Line 1.

Enter the sum of:

Line 2.

Enter the tax on investments that jeopardize charitable purpose from Schedule D, Part II, column (d), that you took part in as a foundation manager.

Line 3.

Enter the tax on taxable expenditures from Schedule E, Part II, column (d), that you took part in as a foundation manager.

Line 4.

Enter the tax on political expenditures from Schedule F, Part II, column (d), that you took part in as an organization or foundation manager.

Line 5.

Enter the tax on disqualifying lobbying expenditures from Schedule H, Part II, column (d), that you took part in as an organization manager.

Line 6.

Enter the sum of:

Line 7.

Enter the tax on you as the entity manager who approved or otherwise caused the entity to be a party to a prohibited tax shelter transaction from Schedule J, Part II, column (d).

Line 8.

Enter the tax on taxable distributions from sponsoring organizations maintaining donor advised funds from Schedule K, Part II, column (d), that you took part in as a manager.

Line 9.

Enter the sum of:

Line 1.

Organizations and related organizations owing tax under section 4960 enter the total tax amount from Part I, line 15. Managers, self-dealers, disqualified persons, donors, donor advisors, or related persons enter the total tax amount from Part II, line 10.

Line 2.

List total payments here, including amounts paid on extension with Form 8868. See the discussion on Extensions, earlier, for details on amounts paid with extensions.

Line 3.

Enter the tax due on this line. Make check(s) or money order(s) payable to the United States Treasury.

Line 4.

This is your refund. Only persons with a legal right to a refund should file a refund request here.

Amounts from Parts I and Part II cannot be combined in Part III.

Requirement.

All organizations that answered “Yes,” to question 1b or 1d in Part VI-B of Form 990-PF, or “Yes,” to question 1b or 1c in Part VIII of Form 5227, must complete Schedule A. In addition, a self-dealer or a manager that participated in an act of self-dealing knowing that it was such an act must also complete Schedule A. Complete Parts I, II, and III of Schedule A only in connection with acts that are subject to the tax on self-dealing.

Paying the tax and filing a Form 4720 is required for each year or part of a year in the taxable period that applies to the act of self-dealing. Generally, the taxable period begins with the date on which the self-dealing occurs and ends on the earliest of:

Self-dealing.

Self-dealing includes any direct or indirect:

Initial taxes on self-dealer.

An initial tax of 10% of the amount involved is charged for each act of self-dealing between a disqualified person and a private foundation for each year or part of a year in the taxable period. Any disqualified person (other than a foundation manager acting only as such) who takes part in the act of self-dealing must pay the tax.

Initial taxes on foundation managers.

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

Part I.

List each act of self-dealing in Part I. In column (c), for each act of self-dealing in Part I, indicate whether the act has been corrected. For the purposes of a self-dealing transaction described in section 4941, the term “correction” generally means undoing the transaction to the extent possible, but in any case, placing the private foundation in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards.

Answer “Yes,” in column (c) if correction has been made in whole or in part. Answer “No,” only if the transaction has not been corrected in any way.

Enter in column (e) the number designation from Form 990-PF, Part VI-B, question 1a, or Form 5227, Part VIII, question 1a that applies to the act. For example, “1a(1)” or “1a(4).”

Part II.

Enter in column (a) the names of all disqualified persons who took part in the acts of self-dealing listed in Part I. If more than one disqualified person took part in an act of self-dealing, each is individually liable for the entire tax in connection with the act. But the disqualified persons who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax to be paid by each disqualified person.

A self-dealer filing Form 4720 should carry the appropriate amount in column (d) to Part II, line 1.

Part III.

Enter in column (a) the names of all foundation managers who took part in the acts of self-dealing listed in Part I, and who knew that the acts were self-dealing (except for foundation managers whose participation was not willful and was due to reasonable cause).

If more than one foundation manager took part in the act of self-dealing, knowing that it was such an act, and participation was willful and not due to reasonable cause, each is individually liable for the entire tax in connection with the act. But the foundation managers liable for the tax may prorate the payment among themselves. Enter in column (c) the tax to be paid by each foundation manager.

Carry the total amount in column (d) for each foundation manager to Part II, line 1.

The organization should not carry any amount from column (d) to Part II, line 1.

Requirement.

