Exception.

A split-interest trust described below isn't required to file Form 5227 if:

If a split-interest trust created before May 27, 1969, receives a contribution to corpus after May 26, 1969, for which a deduction is allowed under any of the sections listed in section 4947(a)(2), the trust will cease to qualify for the exception described above. In that case, the split-interest trust must file Form 5227 for the year when the transfer to corpus occurs and each subsequent year, the same as any split-interest trust created after May 26, 1969.

Split-interest trust.

A split-interest trust is a trust that:

Charitable lead trust.

This is a split-interest trust that annually pays a fixed annuity or unitrust amount to a charitable organization for the lead period specified in the trust instrument. The lead period may be a term of years or it may be a period determined by the lifetime of one or more individuals, as described in Regulations sections 1.170A-6(c), 20.2055-2(e)(2)(vi) and (vii), and 25.2522(c)-3(c)(2)(vi) and (vii). The donor to the trust will have been allowed a deduction under one of the sections listed in section 4947(a)(2). At the end of the lead period, annual payments to the charitable organization cease, and the remaining corpus becomes payable, outright or in trust, to a noncharitable (private) beneficiary.

Charitable remainder annuity trust (CRAT).

This is a split-interest trust described in section 664(d)(1). It pays a fixed dollar (annuity) amount, at least annually, to one or more recipients, at least one of which isn't a charitable organization. The annuity amount must be at least 5%, but cannot exceed 50%, of the initial net fair market value (FMV) of all property contributed to corpus, subject to the further requirement that the remainder interest in the trust (measured at the time property is transferred to the trust) must have a value of at least 10% of the FMV of the initial trust corpus. Payments to the recipient continue for a period of years. The period, if stated as a specific number, cannot exceed 20 years. The period can also be determined by the lifespan of one or more recipients. Whether the period is a fixed number of years, or is measured by an individual’s lifespan, the value of the remainder interest must be at least 10% of the FMV of the property transferred to the trust (as explained above). Upon termination of the recipient’s entitlement to the annuity amount, the remainder interest is transferred to, or is used by, a charitable organization described in section 170(c), or qualified employer securities are transferred to an employee stock ownership plan.

Charitable remainder unitrust (CRUT).

This is a split-interest trust described in section 664(d)(2). It is similar in many respects to a CRAT except that the amount payable to the recipient annually (the unitrust amount) is a fixed percentage (not less than 5% but not more than 50%) of the net FMV of the trust’s assets, subject further to the requirement described above that the remainder interest must have a value of at least 10% of the value of the initial trust corpus, determined at the time property is transferred to the trust. Because the unitrust amount is calculated annually based upon the FMV of trust corpus, and isn't a fixed amount determined upon the creation of the trust, the trustee must determine the FMV of the assets of the trust annually. Upon termination of the recipient’s entitlement to payments of the unitrust amount, the remainder interest is transferred to, or is used by, a charitable organization described in section 170(c), or qualified employer securities are transferred to an employee stock ownership plan. The trust agreement for a CRUT may allow the trustee to distribute less than the full unitrust amount in years when the trust income (as defined under section 643(b)) is less than the unitrust amount. A Net-Income Makeup Charitable Remainder Unitrust (NIMCRUT) is a charitable remainder unitrust that allows payment of the unitrust amount to be deferred in years when the unitrust amount exceeds trust income, with the deferred distributions being made up in a later year when the trust has sufficient income. A Net Income Charitable Remainder Unitrust (NICRUT) is a charitable remainder unitrust that allows for deferral of the unitrust payment (as described above), but does not provide for deferred distributions to be made up in future years.

Note.

The terms “section 664 trust” and “CRT” are general references to charitable remainder trusts. These terms include CRATs and CRUTs.

Pooled income fund.

This is a split-interest trust described in section 642(c)(5), which is created and administered by a charitable organization described in section 170(b)(1)(A) (other than in clauses (vii) or (viii)). Donors to the fund receive a lifetime income interest, based upon the rate of return earned by the trust (or such other rate as may be prescribed for a trust in existence for less than 3 years). Upon the death of the donor and the termination of their income interest, the charitable organization becomes entitled to the portion of the trust corpus attributable to the donor’s contribution, free of trust.

Recipient.

