US Internal Revenue Service: i990pf--1998

8/14/2019 US Internal Revenue Service: i990pf--1998

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1998 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 Item B in the heading has beenchanged. Your state registration numberis no longer entered here. You now entera telephone number that the public andgovernment regulators may use to obtaininformation about the foundation'sfinances and activities. See page 9 of theinstructions for more information.q The Tax and Trade Relief Extension Actof 1998 changed the public inspection

Contents Page rules. Once these rules take effect, theywill eliminate the newspaper noticerequirement and change the time periodand manner in which an annual return orexemption application is made availablefor public inspection. See GeneralInstruction Q for more information.

How To Get Forms and

PublicationsPersonal computer. Access the IRS'sInternet web site at www.irs.ustreas.govto do the following:q Download forms, instructions, andpublications.q See answers to frequently asked taxquestions.q Search publications on-line by topic orkeyword.q Send us comments or request help viae-mail.q Sign up to receive hot tax issues andnews by e-mail from the IRS DigitalDispatch.

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) at703-321-8020.

CD-ROM. Order Pub. 1796, Federal TaxProducts on CD-ROM, and get:q Current year forms, instructions, andpublications.q Prior year forms and instructions.q Popular forms that may be filled inelectronically, printed out for submission,and saved for recordkeeping.

Buy the CD-ROM on the Internet atwww.irs.ustreas.gov/cdorders from theNational Technical Information Service(NTIS) for $13 (plus a $5 handling fee)and save 35%, or call 1-877-CDFORMS(1-877-233-6767) toll-free to buy theCD-ROM for $20 (plus a $5 handling fee).By phone and in person. You can orderforms and publications 24 hours a day, 7days a week, by calling1-800-TAX-FORM (1-800-829-3676). Youcan also get most forms and publicationsat your local IRS office.

Part VQualification Under Section4940(e) for Reduced Tax on NetInvestment Income . . . . . . . . 16

General Instructions

A. Who Must File . . . . . . . . . . 2

B. Which Parts To Complete . . . . 2Part VIExcise Tax Based on

Investment Income . . . . . . . . 16C. Definitions . . . . . . . . . . . . 2

D. Other Forms You May Need To File 3 Part VII-AStatements RegardingActivities . . . . . . . . . . . . . 17E. Useful Publications . . . . . . . . 3

Part VII-BActivities for Which Form4720 May Be Required . . . . . . 18F. Use of Form 990-PF To SatisfyState Reporting Requirements . . 4

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

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

Part IX-ASummary of DirectCharitable Activities . . . . . . . . 19

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

I. Accounting Methods . . . . . . . 4Part IX-BSummary of

Program-Related Investments . . 20J. When and Where To File . . . . 4

K. Extension of Time To File . . . . 5Part XMinimum Investment Return 20

L. Amended Return . . . . . . . . . 5Part XIDistributable Amount . . . 21

M. Penalty for Failure To FileTimely, Completely, or Correctly . 5 Part XIIQualifying Distributions . . 22

Part XIIIUndistributed Income . . 22N. Penalties for Not Paying Taxon Time . . . . . . . . . . . . . 5 Part XIVPrivate Operating

Foundations . . . . . . . . . . . . 23

O. Figuring and Paying Estimated Tax 5 Part XVSupplementary Information 24P. Tax Payment Methods for DomesticPrivate Foundations . . . . . . . 5 Part XVI-AAnalysis of

Income-Producing Activities . . . . 24Q. Public Inspection Requirements . 6Part XVI-BRelationship of Activities

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

R. Disclosures Regarding CertainInformation and Services Furnished 7

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

Part XVIIInformation RegardingTransfers To and Transactions andRelationships With NoncharitableExempt Organizations . . . . . . 25T. Liquidation, Dissolution, Termination,

or Substantial Contraction . . . . 8Part XVIIIPublic Inspection . . . . 26

U. Filing Requirements DuringSection 507(b)(1)(B) Termination 8 Signature . . . . . . . . . . . . . . 26

Exclusion Codes . . . . . . . . . . 27V. Special Rules for Section

507(b)(1)(B) Terminations . . . . 8 Index . . . . . . . . . . . . . . . . 28W. Rounding, Currency, and

Attachments . . . . . . . . . . . 8

Specific Instructions

Completing the Heading . . . . . . 9

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

Part IIBalance Sheets . . . . . . 14

Part IIIAnalysis of Changes in NetAssets or Fund Balances . . . . . 16

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

Cat. No. 11290Y


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General InstructionsPurpose of form. Form 990-PF is used:q To figure the tax on net investmentincome, andq To report charitable distributions andactivities.

