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Department of the Treasury

Internal Revenue Service

Instructions for Form 5227


Split-Interest Trust Information Return
Section references are to the Inter nal Revenue Code unless otherwise noted.

Paperwork Reduction Act Notice You must print the forms to use them; Definitions
the forms are not designed to be filled
We ask for the information on this form A split-interest trust is a trust that:
out on-screen.
to carry out the Internal Revenue laws of ● Is not exempt from tax under section
the United States. You are required to Tax forms, instructions, and
501(a);
give us the information. We need it to publications are also available on
CD-ROM, including prior-year forms ● Has some unexpired interests that are
ensure that you are complying with devoted to purposes other than
these laws and to allow us to figure and starting with the 1991 tax year. For
ordering information and software religious, charitable, or similar purposes
collect the right amount of tax. described in section 170(c)(2)(B); and
requirements, contact the Government
The time needed to complete and file ● Has amounts transferred in trust after
Printing Office’s Superintendent of
this form will vary depending on May 26, 1969, for which a deduction
Documents (202-512-1800) or Federal
individual circumstances. The estimated was allowed under one of the Code
Bulletin Board (202-512-1387).
average time is:
sections listed in section 4947(a)(2).
Recordkeeping 47 hr., 7 min.
General Instructions A split-interest trust is subject to many
of the same requirements and
Learning about the law
or the form 3 hr., 30 min. Purpose of Form restrictions that are imposed on private
foundations.
Preparing the form 10 hr. Use Form 5227 to report the financial
activities of a split-interest trust A recipient is a beneficiary who
Copying, assembling, receives the possession or beneficial
described in section 4947(a)(2); and to
and sending the form enjoyment of the unitrust or annuity
determine whether the trust is treated as
to the IRS 1 hr., 37 min. amount.
a private foundation and is subject to
If you have comments concerning the the excise taxes under Chapter 42. A foundation manager is an officer,
accuracy of these time estimates or A charitable remainder annuity trust or director, or trustee (or an individual who
suggestions for making this form unitrust is exempt from Federal income has powers or responsibilities similar to
simpler, we would be happy to hear tax for any tax year if it: those of officers, directors, or trustees).
from you. You can write to the Tax In the case of any act or failure to act,
● Was created after July 31, 1969, and
Forms Committee, Western Area the term “foundation manager” may also
Distribution Center, Rancho Cordova, ● Has no unrelated business taxable include an employee of the trust who
CA 95743-0001. DO NOT send the tax income for the tax year. has the authority to act.
form to this address. Instead, see Even though the trust is exempt from A disqualified person is:
Where To File on page 2. Federal income tax, it must file Form
1. A substantial contributor;
5227 each year.
2. A foundation manager;
Item To Note Who Must File 3. A person who owns more than 20%
You can use your computer to get tax All charitable remainder trusts described of a corporation, partnership, trust, or
forms and publications. If you subscribe in section 664, pooled income funds unincorporated enterprise, which is itself
to an on-line service, ask if IRS described in section 642(c)(5), and a substantial contributor;
information is available and, if so, how charitable lead trusts (see Exception 4. A member of the family of an
to access it. You can also get below) must file Form 5227. individual in the first three categories; or
information through IRIS, the Internal Exception. Generally, a split-interest 5. A corporation, partnership, trust, or
Revenue Information Service, on trust created before May 27, 1969, is estate in which persons described in 1,
FedWorld, a government bulletin board. not required to file Form 5227. However, 2, 3, or 4 above own a total beneficial
Tax forms, instructions, publications, if any amounts were transferred to the interest of more than 35%.
and other IRS information are available trust after May 26, 1969, for which a
through IRIS. 6. For purposes of section 4943
deduction was allowed under any of the (excess business holdings), a
IRIS is accessible directly by calling sections listed under section 4947(a)(2), disqualified person also includes:
703-321-8020. On the Internet, you can Form 5227 must be filed for the year of
telnet to fedworld.gov or, for file transfer a. A private foundation which is
the transfer and all subsequent years effectively controlled (directly or
protocol services, connect to regardless of whether additional
ftp.fedworld.gov. If you are using the indirectly) by the same persons who
transfers are made in subsequent years. control the trust in question, or
WorldWide Web, connect to Charitable lead trusts and charitable
http://www.ustreas.gov. b. A private foundation substantially all
remainder trusts whose charitable of the contributions to which were made
FedWorld’s help desk offers technical interests involve only war veterans’
assistance on accessing IRIS (not tax (directly or indirectly) by the same
posts or cemeteries described in person or persons described in 1, 2, or 3
help) during regular business hours at sections 170(c)(3) and 170(c)(5),
703-487-4608. The IRIS menus offer above, or members of their families,
respectively, are not required to within the meaning of section 4946(d),
information on available file formats and complete Parts VI and VII of Form 5227.
software needed to read and print files. who made (directly or indirectly)

Cat. No. 13228E


substantially all of the contributions to Unless otherwise allowed by law, the 89-21, 1989-1 C.B. 842, and Rev. Proc.
the trust in question. trust may not change the accounting 90-32, 1990-1 C.B. 546.