If you answered “Yes,” to Form 990-PF, Part VI-B, question 3b; Form 990, Part V, question 8; or Form 5227, Part VIII, question 3b, or otherwise had excess business holdings, complete a Schedule C for each business enterprise in which the foundation had excess business holdings for its tax year beginning in 2023.

Taxes.

A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. The initial tax is 10% of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. The excess holdings are determined on the day during the tax year when they were the largest.

If the foundation keeps the excess business holdings after the initial tax has been imposed, the foundation becomes liable for an additional tax of 200% of the remaining excess business holdings unless it disposes of them within the taxable period. However, if the foundation disposes of its excess business holdings during the correction period, the additional tax won't be assessed or, if assessed, will be abated and if collected, will be credited or refunded. For information on the correction period, go to IRS.gov TG 60 Taxes on Excess Business Holdings IRC 4943.

Business enterprise.

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

The term “business enterprise” doesn't include a functionally related business, as defined in section 4942(j)(4). In addition, business holdings don't include program-related investments (such as investments in small businesses in economically depressed areas or in corporations to assist in neighborhood renovations) as defined in section 4944(c) and related regulations. Also, business enterprise doesn't include a trade or business at least 95% of the gross income of which comes from passive sources. For more information, go to IRS.gov TG 61 Taxes on Investments which Jeopardize Charitable Purposes IRC 4944.

Excess business holdings.

Excess business holdings is the amount of stock or other interest in a business enterprise that the foundation would have to dispose of to a person other than a disqualified person in order for the foundation's remaining holdings in the enterprise to be permitted holdings (section 4943(c)(1)). Go to IRS.gov TG 60 Taxes on Excess Business Holdings IRC 4943 for more information.

Sole proprietorships.

In general, a private foundation can't have any permitted holdings in a business enterprise that is a sole proprietorship. For exceptions, go to IRS.gov TG 60 Taxes on Excess Business Holdings IRC 4943. For a definition of sole proprietorship, see Regulations section 53.4943-10(e).

Corporate voting stock.

This stock entitles a person to vote for the election of directors. Treasury stock and stock that is authorized but unissued isn't voting stock for these purposes. See Regulations sections 53.4943-3(b)(1)(ii) and 53.4943-3(b)(2)(ii).

For a partnership (including a limited partnership) or joint venture, the term “profits interest” should be substituted for “voting stock.” For any unincorporated business enterprise that isn't a partnership, joint venture, or sole proprietorship, the term “beneficial interest” should be substituted for “voting stock.” See Regulations section 53.4943-3(c).

Nonvoting stock.

Corporate equity interests that don't have voting power should be classified as nonvoting stock. Evidences of indebtedness (including convertible indebtedness), warrants, and other options or rights to acquire stock shouldn't be considered equity interests. See Regulations section 53.4943-3(b)(2).

For a partnership (including a limited partnership) or joint venture, the term “capital interest” should be substituted for “nonvoting stock.” For any unincorporated business that isn't a partnership, joint venture, or sole proprietorship, references to nonvoting stock don't apply for computation of permitted holdings. See Regulations section 53.4943-3(c)(4).

Attribution of business holdings.

In determining the holdings in a business enterprise of either a private foundation or a disqualified person, any stock or other interest owned directly or indirectly by or for a corporation, partnership, estate, or trust is considered owned proportionately by or for its shareholders, partners, or beneficiaries. In general, this rule doesn't apply to certain income interests or remainder interests of a private foundation in a split-interest trust described in section 4947(a)(2). See Regulations section 53.4943-8.

Taxable period.

The taxable period begins on the first day the foundation has excess business holdings and ends on the earliest of:

When a notice of deficiency isn't mailed because the restrictions on assessment and collection are waived or because the deficiency is paid, the date of filing the waiver or the date of paying the tax, respectively, will be treated as the end of the taxable period. See Regulations section 53.4943-9.

Line 1.

Enter in column (a) the percentage of voting stock the foundation holds in the business enterprise.

If the foundation is using the rules or principles for determining present holdings under section 4943(c)(4)(A) or (D) (or rules similar to that for donor advised funds and certain supporting organizations), enter in column (b) the percentage of value the foundation holds in all outstanding shares of all classes of stock.

Don't include in either column (a) or (b) stock treated as held by disqualified persons:

Line 2.