Also, Form 990-PF 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 FileForm 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 duedate for filing Form 990-PF.q Organizations that made an election

under 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 Form990-EZ, Short Form Return ofOrganization Exempt From Income Tax.With either of these forms, the trust must

also 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 and Form990-EZ instructions.)

B. Which Parts To CompleteThe parts of the form listed below do notapply to all filers. If an entire part or amajor portion of a part does not apply,enter N/A where appropriate.q Part I, column (c), applies only to

private 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 1of 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.

Sequencing Chart To Complete theForm

You may find the following chart helpful.It limits jumping from one part of the form

to another to compute an amount neededto complete an earlier part. If youcomplete the parts in the listed order, anyinformation you may need from anotherpart will already be entered.

C. Definitions

q A private foundation is a domesticor foreign organization exempt fromincome tax under section 501(a);described in section 501(c)(3); and isother than an organization described insections 509(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 which

are 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 (seeinstructions for Part VII-A, line 10, on

page 18);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 a

foundation 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 beused.

Step Part Step Part

1.................... IV 8 .................. XII2.................... I & II 9 .................. V & VI3.................... Heading 10.................. XI4.................... III 11.................. XIII5.................... VII-A 12.................. VII-B6.................... VIII 13.................. XIV XVIII7.................... IX-A X

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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.

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 thepenalty.Form 990-T, Exempt OrganizationBusiness Income Tax Return. Everyorganization exempt from income taxunder section 501(a) that has total grossincome of $1,000 or more from all tradesor businesses that are unrelated to theorganization's exempt purpose must filea return on Form 990-T.Form 990-W, Estimated Tax 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 section4947(a)(1) nonexempt charitable truststhat also file Form 990-PF. However, if thetrust does not have any taxable incomeunder the income tax provisions (subtitleA of the Code), it may use the filing ofForm 990-PF to satisfy its Form 1041

filing 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, and

nonemployee 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-PFannual 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 ofTime 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 penalty

and 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 any

penalty on this line.Form 4506-A, Request for PublicInspection or Copy of ExemptOrganization Tax Form.Form 4720, Return of Certain ExciseTaxes on Charities and Other PersonsUnder Chapters 41 and 42 of the InternalRevenue Code, is primarily used todetermine 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 a

deduction is claimed for the current taxyear.

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

Employee Benefit Plan (With 100 or moreparticipants).

Form 5500-C/R, Return/Report ofEmployee Benefit Plan (With fewer than100 participants).Form 8109, Federal Tax 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 originaldonee. (It does not matter who gave theproperty to the successor donee. It mayhave been the original donee or anothersuccessor donee.) For successor donees,the form must be filed only for anyproperty that was transferred by theoriginal donee after July 5, 1988.

Form 8275, taxpayers and tax returnpreparers should attach Form 8275,Disclosure Statement, to Form 990-PF todisclose items or positions (except thosecontrary to a 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 fordisregard of rules or substantialunderstatement of tax. Form 8275 is alsoused for disclosures relating to preparerpenalties for understatements due tounrealistic positions or for willful orreckless conduct.Form 8275-R, use Form 8275-R,

Regulation Disclosure Statement, todisclose any item on a tax return for whicha position has been taken that is contraryto Treasury regulations.Form 8300, Report of Cash PaymentsOver $10,000 Received in a Trade orBusiness. Used to report cash amounts inexcess of $10,000 that were received ina single transaction (or in two or morerelated transactions) in the course of atrade or business (as defined insection 162).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 PublicationsThe following publications may be helpfulin preparing Form 990-PF:Publication 525, Taxable andNontaxable Income.Publication 578, Tax Information forPrivate Foundations and FoundationManagers.

Form 990-PF Instructions Page 3


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Publication 583, Starting a Business andKeeping Records.Publication 598, Tax on UnrelatedBusiness Income of ExemptOrganizations.Publication 910, Guide to Free TaxServices.Publication 1391, Deductibility ofPayments Made to Charities ConductingFund-Raising Events.

