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2018 Department of the Treasury

Internal Revenue Service

Instructions for Form 4720


Return of Certain Excise Taxes Under Chapters 41 and 42 of the
Internal Revenue Code
(Sections 170(f)(10), 664(c)(2), 4911, 4912, 4941, 4942,
4943, 4944, 4945, 4955, 4958, 4959, 4960, 4965, 4966, 4967 and 4968)
Section references are to the Internal Revenue Contents Page Private Colleges and Universities
Code unless otherwise noted. (Section 4968), later.
Donor Advised Funds
Contents Page (Section 4966) . . . . . . . . . . . . 16 Section 4943(g). The Bipartisan
General Instructions . . . . . . . . . . . . . 1 Schedule L—Taxes on Prohibited Budget Act of 2018, P.L. 115–123,
Benefits Distributed From
Purpose of Form . . . . . . . . . . . . . . . 1 Donor Advised Funds created an exception from the excise
Who Must File . . . . . . . . . . . . . . . . 2 (Section 4967) . . . . . . . . . . . . 16 tax on excess business holdings for
Where To File . . . . . . . . . . . . . . . . . 3 Schedule M—Tax on Hospital certain independently operated
When To File . . . . . . . . . . . . . . . . . 3 Organization for Failure to enterprises whose voting stock is wholly
Extension . . . . . . . . . . . . . . . . . . . 3 Meet the Community Health owned by a private foundation. For
Name, Address, etc. . . . . . . . . . . . . 4 Needs Assessment more detail see the Instructions for Form
Requirements (Sections 4959 990-PF.
Signature and Verification . . . . . . . . . 4 and 501(r)(3)) . . . . . . . . . . . . . 17
Attachments . . . . . . . . . . . . . . . . . . 4 Schedule N—Tax on Excess
Organizations Organized or Executive Compensation General Instructions
Created in a Foreign Country . . . . 4 (Section 4960) . . . . . . . . . . . . 17
Tax Payments . . . . . . . . . . . . . . . . 4 Schedule O—Excise Tax on Net
Investment Income of Private
Purpose of Form
Rounding Off to Whole Dollars . . . . . . 5
Colleges and Universities Use Form 4720 to figure and pay:
Penalties and Interest . . . . . . . . . . . . 5
(Section 4968) . . . . . . . . . . . . 18 The initial taxes on private
Abatement . . . . . . . . . . . . . . . . . . . 5 foundations and self-dealers, under
Paid Preparer . . . . . . . . . . . . . . . . 19
Initial Tax Liability . . . . . . . . . . . . . . 5 sections 4941 through 4945 for
Phone Help . . . . . . . . . . . . . . . . . 19
Completing the Schedules . . . . . . . . 5 self-dealing, failure to distribute income,
Photographs of Missing Children . . . 19
Amended Return . . . . . . . . . . . . . . . 5 excess business holdings, investments
How To Get Forms and
Specific Instructions for Page 1 . . . . . 5 Publications . . . . . . . . . . . . . . 19 that jeopardize charitable purpose, and
Schedule A—Initial Taxes on IRS e-Services Makes Taxes taxable expenditures (see instructions
Self-Dealing (Section 4941) . . ... 7 Easier . . . . . . . . . . . . . . . . . . 20 for Schedules A through E for
Schedule B—Initial Tax on Index . . . . . . . . . . . . . . . . . . . . . 21 definitions);
Undistributed Income (Section
4942) . . . . . . . . . . . . . . . . ... 8 The initial tax on certain supporting
Schedule C—Initial Tax on Excess Future Developments organizations and donor advised funds
Business Holdings (Section For the latest information about for excess business holdings under
4943) . . . . . . . . . . . . . . . . ... 8 developments related to Form 4720 and section 4943;
Schedule D—Initial Taxes on its instructions, such as legislation The section 4911 tax on excess
Investments That Jeopardize enacted after they were published, go to lobbying expenditures by public
Charitable Purpose (Section charities that have elected to be subject
4944) . . . . . . . . . . . . . . . . . . 11 IRS.gov/Form4720.
to section 501(h) regarding
Schedule E—Initial Taxes on
Taxable Expenditures What’s New expenditures to influence legislation.
(Section 4945) . . . . . . . . . . . . 11 (Private foundations and section
New tax rate. Section 13001 of P.L. 4947(a) trusts aren't eligible to make
Schedule F—Initial Taxes on
Political Expenditures 115-97, The Tax Cut and Jobs Act of this election);
(Section 4955) . . . . . . . . . . . . 12 2017, changed the tax rate under The section 4912 tax on disqualifying
Schedule G—Tax on Excess section 11 to 21%, effective for tax lobbying expenditures that result in loss
Lobbying Expenditures years beginning after December 31, of section 501(c)(3) tax-exempt status;
(Section 4911) . . . . . . . . . . . . 13 2017. The section 4955 tax imposed on any
Schedule H—Taxes on amount paid or incurred by a section
Disqualifying Lobbying New Schedules N and O.
Expenditures (Section 4912) . . . 13 Schedule N—Tax on Excess Executive 501(c)(3) organization that participates
Schedule I—Initial Taxes on Compensation (Section 4960) and or intervenes in any political campaign
Excess Benefit Transactions Schedule O—Excise Tax on Net on behalf of, or in opposition to, any
(Section 4958) . . . . . . . . . . . . 13 Investment Income of Private Colleges candidate for public office;
Schedule J—Taxes on Being a and Universities (Section 4968) have The section 4958 initial taxes on
Party to Prohibited Tax been added to Form 4720, pursuant to disqualified persons and organization
Shelter Transactions (Section P.L. 115-97. See Schedule N Tax on managers of section 501(c)(3) (except
4965) . . . . . . . . . . . . . . . . . . 15 private foundations), section 501(c)(4),
Excess Executive Compensation
Schedule K—Taxes on Taxable and section 501(c)(29) organizations
Distributions of Sponsoring (Section 4960) and Schedule O Excise
Organizations Maintaining Tax on Net Investment Income of that engage in excess benefit
transactions;

Aug 10, 2018 Cat. No. 13023Z


The section 4959 tax on the failure by instructions, later, for the definition of funds must file Form 4720 to report the
a hospital organization to meet the political expenditures.) liability and pay the tax owed on any
community health needs assessment taxable distributions under section 4966
Public charities making excess lob-
requirements under section 501(r)(3); (Schedule K and Part I, line 10). In
bying expenditures. Public charities
The section 4960 taxes on excess addition, sponsoring organizations that
that made the election under section
tax-exempt organization executive have made a distribution resulting in a
501(h) and owe tax on excess lobbying
compensation; prohibited benefit to a donor, donor
expenditures as figured on Schedule C
The section 4965 taxes on prohibited advisor, or related person must file
(Form 990 or 990-EZ), Part II-A, must
tax shelter transactions; Form 4720 to report the distribution
file Form 4720 to report the liability and
The section 4966 taxes on taxable (Schedule L and Part II-A column k).
pay the tax (Schedule G and Part I,
distributions by sponsoring
line 6). Certain organizations (and Charitable remainder trusts. All
organizations maintaining donor
possibly their managers) whose section charitable remainder trusts described in
advised funds;
501(c)(3) status is revoked because of section 664 that have unrelated
The section 4967 taxes on
excess lobbying activities are subject to business taxable income for the tax year
distributions of prohibited benefits from
a 5% excise tax on their lobbying must file Form 4720 to report the liability
donor advised funds;
expenditures (Schedule H and Part I, and pay the tax due (Part I, line 11).
The section 4968 taxes on net
line 7 or Part II-A, column (g), as Unrelated business taxable income is
investment income of certain private
applicable). figured under section 512 and is
colleges and universities;
determined as if Part III of subchapter F
The section 170(f)(10) tax on any Charitable Organizations that en-
applies to such trusts.
premiums paid on a personal benefit gage in excess benefit transactions.
contract in connection with a transfer to Form 4720 must be filed by any Hospital organizations failing to
an organization or charitable remainder organization that answered “Yes” to meet the community health needs
trust for which a charitable deduction question 25a in Part V of Form 990 or assessment requirements (Sections
isn't allowed to the transferor; and that otherwise engaged in an excess 501(r)(3), 4959). An excise tax is
The section 664(c)(2) tax on the benefit transaction described in section imposed on the failure by a hospital
unrelated business taxable income of a 4958. (Schedule I and Part II-A column organization to meet the community
charitable remainder trust. h). health needs assessment (“CHNA”)
requirements of section 501(r)(3)
Charitable organizations that make
Who Must File certain premium payments on per-
(Schedule M).

Organizations sonal benefit contracts. Form 4720 Certain taxpayers that pay excess
must be filed by any organization executive compensation. An
Private foundations and section described in section 170(c) or section applicable tax-exempt organization
4947(a) trusts. Generally, Form 4720 664(d) that answered “Yes,” to question (ATEO) that pays to any covered
must be filed by all organizations, 7f in Part V of Form 990, question 6b in employee more than $1 million in
including foreign organizations, that Part VII-B of Form 990-PF, question 80b remuneration or pays an excess
answered “Yes,” to question 1b, 1c, 2b, in Part VI-B of Form 5227, or that parachute payment during the year
3b, 4a, 4b, 5b, 6b, 7b, or 8 in Part VII-B otherwise paid premiums on a personal must file Form 4720 to report the liability
of Form 990-PF; or “Yes,” to question benefit contract in connection with a and pay the excise tax imposed by
75b, 75c, 77b, 78a, 78b, 79b, or 80b in transfer to an organization for which a section 4960. (Schedule N and Part I,
Part VI-B, and Item G on page 1 of Form charitable deduction was not allowed to line 13). An ATEO includes section
5227. A trust described in section the transferor (Part I, line 8). 501(a) exempt organizations, section
4947(a)(2) is considered a private 527 political organizations, section 521
foundation insofar as it is subject to Certain tax-exempt entities that are a
farmers’ cooperatives, and government
Chapter 42 provisions. (Schedules B party to a prohibited tax shelter
entities that have income excluded
through E and Part I, lines 1 through 4, transaction (PTST). Certain
under section 115(1). In any case in
as applicable). tax-exempt entities must file Form 4720
which remuneration from a related
to report the liability and pay the tax due
Other organizations owing initial tax- organization is included to determine
under section 4965(a)(1) (Schedule J
es on excess business holdings. the tax imposed by section 4960, the
and Part I, line 9). This requirement
Supporting organizations described in related organization must file a separate
applies to entities described in sections
section 4943(f)(3) and donor advised Form 4720 to report its share of liability
501(c), 501(d), or 170(c) (other than the
funds described in section 4966(d)(2) for the tax on Schedule N and Part I,
United States) or an Indian tribal
that owe the tax reported on Schedule C line 13. See the instructions for
government (within the meaning of
(section 4943(a)). (Schedule C and Part Schedule N, later, for the definition of
section 7701(a)(40)).
I, line 2). related organization.
Any entity described in section
Organizations making political ex- A governmental entity that is not
TIP 4965(c) that is a party to a PTST
penditures. All section 501(c)(3) must file Form 8886-T. TIP exempt from tax under section
organizations that make a political 501(a) as a section 501(c)(3)
expenditure must file Form 4720 to Sponsoring organizations maintain- organization and does not exclude
report the liability and pay the tax ing donor advised funds. All section income under section 115(1) is not an
(Schedule F and Part I, line 5). 170(c) organizations (excluding private ATEO for purposes of section 4960.
Organization managers may report any foundations and government
first tier tax they owe on Schedule F of Certain private colleges and univer-
organizations referred to in sections
Form 4720. (See Schedule F sities subject to the excise tax on
170(c)(1) and 170(c)(2)(A)) that
net investment income (section
maintain one or more donor advised
4968). An applicable educational