If the foundation is using the rules or principles for determining present holdings under section 4943(c)(4) (or rules similar to that for donor advised funds and certain supporting organizations), refer to that section and Regulations section 53.4943-4(d) to determine which entries to record in columns (a) and (b). Enter in column (a) the excess of the substituted combined voting level over the disqualified person voting level. Enter in column (b) the excess of the substituted combined value level over the disqualified person value level.

If the foundation is using the rules or principles for determining permitted holdings under section 4943(c)(2), refer to that section to determine which entries to record in column (a). Enter in column (a) the percentage, using the general rule (section 4943(c)(2)(A)) or the 35% rule (see section 4943(c)(2)(B)), if applicable, of permitted holdings the foundation may have in the enterprise's voting stock. If the foundation determines the permitted holdings under section 4943(c)(2)(B), attach a statement showing effective control by a third party.

Line 3.

Enter the value of any stock, interest, etc., in the business enterprise that the foundation is required to dispose of so the foundation's holdings in the enterprise are permitted. See section 4943 and related regulations.

A private foundation using the section 4943(c)(4) rules, or a donor advised fund or supporting organization using rules similar to that, has excess holdings if line 1 is more than line 2 in either column (a) or column (b). Don't include in column (b) the value of any voting stock included in column (a).

A private foundation using the section 4943(c)(2) rules has excess holdings if line 1 is more than line 2 in column (a) or if the private foundation holds nonvoting stock and all disqualified persons together own more than 20% (or 35%, if applicable) of the enterprise's voting stock, interest, etc. In the latter case, enter in column (c) the value of all nonvoting stock the foundation holds.

Line 4.

Enter the value of excess holdings disposed of under the 90-day rule in Regulations section 53.4943-2(a)(1)(ii). If other conditions preclude imposition of tax on excess business holdings, include the value of the nontaxable amount on this line and check the appropriate boxes on the statement page attached to the electronic version of Form 4720. Organizations not required to file electronically may attach an explanation.

Line 5.

Compute the excess holdings in a business enterprise subject to tax.

Line 8.

Excess business holdings are corrected by taking action as needed such that the foundation no longer has excess business holdings in a business enterprise. Answer “Yes,” if the excess business holdings have been corrected in whole or in part.

Requirement.

Complete Schedule D if you answered “Yes,” to Form 990-PF, Part VI-B, question 4a or b; or Form 5227, Part VIII, question 4a or b. Each manager of the organization or trust that answered "Yes," to Form 990-PF, Part VI-B, question 4a or b; or Form 5227, Part VIII, question 4a or b and who took part in making the investment should also complete Schedule D. Report each investment separately. Paying tax and filing a Form 4720 are required for each year or part of a year in the taxable period that applies to the investments that jeopardize the foundation's charitable purpose. Generally, the taxable period begins with the date of the investment and ends with the date corrective action is completed, a notice of deficiency is mailed, or the initial tax is assessed, whichever comes first. Therefore, in addition to investments made in 2023, include all investments subject to tax that were made before 2023 if those investments were not removed from jeopardy before 2023 and the initial tax was not assessed before 2023.

Taxable investments.

An investment to be taxed on this schedule is an investment by a private foundation that jeopardizes the carrying out of its exempt purposes (for example, if it is determined that the foundation managers, in making the investment, didn't exercise ordinary business care and prudence, under prevailing facts and circumstances, in providing for the long- and short-term financial needs of the foundation to carry out its exempt purposes). See Regulations section 53.4944-1(a)(2). An investment isn't taxed on this schedule if it is a program-related investment; that is, one whose primary purpose is one or more of those described in section 170(c)(2)(B) (religious, charitable, educational, etc.). A significant purpose of such an investment can't be the production of income or the appreciation of property. See section 4944(c) and Regulations section 53.4944-3.

Initial taxes on foundation.

The initial tax is 10% of the amount invested for each year or part of a year in the taxable period.

Initial taxes on foundation managers.

When a tax is imposed on an investment that jeopardizes the charitable purpose of the foundation, the tax will be 10% of the investment for each year or part of a year in the taxable period, up to $10,000 for any one investment. It is imposed on all foundation managers who took part in the act, knowing that it was such an act, except for foundation managers whose participation was not willful and was due to reasonable cause. Any foundation manager who took part in making the investment must pay the tax.