Publications and forms are available at

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

F. Use of Form 990-PF ToSatisfy State ReportingRequirementsSome states and local government unitswill accept a copy of Form 990-PF andrequired attachments instead 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 the

following:Determine state filing requirements.Consult the appropriate officials of allstates and other jurisdictions in which theorganization does business to determinetheir specific filing requirements. Doingbusiness in a jurisdiction may include anyof the following: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 or

owning 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 notapply 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 to

Form 990-PF one or more of thefollowing:q Additional financial statements, suchas 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 additionalinformation 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 files

an amended Form 990-PF with the IRS,it must also include a copy of theinformation or amended return to anystate with which it filed a copy of Form990-PF.Method of accounting. Many statesrequire that all amounts be reportedbased on the accrual method ofaccounting.Time for filing may differ. The time forfiling Form 990-PF with the IRS may differfrom the time for filing state reports.

G. Furnishing Copies ofForm 990-PF to State

OfficialsThe 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 besent to the attorney general at the sametime the annual return is filed with theIRS.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 toany 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 foundation

managers submit a copy of Form 990-PFand Form 4720 (if applicable) to a stateattorney general to satisfy a statereporting requirement, they do not haveto 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 1998 return for the calendaryear 1998 or fiscal year beginning in1998. 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 annual

accounting period of the organization. Ifthe organization has no establishedaccounting period, the return should beon the calendar-year basis.

3. For initial or final returns or achange in accounting period, the 1998form may also be used as the return fora short period (less than 12 months)ending November 30, 1999, or earlier.

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

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

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

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.

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

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



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complete liquidation, dissolution, ortermination.

To file the return, mail or deliver it tothe:

Internal Revenue Service CenterOgden, UT 842010027

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

Requests for extension of time to fileare not automatically granted. If a requestis granted, generally, the extension oftime to file will not be for more than 90days. The total time granted to anydomestic organization for all extensionrequests will not exceed 6 months. SeeForm 2758 for more information.

L. Amended ReturnTo change the organization's return forany year, file an amended return,including attachments, with the correctinformation. The amended return mustprovide all the information required by the

form 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 calling1-800-TAX-FORM (1-800-829-3676).

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

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

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

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

To avoid filing an incomplete return or

having 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 enterNone 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 TimeThere is a penalty for not paying tax whendue (section 6651). The penalty generallyis 1/2 of 1% of the unpaid tax for eachmonth or part of a month the tax 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 section 6655penalty for failure to pay estimated taxapplies 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 discussion

of Form 2220 in General Instruction D.

O. Figuring and PayingEstimated TaxA 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 this

requirement. For calendar-yeartaxpayers, the first deposit of estimatedtaxes for a year generally should be madeby May 15 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 on

investment income and unrelatedbusiness income tax.

To figure the estimated tax, multiply theestimated net investment income by thetax rate (1% or 2%, whichever applies)and enter 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.Penalty. A foundation that does not paythe proper estimated tax when due maybe subject to the estimated tax penalty forthe period of the underpayment. (Seesections 6655(b) and (d) and the Form2220 instructions.)

Special Rules

Section 4947(a)(1) nonexemptcharitable trusts should 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 private foundations should useForm 1120-W for figuring any estimatedtax on income subject to tax under section11. Form 1120-W contains the estimatedtax rules for paying the tax on thatincome.

P. Tax Payment Methods forDomestic PrivateFoundationsWhether the foundation uses thedepository method of tax payment or thespecial option for small foundations, itmust pay the tax due (see Part VI) in fullby 15th day of the 5th month after the end

of 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 1998 if:



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q It was required to electronically deposittaxes in prior years,q It deposited more than $50,000 in socialsecurity, Medicare, or withheld incometaxes in 1997, orq It did not deposit social security,Medicare, or withheld income taxes in1997, but deposited more than $50,000 inother taxes under section 6302 (such asthe excise tax based on investmentincome) in either year.

For details, see Regulations section31.6302-1(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 will beimposed prior to July 1, 1999, 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, call

1-800-829-1040.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 thefoundation'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 UnitedStates Treasury, with the Form 990-PFor Form 2758, if it meets all of thefollowing requirements.