-2- Instructions for Form 4720 (2018)


institution must file Form 4720 to report which the manager, self-dealer, When To File
the liability and pay the excise tax disqualified person, donor, donor
imposed by section 4968. (Schedule O advisor or related person owes tax. A Part I taxes. File Form 4720 by the due
and Part I, line 14.) An applicable person filing Form 4720 separate from date (not including extensions) for filing
educational institution is a private the organization should enter his or her the organization's Form 990-PF, Form
college or university that: tax year at the top of Form 4720. Enter 990, Form 990-EZ, or Form 5227. If you
Answered “Yes” to line 16 in part V of the name, address, and taxpayer aren't required to file any of these forms,
Form 990 or that otherwise is a private identification number of the manager, file Form 4720 by the 15th day of the 5th
college or university that is an eligible self-dealer, disqualified person, donor, month after the organization's
educational institution, as defined in donor advisor or related person in Part accounting period ends.
section 25A(f)(2), II-A. Each manager, self-dealer, If the regular due date falls on a
Had at least 500 students during the disqualified person, donor, donor Saturday, Sunday, or legal holiday, file
preceding taxable year, with more than advisor or related person should by the next business day.
50% of those students located in the complete all the information the form
United States, and requires, including the schedule(s) Affiliated group member. See
Had an aggregate fair market value, applicable to each tax shown on Part section 4911(f) and instructions for
at the end of the preceding taxable year, II-A, to the extent possible, and as Schedule G, later, for definition of
of assets not used directly in the applicable. “affiliated group.” For members of an
carrying out of the organization’s affiliated group of organizations that
Managers of tax favored have different tax years, and who are
exempt purpose, held by the
organization and related organizations,
TIP retirement plans, individual filing Form 4720 to report tax under
retirement arrangements, and section 4911, the tax year of the
of at least $500,000 per student.
savings arrangements described in affiliated group is the calendar year,
Individuals sections 401(a), 403(a), 403(b), 529, unless all members of the group elect
457(b), 408(a), 220(d), 408(b), 530, or under Regulations section 56.4911-7(e)
Managers, self-dealers, disqualified 223(d) must report and pay tax due (5) to make a member's year the group's
persons, donors, donor advisors, under section 4965(a)(2) on Form 5330. tax year.
and related persons. A manager,
self-dealer, disqualified person, donor, Part II taxes. Each manager,
donor advisor, or related person who Where To File self-dealer, disqualified person, donor,
owes tax under Chapter 41 or 42, donor advisor, or related person, whose
including an organization manager tax year ends on the same date as the
under section 4965, who has the same IF you are THEN use the tax year of the organization, but who
tax year (or accounting year, as located in ... following files a separate Form 4720 to report and
applicable) as the organization, may address ... pay the tax, must file Form 4720 by the
report the tax shown on Part II-A of the the United States Department of the due date of the Form 990-PF, Form
Form 4720 filed by the organization. A Treasury 5227, Form 990, or Form 990-EZ of the
manager, self-dealer, or disqualified Internal Revenue organization for the tax period that
person who reports a tax on Part II-A is Service Center corresponds to the period reported by
personally responsible for the accuracy Ogden, UT the manager, self-dealer, disqualified
of information set forth on Part II-A, as 84201-0027 person, donor, donor advisor, or related
well as any tax shown there. Each person. A manager, self-dealer,
manager, self-dealer, disqualified a foreign country or Internal Revenue disqualified person, donor, donor
person, donor, donor advisor or related a U.S. possession Service Center advisor, or related person whose tax
person paying taxes shown on Part II-A P.O. Box 409101 year ends on a date different from that
should include his or her own check or Ogden, UT 84409 of the organization, or if the organization
money order, payable to the United is not required to file a Form 990, Form
States Treasury, with Form 4720. The 990-EZ, Form 990-PF, or Form 5227,
organization must not pay any taxes Private delivery services. You can must file a Form 4720 by the 15th day of
shown on Part II-A. use certain private delivery services the 5th month after the end of his or her
A manager, self-dealer, disqualified (PDS) designated by the IRS to meet tax year.
person, donor, donor advisor, and the “timely mailing as timely filing/ If the regular due date falls on a
related person who owes tax under paying” rule for tax returns and Saturday, Sunday, or legal holiday, file
Chapter 41 or 42, including organization payments. Go to IRS.gov/PDS for the by the next business day.
managers under section 4965, and who current list of designated services.
doesn’t have the same tax year (or The private delivery service can tell Extension
accounting year, as applicable) or you how to get written proof of the Use Form 8868, Application for
doesn’t sign the return filed by the mailing date. Automatic Extension of Time To File an
organization, must file a separate Form Exempt Organization Return, to request
Private delivery services can't deliver
4720 showing the tax owed. A separate an automatic extension of time to file.
items to P.O. boxes. You must use the
Form 4720 filed by a manager, The automatic extension will be granted
U.S. Postal Service to mail any item to
self-dealer, disqualified person, donor, if Form 8868 is properly completed,
an IRS P.O. box address. Private
donor advisor or related person who filed, and any balance due shown on
delivery services deliver to:
files a separate Form 4720 should Form 4720 is paid by the due date for
include the name of the organization. If Internal Revenue Service Form 4720.
applicable, a separate Form 4720 1973 Rulon White Blvd.
should be filed for each organization for Ogden, UT 84201

Instructions for Form 4720 (2018) -3-


Even though the organization and For a partnership, the form may be from a United States person (as defined
one or more managers, self-dealers, signed by a partner or partners in section 7701(a)(30)) are from sources
disqualified persons, donors, donor authorized to sign the partnership within the United States. See
advisors, or related persons may file the return. Regulations section 53.4948-1.
same Form 4720 (see Who Must File,
earlier), each person who needs an If the return is filed on behalf of a Although a foreign organization
extension of time to file Form 4720 must trust, the authorized trustee(s) must sign described in section 4948(b) isn't
file his, her, or its own extension. Each it. subject to Chapter 42 taxes, it shall not
Form 8868 should, indicate his, her, or be exempt from tax under section
A receiver, trustee, or assignee 501(a) if it engages in a prohibited
its share of the balance due. Separating required to file any return on behalf of an
amounts in this way allows us to identify transaction. See section 4948(c). A
individual, a trust, estate, partnership, prohibited transaction is a transaction
the persons who paid their share of the association, company, or corporation
tax balance due and should avoid that would subject the organization or its
must sign the Form 4720 filed for these disqualified person to a penalty under
potential problems later on in taxpayers.
processing of the extensions. section 6684 if the foreign organization
Also, a person with a valid power of were a domestic organization. Unless
the transaction constitutes a willful and
Name, Address, etc. attorney may sign for the organization,
flagrant violation of a Chapter 42
The name, address, and employer foundation, manager, self-dealer, donor,
donor advisor, or related person. provision, a transaction violating a
identification number of the organization Chapter 42 provision won't constitute a
should be the same as shown on Form Include a copy of the power of attorney
with the return. prohibited transaction except under the
990-PF, Form 5227, Form 990, Form following circumstances:
990-EZ, and Schedule A (Form 990 or
990-EZ). A self-dealer, donor, donor Attachments 1. There was a prior Chapter 42
advisor, related person, disqualified If you need more space, attach separate violation that resulted in a warning from
person, or manager filing a separate sheets showing the same information in the IRS that a second violation would
Form 4720 enters his, her or its name, the same order as on the printed form. result in a prohibited transaction.
address, and taxpayer identification Show the totals on the printed form. 2. The IRS provides notice that the
number in Part II-A. second transaction will constitute a
Enter the organization's name and prohibited transaction unless it is
Include the suite, room, or other unit EIN on each sheet. Use sheets that are corrected within 90 days of the notice.
number after the street address. the same size as the form and indicate
clearly the line of the printed form to 3. The second transaction isn't
If the Post Office doesn't deliver mail which the information relates. timely corrected.
to the street address, show the P.O. box
number instead of the street address. Organizations Organized Tax Payments
or Created in a Foreign Managers, self-dealers, disqualified
If you want a third party (such as an persons, donors, donor advisors, and
accountant or an attorney) to receive Country related persons, paying tax on the
mail for the foundation or charity, enter Report all amounts in U.S. currency organization's Form 4720 must pay with
on the street address line “C/O” (state conversion rate used) and give the return the tax that applies to them as
followed by the third party's name and information in English. Report items in shown in Part II-A. Managers,
street address or P.O. box. total, including amounts and self-dealers, disqualified persons,
transactions from both inside and donors, donor advisors, and related
Signature and Verification outside the United States. persons, who file separate Forms 4720
If you are a manager, self-dealer, must pay the applicable tax with their
Chapter 42 taxes (including sections
disqualified person, donor, donor separate returns. When managers don't
4941 through 4945, 4955, 4958 through
advisor, or related person, you should sign the organization's Form 4720 to
4960 and 4965 through 4968) don't
sign only in the spaces that apply, report their own tax liability, the amount
apply to foreign organizations that
whether you use the return of the of tax they owe shouldn't be entered in
receive substantially all of their support
foundation or organization as your Part II-B, line 1.
(other than gross investment income)
return, or file separately. from sources outside the United States. Payment by a private foundation of
See section 4948(b). These any taxes owed by the foundation
If you are signing on behalf of the
organizations must complete this form managers or self-dealers will result in
foundation or organization and also
and file it in the same manner as additional taxes under the self-dealing
because of personal tax liability, you
domestic organizations. However, these and taxable expenditure provisions.
must sign twice. You sign:
organizations, as well as their Managers and self-dealers should pay
1. On behalf of the foundation or foundation managers and self-dealers, taxes imposed on them with their own
organization, and don't have to pay any tax that would check or money order.
2. For your own personal tax otherwise be due on this return.
liability. Disqualified persons and entity
For these purposes, a foreign managers should pay taxes on excess
For a corporation (or an association), organization is an organization not benefit transactions that are imposed on
the form may be signed by one of the created or organized in or under the law them with their own check or money
following: president, vice president, of the United States, a U.S. state or order. Any reimbursement of a
treasurer, assistant treasurer, chief possession, or the District of Columbia. disqualified person's tax liability from
accounting officer, or other corporate Gifts, grants, contributions, or excess benefit transactions by the
officer (such as tax officer). membership fees directly or indirectly organization will be treated as an