A recipient is a beneficiary who receives the possession or beneficial enjoyment of the unitrust or annuity amount.

Foundation manager.

A foundation manager is an officer, director, or trustee (or an individual who has powers or responsibilities similar to those of officers, directors, or trustees). In the case of any act or failure to act, the term “foundation manager” may also include an employee of the trust who has the authority to act.

Disqualified person.

A disqualified person is any of the following.

Extension of time to file.

Use Form 8868 to request an automatic extension of time to file. The request for an automatic extension must be filed by the due date of the return.

Mandatory electronic filing.

A filer required to file at least 10 returns of any type during the calendar year ending with or within the tax year must file their returns electronically. “Returns” for purposes of these instructions include information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns (including quarterly Forms 941, Employer's Quarterly Federal Tax Return), and excise tax returns. The failure to file a return electronically when required is deemed a failure to file the return even if the filer submits a paper return.

Waivers and exemptions.

On a year-by-year and form-by-form basis, the IRS may waive the requirement to file electronically in cases of undue hardship. In certain circumstances, a filer may be administratively exempt from the requirement to file electronically. The filer should keep documentation supporting their undue hardship or other applicable reason for not filing electronically in the filer's records. For more information about mandatory electronic filing, waivers, and exemptions, see Regulation section 301.6011-13.

U.S. address.

If you use the U.S. Postal Service, and are located in the United States, file Form 5227 at the following address:

Outside the United States

If you use a designated Private Delivery Service (or are located outside the United States in a foreign country or a U.S. territory), file Form 5227 at this address:

Private delivery services (PDSs).

Tax-exempt organizations can use certain PDSs designated by the IRS to meet the “timely mailing as timely filing” rule for tax returns. Go to IRS.gov/PDS for the current list of designated services.

The PDS can tell you how to get written proof of the mailing date.

PDSs deliver to:

PDSs can’t deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address.

Line 1. Interest income.

Report all taxable interest income that was received by the trust. Examples of taxable interest include interest from:

For taxable bonds acquired after December 31, 1987, amortizable bond premium is treated as an offset to the interest income instead of as a separate interest deduction. See Pub. 550, Investment Income and Expenses.

Line 2a. Ordinary dividends.

Enter on line 2a the total of all ordinary dividends, including the qualified dividends reported on line 2b.

Line 2b. Qualified dividends.

Report on this line all qualified dividends received by the trust. In general, a qualified dividend is a dividend received during the tax year from (a) a domestic corporation, or (b) a qualified foreign corporation. A qualified dividend does not include any dividend from a corporation if the corporation is (or was) exempt from income tax under section 501 or 521 for the corporation's current or preceding tax year during which the distribution was made.

Generally, these dividends are reported to the trust in box 1b of Form(s) 1099-DIV, Dividends and Distributions.

Qualified dividends are treated as a separate class of ordinary income for purposes of ordering distributions. See Ordering Rules for Ordinary Income, later, for more information on distributions. See Pub. 550 for additional information on qualified dividends, including holding period requirements.

Line 3. Business income or (loss).

If the trust operated a business, report the income and expenses on Schedule C (Form 1040), Profit or Loss From Business. Enter the net profit or loss from Schedule C on line 3. (Section 664 trusts, see Part VIII, Line 7, later).

Line 4. Rents, royalties, partnerships, other estates and trusts, etc.

Use Schedule E (Form 1040), Supplemental Income and Loss, to report the trust's income or losses from rents, royalties, partnerships, S corporations, other estates and trusts, and REMICs. Enter the net profit or loss from Schedule E on line 4. See the Instructions for Schedule E (Form 1040) for reporting requirements. If the trust received a Schedule K-1 from a partnership, S corporation, or other flow-through entity, use the corresponding lines on Form 5227 to report the interest, dividends, capital gains, etc., from the flow-through entity. (Section 664 trusts, see Part VIII, Line 7, later).

Line 5. Farm income or (loss).

If the trust operated a farm, use Schedule F (Form 1040), Profit or Loss From Farming, to report farm income and expenses. Enter the net profit or loss from Schedule F on line 5. (Section 664 trusts, see Part VIII, Line 7, later).

Line 6. Ordinary gain or (loss).