7. For purposes of section 4941 method used to report income (for
(self-dealing), a disqualified person also income as a whole or for any material Rounding Off to Whole Dollars
includes certain government officials. item) without first getting consent on You may show the money items on the
(See section 4946(c) and the related Form 3115, Application for Change in return and accompanying schedules as
regulations.) Accounting Method. See Pub. 538, whole-dollar amounts. To do so, drop
Accounting Periods and Methods, for amounts less than 50 cents and
Additional Information more information. increase any amounts from 50 to 99
For additional information on private cents to the next dollar.
When To File
foundations and foundation managers,
see Pub. 578, Tax Information for File Form 5227 for calendar year 1995 Attachments
Private Foundations and Foundation on or before April 15, 1996. If you need more space, attach separate
Managers, available free at most IRS sheets showing the same information in
offices. To order publications and forms,
Extension of Time To File the same order as on the printed form.
call 1-800-TAX-FORM (1-800-829-3676). Use Form 2758, Application for Show the totals on the printed form.
Extension of Time To File Certain Excise, Enter the trust’s name and employer
Other Forms You May Have To Income, Information, and Other Returns, identification number on each sheet.
File to request an extension of time to file. Also, use sheets that are the same size
You may also be required to file one or as the forms and indicate clearly the line
Where To File of the printed form to which the
more of the following forms:
● Form 56, Notice Concerning Fiduciary
If the principal Use the following information relates.
office of the Internal Revenue
Relationship. trust Service Center
● Form 1041, U.S. Income Tax Return is located in address
for Estates and Trusts. Ä Ä Specific Instructions
● Form 1041-A, U.S. Information Alabama, Arkansas, Florida,
Identification Area
Georgia, Louisiana,
Return—Trust Accumulation of Mississippi, North Carolina,
Atlanta, GA 39901
Charitable Amounts. If you received a Form 5227 from the
South Carolina, Tennessee
IRS with a pre-addressed label, attach
● Form 1041-ES, Estimated Income Tax Arizona, Colorado, Kansas, the label to the name and address area
for Estates and Trusts. New Mexico, Oklahoma, Austin, TX 73301 of the return. If the name or address on
● Form 4720, Return of Certain Excise Texas, Utah, Wyoming
the label is wrong, draw a line through
Taxes on Charities and Other Persons Indiana, Kentucky, the incorrect portion and enter the
Under Chapters 41 and 42 of the Michigan, Ohio, Cincinnati, OH 45999 correct information.
Internal Revenue Code. West Virginia
If you did not receive a pre-addressed
● Form 8275, Disclosure Statement—to Alaska, California, Hawaii, label, complete the information called for
disclose items or positions (except those Idaho, Nevada, Oregon, Fresno, CA 93888 at the top of the form as it appears on
contrary to a regulation—see Form Washington
Form SS-4, Application for Employer
8275-R below) that are not otherwise Connecticut, Maine, Identification Number.
adequately disclosed on the tax return. Massachusetts, New
Holtsville, NY 00501
The disclosure is made to avoid parts of Hampshire, New York, Address
the accuracy-related penalty for Rhode Island, Vermont
Include the suite, room, or other unit
disregard of rules or substantial Illinois, Iowa, Minnesota, number after the street address.
understatement of tax. Form 8275 is Missouri, Montana,
Kansas City, MO 64999
also used for disclosures relating to Nebraska, North Dakota, If the postal service does not deliver
preparer penalties for understatements South Dakota, Wisconsin mail to the street address and the
due to unrealistic positions or for willful Delaware, District of trustee has a P.O. box, show the box
or reckless conduct. Columbia, Maryland, number instead of the street address.
New Jersey, Pennsylvania,
● Form 8275-R, Regulation Disclosure Virginia, any U.S.
Philadelphia, PA 19255
A. Employer Identification Number
Statement—to disclose any item on a possession, or foreign (EIN)
tax return for which a position has been country
taken that is contrary to Treasury Every trust must have an employer
regulations. identification number (EIN). To apply for
Trust Instrument one, use Form SS-4. You may get this
● Form 8822, Change of Address.