-4- Instructions for Form 4720 (2018)


excess benefit transaction subject to the self-dealing, see the instructions for Amended Return
tax unless the organization included the Schedule A of this form; for the To correct a previously filed Form 4720
reimbursement in the disqualified definition of investments that jeopardize (including the reporting of additional
person's compensation and the charitable purpose, see the instructions excise taxes discovered after the
disqualified person's total compensation for Schedule D of this form.) Paying the original Form 4720 filing), use the same
was reasonable. See the instructions for tax and filing a Form 4720 are required year form as the form you are
Schedule I, later, for information on for each year or part of a year in the correcting, and:
excess benefit transactions. taxable period that applies to the act or Write “Amended Return,” at the top of
investment. Generally, the taxable page 1.
Rounding Off to Whole period begins with the date of the act or Complete the entire return (not just
Dollars investment and ends with the date the part that changed) following the form
corrective action is completed, a notice and instructions for the amended year.
You may round off cents to whole
of deficiency is mailed, or the tax is Include a statement that identifies the
dollars on your return and schedules. If
assessed, whichever comes first. lines and amounts being changed and
you do round to whole dollars, you must
round all amounts. To round, drop Similar rules apply for the initial tax the reason for each change.
amounts under 50 cents and increase liability resulting from failing to distribute Write the entity's name and EIN at the
amounts from 50 to 99 cents to the next income (Schedule B) and from acquiring top of each page of the statement.
dollar. For example, $1.39 becomes $1 excess business holdings (Schedule C). If the amended return is claiming a
and $2.50 becomes $3. Thus, the initial tax liability for those refund or requesting an abatement,
taxes continues to accrue until the date write “Claim for Refund” or “Request for
If you have to add two or more a notice of deficiency is mailed, the
amounts to figure the amount to enter Abatement,” whichever is applicable,
violation is corrected, or the tax is near the top of the statement discussed
on a line, include cents when adding the assessed, whichever comes first.
amounts and round off only the total. above.
Completing the Schedules Note. If you are claiming a refund or
Penalties and Interest Before completing any of the schedules requesting an abatement, you may use
There are penalties for failure to file or to in this return, read the applicable Form 843, Claim for Refund and
pay tax. There are also penalties for instructions. If any completed schedule Request for Abatement, instead of Form
willful failure to file, supply information or shows taxes owed, enter them on 4720.
pay tax, and for filing fraudulent returns page 1 of this return.
and statements, that apply to public
charities, private foundations, The instructions for Schedules A Specific Instructions for
through O describe acts or transactions
managers, donors, donor advisors,
subject to tax under Chapter 42. Don't
Page 1
related persons, and self-dealers who
are required to file this return. See complete Schedules A and E if Question B. To avoid additional taxes
sections 6651, 7203, 7206, and 7207. exceptions apply to all the acts or and penalties under sections 4941
Also, see section 6684 for penalties that transactions. In general, question A on through 4945, 4955, and 4958, and in
relate to tax liability under Chapter 42. page 1 and Schedules A, B, C, D, and E some cases further initial taxes, a
don't apply to public charities. However, foundation, organization, disqualified
Interest charges for any unpaid tax is Schedule C does apply to some public person, or manager must correct the
charged at the underpayment rate charities including certain sponsoring taxable event within the correction
established under section 6621. The organizations of donor advised funds period. The taxable event is the act,
interest on underpayments is in addition and certain supporting organizations failure to act, or transaction that resulted
to any penalties. that are treated as private foundations in the liability for initial taxes under these
for purposes of section 4943. See the provisions.
Abatement instructions for Schedule C for a Generally, the correction period
See section 4962 for rules on description of the public charities to begins on the date the event occurs and
abatement, refund, or relief from which section 4943 applies. ends 90 days after the mailing date of a
payment of first tier taxes under Before completing Schedule C, notice of deficiency, under section
sections 4942 through 4945, 4955, determine whether the organization or 6212, in connection with the second tier
4958, 4966, and 4967. To request donor advised fund has excess holdings tax imposed on that taxable event. That
abatement, refund, or relief under in any business enterprise. If the time is extended by:
section 4962, write “Request for organization or donor advised fund has Any period in which a deficiency can't
Abatement Under Section 4962” in the holdings subject to the tax on excess be assessed under section 6213(a)
top margin of Form 4720, page 1. business holdings, complete because a petition to the Tax Court for
Schedule C for each enterprise. redetermination of the deficiency is
Initial Tax Liability pending, not extended by any
If you pay an initial tax on self-dealing or Before completing Schedule D, supplemental proceeding by the Tax
on investments that jeopardize determine whether the investment was Court under section 4961(b), regarding
charitable purpose (figured on program related. If not, complete whether correction was made, and
Schedules A and D of Form 4720, Schedule D for each investment for Any other period the IRS determines
respectively) for tax year 2018, the which you answered “Yes,” to Form is reasonable and necessary to correct
payment may not satisfy the entire tax 990-PF, Part VII-B, question 4a or b, or the taxable event.
liability for an act of self-dealing or an Form 5227, Part VI-B, question 78a or b.
The taxable event will be treated as
investment that jeopardizes charitable occurring:
purpose. (For the definition of

Instructions for Form 4720 (2018) -5-


For the tax on failure to distribute If, when the return is filed, the endowment contract that benefits
income, on the first day of the tax year foundation, entity, managers, directly or indirectly the transferor, a
for which there was a failure to distribute self-dealers, disqualified persons, member of the transferor's family, or any
income, donors, donor advisors, or related other person designated by the
For the tax on excess business persons have corrected any acts or transferor (other than an organization
holdings, on the first day on which there transactions resulting in liability for tax described in section 170(c)).
were excess business holdings, or under Chapter 42, answer “Yes,” to
In any other case, on the date the question B and give the following For more information, see Notice
event occurred. information separately for each 2000-24, 2000-17 I.R.B. 952, at
Generally, the term “correction” has correction: IRS.gov/pub/irs-irbs/irb00-17.pdf.
the following meanings. Schedule and item number of the act
or transaction that has been corrected, Line 11
1. Section 4941 (Schedule A) A description of the act or transaction
Undoing the transaction to the extent Enter the charitable remainder trust's
that resulted in the tax,
possible, but in any case placing the unrelated business taxable income on
A detailed description of the
private foundation in a financial position line 11. Charitable remainder trusts
correction made,
not worse than that in which it would be must attach a statement that shows how
The amount of any political
if the disqualified person were dealing their unrelated business taxable income
expenditure recovered,
under the highest fiduciary standards. was computed. The excise tax imposed
Description of safeguards to prevent
2. Section 4942 (Schedule B) on a charitable remainder trust is equal
future political expenditures, and
Making sufficient qualifying distributions to the trust's unrelated business taxable
The date of correction.
to compensate for deficient qualifying income.
For any acts or transactions the
distributions for a prior tax year. foundation, entity, managers, Attached statement. Charitable
3. Section 4943 (Schedule C) self-dealers, disqualified persons, remainder trusts may use Form 990-T
Action that results in the foundation no donors, donor advisors, or related as the attached statement. If the trust
longer having excess business holdings persons have not corrected, give the uses Form 990-T as the attached
in a business enterprise. following information separately for statement, complete Form 990-T as
each act: follows:
4. Section 4944 (Schedule D)
An investment is considered to be Schedule and item number of the act 1. Write “ATTACHMENT TO FORM
removed from jeopardy when the or transaction that hasn't been 4720” at the top of page 1.
investment is sold or otherwise corrected, 2. Enter the trust's name under
disposed of, and the proceeds of such A description of the act or “Name of organization” and complete
sale or other disposition are not transaction, and item D and E at the top of page 1.
investments that jeopardize the carrying A detailed explanation of why
3. Complete Parts I, II and III. If a
out of the foundation's exempt purpose. correction hasn't been made and what
line doesn't apply, leave it blank.
5. Section 4945 (Schedule E) steps are being taken to make the
correction. 4. Complete any of the Schedules
a. Recovering part or all of the on Form 990-T or other forms or attach
expenditure to the extent recovery is If you are correcting deficient
a schedule as required by any line on
possible, and where full recovery isn't distributions under section 4942 where
which an entry is made for Parts I, II and
possible, such additional corrective an election under section 4942(h)(2)
III. Also, attach any schedule as may be
action as is prescribed by regulations, was filed with the IRS, provide a copy of
required on any Schedule on Form
or the election. See the instructions for
990-T or other form that you are
Form 990-PF, Part XIII, lines 4b and 4c
b. Obtaining or making the report in required to complete. However, if
for more information.
question for a case that fails to comply Schedule D (Form 1041) is required,
with section 4945(h)(2) or (3) Part I don't complete Part V of Schedule D
(expenditure responsibility). (Form 1041).
Line 8
6. Section 4955 (Schedule F) 5. Enter the amount from line 38 of
Recovering part or all of the expenditure If the organization has an entry Form 990-T on Part I, line 11 of Form
to the extent recovery is possible, TIP on this line, it must also file 4720. Don't complete Parts IV-VI or the
establishment of safeguards to prevent Form 8870. signature area of Form 990-T.
future political expenditures, and where Enter the total of all premiums paid by If you don't complete a Form 990-T
full recovery isn't possible, such the organization on any personal benefit as the attached statement, then attach a
additional corrective action as is contract if the payment of premiums is in schedule with the same information as
prescribed by the regulations. connection with a transfer for which a Form 990-T and its Schedules (as
7. Section 4958 (Schedule I) deduction isn't allowed under section discussed above) including all the
Undoing the excess benefit to the extent 170(f)(10)(A). Also, if there is an information that must be attached to
possible and taking any additional understanding or expectation that any Form 990-T and its Schedules, such as
measures necessary to place the person will directly or indirectly pay any other forms and attachments. Be sure to
organization in a financial position not premium on a personal benefit contract enter the amount shown as unrelated
worse than that in which it would be if for the transferor, include those business taxable income on Part I,
the disqualified person had been premium payments in the amount line 11 of Form 4720.
dealing under the highest fiduciary entered on this line.
standards.
A personal benefit contract is (to the
transferor) any life insurance, annuity, or

-6- Instructions for Form 4720 (2018)


Part II-A Column (j). Enter for each person
listed in column (a) the tax on taxable Schedule A—Initial Taxes
Columns (a) and (b). List the names,
addresses, and taxpayer identification distributions from sponsoring on Self-Dealing (Section
numbers of all persons who owe tax in organizations maintaining donor 4941)
connection with the foundation or advised funds from Schedule K, Part II,
column (d), that the individual took part General Instructions
organization, whether as managers,
self-dealers, disqualified persons, in as a manager. Requirement. All organizations that
donors, donor advisors, or related Column (k). For each person listed in answered “Yes,” to question 1b or 1c in
persons, as shown in Schedules A, D, column (a), enter the: Part VII-B of Form 990-PF, or “Yes,” to
E, F, H, I, J, K, and L. 1. Tax imposed on a donor, donor question 75b or 75c in Part VI-B of Form
Column (c). For each person listed in advisor, or related person, from 5227, must complete Schedule A. In
column (a), enter the sum of: Schedule L, Part II, column (d), and addition, a self-dealer or a manager that
participated in an act of self-dealing
1. Taxes that person owes as a 2. Tax on each fund manager who knowing that it was such an act must
self-dealer, from Schedule A, Part II, agreed to the making of a distribution of also complete Schedule A. Complete
column (d), and a prohibited benefit from Schedule L, Parts I, II, and III of Schedule A only in
2. Tax for acts of self-dealing in Part III, column (d), that the individual connection with acts that are subject to
which the individual participated as a took part in as a manager. the tax on self-dealing.
manager, from Schedule A, Part III, Liability for tax. A person's liability Paying the tax and filing a Form 4720
column (d). for tax as a manager, self-dealer, is required for each year or part of a
disqualified person, donor, donor year in the taxable period that applies to
Column (d). Enter for each person advisor, or related person, under the act of self-dealing. Generally, the
listed in column (a) the tax on sections 4912, 4941, 4944, 4945, 4955, taxable period begins with the date on
investments that jeopardize charitable 4958, 4966, and 4967 is joint and which the self-dealing occurs and ends
purpose from Schedule D, Part II, several. Therefore, if more than one on the earliest of:
column (d), that the individual took part person owes tax on an act as a The date a notice of deficiency is
in as a foundation manager. manager, self-dealer, disqualified mailed under section 6212, in
Column (e). Enter for each person person, donor, donor advisor, or related connection with the initial tax imposed
listed in column (a) the tax on taxable person, they may apportion the tax on the self-dealer,
expenditures from Schedule E, Part II, among themselves. However, when all The date the initial tax on the
column (d), that the individual took part managers, self-dealers, donors, donor self-dealer is assessed, or
in as a foundation manager. advisors, related persons, or The date correction of the act of
disqualified persons who are liable for self-dealing is completed.
Column (f). Enter for each person tax on a particular transaction under
listed in column (a) the tax on political sections 4912, 4941, 4944, 4945, 4955, Self-dealing. Self-dealing includes any
expenditures from Schedule F, Part II, 4958, 4966, or 4967 pay less than the direct or indirect:
column (d), that the individual took part total tax due on that transaction, then Sale, exchange, or leasing of
in as an organization or foundation the IRS may charge the amount owed to property between a private foundation
manager. one or more of them regardless of the and a disqualified person (see
tax apportionment shown on this return. definitions in Form 990-PF instructions),
Column (g). Enter for each person
Lending of money or other extension
listed in column (a) the tax on
disqualifying lobbying expenditures from
Part II-B of credit between a private foundation
and a disqualified person,
Schedule H, Part II, column (d), that the Line 1. If there is more than one signer
Furnishing of goods, services, or
individual took part in as an organization for this return, see Tax Payments,
facilities between a private foundation
manager. earlier.
and a disqualified person,
Column (h). For each person listed in Line 3. List total payments here, Payment of compensation (or
column (a), enter the sum of: including amounts paid on extension(s) payment or reimbursement of
1. Taxes that person owes as a with Form 8868. See the discussion on expenses) by a private foundation to a
disqualified person, from Schedule I, Extensions, earlier, for details on disqualified person,
Part II, column (d), and amounts paid with extensions. Transfer to, or use by or for the
benefit of, a disqualified person of the
2. Tax on excess benefit Line 4. Enter the tax due on this line.
income or assets of a private
transactions in which the organization (Make check(s) or money order(s)
foundation, and
manager participated knowing that the payable to the United States Treasury.)
Agreement by a private foundation to
transaction was an excess benefit Line 5. This is your refund. If various make any payment of money or other
transaction, from Schedule I, Part III, persons (individuals or organizations) property to a government official other
column (d). have overpaid their taxes, please have than an agreement to employ or make a
Column (i). Enter for each person each person request only his, her, or its grant to that individual for any period
listed in column (a) the tax on the entity legal share of the refund. This can be after the end of government service if
manager who approved or otherwise shown on an attachment to the Form that individual will be ending
caused the entity to be a party to a 4720. Only persons with a legal right to government service within a 90-day
prohibited tax shelter transaction from a refund should file a refund request period.
Schedule J, Part II, column (d). here.
Exceptions to self-dealing. Go to
IRS.gov/irm/part7/