Part I.

Complete this part for all taxable investments. Investments that jeopardize the carrying out of the foundation’s exempt purpose are corrected by selling or otherwise disposing of the investment, and holding the proceeds of such sale or other disposition in investments that do not jeopardize the carrying out of the foundation's exempt purpose. In column (c), for each act of investment listed in Part I, indicate whether the investment has been corrected. Answer “Yes,” if correction has been made in whole or in part. Answer “No,” only if the investment has not been corrected in any way.

Part II.

Enter in column (a) the names of all foundation managers who took part in making the investments listed in Part I. See Initial taxes on foundation managers, earlier.

If more than one foundation manager is listed in column (a), each is individually liable for the entire amount of tax in connection with the investment. However, the foundation managers who are liable for the tax may prorate payment among themselves. Enter in column (c) the tax each foundation manager will pay.

A foundation manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 2.

Requirement.

Complete Schedule E if you answered “Yes,” to Form 990-PF, Part VI-B, question 5b, or Form 5227, Part VIII, question 5b. Complete Parts I and II of Schedule E only for expenditures that are subject to tax.

Taxable expenditures.

With certain exceptions, this means any amount a private foundation pays or incurs:

Exceptions.

Section 4945(d)(4)(B) provides an exception to taxable expenditures that applies to certain grants to organizations when the granting foundation exercises expenditure responsibility described in section 4945(h). Additional information on special rules and exceptions to the definition of taxable expenditures given above can be found at IRS.gov TG 62 Excise Taxes on Taxable Expenditures under IRC 4945.

Initial tax on foundation.

An initial tax of 20% is imposed on each taxable expenditure of the foundation.

Initial tax on foundation managers.

When a tax is imposed on a taxable expenditure of the foundation, a tax of 5% of the expenditure will be imposed on any foundation manager who agreed to the expenditure and who knew that it was a taxable expenditure. Foundation managers whose participation was not willful and was due to reasonable cause aren't liable for the tax. Any foundation manager who took part in the expenditure and is liable for the tax must pay the tax. The maximum total amount of tax on all foundation managers for any one taxable expenditure is $10,000. If more than one foundation manager is liable for tax on a taxable expenditure, all those foundation managers are jointly and severally liable for the tax.

Part I.

Complete this part for all taxable expenditures. Enter in column (f) the number designation from Form 990-PF, Part VI-B, question 5a, or Form 5227, Part VIII, line 5 that applies to the act; for example, “5a(1).”

A taxable expenditure is corrected by (a) recovering part or all of the expenditure to the extent recovery is possible, and where full recovery isn't possible, such additional corrective action as is prescribed by regulations; or (b) if the taxable expenditure is due to failure to comply with requirements described in section 4945(h)(2) or (3) (expenditure responsibility), obtaining or making the report in question. In column (d), for each act of taxable expenditure listed in Part I, indicate whether the investment has been corrected. Answer “Yes,” if correction has been made in whole or in part. Answer only “No,” if the taxable expenditure has not been corrected in any way.

Part II.

Enter in column (a) the names of all foundation managers who agreed to make the taxable expenditure. See Initial tax on foundation managers, earlier. If more than one foundation manager is listed in column (a), each is individually liable for the entire tax in connection with the expenditure. However, the foundation managers who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax each foundation manager will pay.

A foundation manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 3.

Requirement.

Complete Schedule F if you answered “Yes,” to question 5a(2) and 5b of Form 990-PF, Part VI-B. Complete Schedule F if you entered an amount on line 2 of Schedule C (Form 990), Part I-A. Complete Schedule F if you are otherwise a section 501(c)(3) organization that made a political expenditure.

Political expenditures.

These include any amount paid or incurred by a section 501(c)(3) organization that participates or intervenes in (including the publication or distribution of statements) any political campaign on behalf of, or in opposition to, any candidate for public office. The tax is imposed even if the political expenditure gives rise to a revocation of the organization's section 501(c)(3) status.

These taxes apply in the case of both public charities and private foundations. When tax is imposed under this provision in the case of a private foundation, however, the expenditure in question won't be treated as a taxable expenditure under section 4945.

For an organization formed primarily to promote the candidacy or prospective candidacy of an individual for public office (or that is effectively controlled by a candidate or prospective candidate and is used primarily for such purposes), amounts paid or incurred for any of the following purposes are deemed political expenditures:

Initial tax on organization or foundation.

