribution will incur apenalty of $10 for each failure, not toexceed $5,000 for a particular fundraisingevent or mailing, unless it can showreasonable cause for not providing thedisclosure.

For more information. SeeRegulations section 1.170A-13 for moreinformation on charitable recordkeepingand substantiation requirements.

Line 2Certain contributions fromsplit-interest trusts described insection 4947(a)(2). The income portionof distributions from split-interest truststhat was earned on amounts placed intrust after May 26, 1969, is treated asinvestment income. Include only theincome portion of these distributions online 2. That same figure is a part ofline 1.

Line 3Interest on savings andtemporary cash investments.

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

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

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

Line 4Dividends and interest fromsecurities.

In column (a), enter the amount ofdividend and interest income fromsecurities (stocks and bonds) of the typereportable in Balance Sheets, Part II, line10. Include amounts received frompayments on securities loans, as definedin section 512(a)(5). Do not include anycapital gain dividends reportable on line6. Report income from program-relatedinvestments on line 11. For debtinstruments with an original issuediscount, report the original issue discountratably over the life of the bond on line 4.

See section 1272 for more information.In column (b), enter the amount of

dividend and interest income, andpayments on securities loans from column(a). Do not include interest on tax-exemptgovernment obligations.

In column (c), enter the amount ofdividends and interest income, andpayments on securities loans from column(a). Include interest on tax-exemptgovernment obligations.

Line 5aGross rents.

In column (a), enter the gross rentalincome for the year from investmentproperty reportable on line 11 of Part II.

In columns (b) and (c), enter the grossrental income from column (a).

Line 5bNet rental income or (loss).Figure the net rental income or (loss) forthe year and enter that amount on theentry line to the left of column (a).

Report rents from other sources on line

11, Other income. Enter any expensesattributable to the rental income reportedon line 5, such as interest anddepreciation, on lines 1323.

Line 6Net gain or (loss) from sale ofassets. Enter the net gain or (loss) perbooks from all asset sales not includedon line 10.

For assets sold and not included in PartIV, attach a schedule showing:q Date acquired,q Manner of acquisition,q Gross sales price,q Cost, other basis, or value at time of

acquisition (if donated) and which of thesemethods was used,q Date sold,q To whom sold,q Expense of sale and cost ofimprovements made subsequent toacquisition, andq Depreciation since acquisition (ifdepreciable property).

Line 7Capital gain net income. Enterthe capital gain net income from Part IV,line 2. See Part IV instructions.

Line 8Net short-term capital gain.

Tip! Only private operating foundationsreport their short-term capital gains on

line 8.Include only net short-term capital gain

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

Do not include on line 8 a net gain fromthe sale or exchange of depreciableproperty, or land used in a trade orbusiness (section 1231) and held for morethan 1 year. However, include a net lossfrom such property on line 23 as an Otherexpense.

In general, organizations may carry toline 8 the net short-term capital gain

reported in Part IV, line 3. However, if thefoundation had any short-term capital gainfrom sales of debt-financed property, addit to the amount reported on Part IV, line3, to figure the amount to include on line8. For definition of debt-financedproperty, see the instructions for Form990-T.

Line 9Income modifications. Includeon this line:q Amounts received or accrued asrepayments of amounts taken intoaccount as qualifying distributions (see

the instructions for Part XII for anexplanation of qualifying distributions) forany year.q Amounts received or accrued from thesale or other disposition of property to theextent that the acquisition of the propertywas considered a qualifying distributionfor any tax year.q Any amount set aside for a specificproject (see explanation in the instructionsfor Part XII) that was not necessary for the

purposes for which it was set aside.q Income received from an estate, butonly if the estate was consideredterminated for income tax purposes dueto a prolonged administration period.q Amounts treated in an earlier tax yearas qualifying distributions to:

1. A private foundation, which is nota private operating foundation, if theamounts were not redistributed by thegrantee organization by the close of its taxyear following the year in which it receivedthe funds, or

2. An organization controlled by thedistributing foundation or a disqualified

person if the amounts were notredistributed by the grantee organizationby the close of its tax year following theyear in which it received the funds.

Lines 10a, b, cGross profit fromsales of inventory. Enter the gross sales(less returns and allowances), cost ofgoods sold, and gross profit or (loss) fromthe sale of all inventory items, includingthose sold in the course of special eventsand activities. These inventory items arethe ones the organization either makes tosell to others or buys for resale.

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

Do not include any profit or (loss) fromthe sale of capital items such assecurities, land, buildings, or equipmenton line 10. Enter these amounts online 6.

Do not include any business expensessuch as salaries, taxes, rent, etc., on line10. Include them on lines 1323.

Attach a schedule showing thefollowing items: Gross sales, Cost ofgoods sold, Gross profit or (loss). Theseitems should be classified according totype of inventory sold (such as books,tapes, other educational or religiousmaterial, etc.). The totals from the

schedule should agree with the entries onlines 10a10c.

In column (c), enter the gross profit or(loss) from sales of inventory shown incolumn (a), line 10c.

Line 11Other income. Enter the totalof all the foundation's other income for theyear. Include all income not reported onlines 1 through 10c. Refer to theinstructions for Part XVI-A, line 11.Include imputed interest on certaindeferred payments figured under section483, and any investment income not



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

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

In column (c), include all other itemsincludible in adjusted net income notcovered elsewhere in column (c).

Line 12Total.In column (b),domestic organizations should enter thetotal of lines 211. Exempt foreignorganizations, enter the total of lines 3,4, 5, and 11 only.

Line 13Compensation of officers,directors, trustees, etc.