Enter from Form 4797, Sales of Business Property, the gain or loss from the sale or exchange of property (other than capital assets) and also from involuntary conversions (other than casualty or theft). For more information, see the Instructions for Form 4797.

Line 7. Other income.

List any other item and its amount that is includible in gross income but not included on lines 1 through 6 (or Section B), on the dashed line to the left of the entry space. If more space is needed, attach a statement. Enter the total of these items in the entry space to the right.

Net investment income (NII).

Beginning in 2013, charitable remainder trusts must begin tracking Excluded Income and NII received and distributed. For 2013 and later years, columns (a), (b), and (c) of Part II, line 1, have been divided into NII and Excluded Income.

The term “Excluded Income” is income received (or losses incurred) by the charitable remainder trust not taken into account in computing NII. For charitable remainder trusts (CRTs) in existence before 2013, all undistributed income as of the end of 2012 is Excluded Income. For 2013 and later years, the CRT must determine whether the items of income, gain, loss, and deduction reported on sections A through D of Part I constitute NII or Excluded Income.

Line 1.

Enter the amounts of undistributed Excluded Income and undistributed accumulated NII from post-2012 tax years.

Line 2.

Allocate the items of income or loss from the current year between Excluded Income and NII.

The allocation of items of income or loss from the current year between Excluded Income and NII should be reported on line 2 after the application of the gain and loss netting rules outlined in Part III of Schedule A, later. In certain situations, NII losses may reduce Excluded Income due to the netting rules. Therefore, those rules should be applied before entering amounts on line 2.

Line 7.

Provide the information requested for columns A through C and enter the amount on the line to the right. In column C, list in sufficient detail each class of activity to the same payee for charitable purposes for amounts distributed in which a section 642(c) deduction was claimed.

Don't merely enter the category (that is, religious, charitable, scientific, literary, or educational). The purpose of the deduction must be entered as shown in the examples in Section A.

Line 1. Cash—non-interest-bearing.

Enter the amount of cash on deposit in checking accounts, deposits in transit, change funds, petty cash funds, or any other non-interest-bearing account. Don't include advances to employees or officers or refundable deposits paid to suppliers or others.

Line 2. Savings and temporary cash investments.

Enter the total of cash in savings or other interest-bearing accounts and temporary cash investments, such as money market funds, commercial paper, certificates of deposit, U.S. Treasury bills, or other governmental obligations that mature in less than 1 year.

Line 3. Accounts receivable.

Enter the total accounts receivable (reduced by the corresponding allowance for doubtful accounts) that arose from the sale of goods and/or the performance of services. Claims against vendors or refundable deposits with suppliers or others may be reported here if not significant in amount. (Otherwise, report them on line 12.) Any receivables due from officers, directors, trustees, foundation managers, or other disqualified persons must be reported on line 4. Receivables (including loans and advances) due from other employees should be reported on line 12.

Line 4. Receivables due from officers, directors, trustees, and other disqualified persons.

Enter here (and in an attached statement described below) all receivables due from officers, directors, trustees, and other disqualified persons and all secured and unsecured loans (including advances) to such persons.
 

Line 5. Other notes and loans receivable.

Enter the combined total of notes receivable and net loans receivable.

Line 6. Inventories for sale or use.

Enter the amount of materials, goods, and supplies purchased or manufactured by the trust and held for sale or use in some future period.

Line 7. Prepaid expenses and deferred charges.

Enter the amount of short-term and long-term prepayments of future expenses attributable to one or more future accounting periods. Examples include prepayments of rent, insurance, and pension costs, and expenses incurred in connection with a solicitation campaign to be conducted in a future accounting period.

Lines 8a, b, and c. Investments—U.S. and state government obligations, corporate stock, and corporate bonds.

Enter the book value (which may be market value) of these investments. Attach a statement that lists each security held at the end of the year and shows whether the security is listed at cost (including the value recorded at the time of receipt in the case of donated securities) or end-of-year market value. Don't include amounts shown on line 2. Governmental obligations reported on line 8a are those that mature in 1 year or more. Debt securities of the U.S. Government may be reported as a single total rather than itemized. Obligations of state and municipal governments may also be reported as a lump-sum total. Don't combine U.S. Government obligations with state and municipal obligations on the attached statement.

Line 9. Investments—Land, buildings, and equipment.