The initial tax on the organization or foundation is 10% of the amount involved.

Initial tax on organization managers or foundation managers.

An initial tax of 2.5% of the amount involved (up to $5,000 of tax on any one expenditure) is imposed on any manager who agrees to an expenditure, knowing that it is a political expenditure, unless the agreement isn't willful and is due to reasonable cause.

Any manager who agreed to the expenditure must pay the tax.

Part I.

Complete this part for all political expenditures. A political expenditure described in section 4955 is corrected by recovering part or all of the expenditure to the extent recovery is possible, establishment of safeguards to prevent future political expenditures, and where full recovery isn't possible, such additional corrective action as is prescribed by the regulations. In column (d), for each act of political expenditure listed in Part I, indicate whether the investment has been corrected. Answer “Yes,” if correction has been made in whole or in part. Answer “No,” only if the political expenditure has not been corrected in any way.

Part II.

Enter in column (a) the names of all managers who took part in making the political expenditures listed in Part I. See Initial tax on organization managers or foundation managers, earlier.

If more than one manager is listed in column (a), each is individually liable for the entire amount of tax on the expenditure. However, the managers who are liable for the tax may prorate payment among themselves. Enter in column (c) the tax each manager will pay.

An organization manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 4.

Requirement.

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

Exceptions.

These taxes aren't imposed on a private foundation (whose lobbying expenditures may be subject to the tax on taxable expenditures). These taxes also aren't imposed on any organization for which a section 501(h) election was in effect at the time of the lobbying expenditures or that was not eligible to make a section 501(h) election.

Tax on organization.

A tax of 5% of the lobbying expenditures is imposed on the organization whose section 501(c)(3) status is revoked because of excess lobbying activities.

Tax on organization managers.

A tax of 5% of the lobbying expenditures is also imposed on any manager who willfully and without reasonable cause consented to the lobbying expenditures, knowing that they would likely result in the organization no longer qualifying under section 501(c)(3).

There is no limit on the amount of this tax that may be imposed against either the organization or its managers. Any organization manager who agreed to the expenditure must pay the tax.

Part I.

Complete this part for all disqualifying lobbying expenditures.

Part II.

Enter in column (a) the names of all organization managers who took part in making disqualifying lobbying expenditures listed in Part I. See Tax on organization managers, earlier.

If more than one organization manager is listed in column (a), each is individually liable for the entire amount of tax in connection with the expenditure. However, the managers who are liable for the tax may prorate payment among themselves. Enter in column (c) the tax each manager will pay.

A manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 5.

Requirement.

Schedule I must be completed by any Applicable organization or Disqualified person that engaged in an Excess benefit transaction, and by any fund manager who knowingly participated in the excess benefit transaction. These terms are discussed below. Each person must file separately.

Initial taxes.

Excise taxes are imposed under section 4958 on each excess benefit transaction. If a manager receives an excess benefit from an excess benefit transaction, the manager may be liable for the tax on disqualified persons and the tax on the organization manager. The applicable organization must complete Schedule I. However, the excise tax under section 4958 is imposed on the disqualified person. The organization completing Schedule I should not report the initial tax amount on Part II and should not pay the tax liability of any disqualified person or organization manager. See Abatement, earlier, for information on abatement, refund, or relief from this tax.

Excess benefit transaction.

An excess benefit transaction is any transaction in which:

Until final regulations are issued regarding the special rules for revenue sharing transactions described in 2 above, these transactions will only be subject to section 4958 liability under the general rule described in 1 above.

Special rule.

The initial and additional taxes of this section don't apply if the transaction described in 1 under Excess benefit transaction was pursuant to a written contract in effect on September 13, 1995, and at all times after that date until the time that the transaction occurs.

However, if a written contract is materially modified, it is treated as a new contract entered into as of the date of the material modification. A material modification includes amending the contract to extend its term or to increase the compensation payable to a disqualified person.

Disqualified person.

For purposes of this Schedule I, a disqualified person means:

Part I.

List each excess benefit transaction in Part I, column (d). Enter the date of the transaction in column (b) and the amount of the excess benefit in column (e). Compute the tax on the excess benefit for disqualified persons and enter it in column (f). Compute any tax on the excess benefit for organization managers and enter the amount in column (g). The organization reporting one or more excess benefit transactions should not carry totals from column (f) or column (g) to Part II, line 6.