1. The foundation must not berequired to use EFTPS.

2. The tax based on investmentincome 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 1998 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

Requirements Placed on theOrganization

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

Caution: These rules will not apply toany return for which the due date is afterthe effective date of the new rules. SeeAnnual Returns (New Rules).

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 notice

must: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, andq Show the name of the privatefoundation's principal manager.

A private foundation may designate, inaddition to its principal office, any otherlocation where its return will be available.

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

inspection in the manner and at the timeprescribed instead of providing a place toinspect the return.

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 forpublic 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 not attacha copy of the notice to a timely filedreturn, it may be subject to the penaltydiscussed in Against the orgnanizationunder section M. Also, the responsibleperson may be subject to the penaltydiscussed in Against the responsibleperson under section M.

A penalty may be imposed on any

person who does not make the return(including all required attachments)available for public inspection accordingto the section 6104(d) provisionsdiscussed above under Annual Returns.If more than one person fails to comply,each person is jointly and severally liablefor the full amount of the penalty. Thepenalty amount is $20 for each day duringwhich a failure continues. The maximumpenalty that may be imposed on allpersons for any 1 return is $10,000.

Any person who willfully fails to complywith the section 6104(d) public inspectionrequirements is subject to an additionalpenalty of $1,000 (section 6685).

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

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

the United States. The requirement tofurnish copies of annual returns to stateofficials also does not apply to suchforeign foundations (see GeneralInstruction G).

Annual Returns (New Rules)

Caution: See theEffective dateto findout when these rules take effect.

A private foundation must make itsannual return available for publicinspection. Once these rules take effect,the newspaper notice requirement will beeliminated.



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How to make the annual returnavailable. Public inspection must bemade available in 2 ways:

1. Office visitation, and2. Providing copies.

Office visitation. A copy of the annualreturn must be available for immediateinspection at the private foundation'sprincipal office. Also, immediateinspection must be available at anyregularly maintained regional or districtoffice having 3 or more employees.

Providing copies. A copy of theannual return can be asked for in writingor in person at the private foundation'sprincipal office (or regional or district officehaving 3 or more employees). Theprivate foundation must provide a copyimmediately if the request is made inperson. If the request is made in writing,the private foundation must provide acopy within 30 days. No charge can bemade other than a reasonable fee forreproduction costs and actual postage.Limitations

On inspections. Public inspection ofannual returns only applies to annual

returns for a 3-year period. The periodbegins on the due date of the return(including extensions).

On providing copies. A privatefoundation does not have to providecopies if it follows certain rules to beissued by Treasury. These rules willrelieve the private foundation fromproviding copies if it:q Makes the requested documents widelyavailable, orq Applies and receives relief fromproviding copies because the request forcopies is part of a harassment campaignand complying with the request is not inthe public interest.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 charitieswithout keeping any right, title, or interestin those assets, does not have to followthe public inspection rules for the tax yearin which it terminates (Regulations section1.507-2(a)(6)).

The public inspection provisionsdiscussed above do not apply to anyforeign foundation that, from the date ofits creation, has received at least 85% ofits support (excluding gross investmentincome) from sources outside the United

States. The requirement to furnish copiesof annual returns to state officials alsodoes not apply to such foreignfoundations (see General Instruction G).Penalties. A penalty may be imposed onany person who does not make the return(including all required attachments)available for public inspection accordingto the section 6104(d) rules discussedabove. If more than one person fails tocomply, each person is jointly andseverally liable for the full amount of the

penalty. The penalty amount is $20 foreach day during which a failure continues.The maximum penalty that may beimposed on all persons for any 1 return is$10,000.

Any person who willfully fails to complywith the section 6104(d) public inspectionrequirements is subject to an additionalpenalty of $5,000 (section 6685).Effective date. These rules take effectthe 60th day after Treasury issues theregulations that are referred to in section

6104(d)(4).

Exemption Applications

Caution: TheNew rules(and not therules in the following paragraph) apply torequests made after the 60th day afterTreasury issues regulations referred to insection 6104(d)(4).