When you file the first return for a form from the IRS or the Social Security
Period To Be Covered by Return charitable remainder annuity trust or Administration. Form SS-4 contains
unitrust, include: instructions on how to obtain a number
File Form 5227 for each calendar year. immediately by telephone. If applying by
1. A copy of the trust instrument; and
This revision of the form is for the 1995 mail, send in the Form SS-4 at least 4 to
calendar year. 2. A written declaration under
penalties of perjury that it is a true and 5 weeks before you need the number.
Accounting Methods complete copy. B. Type of Entity
Trust income must be computed using For sample forms of trusts that meet
the requirements of a charitable Charitable lead trust.—This is a trust
the method of accounting regularly used that pays a fixed annuity or unitrust
in keeping the trust’s books and remainder unitrust, see Rev. Proc.
89-20, 1989-1 C.B. 841, Rev. Proc. amount to a charitable organization for a
records. Generally, permissible methods fixed number of years. Upon termination
include the cash method, the accrual 90-30, 1990-1 C.B. 534, and Rev. Proc.
90-31, 1990-1 C.B. 539. of the payments, the remainder interest
method, or any other method authorized is transferred to a noncharitable
by the Internal Revenue Code. The For sample forms of a trust that meet beneficiary.
method used must clearly reflect the requirements of a charitable
income. remainder annuity trust, see Rev. Proc. Charitable remainder annuity trust.—
This is a trust under section 664(d)(1)
that pays a fixed dollar amount, at least
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annually, to one or more beneficiaries, at trust). Use Form 1041 to report all the Line 5—Farm Income or (Loss)
least one of which is not a charitable trust’s income (not just the unrelated If the trust operated a farm, use
organization, for life, or for a specified business income) and its deductions Schedule F (Form 1040), Profit or Loss
number of years (not to exceed 20). (including the deduction for distributions From Farming, to report farm income
Upon termination of the payments, the to beneficiaries) and to compute any tax and expenses. Enter the net profit or
remainder interest is transferred to a due. Use the regular trust rules (loss) from Schedule F on line 5.
charitable organization described in contained in the Instructions for Form
section 170(c). 1041. You must also complete Schedule Line 6—Ordinary Gain or (Loss)
Charitable remainder unitrust.—This is I of Form 1041 to determine whether the
Enter from Form 4797, Sales of
a trust under section 664(d)(2) similar to trust is subject to any alternative
Business Property, the gain or loss from
a charitable remainder annuity trust, minimum tax. See the instructions for
the sale or exchange of property other
except that it pays, at least annually, a Part III to determine the amount of the
than capital assets and also from
fixed percentage (not less than 5%) of current distribution to report to each
involuntary conversions (other than
the net fair market value of the trust’s beneficiary on Form 1041, Schedule K-1.
casualty or theft). For more information,
assets. see the instructions for Form 4797.
Part I—Ordinary Income
Pooled income fund.—This is a trust
under section 642(c)(5) created and Line 1—Interest Income Deductions
maintained by a charitable organization Report all taxable interest income that Deductions are to be allocated in the
described in section 170(b)(1)(A)(i)-(iv). was received by the trust. Examples of following manner:
Donors to the fund receive a lifetime taxable interest include interest from: 1. Allowable deductions directly
income interest and the charitable
organization receives the remainder ● Accounts (including certificates of attributable to one or more classes of
deposit and money market accounts) income items (i.e., interest, dividends, or
interest.
with banks, credit unions, and thrifts. rents) or corpus are allocated to such
E. Initial Return, Final Return, ● Notes, loans, and mortgages. income classes or corpus.
Amended Return; or Change of ● U.S. Treasury bills, notes, and bonds. 2. Allowable deductions not allocated
Name or Address under 1 above are allocated on the basis
● U.S. savings bonds. of gross income after directly
Initial return.—Check this box if this is ● Original issue discount. attributable deductions, to the extent of
the initial return for the split-interest trust ● Income received as a regular interest such income.
and enter the date that the entity was holder of a Real Estate Mortgage 3. Deductions not allocated under
created. Investment Conduit (REMIC). either 1 or 2 above may be allocated in
Final return.—Check this box if this is a For taxable bonds acquired after any manner.
final return because the trust has December 31, 1987, amortizable bond No deduction is ever allowed for:
terminated. Also, check the “Final K-1” premium is treated as an offset to the
box at the top of the Schedule K-1 ● The personal exemption under section
interest income instead of as a separate 642(b).
(Form 1041). interest deduction. See Pub. 550,
Amended return.—If you are filing an Investment Income and Expenses. ● Charitable contributions under section
amended 1995 Form 5227, check the 642(c).
“Amended return” box. Complete the Line 2—Dividends ● Net operating losses under section
entire return and correct the appropriate Report all taxable dividends received by 642(d).
line(s) with the new information. On an the trust. ● Income distribution deductions under
attachment, explain the reason for the section 661.
change(s) and identify the line(s) and Line 3—Business Income or (Loss)
● Capital loss carryforwards under
amount(s) being changed. If the trust operated a business, report section 1212.