Instructions for Form 4720 (2018) -7-


irm_07-027-015.html#d0e272 for a liable for the entire tax in connection Requirement. If you answered “Yes,”
description of acts that aren't with the act. But the foundation to Form 990-PF, Part VII-B, question 3b;
considered self-dealing. managers liable for the tax may prorate Form 990, Part V, question 8; or Form
the payment among themselves. Enter 5227, Part VI-B, question 77b, or
Initial taxes on self-dealer. An initial
in column (c) the tax to be paid by each otherwise had excess business
tax of 10% of the amount involved is
foundation manager. holdings, complete a Schedule C for
charged for each act of self-dealing
between a disqualified person and a Carry the total amount in column (d) each business enterprise in which the
private foundation for each year or part for each foundation manager to Part foundation had excess business
of a year in the taxable period. Any II-A, column (c). holdings for its tax year beginning in
disqualified person (other than a 2018.
foundation manager acting only as
such) who takes part in the act of
Schedule B—Initial Tax on Taxes. A private foundation that has
excess holdings in a business
self-dealing must pay the tax. Undistributed Income enterprise may become liable for an
Initial taxes on foundation manag- (Section 4942) excise tax based on the amount of
ers. When a tax is imposed on a Complete Schedule B if you answered holdings. The initial tax is 10% of the
foundation manager for an act of “Yes,” to Form 990-PF, Part VII-B, value of the excess holdings and is
self-dealing, the tax will be 5% of the question 2b. imposed on the last day of each tax year
amount involved in the act of that ends during the taxable period. The
An initial excise tax of 30% is excess holdings are determined on the
self-dealing for each year or part of a imposed on a private foundation's
year in the taxable period. However, the day during the tax year when they were
undistributed income on the first day of the largest.
total tax imposed for all years in the the second or any succeeding tax year
taxable period is limited to $20,000 for after the tax year in connection with If the foundation keeps the excess
each act of self-dealing. The tax is which income remains undistributed. business holdings after the initial tax
imposed on any foundation manager has been imposed, it becomes liable for
who took part in the act knowing that it Use the 2018 Form 4720 to report an additional tax of 200% of the
was self-dealing except those the initial tax on undistributed income for remaining excess business holdings
foundation managers whose tax years beginning in 2017 or earlier unless it disposes of them within the
participation was not willful and was due that remains undistributed at the end of taxable period. However, if the
to reasonable cause. the foundation's current tax year foundation disposes of its excess
beginning in 2018. The initial tax won't business holdings during the correction
Specific Instructions apply to a private foundation's period, the additional tax won't be
Part I. List each act of self-dealing in undistributed income: assessed or, if assessed, will be abated
Part I. Enter in column (d) the number For any tax year it is an operating and if collected, will be credited or
designation from Form 990-PF, Part foundation (as defined in section 4942(j) refunded. For information on the
VII-B, question 1a, or Form 5227, Part (3) and related regulations or in section correction period, go to IRS.gov/irm/
VI-B, question 75a, that applies to the 4942(j)(5)), or part7/irm_07-027-017.html#d0e680.
act. For example, “1a(1)” or “1a(4).” To the extent it didn't distribute an
amount solely because of an incorrect Business enterprise. In general, this
Part II. Enter in column (a) the names valuation of assets, provided the means the active conduct of a trade or
of all disqualified persons who took part foundation satisfies the requirements of business, including any activity regularly
in the acts of self-dealing listed in Part I. section 4942(a)(2), or conducted to produce income from
If more than one disqualified person For any year for which the initial tax selling goods or performing services,
took part in an act of self-dealing, each was previously assessed or a notice of that is an unrelated trade or business
is individually liable for the entire tax in deficiency was issued. described in section 513.
connection with the act. But the The term “business enterprise”
disqualified persons who are liable for doesn't include a functionally related
the tax may prorate the payment among Schedule C—Initial Tax on business as defined in section 4942(j)
themselves. Enter in column (c) the tax Excess Business Holdings (4). In addition, business holdings don't
to be paid by each disqualified person. include program-related investments
Carry the total amount in column (d)
(Section 4943) (such as investments in small
for each self-dealer to Part II-A, General Instructions businesses in economically depressed
column (c). Private foundations may be subject to areas or in corporations to assist in
an excise tax on the amount of any neighborhood renovations) as defined
Part III. Enter in column (a) the names
excess holdings, as described later. For in section 4944(c) and related
of all foundation managers who took
purposes of section 4943, donor regulations. Also, business enterprise
part in the acts of self-dealing listed in
advised funds and certain supporting doesn't include a trade or business at
Part I, and who knew that they were acts
organizations are considered private least 95% of the gross income of which
of self-dealing (except for foundation
foundations. For more information on comes from passive sources. For more
managers whose participation was not
the applicability of Schedule C to such information, go to IRS.gov/irm/part7/
willful and was due to reasonable
organizations, see General rules on the irm_07-027-017.html#d0e77.
cause).
If more than one foundation manager permitted holdings of donor advised Excess business holdings. Excess
took part in the act of self-dealing, funds and certain supporting business holdings is the amount of
knowing that it was such an act, and organizations in a business enterprise, stock or other interest in a business
participation was willful and not due to later. enterprise that the foundation would
reasonable cause, each is individually have to dispose of to a person other

-8- Instructions for Form 4720 (2018)


than a disqualified person in order for described in section 4947(a)(2). See enterprise or (b) on nonvoting stock, if
the foundation's remaining holdings in Regulations section 53.4943-8. all disqualified persons together don't
the enterprise to be permitted holdings own more than 20% of the voting stock
Taxable period. The taxable period
(section 4943(c)(1)). Go to IRS.gov/irm/ of the business enterprise.
begins on the first day the foundation
part7/irm_07-027-017.html#d0e179 for If the private foundation and all
has excess business holdings and ends
more information. disqualified persons together don't own
on the earliest of:
Sole proprietorships. In general, a The mailing date of a notice of more than 35% of the enterprise's voting
private foundation can't have any deficiency, under section 6212, in stock, and effective control is in one or
permitted holdings in a business connection with the initial tax on excess more persons who aren't disqualified
enterprise that is a sole proprietorship. business holdings related to those persons in connection with the
For exceptions, go to IRS.gov/irm/part7/ holdings, foundation, then 35% may be
irm_07-027-017.html#d0e77. For a The date the excess is eliminated, or substituted for 20% wherever it appears
definition of sole proprietorship, see The date the initial tax on excess in the preceding paragraph. See
Regulations section 53.4943-10(e). business holdings related to those sections 4943(c)(2) and 4943(c)(3).
holdings is assessed. If a private foundation and all
Corporate voting stock. This stock
entitles a person to vote for the election When a notice of deficiency isn't disqualified persons together had
of directors. Treasury stock and stock mailed because the restrictions on holdings in a business enterprise of
that is authorized but unissued isn't assessment and collection are waived more than 20% of the voting stock on
voting stock for these purposes. See or because the deficiency is paid, the May 26, 1969, substitute that
Regulations sections 53.4943-3(b)(1)(ii) date of filing the waiver or the date of percentage for 20% and for 35% (if the
and 53.4943-3(b)(2)(ii). paying the tax, respectively, will be holding is greater than 35%), using the
treated as the end of the taxable period. principles of section 4943(c)(4) that
For a partnership (including a limited apply. However, the percentage
See Regulations section 53.4943-9.
partnership) or joint venture, the term substituted can't be more than 50%.
“profits interest” should be substituted
for “voting stock.” For any Exceptions to Tax on Excess The percentage substituted under
unincorporated business enterprise that Business Holdings the preceding paragraph is (1) subject
isn't a partnership, joint venture, or sole to reductions and limitations (see
proprietorship, the term “beneficial 2% de minimis rule. A private sections 4943(c)(4)(A)(ii) and 4943(c)
interest” should be substituted for foundation won't be treated as having (4)(D)) and (2) applicable, both in
“voting stock.” See Regulations section excess business holdings in any connection with the voting stock and,
53.4943-3(c). enterprise in which it, together with separately, in connection with the value
related foundations as described in the of all outstanding shares of all classes of
Nonvoting stock. Corporate equity instructions for Form 990-PF (under the stock (see section 4943(c)(4)(A)(iii)).
interests that don't have voting power definition for “disqualified person” in the
should be classified as nonvoting stock. Interests held by a private founda-
General Instructions), owns not more
Evidences of indebtedness (including tion (other than donor advised funds
than 2% of the voting stock and not
convertible indebtedness), warrants, and supporting organizations) on
more than 2% in value of all outstanding
and other options or rights to acquire May 26, 1969. For private foundations,
shares of all classes of stock.
stock shouldn't be considered equity other than donor advised funds and
interests. See Regulations section Disposition of excess business hold- supporting organizations considered to
53.4943-3(b)(2). ings within 90 days. Generally, when be private foundations for purposes of
a private foundation acquires excess section 4943, that had business
For a partnership (including a limited business holdings other than as a result holdings on May 26, 1969 (or holdings
partnership) or joint venture, the term of purchase by the foundation (such as acquired by trust or will as described
“capital interest” should be substituted an acquisition by a disqualified person), below), that were more than the current
for “nonvoting stock.” For any the foundation won't be taxed on those limits permit, there are transitional rules
unincorporated business that isn't a excess holdings if it disposes of enough that permit the foundation to dispose of
partnership, joint venture, or sole of them so that it no longer has an the excess over time without being
proprietorship, references to nonvoting excess. To avoid the tax, the disposition subject to the tax on excess business
stock don't apply for computation of must take place within 90 days from the holdings.
permitted holdings. See Regulations date the foundation knew, or had reason
section 53.4943-3(c)(4). During the first phase, no excess
to know, of the event that caused it to business holdings tax was imposed on
Attribution of business holdings. In have excess business holdings. That a private foundation for interests held
determining the holdings in a business 90-day period will be extended to since May 26, 1969, if the foundation
enterprise of either a private foundation include the period during which federal had excess holdings on that date. The
or a disqualified person, any stock or or state securities laws prevent the first phase is:
other interest owned directly or foundation from disposing of those
A 20-year period beginning on May
indirectly by or for a corporation, excess business holdings. See
26, 1969, if on that date the foundation
partnership, estate, or trust is Regulations section 53.4943-2(a).
and all disqualified persons held more
considered owned proportionately by or General rules on the permitted hold- than a 95% voting interest in the
for its shareholders, partners, or ings of a private foundation in a enterprise (the 20-year first phase
beneficiaries. In general, this rule business enterprise. No excess expired on May 25, 1989);
doesn't apply to certain income interests business holdings tax is imposed (a) if a A 15-year period beginning on May
or remainder interests of a private private foundation and all disqualified 26, 1969, if on that date the foundation
foundation in a split-interest trust persons together hold no more than and all disqualified persons together
20% of the voting stock of a business