Any section 501(c) organization thatfiled an 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.Penalties. Any person who does notcomply with the requirement for publicinspection of applications will be chargeda penalty for each day that inspection wasnot permitted. 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 who willfully fails to complyis subject to an additional penalty of$1,000.New rules. The rules discussed underHow to make the annual returnavailable and On providing copies alsoapplies to the exempt status applicationmaterials. When reading these rules,substitute exempt status application

materials for annual returns.Exempt status application materials

means:1. The application for recognition of

exemption,2. Any papers sent in support of the

application, and3. Any letter or document issued by

the IRS that relates to application.The same penalties discussed above

also apply to these rules. However, theadditional penalty for willfully failing tocomply is $5,000 (not $1,000).

Requirements Placed on 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 return

should indicate the type (number) of thereturn and the year(s) involved. Therequest should be sent to the DistrictDirector (Attention: Disclosure Officer) ofthe district in which the requester wantsto inspect the return or application. If therequester wants the inspection at the 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 organization

return at an IRS office. There is a chargefor photocopying.

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

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

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

instructions, 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 on



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securities 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) and

4940, 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 SubstantialContractionIf there is a liquidation, dissolution,termination, or substantial contraction

(defined below) of the organization,attach:1. A statement to the return

explaining it,2. A certified copy of the liquidation

plan, 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 andfair 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 for

the termination year (see Exceptions 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 currentincome.

A significant disposition of assetsdoes not include any disposition for a taxyear if:

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

years) is less than 25% of the fair marketvalue of the net assets of the organizationat the beginning of the tax year in whichany of the series of related 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 takeninto account as a significant dispositionof assets. See Regulations section1.170A-9(g)(2).

U. Filing RequirementsDuring Section 507(b)(1)(B)TerminationAlthough an organization terminating itsprivate foundation status under section507(b)(1)(B) may be regarded as a publiccharity for certain purposes, it 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 the

60-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 furnishedestablishing a successful termination,then, for the final year of the terminationperiod, the organization should complywith the filing requirements for the typeof public charity it has become. See the

Instructions 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 areasonable period of time to file anyprivate foundation returns required (forthe last year of the termination period) butnot previously filed if it is later determined

that 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 its privatefoundation status under the 60-monthprovisions of section 507(b)(1)(B), specialrules apply. (See General Instructions Tand U.) Under these rules, theorganization may file Form 990-PFwithout paying the tax based oninvestment income if it filed a consentunder section 6501(c)(4) with itsnotification to the district director of itsintention to begin a section 507(b)(1)(B)termination. The consent provides that theperiod of limitation on the assessment ofexcise tax under section 4940 or 4948based on investment income for any taxyear in the 60-month period will not expire

until at least 1 year after the period forassessing a deficiency for the last taxyear in which the 60-month period wouldnormally expire. Any foundation notpaying the tax when it files Form 990-PFmust attach a copy 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 the

period for which it paid the tax.

W. Rounding, Currency, andAttachmentsRounding off to whole-dollar amounts.You may show the money items on thereturn 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 attachment, write:q Form 990-PF,q The tax year,q The corresponding schedule numberor letter,q The organization's name and EIN, and



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q The information requested using theformat and line sequence of the printedform.Also, show totals on the printed forms.

Specific Instructions

Completing the HeadingThe 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 apeel-off label, please use it. If the nameor address on the label is wrong, makecorrections on the label. The addressused must be that of the principal officeof 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 IRSwill then advise which number to use.

BTelephone Number

Enter a foundation telephone number(including the area code) that the publicand government regulators may use toobtain information about the foundation'sfinances and activities. This informationshould be available at this telephonenumber during normal business hours. Ifthe foundation does not have a telephone,enter a telephone number of a foundationofficial who can provide this informationduring normal business hours.

D2Foreign Organizations

If the foreign organization meets the 85%test of Regulations 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 is

claiming 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 section507(b)(1)(A), by distributing all its netassets to one or more public charitieswithout keeping any right, title, or interestin those assets, should check the box inE on page 1 of Form 990-PF. SeeGeneral Instructions T and Q.

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 for

information regarding payment of the taxbased on investment income (computedin Part VI) during a section 507(b)(1)(B)termination.

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 ExpensesColumn 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 net investment income.

Exempt foreign foundations are subjectto an excise tax on 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 income

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

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

interest, 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, ifthe debt/basis percentage of a



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debt-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 necessary

expenses 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 1998 from historicbuildings held open to the public,deductions for amounts paid or incurredin 1998 for the production of this incomemay not be more than the amount ofrental income includible as grossinvestment income in column (b) for 1998.