If the amended return results in a the income and expenses on Schedule ● Federal income taxes.
change to income, or a change in C, Profit or Loss From Business (or
distribution of any income or other Schedule C-EZ, Net Profit From ● Federal excise taxes under
information provided to a recipient, an Business) of Form 1040. See the Chapter 42.
amended Schedule K-1 (Form 1041) instructions for F. Unrelated Business Any expense that is not deductible in
must be filed with the amended Form Taxable Income above. Enter the net determining taxable income and not
5227 and also given to each recipient. profit or (loss) from Schedule C or C-EZ allocated to nontaxable income must be
Check the “Amended K-1” box at the on line 3. allocated to corpus. For a discussion on
top of the Schedule K-1 (Form 1041). the allocation of deductions to
Line 4—Rents, Royalties, tax-exempt income, see the Instructions
Change of name or address.—If there Partnerships, Other Estates and
has been a change in the trustee’s name for Form 1041.
Trusts, etc. All Federal income taxes for which the
or address, check the appropriate box.
Use Schedule E (Form 1040), split-interest trust is liable because it has
F. Unrelated Business Taxable Supplemental Income and Loss, to unrelated business taxable income, and
Income (section 664 trusts only) report the trust’s income or (losses) from all taxes imposed by Chapter 42 of the
rents, royalties, partnerships, S Internal Revenue Code (relating to
If the charitable remainder trust has any
corporations, other estates and trusts, private foundations), are allocated to
unrelated business taxable income
and REMICs. Enter the net profit or corpus.
(within the meaning of section 512 and
(loss) from Schedule E on line 4. See the
related regulations) for 1995, all of the
instructions for Schedule E (Form 1040) Part II—Accumulation
trust’s income is subject to the same
for reporting requirements. If the trust
taxes (including estimated tax payments)
received a Schedule K-1 from a Schedule
that are imposed on complex trusts
partnership, S corporation, or other Report the income (both current and
under Subchapter J of the Internal
flow-through entity, use the cumulative undistributed income) of the
Revenue Code. The trust cannot be
corresponding lines on Form 5227 to trust for purposes of determining the
taxed as a grantor trust.
report the interest, dividends, capital character of distributions in three
If you answer “Yes,” in addition to gains, etc., from the flow-through entity. categories:
Form 5227, file Form 1041 (if a domestic
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1. Ordinary income, Amounts distributed by a charitable related allowance for doubtful accounts
2. Capital gains and losses, and remainder annuity trust or a charitable or depreciable assets and accumulated
remainder unitrust have the following depreciation. Enter the net amounts in
3. Nontaxable income.
characteristics in the hands of the column (b).
A loss in any one of the three recipients:
categories may not be used to reduce a
● First, as ordinary income to the extent
Column (c)
gain in any other category. For example,
of current and undistributed ordinary In computing the net fair market value
a capital loss may not be used to
income for prior years of the trust. (FMV) of the unitrust’s assets, take into
reduce ordinary income. However, a loss
Ordinary income is computed without account all assets and liabilities without
in any one category may be used to
regard to any net operating loss regard to whether particular items are
reduce undistributed gain for earlier
deductions under section 172. taken into account in determining the
years within that same category, and
● Second, as capital gains to the extent income of the trust. The net FMV of the
any excess may be carried forward to
of the trust’s undistributed capital gains. trust’s assets may be determined on any
reduce gain in future years within that
Undistributed capital gains of the trust one date during the taxable year of the
same category.
are determined on a cumulative net trust, or by taking the average of
basis under the following rules without valuations made on more than one date
Part III—Current regard to any capital loss carrybacks during the tax year of the trust, so long
Distributions Schedule and carryovers: as the same valuation date or dates and
valuation methods are used each year.
You must give each recipient listed in 1. If, in any tax year of the trust, the
See Regulations section 1.664-3.
Part III a Schedule K-1 (Form 1041) that trust has both undistributed short-term
reflects that recipient’s current capital gain and undistributed long-term Line 25—Cash—Non-Interest-Bearing
distribution. Also, attach a copy of each capital gain, the short-term capital gain
is deemed distributed before any Enter the amount of cash on deposit in
Schedule K-1 to Form 5227. See the
long-term capital gain. checking accounts, deposits in transit,
Specific Instructions for Schedule K-1
change funds, petty cash funds, or any
(Form 1041) for more information. 2. If the trust has capital losses in other non-interest-bearing account. Do
excess of capital gains for any tax year: not include advances to employees or
Beneficiary’s Identifying Number
a. The excess of the net short-term officers or refundable deposits paid to
As a payer of income, the trust is capital loss over the net long-term suppliers or others.