Enter the book value (cost or other basis less accumulated depreciation) of all land, buildings, and equipment held for investment purposes, such as rental properties. Attach a statement listing these investment fixed assets held at the end of the year and showing, for each item or category listed, the cost or other basis, accumulated depreciation, and book value.

Line 10. Investments—Other.

Enter the amount of all other investment holdings not reported on line 8 or line 9. Attach a statement describing each of these investments held at the end of the year. Show the book value for each and indicate whether the investment is listed at cost or end-of-year market value. Don't include program-related investments. See the instructions for line 12.

Line 11. Land, buildings, and equipment.

Enter the book value (cost or other basis less accumulated depreciation) of all land, buildings, and equipment owned by the trust and not held for investment. This includes any equipment owned and used by the trust in conducting its charitable activities. Attach a statement listing these fixed assets held at the end of the year and showing for each item or category listed, the cost or other basis, accumulated depreciation, and book value.

Line 12. Other assets.

List and show the book value of each category of assets not reportable on lines 1 through 11. Attach a separate statement if more space is needed.

One type of asset reportable on line 12 is program-related investments made primarily to accomplish a charitable purpose of the trust rather than to produce income.

Line 13. Total assets.

Columns (a) and (b) (and column (c) if a unitrust) must always have an entry, even if it is zero.

Line 14. Accounts payable and accrued expenses.

Enter the total accounts payable to suppliers and others, and accrued expenses such as salaries payable, accrued payroll taxes, and interest payable.

Line 15. Deferred revenue.

Include revenue that the organization has received but not yet earned as of the balance sheet date under its method of accounting.

Line 16. Loans from officers, directors, trustees, and other disqualified persons.

Enter the unpaid balance of loans received from officers, directors, trustees, and other disqualified persons. For loans outstanding at the end of the year, attach a statement that provides (for each loan) the name and title of the lender and the information specified in the line 4 instructions.

Line 17. Mortgages and other notes payable.

Enter the amount of mortgages and other notes payable at the beginning and end of the year. Attach a statement showing, as of the end of the year, the total amount of all mortgages payable and, for each nonmortgage note payable, the name of the lender and the other information specified in the line 4 instructions. The statement should also identify the relationship of the lender to any officer, director, trustee, or other disqualified person.

Line 18. Other liabilities.

List and show the amount of each liability not reportable on lines 14 through 17. Attach a separate statement if more space is needed.

Charitable remainder unitrusts must include any unitrust amounts applicable to prior periods that are unpaid but required to be paid as of the valuation date, since such amounts reduce the net FMV of the trust's assets. However, don't include any make-up amount for a NIMCRUT.

Line 19. Total liabilities.

Columns (a) and (b) (and column (c) if a unitrust) must always have an entry, even if it is zero.

Line 23. Total liabilities and net assets.

Columns (a) and (b) must always have an entry, even if it is zero.

Line 1b.

To figure the total annual annuity amounts for a short tax year, see Short tax years, later.

Line 4a.

Enter the unitrust fixed percentage (which may not be less than 5% or more than 50%).

If there is more than one unitrust recipient, attach a statement showing the percentage of the total unitrust dollar amount payable to each recipient. The sum of these individual shares should be 100%.

Line 4b.

This line must always have an entry, even if it is zero.

Line 5a.

Enter the trust's 2023 (fiduciary) accounting income determined under the terms of the governing instrument and applicable local law. See section 643(b) and Regulations sections 1.664-3(a)(1)(i)(b)(3) and 1.643(b)-1 for more information.

Line 6a.

Enter the amount, if any, from line 69 of the 2022 Form 5227.

If the amount entered isn't the same as line 69 from the prior year's form, attach an explanation and a statement that supports the balance in the make-up account. Figure the total deficiencies from previous years as follows.

Line 8.

Use this amount to determine future accrued accumulated distribution deficiencies.

Short tax years.

To figure the annuity amount (Part V, line 1b) or the unitrust amount (Part VI, line 7) for short tax years, multiply the annuity or unitrust amount by the number of days in the trust's tax year, and then divide the result by 365 (or 366 for leap years).

For a unitrust whose governing instrument provides for an income exception, if no valuation date occurs before the end of the trust's tax year, value the trust's assets as of the last day of the trust's tax year.