Expenses related to tax-exemptinterest. Do not include on lines 1323of column (b) any expenses paid orincurred that are allocable to tax-exemptinterest that is excluded from lines 3and 4.

Column (c)Adjusted Net Income

Tip! Nonoperating private foundationsshould see item1 underNonoperatingprivate foundationson page 10 to findout if they need to complete 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 lineinstructions 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 income

computation.Income. For column (c), include

income 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(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 incolumn (d).

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

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 other

kinds 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 forCharitable Purposes

Expenses 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, giftsand grants to organizations described insection 501(c)(3), that have beendetermined to be publicly supportedcharities (i.e., organizations that are notprivate foundations as defined in section509(a)), are qualifying distributions, onlyif the granting foundation does not controlthe 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,



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or other property valued at $5,000 ormore was received directly or indirectlyfrom any one person during the year,attach a schedule showing the name andaddress of the person and the amountand date of each gift made during theyear.

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

contribution is in the form of property,describe the property and include its fairmarket value.

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 asset

adjustment (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 charitable

contribution of $250 or more will not beallowed a Federal income tax deductionunless the donor obtains a writtenacknowledgment from the doneeorganization by the earlier of the date onwhich the donor files a tax return for thetax year in which the contribution wasmade or the due date, includingextensions, for filing that return. However,see section 170(f)(8) and Regulationssection 1.170A-13 for exceptions to thisrule.

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 donorsomething 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 the

donor with a good-faith estimate of thevalue of goods or services given in returnfor the contribution.

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 other

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

In column (c), enter the amount ofdividends and interest income, 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 line11, 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) per

books 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 ofacquisition (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 online 8.

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

Do not include on line 8 a net gain from

the 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 gainreported 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 line



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8. 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 (seethe instructions for Part XII for anexplanation of qualifying distributions) forany year.q Amounts received or accrued from thesale or other disposition of property to theextent that the acquisition of the propertywas considered a qualifying distributionfor any tax year.q Any amount set aside for a specificproject (see explanation in the instructionsfor Part XII) that was not necessary for thepurposes for which it was set aside.q Income received from an estate, butonly if the estate was consideredterminated for income tax purposes dueto a prolonged administration period.q Amounts treated in an earlier tax yearas qualifying distributions to:

1. A nonoperating private foundation,

if the amounts were not redistributed bythe grantee organization by the close ofits tax year following the year in which itreceived the funds, or

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

Lines 10a, b, 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 of

goods sold, Gross profit or (loss). Theseitems should be classified according totype of inventory sold (such as books,tapes, other educational or religiousmaterial, etc.). The totals from theschedule should agree with the 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 on

lines 1 through 10c. See the instructionsfor Part XVI-A, line 11. Include imputedinterest on certain deferred paymentsfigured under section 483, and anyinvestment income not reportable on lines3 through 5, including income fromprogram-related investments (defined inthe instructions for Part IX-B). However,do not include unrealized gains andlosses on investments carried at marketvalue. Report those as fund balance ornet asset adjustments in Part III. Attach a

schedule showing the description andamount of the income.In column (b), enter the amount of

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

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

produce or collect income included incolumn (c).Line 14Other employee salaries andwages. Enter the salaries and wages ofall 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 the

Form 5500 series appropriate for theorganization's plan. (See the Instructionsfor Form 5500 for information aboutemployee welfare benefit plans requiredto file that form.)

Also include the amount of Federal,state, and local payroll taxes for the year,but only those that are imposed on theorganization as an employer. Thisincludes the employer's share of socialsecurity and Medicare taxes, FUTA tax,state unemployment compensation tax,and other state and local payroll taxes.Do not include taxes withheld from

employees' salaries and paid over to thevarious governmental units (such asFederal and state income taxes and theemployee's share of social security andMedicare taxes).Lines 16a, b, and 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 and

individuals 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 realized

on 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 (exclude

any land),4. The depreciation allowed or

allowable in prior years,5. The method of computation,6. The rate (%) or life (years), and



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7. The depreciation this year.On a separate line on the schedule,

show the amount of depreciation includedin cost 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.A deduction for depletion is allowed butmust be figured only using the cost

depletion method.The basis used in figuring depreciation

and 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, orautomobile expenses), meals and

lodging, 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

Documents

US Internal Revenue Service: i990pf--1998