required under section 6109 to request capital gain for that year is a short-term
and provide a proper identifying number capital loss in the next tax year. Line 26—Savings and Temporary Cash
for each recipient of income. Enter the Investments
b. The excess of the net long-term
recipient’s number on the respective Enter the total of cash in savings or
capital loss over the net short-term
Schedule K-1. Individuals and business other interest-bearing accounts and
capital gain for that year is a long-term
recipients are responsible for giving you temporary cash investments, such as
capital loss in the next tax year.
their taxpayer identification numbers money market funds, commercial paper,
upon request. You may use Form W-9, 3. If the trust has capital gains in
excess of capital losses for any tax year: certificates of deposit, and U.S. Treasury
Request for Taxpayer Identification bills or other governmental obligations
Number and Certification, to request the a. The excess of the net short-term
that mature in less than 1 year.
beneficiary’s identifying number. capital gain over the net long-term
Penalty.—Under section 6723, the payer capital loss for that year is, to the extent Line 27—Accounts Receivable
is charged a $50 penalty for each failure not deemed distributed, a short-term
capital gain in the next tax year. Enter the total accounts receivable
to provide a required taxpayer (reduced by the corresponding
identification number, unless reasonable b. The excess of the net long-term allowance for doubtful accounts) that
cause is established for not providing it. capital gain over the net short-term arose from the sale of goods and/or the
Explain any reasonable cause in a capital loss for that year is, to the extent performance of services. Claims against
signed affidavit and attach it to this not deemed distributed, a long-term vendors or refundable deposits with
return. capital gain in the next tax year. suppliers or others may be reported here
● Third, as nontaxable income to the if not significant in amount. (Otherwise,
Substitute Forms extent of the trust’s nontaxable income report them on line 36, Other Assets.)
You do not need prior IRS approval for for the current year and undistributed Any receivables due from officers,
substitute Schedules K-1 that follow the nontaxable income for prior years. directors, trustees, foundation managers,
specifications in Pub. 1167, Substitute ● Fourth, as a distribution of trust or other disqualified persons must be
Printed, Computer-Prepared, and corpus. For this purpose, “trust corpus” reported on line 28. Receivables
Computer-Generated Tax Forms and means the net fair market value of the (including loans and advances) due from
Schedules, or that are an exact copy of trust assets less the total undistributed other employees should be reported on
an IRS Schedule K-1. Other substitute income (but not loss) in each of the line 36.
Schedules K-1 require approval. You above categories.
may apply for approval of a substitute Line 28—Receivables Due From
The accumulation distribution rules do Officers, Directors, Trustees, and
form by writing to: Internal Revenue not apply to charitable remainder trusts.
Service; Attention: Substitute Forms Other Disqualified Persons
See Regulations section 1.664-1(d).
Program Coordinator, T:FP:S, 1111 Enter here (and in an attached schedule
Constitution Avenue, NW, Washington, described below) all receivables due
DC 20224. Part IV—Balance Sheet from officers, directors, trustees, and
Complete the balance sheet using the other disqualified persons and all
Inclusion of Amounts in accounting method the trust uses in secured and unsecured loans (including
Recipients’ Income keeping its books and records. All filers advances) to such persons.
If there are two or more recipients, each must complete columns (a) and (b). All
unitrusts must also complete column (c). Attached Schedule.—
will be treated as receiving his or her pro
rata share of the various classes of Enter the end-of-year book value 1. In the required schedule, report
income or corpus. where space is provided to the left of each loan separately, even if more than
column (a) to report receivables and the one loan was made to the same person,

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or the same terms apply to all loans officers, directors, trustees, or other land, buildings, and equipment owned
made. disqualified persons on line 28, and by the trust and not held for investment.
Salary advances and other advances loans to other employees on line 36. This includes any equipment owned and
for personal use and benefit, and used by the trust in conducting its
Line 30—Inventories for Sale or Use charitable activities. Attach a schedule
receivables subject to special terms or
arising from transactions not functionally Enter the amount of materials, goods, listing these fixed assets held at the end
related to the trust’s charitable purposes and supplies purchased or manufactured of the year and showing for each item or
must be reported as separate loans for by the trust and held for sale or use in category listed, the cost or other basis,
each officer, director, etc. some future period. accumulated depreciation, and book
value.