Instructions for Form 4720 (2018) -9-


had more than a 75% voting stock Gifts or bequests of business hold- aren't functionally integrated and (2)
interest (or more than a 75% profits or ings. Except as provided in the Type II supporting organizations that
beneficial interest of any unincorporated exception regarding Holdings acquired accept any gift or contribution from a
enterprise), or more than a 75% interest by trust or will (discussed above), there person who by himself or in connection
in the value of all outstanding shares of is a special rule for private foundations with a related party controls the
all classes of stock (or more than a 75% that have excess business holdings as a supported organization that the Type II
capital interest of a partnership or joint result of a change in holdings after May supporting organization supports. (See
venture) in the enterprise (the 15-year 26,1969. This rule applies if the change the 2018 Instructions for Schedule A
first phase expired on May 25, 1984); is other than by purchase by the (Form 990 or 990-EZ), Part I, question
and foundation or by disqualified persons 11, for help in determining the type of
A 10-year period beginning on May (such as through gift or bequest) and your supporting organization.)
26, 1969, in all other cases in which the the additional holdings result in the Readjustments, distributions, or
foundation had excess business foundation having excess business changes in relative value of different
holdings on May 26, 1969. The 10-year holdings. In that case, the foundation classes of stock. See Regulations
first phase expired on May 25, 1979. has 5 years to reduce these holdings or section 53.4943-4(d)(10) for special
During the second phase (the those of its disqualified persons to rules whereby increases in the
15-year period after the first phase), if permissible levels to avoid the tax. See percentage of value of holdings in a
the foundation's disqualified persons section 4943(c)(6) and Regulations corporation that result solely from
hold more than 2% of the enterprise's section 53.4943-6. changes in the relative values of
voting stock, the foundation will be liable A private foundation that received an different classes of stock won't result in
for tax if the foundation holds more than unusually large gift or bequest of excess business holdings.
25% of the voting stock or if the business holdings after 1969, and that See Regulations section
foundation and its disqualified persons has made a diligent effort to dispose of 53.4943-6(d) for rules on treatment of
together hold more than 50% of the excess business holdings, may apply increases in holdings due to
voting stock. for an additional 5-year period to reduce readjustments, distributions, or
However, during the second phase, if its holdings to permissible levels if redemptions.
a foundation's disqualified persons certain conditions are met. See section
See Regulations section 53.4943-7
purchase voting stock in a business 4943(c)(7).
for special rules for readjustments
enterprise after July 18, 1984, causing
General rules on the permitted hold- involving grandfathered holdings.
the combined holdings of the
ings of donor advised funds and cer-
disqualified persons to exceed 2% of Exceptions from self-dealing taxes
tain supporting organizations in a
the enterprise's voting stock, the on certain dispositions of excess
business enterprise. Rules similar to
foundation has 5 years to reduce its business holdings. Section 101(I)(2)
those described above for interests held
holdings in the enterprise to below its (B) of the Tax Reform Act of 1969
by private foundations on May 26, 1969,
second phase limit before the increase provides for a limited exception from
will be applied to determine if donor
will be treated as held by the foundation. self-dealing taxes for private
advised funds or certain supporting
See sections 4943(c)(4)(D) and 4943(c) foundations that dispose of certain
organizations with interests as of August
(6). excess business holdings to disqualified
17, 2006, have any excess business
The first-phase periods may be persons, as long as the sales price
holdings. However, the date of August
suspended pending the outcome of any equals or is more than fair market value.
17, 2006, will be substituted for May 26,
judicial proceeding the private 1969. The excess business holdings
foundation brings regarding reform or involved are interests that are subject to
other procedure to excuse it from Donor advised fund. In general, a the section 4941 transitional rules for
compliance with its governing donor advised fund is a fund or account May 26, 1969, holdings. These interests
instrument or similar instrument in effect separately identified by reference to would also be subject to the excess
on May 26, 1969. See section 4943(c) contributions of a donor or donors that is business holdings tax if they were not
(4)(C) and Regulations section owned and controlled by a sponsoring reduced by the required amount.
53.4943-4. organization and for which the donor
has or expects to have advisory Specific Instructions
Holdings acquired by trust or will. privileges concerning the distribution or Complete columns (a) and (b) of
Holdings acquired under the terms of a investment of the funds. See Schedule C if sections 4943(c)(4),
trust that was irrevocable on May 26, Schedule K for further details. 4943(c)(3) (using the principles of
1969, or under the terms of a will 4943(c)(4)), or 4943(c)(5) apply.
executed by that date, are treated as Sponsoring organization. A
held by the foundation on May 26, 1969, sponsoring organization is any section Complete column (a) and column (c)
except that the 15- and 10-year periods 170(c) organization other than (if applicable) if sections 4943(c)(2) or
of the first phase for the holdings start governmental entities (described in 4943(c)(3) (using the principles of
on the date of distribution under the trust section 170(c)(1) and (2)(A)) that isn't a 4943(c)(2)) apply.
or will instead of on May 26, 1969. See private foundation as defined in section Complete Schedule C for that day
section 4943(c)(5) and Regulations 509(a)(3) that maintains one or more during the tax year when the
section 53.4943-5. See section 4943(d) donor advised funds. foundation's excess holdings in the
(1) and Regulations section 53.4943-8 Supporting organizations. Only enterprise were largest.
for rules relating to constructive certain supporting organizations are Line 1. Enter in column (a) the
holdings held in a corporation, subject to the excess business holdings percentage of voting stock the
partnership, estate, or trust for the tax under section 4943. These include foundation holds in the business
benefit of the foundation. (1) Type III supporting organizations that enterprise.

-10- Instructions for Form 4720 (2018)


If the foundation is using the rules or holdings if line 1 is more than line 2 in (B) (religious, charitable, educational,
principles for determining present column (a) or if the private foundation etc.). A significant purpose of such an
holdings under section 4943(c)(4)(A) or holds nonvoting stock and all investment can't be the production of
(D) (or rules similar to that for donor disqualified persons together own more income or the appreciation of property.
advised funds and certain supporting than 20% (or 35%, if applicable) of the See section 4944(c) and Regulations
organizations), enter in column (b) the enterprise's voting stock, interest, etc. In section 53.4944-3.
percentage of value the foundation the latter case, enter in column (c) the
Initial taxes on foundation. The initial
holds in all outstanding shares of all value of all nonvoting stock the
tax is 10% of the amount invested for
classes of stock. foundation holds.
each year or part of a year in the taxable
Don't include in either column (a) or Line 4. Enter the value of excess period.
(b) stock treated as held by disqualified holdings disposed of under the 90-day
persons: Initial taxes on foundation manag-
rule in Regulations section 53.4943-2(a)
Under section 4943(c)(6) or ers. When a tax is imposed on an
(1)(ii). If other conditions preclude
Regulations sections 53.4943-6 and investment that jeopardizes the
imposition of tax on excess business
53.4943-10(d), or charitable purpose of the foundation,
holdings, include the value of the
During the first phase if the first phase the tax will be 10% of the investment for
nontaxable amount on this line and
is still in effect (see Regulations each year or part of a year in the taxable
attach a statement.
sections 53.4943-4(a), (b), and (c)). period, up to $10,000 for any one
investment. It is imposed on all
Line 2. If the foundation is using the
rules or principles for determining
Schedule D—Initial Taxes foundation managers who took part in
the act, knowing that it was such an act,
present holdings under section 4943(c) on Investments That except for foundation managers whose
(4) (or rules similar to that for donor Jeopardize Charitable participation was not willful and was due
advised funds and certain supporting Purpose (Section 4944) to reasonable cause. Any foundation
organizations), refer to that section and manager who took part in making the
Regulations section 53.4943-4(d) to General Instructions investment must pay the tax.
determine which entries to record in
columns (a) and (b). Enter in column (a) Requirement. Complete Schedule D if Specific Instructions
the excess of the substituted combined you answered “Yes,” to Form 990-PF,
Part VII-B, question 4a or b, or Form Part I. Complete this part for all taxable
voting level over the disqualified person investments.
voting level. Enter in column (b) the 5227, Part VI-B, question 78a or b.
excess of the substituted combined Report each investment separately. Part II. Enter in column (a) the names
value level over the disqualified person Paying tax and filing a Form 4720 are of all foundation managers who took
value level. required for each year or part of a year part in making the investments listed in
in the taxable period that applies to the Part I. See Initial taxes on foundation
If the foundation is using the rules or investments that jeopardize the managers, earlier.
principles for determining permitted foundation's charitable purpose.
holdings under section 4943(c)(2), refer If more than one foundation manager
Generally, the taxable period begins
to that section to determine which is listed in column (a), each is
with the date of the investment and
entries to record in column (a). Enter in individually liable for the entire amount
ends with the date corrective action is
column (a) the percentage, using the of tax in connection with the investment.
completed, a notice of deficiency is
general rule (section 4943(c)(2)(A)) or However, the foundation managers who
mailed, or the initial tax is assessed,
the 35% rule (see section 4943(c)(2) are liable for the tax may prorate
whichever comes first. Therefore, in
(B)), if applicable, of permitted holdings payment among themselves. Enter in
addition to investments made in 2018,
the foundation may have in the column (c) the tax each foundation
include all investments subject to tax
enterprise's voting stock. If the manager will pay.
that were made before 2018 if those
foundation determines the permitted investments were not removed from Carry the total amount in column (d)
holdings under section 4943(c)(2)(B), jeopardy before 2018 and the initial tax for each foundation manager to Part
attach a statement showing effective was not assessed before 2018. II-A, column (d).
control by a third party.
Taxable investments. An investment
Line 3. Enter the value of any stock, to be taxed on this schedule is an Schedule E—Initial Taxes
interest, etc., in the business enterprise
that the foundation is required to
investment by a private foundation that on Taxable Expenditures
jeopardizes the carrying out of its
dispose of so the foundation's holdings exempt purposes (for example, if it is (Section 4945)
in the enterprise are permitted. See determined that the foundation
section 4943 and related regulations. General Instructions
managers, in making the investment,
A private foundation using the didn't exercise ordinary business care Requirement. Complete Schedule E if
section 4943(c)(4) rules, or a donor and prudence, under prevailing facts you answered “Yes,” to Form 990-PF,
advised fund or supporting organization and circumstances, in providing for the Part VII-B, question 5b, or Form 5227,
using rules similar to that, has excess long- and short-term financial needs of Part VI-B, question 79b. Complete Parts
holdings if line 1 is more than line 2 in the foundation to carry out its exempt I and II of Schedule E only for
either column (a) or column (b). Don't purposes). See Regulations section expenditures that are subject to tax.
include in column (b) the value of any 53.4944-1(a)(2). An investment isn't
voting stock included in column (a). taxed on this schedule if it is a Note. Also, see Schedule F, Initial
program-related investment; that is, one Taxes on Political Expenditures.
A private foundation using the
section 4943(c)(2) rules has excess whose primary purpose is one or more
of those described in section 170(c)(2)