Line 1.

A split-interest trust must have a governing instrument that requires the trust to act or refrain from acting so as not to engage in an act of self-dealing under section 4941 or subject it to the excise taxes under section 4943, 4944, or 4945. The trust may satisfy the requirements either by express language in its governing instrument or by the operation of state law which imposes the above requirements on the trust or treats these requirements as being contained in the governing instrument. If a trust claims it satisfies the requirements of section 508(e) by operation of state law, the provisions of state law must effectively impose the requirements of section 508(e) on the trust.

If, however, the state law does not apply to a governing instrument which contains mandatory directions conflicting with any of its requirements and the trust has such mandatory directions in its governing instrument, then the trust has not satisfied the requirements of section 508(e) by the operation of that state law.

Line 1.

The activities listed on lines 1a(1) through (6) are considered self-dealing under section 4941 unless one of the exceptions described in section 4941(d)(2)(D), (E), (F), or (G) applies. You may also access information about self-dealing at IRS.gov/charities/foundations/index.html by clicking on the link for Life Cycle of a Private Foundation.

The terms “disqualified person” and “foundation manager” are defined under Definitions, earlier.

Line 1b.

If you answered “Yes” to any of the questions in line 1a, you should answer “Yes” to line 1b unless all of the acts engaged in were “excepted” acts. Excepted acts are described in Regulations sections 53.4941(d)-3 and -4 or appear in Notices published in the Internal Revenue Bulletin, relating to disaster assistance. At the time this form went to print, there were no Notices currently in effect relating to disaster assistance for “excepted” acts to self-dealing.

Line 2.

Under section 4947(b)(3)(A), a split-interest trust isn't subject to the excess business holdings tax (section 4943) or tax on investments that jeopardize the trust's charitable purpose (section 4944) if all the income interest (and none of the remainder interest) of the trust is devoted solely to one or more of the charitable purposes described in section 170(c)(2)(B). In addition, all amounts in the trust for which a charitable contribution deduction was allowed under section 170 (for individual taxpayers) or a similar section for personal holding companies, foreign personal holding companies, or estates or trusts (including a deduction for estate or gift tax purposes) cannot have a total value of more than 60% of the total FMV of all amounts in the trust. For the purposes of section 4947(b)(3)(A), the term “income interest” includes the right to receive an annuity or unitrust payment, as described in Regulations section 53.4947-2(b)(2)(i).

Under section 4947(b)(3)(B), a split-interest trust isn't subject to the section 4943 or 4944 taxes if a deduction was allowed under section 170 (and related provisions for other entities) for amounts payable under the terms of the trust to every remainder beneficiary but not to any income beneficiary. For the purposes of section 4947(b)(3)(B), the term “income beneficiary” includes the recipient entitled to receive an annuity or unitrust payment under a CRT, as well as the donor entitled to payments from a pooled income fund. The term “remainder beneficiary” includes the charitable organization entitled to the remainder interest under a CRT or a pooled income fund.

Line 3.

In general, excess business holdings are the amount of stock or other interest in a business enterprise that the trust must dispose of to a person other than a disqualified person in order for the trust's remaining holdings in the enterprise to be permitted holdings.

In general, the combined permitted holdings of a trust and all disqualified persons may not be more than 20% of the voting power (or beneficial or profits interest, in the case of a trust or a partnership) in any business enterprise.

In general, a business enterprise means the active conduct of a trade or business, including any activity that is regularly conducted to produce income from selling goods or performing services that is an unrelated trade or business under section 513.

The term “business enterprise” does not include:

See section 4943(d)(3)(B) for additional items that are included in gross income from passive sources.

Line 3a.

A private foundation isn't treated as having excess business holdings in any enterprise if, together with related foundations, it owns 2% or less of the voting stock and 2% or less in value of all outstanding shares of all classes of stock. A similar exception applies to a beneficial or profits interest in any business enterprise that is a trust or partnership.

Line 4.

In general, an investment which jeopardizes any of the charitable purposes of a trust is one in which a foundation manager did not exercise ordinary business care in making the investment to provide for the long- and short-term financial needs of the trust in carrying out its charitable purposes.

For more information on investments that jeopardize charitable purposes, see Regulations section 53.4944-1.

Line 5.