2. Receivables that are subject to the Line 31—Prepaid Expenses and
same terms and conditions (including Deferred Charges Line 36—Other Assets
credit limits and rate of interest) as
receivables due from the general public Enter the amount of short-term and List and show the book value of each
and that arose in connection with an long-term prepayments of future category of assets not reportable on
activity functionally related to the trust’s expenses attributable to one or more lines 25 through 35. Attach a separate
charitable purposes may be reported as future accounting periods. Examples schedule if more space is needed.
a single total for all the officers, include prepayments of rent, insurance, One type of asset reportable on line
directors, etc. Travel advances made in and pension costs, and expenses 36 is program-related investments made
connection with official business of the incurred in connection with a solicitation primarily to accomplish a charitable
trust may also be reported as a single campaign to be conducted in a future purpose of the trust rather than to
total. accounting period. produce income.
For each outstanding loan or other Lines 32a, b, and c—Investments— Liabilities
receivable that must be reported Government Obligations, Corporate
separately, the attached schedule Stocks, and Bonds Line 38—Accounts Payable and
should show the following information. Accrued Expenses
Enter the book value (which may be
Use columnar format: Enter the total accounts payable to
market value) of these investments.
● Borrower’s name and title. Attach a schedule that lists each suppliers and others, and accrued
● Original amount. security held at the end of the year and expenses such as salaries payable,
● Balance due. shows whether the security is listed at accrued payroll taxes, and interest
cost (including the value recorded at the payable.
● Date of note.
time of receipt in the case of donated
● Maturity date. securities) or end-of-year market value. Line 39—Deferred Revenue
● Repayment terms. Do not include amounts shown on line Include revenue that the organization
● Interest rate. 26. Governmental obligations reported has received but not yet earned as of
● Security provided by the borrower. on line 32a are those that mature in 1 the balance sheet date under its method
year or more. Debt securities of the U.S. of accounting.
● Purpose of the loan. Government may be reported as a single
● Description and FMV of the total rather than itemized. Obligations of Line 40—Loans From Officers,
consideration furnished by the lender. state and municipal governments may Directors, Trustees, and Other
The above detail is not required for also be reported as a lump-sum total. Disqualified Persons
receivables or travel advances that may Do not combine U.S. Government Enter the unpaid balance of loans
be reported as a single total (see obligations with state and municipal received from officers, directors,
instruction 2 above). However, report obligations on the attached schedule. trustees, and other disqualified persons.
and identify those totals separately in For loans outstanding at the end of the
the attachment. Line 33—Investments—Land, year, attach a schedule that provides
Buildings, and Equipment (for each loan) the name and title of the
Line 29—Other Notes and Loans Enter the book value (cost or other basis lender and the information specified in
Receivable less accumulated depreciation) of all the line 28 instructions.
Enter the combined total of notes land, buildings, and equipment held for
receivable and net loans receivable. investment purposes, such as rental Line 41—Mortgages and Other Notes
properties. Attach a schedule listing Payable
Notes Receivable.—Enter the amount
of all notes receivable not listed on line these investment fixed assets held at Enter the amount of mortgages and
28 and not acquired as investments. the end of the year and showing, for other notes payable at the beginning
Attach a schedule similar to that called each item or category listed, the cost or and end of the year. Attach a schedule
for in the line 28 instructions. The other basis, accumulated depreciation, showing, as of the end of the year, the
schedule should also identify the and book value. total amount of all mortgages payable
relationship of the borrower to any and, for each nonmortgage note
Line 34—Investments—Other payable, the name of the lender and the
officer, director, trustee, or other
disqualified person. Enter the amount of all other investment other information specified in the line 28
For a note receivable from any section holdings not reported on line 32 or 33. instructions. The schedule should also
501(c)(3) organization, list only the name Attach a schedule describing each of identify the relationship of the lender to
of the borrower and the balance due on these investments held at the end of the any officer, director, trustee, or other
the required schedule. year. Show the book value for each and disqualified person.
indicate whether the investment is listed
Loans Receivable.—Enter the gross at cost or end-of-year market value. Do Line 42—Other Liabilities
amount of loans receivable, less the not include program-related investments. List and show the amount of each
allowance for doubtful accounts, arising See instructions for line 36. liability not reportable on lines 38
from the normal activities of the trust. An through 41. Attach a separate schedule
itemized list of these loans is not Line 35—Land, Buildings, and if more space is needed.
required, but attach a schedule Equipment
indicating the total amount of each type Both annuity trusts and unitrusts
Enter the book value (cost or other basis should include any advances from
of loan outstanding. Report loans to less accumulated depreciation) of all
Page 5
trustees on line 42. Unitrusts should also Part VI-A 3. Transferred in trust before May 27,
include any unitrust amounts applicable 1969.
to prior periods that are unpaid as of the Line 1
valuation date, since such amounts Line 1
A split-interest trust must have a
reduce the net FMV of the trust’s assets. governing instrument that requires the The activities listed on lines 1a(1)–(6) are
trust to act or refrain from acting so as considered self-dealing under section
Part V-A and B—Charitable not to engage in an act of self-dealing 4941 unless one of the exceptions
under section 4941 or subject it to the described in Pub. 578 applies.