An excess benefit transaction is corrected by undoing the excess benefit to the extent possible and taking any additional measures necessary to place the organization in a financial position not worse than that in which it would be if the disqualified person had been dealing under the highest fiduciary standards, except that in the case of any correction of an excess benefit transaction involving a donor advised fund no amount repaid in a manner prescribed by the Secretary may be held in any donor advised fund. In column (c), for each act of excess benefit transaction in Part I, indicate whether the act has been corrected. Answer “Yes,” if correction has been made in whole or in part. Answer “No,” only if the transaction has not been corrected in any way.

For organization managers, the tax is the lesser of 10% of the excess benefit or $20,000. This tax is computed on each transaction.

Part II.

Enter in column (a) the names of all disqualified persons who took part in the excess benefit transactions. If more than one disqualified person took part in an excess benefit transaction, each is individually liable for the entire tax on the transaction. But the disqualified persons who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax to be paid by each disqualified person.

Carry the total amount in column (d) for each disqualified person to Part II, line 6.

Part III.

Enter in column (a) the names of all managers who knowingly took part in the excess benefit transactions listed in Part I. If more than one manager knowingly took part in an excess benefit transaction, each is individually liable for the entire tax in connection with the transaction. But the managers liable for the tax may prorate the payment among themselves. Enter in column (c) the tax to be paid by each organization manager.

A manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 6.

Requirement.

Prohibited tax shelter transaction.

In general, a prohibited tax shelter transaction means any listed transaction (including a subsequently listed transaction) and any prohibited reportable transaction.

Listed transaction.

A listed transaction includes any transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction. These transactions are identified by notice, regulation, or other form of published guidance as a listed transaction. For existing guidance, see Notice 2009-59, 2009-31 I.R.B. 170.

For updates to this list, go to the IRS website at IRS.gov/businesses/corporations/abusive-tax-shelters-and-transactions. The listed transactions in the above notices and rulings will also be periodically updated in future issues of the Internal Revenue Bulletin.

Prohibited reportable transaction.

A prohibited reportable transaction is any confidential transaction or any transaction with contractual protection that is a reportable transaction. See Regulations sections 1.6011-4(b)(3) and (4), and the Instructions for Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction, for more information.

Allocation of net income and proceeds to a tax year.

The net income and proceeds attributable to a prohibited tax shelter transaction must be allocated to a particular tax year in a manner consistent with the entity's established method of accounting for federal income tax purposes. If an entity hasn't established a method of accounting for federal income tax purposes, the entity must use the cash receipts and disbursements method to determine the amount and timing of net income and proceeds attributable to a prohibited tax shelter transaction.

If an entity has an established method of accounting other than the cash method, the entity may use the cash method to determine the amount of the net income and proceeds attributable to a prohibited tax shelter transaction.

Part I.

Complete this part for each transaction if during the tax year the entity received proceeds from or has net income attributable to a PTST.

Figure the tax for each transaction as follows.

After the tax has been figured for all PTSTs entered on Schedule J, then total column (h) and enter the amount on the Total line and on line 9 of Part I.

Part II.

Enter in column (a) the names of all entity managers who approved the entity as (or otherwise caused the entity to be) a party to a PTST at any time during the tax year and who knew or had reason to know that the transaction is a PTST.

A manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 7.

Requirement.

Complete Schedule K if you answered “Yes,” to question 9a in Part V of Form 990, or if you are a fund manager of a sponsoring organization who agreed to the making of a taxable distribution knowing that it was a taxable distribution. Report each taxable distribution separately. These terms are discussed below.

Taxable distribution.

A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if:

However, a taxable distribution doesn't include a distribution from a donor advised fund to:

Sponsoring organization.

A sponsoring organization is a section 170(c) organization that isn't a government organization (as referred to in section 170(c)(1) and (2)(A)) or a private foundation and maintains one or more donor advised funds.

Donor advised fund.

A donor advised fund is a fund or account:

Tax on sponsoring organization.

A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization.

Tax on fund manager.

If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. Any fund manager who took part in the distribution and is liable for the tax must pay the tax. The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax.

Part I.