Grants by a trust to a public charity aren't taxable expenditures if the grants aren't earmarked for use for any of the activities described on lines 5a(1) through (5) and there is no oral or written agreement by which the trust may cause the public charity to engage in any such prohibited activity or to select the grant grantee.

Grants made to exempt operating foundations (as defined in section 4940(d)(2)) aren't subject to the expenditure responsibility provisions of section 4945. If the trust made grants to such organizations, you don't have to file Form 4720 for those grants. See the section 4945 regulations for more information.

Line 5b.

If you answered “Yes” to any of the questions in line 5a, you should answer “Yes” to line 5b unless all of the transactions engaged in were “excepted” transactions. Excepted transactions are described in Regulations section 53.4945 or appear in Notices published in the Internal Revenue Bulletin, relating to disaster assistance. At the time this form went to print, there were no Notices currently in effect relating to disaster assistance for “excepted” transactions to taxable expenditures.

Line 6a.

A personal benefit contract is, in general, any life insurance, annuity, or endowment contract that benefits, directly or indirectly, a transferor, a transferor's family member, or a transferor designee that isn't an organization described in section 170(c).

Line 6b.

Enter the total of all premiums paid by the split-interest trust on any personal benefit contract if the payment of premiums is in connection with a transfer for which a deduction isn't allowed under section 170(f)(10)(A). Also, if there is an understanding or expectation that any person will directly or indirectly pay any premium on a personal benefit contract for the transferor, include those premium payments in the amount entered on this line. For more information, see the instructions for Form 8870.

Line 7.

If a charitable remainder trust has any unrelated business taxable income (within the meaning of section 512 and related regulations) for 2023, the trust is liable for a tax under section 664(c)(2), which is treated as a Chapter 42 excise tax. The amount of the excise tax is equal to the amount of the trust's unrelated business taxable income. If the trust has any unrelated business taxable income, answer “Yes” and file Form 4720, in addition to Form 5227, to report the trust's unrelated business taxable income and the tax due.

Paid preparer.

Generally, anyone who is paid to prepare a tax return for a charitable remainder trust must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. For all other trusts, completion of Form 5227's Paid Preparer Use Only area is optional.

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

The person required to sign the return as the preparer must:

Enter the paid preparer’s PTIN, not their social security number (SSN), in the “PTIN” box in the paid preparer’s block. Because Form 5227 is publicly disclosable, any information entered in this block will become public. For more information about PTINs, visit the IRS website at IRS.gov/PTIN.

Column (b).

Enter the CRT’s current year NII.

Using Form 8960 as a worksheet, include the amounts of income, gain, loss, and deductions reported on lines 1–12 of Form 8960 to compute NII (line 12 of Form 8960). Don't file the Form 8960 with the Form 5227.

Column (c).

Enter the lesser of (i) the sum of columns (a) and (b), or (ii) the total distributions for the year (reported on line 2a of Part I of Schedule A). If the sum of columns (a) and (b) is zero or less, enter -0- in column (c).

Column (d).

Subtract column (c) from the sum of columns (a) and (b). This amount will be reported in column (a) of the 2024 Form 5227.

Line 1.

A charitable lead trust uses line 1 of Part IV to report the aggregate amount of distributions made during the year to one or more noncharitable (private) beneficiaries. For example, when the lead period terminates, all future distributions are payable to the noncharitable beneficiary. However, because charitable lead trusts can vary considerably, the expiration of the lead period isn't the only context within which the trust may provide for payments to a noncharitable (private) beneficiary. See the annotations to the sample charitable lead trusts in Rev. Proc. 2007-45, 2007-29 I.R.B. 89, and Rev. Proc. 2007-46, 2007-29 I.R.B. 102, for examples of other situations in which amounts may be payable to a noncharitable beneficiary.

A pooled income fund uses line 1 of Part IV to report the amount distributable annually among one or more noncharitable (private) beneficiaries who hold income interests in the fund.

Line 2.

Pooled income funds don't complete lines 1 and 2.

For trusts that answered “Yes” to question 1, complete all columns on line 2 for all donors to the trust in 2023. For additional donors to the trust that did not contribute to the trust in 2023, complete column (a) only.

For trusts that answered “No” to question 1, complete only column (a) for all donors to the trust.