Remainder Trust Information
excise taxes under section 4943, 4944, The terms “disqualified person” and
Line 49a or 4945. The trust may satisfy the “foundation manager” are defined on
Enter the unitrust fixed percentage requirements either by express language page 1.
(which may not be less than 5%). in its governing instrument or by the Line 1b.—If you answered “Yes” to any
operation of state law which imposes of the questions in 1a, you should
If there is more than one unitrust the above requirements on the trust or
recipient, attach a schedule showing the answer “Yes” to 1b unless all of the acts
treats these requirements as being engaged in were “excepted” acts.
percentage of the total unitrust dollar contained in the governing instrument. If
amount payable to each recipient. The Excepted acts are described in
a trust claims it satisfies the Regulations sections 53.4941(d)-3 and 4
sum of these individual shares should be requirements of section 508(e) by
100%. and appear in Notices published in the
operation of state law, the provisions of Internal Revenue Bulletin, relating to
Line 50a state law must effectively impose the disaster assistance. Notices currently in
requirements of section 508(e) on the effect relating to disaster assistance
Enter the trust’s 1995 income trust.
determined under the terms of the include Notice 95-7, 1995-6 I.R.B. 36,
governing instrument and applicable If, however, the state law does not supplemented by Notice 95-16, 1995-16
local law. Do not include extraordinary apply to a governing instrument which I.R.B. 12, Notice 95-33, 1995-23 I.R.B.
dividends or taxable stock dividends contains mandatory directions conflicting 10, and Notice 95-47, 1995-35 I.R.B. 17.
that are determined under the governing with any of its requirements and the
trust has such mandatory directions in Line 2
instrument and applicable local law to
be allocable to corpus. its governing instrument, then the trust Under section 4947(b)(3)(A), a
has not satisfied the requirements of split-interest trust is not subject to the
Line 51a section 508(e) by the operation of that excess business holdings tax (section
state law. 4943) or tax on investments that
Figure the total accrued distribution
deficiencies from previous years as jeopardize the trust’s charitable purpose
follows: Part VI-B (section 4944) if all the income interest
(and none of the remainder interest) of
1. Aggregate the unitrust’s net asset Complete Part VI-B to determine the trust is devoted solely to one or
FMV for each previous year. whether the trust has complied with the more of the charitable purposes
2. Multiply 1 above by the unitrust’s applicable chapter 42 rules relating to described in section 170(c)(2)(B). In
fixed percentage. private foundations and whether the addition, all amounts in the trust for
trust, trustee, disqualified persons, or which a charitable contribution
3. From the result in 2, subtract the
some combination of these, may be deduction was allowed under section
aggregate trust income that was
liable for foundation excise taxes. These 170 (for individual taxpayers) or similar
distributed for previous years.
excise taxes include: Code section for personal holding
Line 52 ● The section 4941 tax on self-dealing companies, foreign personal holding
Enter the total 1995 unitrust distributions between the trust and “disqualified companies, estates or trusts (including a
reported in Part III. persons.” deduction for estate or gift tax
● The section 4943 tax on excess purposes), cannot have a total value of
Line 53 business holdings. more than 60% of the total FMV of all
This amount is to be used in determining ● The section 4944 tax on investments amounts in the trust.
future accrued distribution deficiencies. that jeopardize the trust’s charitable Under section 4947(b)(3)(B), a
Short tax years.—To figure the annuity purposes. split-interest trust is not subject to the
amount (line 48b) or the unitrust amount ● The section 4945 tax on taxable section 4943 or 4944 taxes if a
(line 52) for short tax years, multiply the expenditures. deduction was allowed under section
annuity or unitrust amount by the 170 (and related provisions for other
The split-interest trust pays these entities) for amounts payable under the
number of days in the trust’s tax year, taxes on Form 4720. For a detailed
and then divide the result by 365 (or 366 terms of the trust to every remainder
explanation of each of these taxes, see beneficiary but not to any income
for leap years). the instructions for Form 4720. beneficiary.
For a unitrust whose governing The excise taxes on private
instrument provides for an income foundations do not apply to any Line 3
exception, if no valuation date occurs amounts:
before the end to the trust’s tax year, In general, excess business holdings are
1. Payable under the terms of the trust the amount of stock or other interest in
value the trust’s assets as of the last
to income beneficiaries, unless a a business enterprise that the trust must
day of the trust’s tax year.
deduction was allowed under sections dispose of to a person other than a
170(f)(2)(B), 2055(e)(2)(B), or disqualified person in order for the
Part VI-A and B—Statements 2522(c)(2)(B); trust’s remaining holdings in the
Regarding Activities 2. In trust for which a charitable enterprise to be permitted holdings.