Complete this part for all taxable distributions.

Part II.

Enter in column (a) the names of all fund managers who agreed to make the taxable distribution. If more than one fund manager is listed in column (a) for one distribution, each is individually liable for the entire tax in connection with that distribution. However, the fund managers who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax each manager will pay for each distribution for which such manager owes a tax.

A fund manager filing this Form 4720 should carry the apportioned amount in column (d) to Part II, line 8.

Requirement.

A sponsoring organization of donor advised funds that answered “Yes,” to Form 990, Part V, line 9b, or that otherwise distributed prohibited benefits under section 4967, must complete Schedule L. In addition, a donor, donor advisor, or related party that (1) advised a distribution that provided a prohibited benefit under section 4967, or (2) that received such a benefit, and any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit, must complete Schedule L. Report each distribution separately. Complete Parts I, II, and III of Schedule L only in connection with distributions made by a sponsoring organization from a donor advised fund which results in a prohibited benefit. (See the instructions for Schedule K for definitions of the terms sponsoring organization and donor advised fund). An organization reporting a prohibited benefit on Schedule L is not liable for the tax and should not report any tax amount on Part II, line 9.

Prohibited benefit.

If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit.

Donor advisor.

A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account.

Related party.

A related party includes any family member or 35% controlled entity. See the General Instructions for Schedule I for a definition of those terms.

Tax on donor, donor advisor, or related person.

A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). The advisor and the party who received the benefit are jointly and severally liable for the tax.

Tax on fund managers.

If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. Any fund manager who took part in the distribution and is liable for the tax must pay the tax. The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax.

Exception.

If a tax is imposed under section 4958 for the same transaction, then no additional tax is imposed under section 4967 on that transaction.

Part I.

Complete this part for all prohibited benefits.

Part II.

Enter in column (a) the names of all donors, donor advisors, and related persons who received a prohibited benefit or advised as to the distribution of such benefit. If more than one donor, donor advisor, or related person is listed in column (a) for one distribution, each is individually liable for the entire tax for that distribution. However, the donors, donor advisors, or related persons who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax each donor, donor advisor, or related person will pay for each distribution for which such donor, donor advisor, or related person owes a tax.

A donor, donor advisor, or related person filing this Form 4720 should carry the apportioned amount in Schedule L, Part II, column (d) to Part II, line 9.

Part III.

Enter in column (a) the names of all fund managers who agreed to make the distribution conferring the prohibited benefit. If more than one fund manager is listed in column (a) for one distribution, each is individually liable for the entire tax for that distribution. However, the fund managers who are liable for the tax may prorate the payment among themselves. Enter in column (c) the tax each donor advisor, or related person will pay for each distribution for which such donor, donor advisor, or related person owes a tax.

A fund manager filing this Form 4720 should carry the total amount in Schedule L, Part III, column (d) to Part II, line 9.

Requirements.

Section 4959 imposes an excise tax on hospital organizations that fail to meet the section 501(r)(3) requirements in any tax year.

Section 501(r)(3) requirements pertain to a hospital organization conducting a community health needs assessment (CHNA). The requirements, which apply separately to each hospital facility the hospital organization operates, are as follows.

See Notice 2011-52, 2011-30 I.R.B. 60; Final Regulations, T.D. 9708, 79 Fed. Reg. 78954 (Dec. 31, 2014), 2012-32 I.R.B. 126; Notice 2014-2, 2014-3 I.R.B. 407; Notice 2014-3, 2014-3 I.R.B. 408; as well as any future related guidance for details. For additional information on the CHNA requirements, see Schedule H (Form 990), Hospitals, Part V, Section B.

Part I.

For each hospital facility, list the following information in the relevant column: (b) name of facility, (c) description of the failure to meet section 501(r)(3), (d) tax year hospital facility last conducted a CHNA, and (e) tax year hospital facility last adopted an implementation strategy.

Requirement.

Complete Schedule N if you answered “Yes” to question 15 in Part V of Form 990, question 8 of Part VI-B of Form 990-PF, or if you are an ATEO (as defined earlier) or a related organization but only if you are liable for the tax under section 4960(a). Section 4960(a) imposes an excise tax of 21% on the amount of remuneration paid by an ATEO with respect to employment of any covered employee in excess of $1 million and on any excess parachute payment paid by such organization to any covered employee.