Instructions for Form 4720 (2018) -11-


Taxable expenditures. With certain managers whose participation was not These taxes apply in the case of both
exceptions, this means any amount a willful and was due to reasonable cause public charities and private foundations.
private foundation pays or incurs: aren't liable for the tax. Any foundation When tax is imposed under this
manager who took part in the provision in the case of a private
1. To carry on propaganda or expenditure and is liable for the tax must foundation, however, the expenditure in
otherwise influence any legislation pay the tax. The maximum total amount question won't be treated as a taxable
through: of tax on all foundation managers for expenditure under section 4945.
a. An attempt to influence general any one taxable expenditure is $10,000. For an organization formed primarily
public opinion or any segment of it, and If more than one foundation manager is to promote the candidacy or prospective
b. Communication with any member liable for tax on a taxable expenditure, candidacy of an individual for public
or employee of a legislative body, or all those foundation managers are office (or that is effectively controlled by
with any other government official or jointly and severally liable for the tax. a candidate or prospective candidate
employee who may take part in and is used primarily for such
Specific Instructions
formulating legislation; purposes), amounts paid or incurred for
2. To influence the outcome of any Part I. Complete this part for all taxable any of the following purposes are
specific public election, or to conduct, expenditures. Enter in column (f) the deemed political expenditures:
directly or indirectly, any voter number designation from Form 990-PF, Remuneration to the candidate or
registration drive; Part VII-B, question 5a, or Form 5227, prospective candidate for speeches or
Part VI-B, question 79a, that applies to other services;
3. As a grant to an individual for the act; for example, “5a(1).”
travel, study, or other purposes; Travel expenses of the individual;
Part II. Enter in column (a) the names Expenses of conducting polls,
4. As a grant to an organization not surveys, or other studies, or preparing
described in section 509(a)(1), (2), or of all foundation managers who agreed
to make the taxable expenditure. See papers or other material for use by the
(3) or that isn't an exempt operating individual;
foundation (as defined in section Initial tax on foundation managers,
earlier. If more than one foundation Expenses of advertising, publicity,
4940(d)(2)). This includes grants to: and fundraising for such individual; and
manager is listed in column (a), each is
a. Type I, Type II, and Type III individually liable for the entire tax in Any other expense which has the
functionally integrated supporting connection with the expenditure. primary effect of promoting public
organizations (as described in section However, the foundation managers who recognition or otherwise primarily
4942(g)(4)(B) and (C)) if a disqualified are liable for the tax may prorate the accruing to the benefit of the individual.
person of the foundation controls such payment among themselves. Enter in Initial tax on organization or founda-
supporting organization or the column (c) the tax each foundation tion. The initial tax on the organization
supported organizations of such manager will pay. or foundation is 10% of the amount
supporting organizations, and
Carry the total amount in column (d) involved.
b. Type III supporting organizations for each foundation manager to Part
(as described in section 4943(f)(5)(A)) Initial tax on organization managers
II-A, column (e). or foundation managers. An initial tax
that aren't functionally integrated with
their supported organizations; or of 2.5% of the amount involved (up to
Schedule F—Initial Taxes $5,000 of tax on any one expenditure) is
5. For any purpose other than imposed on any manager who agrees to
religious, charitable, scientific, literary, on Political Expenditures an expenditure, knowing that it is a
educational, or public purposes, or the (Section 4955) political expenditure, unless the
prevention of cruelty to children or agreement isn't willful and is due to
animals. General Instructions reasonable cause.
Exceptions. Section 4945(d)(4)(B) Requirement. Complete Schedule F if Any manager who agreed to the
provides an exception to taxable you answered “Yes,” to question 5a(2) expenditure must pay the tax.
expenditures that applies to certain and 5b of Form 990-PF, Part VII-B.
Complete Schedule F if you entered an Specific Instructions
grants to organizations when the
granting foundation exercises amount on line 2 of Schedule C (Form Part I. Complete this part for all political
expenditure responsibility described in 990 or 990-EZ), Part 1-A. Complete expenditures.
section 4945(h). Additional information Schedule F if you are otherwise a
section 501(c)(3) organization that Part II. Enter in column (a) the names
on special rules and exceptions to the
made a political expenditure. of all managers who took part in making
definition of taxable expenditures given
the political expenditures listed in Part I.
above can be found at IRS.gov/irm/ Political expenditures. These include See Initial tax on organization managers
part7/irm_07-027-019.html. any amount paid or incurred by a or foundation managers, earlier.
Initial tax on foundation. An initial tax section 501(c)(3) organization that
If more than one manager is listed in
of 20% is imposed on each taxable participates or intervenes in (including
column (a), each is individually liable for
expenditure of the foundation. the publication or distribution of
the entire amount of tax on the
statements) any political campaign on
Initial tax on foundation managers. expenditure. However, the managers
behalf of, or in opposition to, any
When a tax is imposed on a taxable who are liable for the tax may prorate
candidate for public office. The tax is
expenditure of the foundation, a tax of payment among themselves. Enter in
imposed even if the political expenditure
5% of the expenditure will be imposed column (c) the tax each manager will
gives rise to a revocation of the
on any foundation manager who agreed pay.
organization's section 501(c)(3) status.
to the expenditure and who knew that it
was a taxable expenditure. Foundation

-12- Instructions for Form 4720 (2018)


Carry the total amount in column (d) discussion of the lobbying provisions, Carry the total amount in column (d)
for each manager to Part II-A, column including how to figure the taxable for each organization manager to Part
(f). amount. II-A, column (g).

Schedule G—Tax on Schedule H—Taxes on Schedule I—Initial Taxes


Excess Lobbying Disqualifying Lobbying on Excess Benefit
Expenditures (Section Expenditures (Section Transactions (Section
4911) 4912) 4958)
Requirement. Schedule G must be General Instructions General Instructions
completed by eligible section 501(c)(3)
organizations that elected to be subject Requirement. Schedule H must be Requirement. Schedule I must be
to the limitations on lobbying completed by certain organizations completed by any Applicable
expenditures under section 501(h) and whose section 501(c)(3) status is organization or Disqualified person
that made excess lobbying revoked because of excess lobbying that engaged in an Excess benefit
expenditures as defined in section activities. transaction, and by any fund manager
4911(b). who knowingly participated in the
Exceptions. These taxes aren't
excess benefit transaction. These terms
Except as noted below, follow the imposed on a private foundation (whose
are discussed below.
line instructions on Schedule G. lobbying expenditures may be subject to
the tax on taxable expenditures). These Applicable organization. In
Affiliated groups. Two or more taxes also aren't imposed on any general, an applicable organization is
organizations are members of an organization for which a section 501(h) any section 501(c)(3) (except a private
affiliated group of organizations for the election was in effect at the time of the foundation), 501(c)(4), or 501(c)(29)
purposes of section 4911 only if: lobbying expenditures or that was not organization.
The governing instrument of one eligible to make a section 501(h)
organization requires it to be bound by Also, an applicable organization
election. includes any organization that was a
decisions of the other organization on
legislative issues; or Tax on organization. A tax of 5% of section 501(c)(3) (except a private
The governing board of one the lobbying expenditures is imposed foundation), 501(c)(4), or 501(c)(29)
organization includes persons who are on the organization whose section organization at any time during a
specifically designated representatives 501(c)(3) status is revoked because of five-year period ending on the date of
of another such organization or are excess lobbying activities. an excess benefit transaction (the
members of the government, officers or lookback period).
Tax on organization managers. A tax
paid executive staff members of such of 5% of the lobbying expenditures is Initial taxes. Excise taxes are imposed
other organization, and who, by also imposed on any manager who under section 4958 on each excess
aggregating their votes, hold sufficient willfully and without reasonable cause benefit transaction. If a manager
voting power to cause or prevent action consented to the lobbying expenditures, receives an excess benefit from an
on legislative activities by the first knowing that they would likely result in excess benefit transaction, the manager
organization. See section 4911(f) and the organization no longer qualifying may be liable for the tax on disqualified
Regulations section 56.4911-7. under section 501(c)(3). persons and the tax on the organization
A nonelecting member of an affiliated There is no limit on the amount of this manager. See Abatement, earlier, for
group doesn’t file Form 4720. tax that may be imposed against either information on abatement, refund, or
Electing members of an affiliated the organization or its managers. Any relief from this tax.
group may file a group return or may file organization manager who agreed to Tax on disqualified persons. The
separately. An electing member of an the expenditure must pay the tax. tax is 25% of the excess benefit and is
affiliated group that files a separate paid by any disqualified person who
return, should enter on line 1 the Specific Instructions
improperly benefited from the excess
amount from Schedule C (Form 990 or Part I. Complete this part for all benefit transaction.
990-EZ), Part II-A, column (a), line 1h. disqualifying lobbying expenditures.
Enter on line 2 the amount from Tax on organization managers. If
Schedule C (Form 990 or 990-EZ), Part Part II. Enter in column (a) the names tax is imposed on a disqualified person
II-A, column (a), line 1i. of all organization managers who took for any excess benefit transaction, then
part in making disqualifying lobbying tax is also imposed on any manager
An electing member of an affiliated expenditures listed in Part I. See Tax on who knowingly participated in the
group that is included in a group return, organization managers, earlier. excess benefit transaction. The tax is
should enter on line 1 its share of the
If more than one organization 10% of the excess, not to exceed
excess grass root lobbying
manager is listed in column (a), each is $20,000 for each transaction.
expenditures of the affiliated group, and
on line 2 its share of the excess individually liable for the entire amount Taxable period. Taxable period
lobbying expenditures of the affiliated of tax in connection with the means the period beginning with the
group. Take these amounts from the expenditure. However, the managers date on which the excess benefit
schedule of excess lobbying who are liable for the tax may prorate transaction occurs and ending on the
expenditures that must be attached to payment among themselves. Enter in earlier of:
Schedule C (Form 990 or 990-EZ). See column (c) the tax each manager will
pay. 1. The date a notice of deficiency
the instructions for Schedule C (Form was mailed to the disqualified person for
990 or 990-EZ), Part II-A, for a