Answer every question in these sections. contribution deduction was not allowed In general, the combined permitted
If a line does not apply, enter “N/A.” under any provision of the Code, if the holdings of a trust and all disqualified
amounts are segregated (as defined in persons may not be more than 20% of
section 4947(a)(3)) from amounts for the voting power (or beneficial or profits
which a deduction was allowable; or interest, in the case of a trust or a
partnership) in any business enterprise.
Page 6
There were grace periods of 15 or 20 short-term financial needs of the trust in Line 3
years for certain excess business carrying out its charitable purposes. Enter the amount for payments
holdings that the trust held on May 26, For more information on investments described in sections 170(f)(2)(B),
1969. These holdings were considered which jeopardize charitable purposes, 2055(e)(2)(B), and 2522(c)(2)(B).
held by disqualified persons rather than see Regulations section 53.4944-1.
the trust during the grace period. The Line 4
15-year grace period expired on May 25, Line 5
Enter the amount for payments
1984. This period applied when a trust Grants by a trust to a public charity are permitted by Regulations sections
and all disqualified persons together not taxable expenditures if the grants 1.170A-6, 20.2055-2, and 25.2522(c)-3.
held 75% or more (but not more than are not earmarked for use for any of the
95%) interest in a business enterprise. activities described on lines 5a(1)–(5) Section B—Pooled Income Funds
The 20-year grace period expired on and there is no oral or written agreement
May 25, 1989. It applied if the combined by which the trust may cause the public Line 2
holdings were more than 95%. charity to engage in any such prohibited Upon termination of the income interest
In general, a “business enterprise” activity or to select the grant recipient. retained or created by a donor, the
means the active conduct of a trade or Grants made to exempt operating trustee is required to sever from the
business, including any activity that is foundations (as defined in section fund an amount equal to the value of the
regularly conducted to produce income 4940(d)(2)) are not subject to the remainder interest in the property upon
from selling goods or performing expenditure responsibility provisions of which the income interest is based. The
services, that is an unrelated trade or section 4945. If the trust made grants to amount severed from the fund must
business under section 513. such organizations, you do not have to either be paid to, or retained for the use
The term “business enterprise” does file Form 4720 for those grants. See the of, the designated public charity, as
not include: section 4945 regulations for more provided in the governing instrument.
1. A functionally related business, information. See Regulations section 1.642(c)-5(b)(8)
defined in section 4942(j)(4); or Line 5b.—If you answered “Yes” to any for valuation procedures.
2. A trade or business if at least 95% of the questions in 5a, you should
of its gross income is derived from answer “Yes” to 5b unless all of the Signature
passive sources. transactions engaged in were Form 5227 must be signed by the
See section 4943(d)(3) for additional “excepted” transactions. Excepted trustee or by an authorized
items that are included in gross income transactions are described in representative.
from passive sources. Regulations section 53.4945 and appear
If you, as trustee (or an employee or
in Notices published in the Internal
officer of the trust), fill in Form 5227, the
Line 3a Revenue Bulletin, relating to disaster
Paid Preparer’s space should remain
assistance. Notices currently in effect
A private foundation is not treated as blank. If someone prepares this return
relating to disaster assistance include
having excess business holdings in any without charge, that person should not
Notice 95-7, 1995-1 C.B. 292,
enterprise if, together with related sign the return.
supplemented by Notice 95-16, 1995-1
foundations, it owns 2% or less of the Generally, anyone who is paid to
C.B. 300, Notice 95-33, 1995-1 C.B.
voting stock and 2% or less in value of prepare a tax return must sign the return
309, Notice 95-47, 1995-35 I.R.B. 17,
all outstanding shares of all classes of and fill in the other blanks in the Paid
and Notice 95-56, 1995-45 I.R.B. 11.
stock. A similar exception applies to a Preparer’s Use Only area of the return.
beneficial or profits interest in any
Part VII—Questionnaire for If you have questions about whether a
business enterprise that is a trust or
preparer is required to sign the return,
partnership. Charitable Lead Trusts and please contact an IRS office.
Line 4 Pooled Income Funds The person required to sign the return
In general, an investment which as the preparer must complete the
Section A—Charitable Lead Trusts required preparer information and:
jeopardizes any of the charitable
purposes of a trust is one in which a Line 1 ● Sign it, by hand, in the space provided
foundation manager did not exercise The information on this line is used to for the preparer’s signature. (Signature
ordinary business care in making the determine whether sections 4943 and stamps and labels are not acceptable.)
investment to provide for the long- and 4944 apply for 1995. ● Give the trustee a copy of the return
in addition to the copy to be filed with
the IRS.

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