Form 4720, Schedule N, is used to report and pay any section 4960 tax owed. Because there is no requirement to make estimated tax payments for the section 4960 tax, Form 990-W does not apply to the section 4960 tax.

Covered employee.

A covered employee means any employee of an ATEO (including any former employee) that is one of the ATEO’s five highest compensated employees for the tax year or was the ATEO’s (or a predecessor’s) covered employee for any preceding tax year beginning after 2016.

Remuneration.

Remuneration means wages (as defined in section 3401(a)). Remuneration also includes amounts required to be included in gross income under section 457(f). Remuneration shall be treated as paid when there is no substantial risk of forfeiture (within the meaning of section 457(f)(3)(B)) of the rights to such remuneration.

Excess parachute payment.

For purposes of this provision, an excess parachute payment equals the excess of any parachute payment over the portion of the base amount allocated to such payment.

Requirement.

An applicable educational institution that answered “Yes” to Form 990, Part V, line 16, or that is otherwise subject to the section 4968 tax on net investment income, must complete Schedule O.

Organizations subject to the section 4968 excise tax.

A private college or university is subject to a 1.4% excise tax on net investment income under section 4968 if all four of the following threshold tests are met.

Form 4720, Schedule O, is used by applicable educational institutions to report and pay any section 4968 tax owed. Because there is no requirement to make estimated tax payments for the section 4968 tax, Form 990-W does not apply to the section 4968 tax.

Related organizations.

The net investment income of related organizations is taken into account under certain circumstances. Section 4968 defines “related organization” to include only the following organizations.

When calculating the net investment income of a related organization, exclude (1) net investment income of any related organization to the extent that such net investment income is taken into account with respect to another educational institution; and (2) net investment income from assets that are not intended, or are not available for the use or benefit of the educational institution, unless the related organization is controlled by the educational institution, or unless the related organization is a supporting organization with respect to the educational institution.

Net investment income.

Net investment income is the amount by which the sum of the gross investment income and the capital gain net income exceeds the administrative expenses allocable to gross investment income and capital gain net income.

To determine net investment income, including certain exceptions to gross investment income and modifications to allowable deductions, see Regulations section 53.4968-2.

Basis.

As described in Regulations section 53.4968-2(d)(2), in the case of property held by an applicable educational institution on December 31, 2017, and continuously thereafter to the date of its disposition, the basis for determining gain shall be deemed not to be less than the fair market value of such property on December 31, 2017, plus or minus all adjustments after December 31, 2017, and before the date of disposition consistent with the regulations under section 4940(c). However, for purposes of determining loss, basis rules that are consistent with the regulations under section 4940(c) will apply.

Modified capital gain net income.

Column (d) can reflect capital losses from sales or other dispositions of property in one organization only to the extent of capital gains from such sales or other dispositions in all the other organizations (modified capital gain net income). See Regulations section 53.4968–2. Amounts listed in column (d), for the filing organization and any related organization, may indicate a net loss. However, the amount carried to line 6, column (d) must be the greater of the modified capital gain net income or zero. Do not take into account capital loss carrybacks. Capital loss carryovers are allowed.

Line 1.

Use Line 1 to report the gross investment income , capital gain net income (or loss), and associated allocable administrative expenses of the filing organization.

Lines 2–5.

Use Lines 2–5 to report the gross investment income, capital gain net income (or loss), and associated allocable administrative expenses from related organizations during the related organizations’ tax years that end with or within the tax year of the organization. If a related organization is a partner in a partnership or a shareholder of an S corporation, include the pertinent items of income, gain, loss, or deduction from the entity's Schedule K-1 (Form 1065 or 1120-S) for the tax year of the entity ending with or within the tax year of the filing organization.

Report income from related organizations in descending order from most income to least income. If there are more than three related organizations, attach a schedule to your Form 4720 showing the information for columns (a) through (e) for each related organization and enter the total amounts from the schedule in line 5, columns (c) through (e).

Line 6.

Total the amounts in columns (c), (d), and (e). See Notice 2018-55, 2018-26 I.R.B. 773.

Add 6(c) and 6(d), subtract 6(e), and enter the total in 6(f).

Line 7.

Multiply line 6(f) by 0.014 (1.4%) and enter the amount in box 7f and on Part I, line 14.