Instructions for Form 4720 (2018) -13-


the initial tax on the excess benefit given (including services) by a more than 35% of the total combined
transaction, or disqualified person, except in the voting power,
2. The date on which the initial tax immediately preceding special rules A partnership in which such persons
on the excess benefit transaction for the where the entire amount of the grant, own more than 35% of the profits
disqualified person is assessed. loan, compensation, or other similar interest, or
payment is considered the excess A trust or estate in which such
Excess benefit transaction. An benefit. persons own more than 35% of the
excess benefit transaction is any However, an economic benefit won't beneficial interest.
transaction in which: be treated as compensation for services In determining the holdings of a
1. An excess benefit is provided by unless the applicable organization business enterprise, any stock or other
the organization, directly or indirectly to, clearly indicates its intent to treat the interest owned directly or indirectly shall
or for the use of, any disqualified economic benefit (when paid) as apply.
person, or compensation for a disqualified person's For donor advised funds, sponsor-
2. The amount of any economic services. See Regulations section ing organizations, and certain sup-
benefit provided to, or for the use of, a 53.4958-4(c) for more information. porting organization transactions
disqualified person is determined in Exception. Generally, section 4958 occurring after August 17, 2006. The
whole or in part by the revenues of the doesn't apply to any fixed payment following persons will be considered
organization and violates the private made to a person under an initial disqualified persons along with certain
inurement prohibition rules (to the extent contract. See Regulations section family members and 35% controlled
provided in regulations). 53.4958-4(a)(3) for details. entities associated with them:
Until final regulations are issued Special rule. The initial and additional
regarding the special rules for Donors of donor advised funds,
! taxes of this section don't apply if the
CAUTION revenue sharing transactions
Donor advisors of donor advised
transaction described in 1 under Excess
described in 2 above, these funds,
benefit transaction was pursuant to a
transactions will only be subject to Investment advisors of sponsoring
written contract in effect on September
section 4958 liability under the general organizations, and
13, 1995, and at all times after that date
rule described in 1 above. Disqualified persons of a section
until the time that the transaction
509(a)(3) supporting organization for
occurs.
Supporting organization the organizations that organization
However, if a written contract is supports.
transactions occurring after July 25, materially modified, it is treated as a
2006. For any supporting organization, new contract entered into as of the date For certain supporting
as defined in section 509(a)(3), any of the material modification. A material organization transactions occurring
grant, loan, compensation, or other modification includes amending the after July 25, 2006. Substantial
similar payment provided to a contract to extend its term or to increase contributors to supporting organizations
substantial contributor (defined later), the compensation payable to a will also be considered disqualified
family member, or 35% controlled entity disqualified person. persons along with their family members
will be considered an excess benefit and 35% controlled entities.
transaction. The amount of the excess Disqualified person. For purposes of
benefit is the amount of such grant, this Schedule I, a disqualified person Donor advised fund. See the
loan, compensation, or other similar means: Schedule K instructions for a definition
payment. Also, any loan provided to a 1. Any person (at any time during of donor advised fund.
disqualified person that isn't an the 5-year period ending on the date of Investment advisor. Investment
organization described in section 509(a) the transaction) in a position to exercise advisor means for any sponsoring
(1), (2), or (4) or a supported substantial influence over the affairs of organization, any person compensated
organization of the supporting the organization, by such organization (but not an
organization exempt under section 2. A family member of an individual employee of such organization) for
501(c)(4), (5), (6) and described in the described in 1 above, and managing the investment of, or
last sentence of section 509(a) is providing investment advice for assets
considered an excess benefit 3. A 35% controlled entity of a
person described in 1 or 2 above. maintained in donor advised funds
transaction. maintained by such sponsoring
Donor advised fund transactions Family members. Family members organization.
occurring after August 17, 2006. Any of a disqualified person described in 1
above include a disqualified person's Sponsoring organization. See the
grant, loan, compensation, or other Schedule K instructions for a definition
similar payment from any donor advised spouse, ancestors, children,
grandchildren, great grandchildren, and of sponsoring organization.
fund to a donor, donor advisor, family
member, or 35% controlled entity is an brothers and sisters (whether by whole- Substantial contributor. In
excess benefit transaction. The amount or half-blood). It also includes the general, a substantial contributor means
of the excess benefit is the amount of spouse of the children, grandchildren, any person who contributed or
such grant, loan, compensation, or great grandchildren, brothers, or sisters bequeathed an aggregate of more than
other similar payment. (whether by whole- or half-blood). $5,000 to the organization, if that
35% controlled entity. The term amount is more than 2% of the total
Excess benefit. Excess benefit contributions and bequests received by
means the excess of the economic 35% controlled entity means:
A corporation in which a disqualified the organization before the end of the
benefit received from the applicable tax year of the organization in which the
organization over the consideration person described in 1 or 2 above owns
contribution or bequest is received by

-14- Instructions for Form 4720 (2018)


the organization from such person. A have net income attributable to a Regulations sections 1.6011-4(b)(3)
substantial contributor includes the prohibited tax shelter transaction and (4), and the Instructions for Form
grantor of a trust. (PTST). 8886-T, Disclosure by Tax-Exempt
2. Complete Schedule J if you are Entity Regarding Prohibited Tax Shelter
Specific Instructions Transaction, for more information.
an entity manager of such an entity who
Part I. List each excess benefit approved the entity as (or otherwise Allocation of net income and pro-
transaction in Part I, column (c). Enter caused the entity to be) a party to a ceeds to a tax year. The net income
the date of the transaction in column (b) PTST at any time during the tax year and proceeds attributable to a
and the amount of the excess benefit in and who knew (or had reason to know) prohibited tax shelter transaction must
column (d). Compute the tax on the that the transaction is a PTST. be allocated to a particular tax year in a
excess benefit for disqualified persons manner consistent with the entity's
and enter it in column (e). Compute any See the following guidance and any
future guidance for details. established method of accounting for
tax on the excess benefit for federal income tax purposes. If an entity
organization managers and enter the Notice 2006-65, 2006-31 I.R.B. 102;
Notice 2007-18, 2007-9 I.R.B. 608; hasn't established a method of
amount in column (f). accounting for federal income tax
T.D. 9334, 2007-34 I.R.B. 382; and
For organization managers, the tax is T.D. 9492, 2010-33 I.R.B. 242. purposes, the entity must use the cash
the lesser of 10% of the excess benefit receipts and disbursements method to
or $20,000. This tax is computed on Managers of tax favored determine the amount and timing of net
each transaction. TIP retirement plans, individual income and proceeds attributable to a
retirement arrangements, and prohibited tax shelter transaction.
Part II. Enter in column (a) the names savings arrangements described in
of all disqualified persons who took part If an entity has an established
sections 401(a), 403(a), 403(b), 529, method of accounting other than the
in the excess benefit transactions. If 457(b), 408(a), 220(d), 408(b), 530, or
more than one disqualified person took cash method, the entity may use the
223(d) must report and pay tax due cash method to determine the amount
part in an excess benefit transaction, under section 4965(a)(2) on Form 5330.
each is individually liable for the entire of the net income and proceeds
tax on the transaction. But the attributable to a prohibited tax shelter
Prohibited tax shelter transaction. In
disqualified persons who are liable for transaction.
general, a prohibited tax shelter
the tax may prorate the payment among transaction means any listed transaction Specific Instructions
themselves. Enter in column (c) the tax (including a subsequently listed
to be paid by each disqualified person. transaction) and any prohibited Part I. Complete this part for each
Carry the total amount in column (d) reportable transaction. transaction if during the tax year the
for each disqualified person to Part II-A, entity received proceeds from or has net
Listed transaction. A listed income attributable to a PTST.
column (h).
transaction includes any transaction that
Figure the tax for each transaction as
Part III. Enter in column (a) the names is the same as or substantially similar to
follows:
of all managers who knowingly took part one of the types of transactions that the
If column (e) was answered “Yes,”
in the excess benefit transactions listed IRS has determined to be a tax
then enter the larger of the column (f) or
in Part I. If more than one manager avoidance transaction. These
column (g) amount in column (h).
knowingly took part in an excess benefit transactions are identified by notice,
If column (e) was answered “No,”
transaction, each is individually liable for regulation, or other form of published
then multiply the larger of the amount in
the entire tax in connection with the guidance as a listed transaction. For
column (f) or column (g) by 21% (0.21)
transaction. But the managers liable for existing guidance, see Notice 2009-59,
and enter the result in column (h).
the tax may prorate the payment among 2009-31 I.R.B. 170.
themselves. Enter in column (c) the tax After the tax has been figured for all
For updates to this list, go to the IRS
to be paid by each organization PTSTs entered on Schedule J, then
website at IRS.gov/businesses/
manager. total column (h) and enter the amount
corporations/abusive-tax-shelters-and-
on the Total line and on line 9 of Part I.
Carry the total amount in column (d) transactions. The listed transactions in
for each manager to Part II-A, column the above notices and rulings will also Part II. Enter in column (a) the names
(h). be periodically updated in future issues of all entity managers who approved the
of the Internal Revenue Bulletin. entity as (or otherwise caused the entity
to be) a party to a PTST at any time
Schedule J—Taxes on Subsequently listed transaction. during the tax year and who knew or
Being a Party to Prohibited A subsequently listed transaction is a had reason to know that the transaction
transaction that is identified in published
Tax Shelter Transactions guidance as a listed transaction after
is a PTST.
(Section 4965) the entity has entered into the Carry the total amount in column (d)
transaction and that was not a for each manager to Part II-A, column
General Instructions confidential transaction or transaction (i).
Requirement. with contractual protection at the time
the entity entered into the transaction.
1. Complete Schedule J if you are
an entity described in section 501(c), Prohibited reportable transaction. A
501(d), or 170(c) (other than the United prohibited reportable transaction is any
States) or an Indian tribal government confidential transaction or any
(within the meaning of section 7701(a) transaction with contractual protection
(40)) and you received proceeds from or that is a reportable transaction. See

Instructions for Form 4720 (2018) -15-


because of the donor's status as a connection with that distribution.
Schedule K—Taxes on donor. However, the fund managers who are
Taxable Distributions of Exception. A donor advised fund
liable for the tax may prorate the
payment among themselves. Enter in
Sponsoring Organizations doesn't include: column (c) the tax each manager will
Maintaining Donor 1. A fund or account that makes pay for each distribution for which such
Advised Funds (Section distributions only to a single identified manager owes a tax.
organization or governmental entity, or
4966) Carry the total amount in column (d)
2. Any fund or account with respect for each fund manager to Part II-A,
General Instructions to which a donor or donor advisor (as column (j).
defined in the Schedule L instructions)
Requirement. Complete Schedule K if
gives advice about which individuals
you answered “Yes,” to question 9a in
receive grants for travel, study, or Schedule L—Taxes on
Part V of Form 990, or if you are a fund
manager of a sponsoring organization
similar purposes, if: Prohibited Benefits
who agreed to the making of a taxable a. Such person's advisory privileges Distributed From Donor
are performed exclusively by such
distribution knowing that it was a taxable
person in their capacity as a committee
Advised Funds (Section
distribution. Report each taxable
distribution separately. These terms are member of which all the committee 4967)
discussed below. members are appointed by the
sponsoring organization,
General Instructions
Taxable distribution. A taxable Requirement. A sponsoring
distribution is any distribution from a b. No combination of donors, donor
advisors, or persons related (as defined organization of donor advised funds that
donor advised fund to any natural answered “Yes,” to Form 990, Part V,
person or to any other person if: in the Schedule L instructions) to donors
or donor advisors, directly or indirectly line 9b, or that otherwise distributed
1. The distribution is for any control the committee, and prohibited benefits under section 4967,
purpose other than one specified in must complete Schedule L. In addition,
section 170(c)(2)(B), or c. All grants from the fund or
a donor, donor advisor, or related party
account are awarded on an objective
2. The sponsoring organization that (1) advised a distribution that
and nondiscriminatory basis according
maintaining the donor advised fund provided a prohibited benefit under
to a procedure approved in advance by
doesn't exercise expenditure section 4967 or (2) that received such a
the board of directors of the sponsoring
responsibility with respect to such benefit, and any fund manager who
organization. The procedure must be
distribution in accordance with section agreed to the distribution knowing that it
designed to ensure that all grants meet
4945(h). would confer a prohibited benefit, must
the requirements of section 4945(g)(1),
complete Schedule L. Report each
However, a taxable distribution (2), or (3).
distribution separately. Complete Parts
doesn't include a distribution from a I, II, and III of Schedule L only in
donor advised fund to: Tax on sponsoring organization. A
tax of 20% of the amount of each connection with distributions made by a
1. Any organization described in taxable distribution is imposed on the sponsoring organization from a donor
section 170(b)(1)(A) (other than a sponsoring organization. advised fund which results in a
disqualified supporting organization), prohibited benefit. (See instructions to
Tax on fund manager. If a tax is Schedule K for definitions of the terms
2. The sponsoring organization of
imposed on a taxable distribution of the sponsoring organization and donor
such donor advised fund, or
sponsoring organization, a tax of 5% of advised fund).
3. Any other donor advised fund. the distribution will be imposed on any
fund manager who agreed to the Prohibited benefit. If any donor, donor
Sponsoring organization. A distribution knowing that it was a taxable advisor, or related party advises the
sponsoring organization is a section distribution. Any fund manager who took sponsoring organization about making a
170(c) organization that isn't a part in the distribution and is liable for distribution which results in a donor,
government organization (as referred to the tax must pay the tax. The maximum donor advisor, or related party receiving
in section 170(c)(1) and (2)(A)) or a amount of tax on all fund managers for (either directly or indirectly) a more than
private foundation and maintains one or any one taxable distribution is $10,000. incidental benefit, then such benefit is a
more donor advised funds. If more than one fund manager is liable prohibited benefit.
Donor advised fund. A donor advised for tax on a taxable distribution, all such Donor advisor. A donor advisor is any
fund is a fund or account: managers are jointly and severally liable person appointed or designated by a
1. Which is separately identified by for the tax. donor to advise a sponsoring
reference to contributions of a donor or organization on the distribution or
Specific Instructions
donors, investment of amounts held in the
Part I. Complete this part for all taxable donor's fund or account.
2. Which is owned and controlled by
distributions.
a sponsoring organization, and Related party. A related party includes
3. For which the donor (or any Part II. Enter in column (a) the names any family member or 35% controlled
person appointed or designated by the of all fund managers who agreed to entity. See the General Instructions for
donor) has or expects to have advisory make the taxable distribution. If more Schedule I for a definition of those
privileges concerning the distribution or than one fund manager is listed in terms.
investment of the funds held in the column (a) for one distribution, each is
Tax on donor, donor advisor, or rela-
donor advised funds or accounts individually liable for the entire tax in
ted person. A tax of 125% of the