In column (a), enter the totalcompensation for the year of all officers,directors, and trustees. If none was paid,enter zero. Complete line 1 of Part VIII toshow the compensation of officers,directors, trustees, and foundationmanagers.

In columns (b), (c), and (d), enter theportion of the compensation included incolumn (a) that is applicable to thecolumn. For example, in column (c) enterthe portion of the compensation includedin column (a) that was paid or incurred toproduce or collect income included incolumn (c).

Line 14Other employee salaries andwages. Enter the salaries and wages of

all employees other than those includedon line 13.

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

employee welfare benefit plans requiredto file that form.)

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

Federal and state income taxes and theemployee's share of social security andMedicare taxes).

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

Attach a schedule for lines 16a, b, andc. Show the type of service and amountof expense for each. If the same personprovided more than one of these services,include an allocation of those expenses.Report any fines, penalties, or judgmentsimposed against the foundation as aresult of legal proceedings on line 23,Other expenses.

Line 18Taxes. Attach a schedule listingthe type and amount of each tax reportedon line 18. Do not enter any taxesincluded on line 15.

In column (a), enter the taxes paid (oraccrued) during the year. Include all typesof taxes recorded on the books, includingreal estate tax not reported on line 20; thetax on investment income; and anyincome tax.

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

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

In column (d), do not include anyexcise tax paid on investment income (asreported in Part VI of this return or theequivalent part of a return for prior years)unless the organization is claiming statusas a private operating foundation andcompletes Part XIV.

Line 19Depreciation and depletion.

In column (a), enter the expenserecorded in the books for the year.

For depreciation, attach a scheduleshowing:

1. A description of the property,

2. The date acquired,

3. The cost or other basis (excludeany land),

4. The depreciation allowed orallowable in prior years,

5. The method of computation,

6. The rate (%) or life (years), and

7. The depreciation this year.On a separate line on the schedule, showthe amount of depreciation included incost of goods sold and not included online 19.

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

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

Line 20Occupancy. Enter the amountpaid or incurred for the use of office spaceor other facilities. If the space is rentedor leased, enter the amount of rent. If thespace is owned, enter the amount ofmortgage interest, real estate taxes, and

similar expenses, but not depreciation(reportable on line 19). In either case,include the amount for utilities and relatedexpenses (e.g., heat, lights, water, power,telephone, sewer, trash removal, outside

janitorial services, and similar services).Do not include any salaries of theorganization's own employees that arereportable on line 14.

Line 21Travel, conferences, andmeetings. Enter the expenses forofficers, employees, or others during theyear for travel, attending conferences,meetings, etc. Include transportation(including fares, mileage allowance, or

automobile expenses), meals andlodging, and related costs whether paidon the basis of a per diem allowance oractual expenses incurred. Do not includeany compensation paid to those whoparticipate.

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

In column (c), enter the total amountof expenses paid or incurred by officers,

employees, or others for travel,conferences, meetings, etc., related toincome included in column (c).

Line 22Printing and publications.Enter the expenses for printing orpublishing and distributing anynewsletters, magazines, etc. Also includethe cost of subscriptions to, or purchasesof, magazines, newspapers, etc.

Line 23Other expenses. Enter allother expenses for the year. Include allexpenses not reported on lines 1322.Attach a schedule showing the type andamount of each expense.



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

Total amount of amortization.In column (c), in addition to theapplicable portion of expenses fromcolumn (a), include any net loss from thesale or exchange of land or depreciableproperty that was held for more than1 year and used in a trade or business.

A deduction for amortization is allowedbut only for assets used for the productionof income reported in column (c).

Line 25Contributions, gifts, grantspaid.

In column (a), enter the total of allcontributions, gifts, grants, and similaramounts paid (or accrued) for the year.

List each contribution, gift, grant, etc., inPart XV, or attach a schedule of the itemsincluded on line 25 and list:

1. Each class of activity,

2. A separate total for each activity,

3. Name and address of donee,

4. Relationship of donee if related by:

a. Blood,

b. Marriage,

c. Adoption, or

d. Employment (including children ofemployees) to any disqualified person(see General Instruction C for definitions),and

5. The organizational status of donee(e.g., public charityan organizationdescribed in section 509(a)(1), (2), or (3)).

You do not have to give the name ofany indigent person who received one ormore gifts or grants from the foundationunless that individual is a disqualifiedperson or one who received a total ofmore than $1,000 from the foundationduring the year.

Activities should be classified accordingto purpose and in greater detail thanmerely classifying them as charitable,educational, religious, or scientificactivities. For example, use identification

such as: payments for nursing service,for fellowships, or for assistance toindigent families.

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

When the fair market value of theproperty at the time of disbursement is themeasure of a contribution, the schedulemust also show:

1. A description of the contributedproperty,

2. The book value of the contributedproperty,

3. The method used to determine thebook value,

4. The method used to determine thefair market value, and

5. The date of the gift.

Tip! The difference between fair marketvalue and book value should be shown in

the books of account and as a net assetadjustment in Part III.

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

regulations under section 4942(g).q Do not reduce the amount of grantspaid in the current year by the amount ofgrants paid in a prior year that wasreturned or recovered in the current year.Report those repayments in column (c),line 9, and in Part XI, line 4a.q Do not include any payments ofset-asides (see instructions for Part XII,line 3) taken into account as qualifyingdistributions in the current year or anyprior year. All set-asides are included inqualifying distributions (Part XII, line 3) inthe year of the set-aside regardless ofwhen paid.

q Do not include current year's write-offsof prior years' program-relatedinvestments. All program-relatedinvestments are included in qualifyingd