-16- Instructions for Form 4720 (2018)


benefit resulting from the distribution is column (c) the tax each donor advisor, Part II. On line 1 enter the number of
imposed on both the party who advised or related person will pay for each hospital facilities operated by the
as to the distribution (which might be a distribution for which such donor, donor hospital organization that failed to meet
donor, donor advisor, or related party) advisor, or related person owes a tax. the CHNA requirements of section
and the party who received such benefit Carry the total amount in column (d) 501(r)(3). Enter $50,000 multiplied by
(which might be a donor, donor advisor, for each fund manager to Part II-A, line 1 on line 2 and on Part 1, line 12.
or related party). The advisor and the column (k). This is the CHNA excise tax under
party who received the benefit are jointly section 4959.
and severally liable for the tax.
Tax on fund managers. If a tax is
Schedule M—Tax on
imposed on a prohibited benefit Hospital Organization for Schedule N—Tax on
received by a donor, donor advisor, or Failure to Meet the Excess Executive
related person, a tax of 10% of the
Community Health Needs Compensation (Section
amount of the prohibited benefit is
imposed on any fund manager who Assessment Requirements 4960)
agreed to the distribution knowing that it (Sections 4959 and 501(r) General Instructions
would confer a prohibited benefit. Any (3))
fund manager who took part in the Requirement. Complete Schedule N if
distribution and is liable for the tax must General Instructions you answered “Yes” to question 15 in
pay the tax. The maximum amount of Part V of Form 990, question 8 of Part
tax on all fund managers for any one Requirements. Section 4959 imposes VII-B of Form 990-PF, or if you are an
taxable distribution is $10,000. If more an excise tax on hospital organizations ATEO or a related organization and you
than one fund manager is liable for tax that fail to meet the section 501(r)(3) are liable for the tax under section
on a taxable distribution, all such requirements in any tax year. 4960(a). Section 4960(a) imposes an
managers are jointly and severally liable Section 501(r)(3) requirements excise tax of 21% on the amount of
for the tax. pertain to a hospital organization remuneration paid by an ATEO with
conducting a community health needs respect to employment of any covered
Exception. If a tax is imposed under assessment (CHNA). The requirements, employee in excess of $1 million and on
section 4958 for the same transaction, which apply separately to each hospital any excess parachute payment paid by
then no additional tax is imposed under facility the hospital organization such organization to any covered
section 4967 on that transaction. operates, are as follows. employee.
Specific Instructions 1. To conduct a CHNA this tax year, Form 4720, Schedule N, is the
Part I. Complete this part for all or in either of the two prior tax years. TIP schedule used to report and pay
The CHNA must take into account input any section 4960 tax owed.
prohibited benefits.
from persons who represent the broad Because there is no requirement to
Part II. Enter in column (a) the names interests of the community served by make estimated tax payments for the
of all donors, donor advisors, and the hospital facility, including people section 4960 tax, Form 990-W does not
related persons who received a with special knowledge of or expertise apply to the section 4960 tax.
prohibited benefit or advised as to the in public health. The CHNA must be
distribution of such benefit. If more than made widely available to the public. Covered employee. A covered
one donor, donor advisor, or related 2. To adopt an implementation employee means any employee of an
person is listed in column (a) for one strategy to meet the community health ATEO (including any former employee)
distribution, each is individually liable for needs identified through the CHNA. that is one of the organization’s five
the entire tax for that distribution. highest compensated employees for the
However, the donors, donor advisors, or See Notice 2011-52, 2011-30 I.R.B. tax year or was the organization’s (or a
related persons who are liable for the 60; Final Regulations, T.D. 9708, 79 predecessor’s) covered employee for
tax may prorate the payment among Fed. Reg. 78954 (Dec. 31, 2014), any preceding tax year beginning after
themselves. Enter in column (c) the tax 2012-32 I.R.B. 126; Notice 2014-2, 2016.
each donor, donor advisor, or related 2014-3 I.R.B. 407; Notice 2014-3,
Remuneration. Remuneration means
person will pay for each distribution for 2014-3 I.R.B. 408; as well as any future
wages (as defined in section 3401(a)).
which such donor, donor advisor, or related guidance for details. For
Remuneration also includes amounts
related person owes a tax. additional information on the CHNA
required to be included in gross income
Carry the total amount in column (d) requirements, see Schedule H (Form
under section 457(f). Remuneration
for each donor, donor advisor, or related 990), Hospitals, Part V, Section B.
shall be treated as paid when there is no
person to Part II-A, column (k). Specific Instructions substantial risk of forfeiture (within the
Part III. Enter in column (a) the names meaning of section 457(f)(3)(B)) of the
Part I. For each hospital facility, list the rights to such remuneration.
of all fund managers who agreed to following information in the relevant
make the distribution conferring the column: (b) name of facility, (c) Remuneration exceptions. For
prohibited benefit. If more than one fund description of the failure to meet section purposes of this provision, remuneration
manager is listed in column (a) for one 501(r)(3), (d) tax year hospital facility does not include:
distribution, each is individually liable for last conducted a CHNA, and (e) tax Designated Ro.th contributions (as
the entire tax for that distribution. year hospital facility last adopted an defined in section 402A(c)),
However, the fund managers who are implementation strategy. The portion of any remuneration paid
liable for the tax may prorate the to a licensed medical professional
payment among themselves. Enter in (including a veterinarian) which is for the

Instructions for Form 4720 (2018) -17-


performance of medical or veterinary Property transfers. Rules similar to 4968 tax on net investment income,
services by such professional, or the rules of section 280G(d)(3) and (4) must complete Schedule O.
Remuneration the deduction for shall apply to property transfers.
Organizations subject to the section
which is not allowed by reason of
Exception from excess parachute 4968 excise tax. A private college or
section 162(m).
payments. An excess parachute university is subject to a 1.4% excise tax
Remuneration from related payment does not include any on net investment income under section
organizations. Remuneration of a payments: 4968 if all four of the following threshold
covered employee by an ATEO includes Described in section 280G(b)(6) tests are met.
any remuneration paid with respect to (relating to exemption for payments The organization must be an eligible
employment of such employee by any under qualified plans), educational institution (as defined in
related person or governmental entity. Made under or to an annuity contract section 25A(f)(2)). Section 25A(f)(2)
For this purpose, a person or described in section 403(b) or a plan defines “eligible educational institution”
governmental entity is related to an described in section 457(b), as an institution that is described in
ATEO if it: To a licensed medical professional section 481 of the Higher Education Act
Controls, or is controlled by, the (including a veterinarian) to the extent of 1965 (20 U.S.C. section 1088), as in
ATEO; that such payment is for the effect on August 5, 1997; and is eligible
Is controlled by one or more persons performance of medical or veterinary to participate in a program under Title IV
who control the ATEO; services by such professional, or of such Act (20 U.S.C. sections 1070 et
Is a supported organization (as To an individual who is not a highly seq.).
defined in section 509(f)(3)) or compensated employee as defined in The organization must have had at
supporting organization (as defined in section 414(q). least 500 tuition-paying students, based
section 509(a)(3)) with respect to the upon a daily average student count,
Specific Instructions during the preceding tax year.
ATEO during the taxable year; or
In the case of an ATEO that is a Enter the name of each covered More than 50% of those students
section 501(c)(9) voluntary employees’ employee in column (b). If more than must have been located in the United
beneficiary association (VEBA), five covered employees, attach a States.
establishes, maintains, or makes statement with the information required The aggregate fair market value, at
contributions to the ATEO. by the schedule and show the total the end of the preceding tax year, of the
amounts for column (e) on line 6. assets not used directly in carrying out
Liability for tax in case of the organization’s exempt purpose, held
remuneration from more than one For each covered employee, enter in by the organization and related
employer. In any case in which column (c) the amount of remuneration organizations, must be at least
remuneration from more than one you paid that exceeded $1 million. Do $500,000 per student.
employer is taken into account under not include any excess parachute
payment reported in column (d). If Form 4720, Schedule O, is the
the rule above, each related employer is
liable for the tax in an amount which remuneration from related employer(s) TIP schedule used by applicable
was taken into account in determining educational institutions to report
bears the same ratio to the total tax as
that remuneration exceeded $1 million, and pay any section 4968 tax owed.
the ratio of (1) the amount of
enter your proportional share of the Because there is no requirement to
remuneration that employer paid with
amount of remuneration that exceeded make estimated tax payments for the
respect to such employee, to (2) the
$1 million, based on your proportional section 4968 tax, Form 990-W does not
amount of remuneration paid by all
share of total remuneration paid to the apply to the section 4968 tax.
related employers to the employee.
covered employee. Also, attach a
Excess parachute payment. For statement to Form 4720 with the name Related organizations. The net
purposes of this provision, an excess and EIN of the related employer(s). investment income of related
parachute payment equals the excess organizations is taken into account
of any parachute payment over the For each covered employee, enter in under certain circumstances. Section
portion of the base amount allocated to column (d) the amount of any excess 4968 defines “related organization” to
such payment. parachute payment you paid. include only the following organizations.
Organizations that control or are
Parachute payment. A parachute For each covered employee, enter in controlled by the educational institution,
payment is any payment in the nature of column (e) the sum of columns (c) and Organizations that are controlled by
compensation to (or for the benefit of) a (d). one or more of the same persons who
covered employee if the payment: control the educational institution,
Is contingent on such employee’s A supported organization (as defined
separation from the employment with Schedule O—Excise Tax in section 509(f)(3)), and
the employer, and on Net Investment Income Supporting organizations described
Has an aggregate present value that
equals or exceeds three times the base of Private Colleges and in section 509(a)(3) that support the
educational institution during the tax
amount. Universities (Section year.
Base amount. Rules similar to the 4968) When calculating the net investment
rules of section 280G(b)(3) shall apply General Instructions income of a related organization,
for purposes of determining the base exclude (1) net investment income of
amount. Requirement. An applicable any related organization to the extent
educational institution that answered that such net investment income is
“Yes” to Form 990, Part V, line 16, or taken into account with respect to
that is otherwise subject to the section

-18- Instructions for Form 4720 (2018)


another educational institution; and (2) Form 4720 showing the information for questions that arise during the
net investment income from assets that columns (a) through (e) for each related processing of the return. The
are not intended, or are not available for organization and enter the total amounts organization is also authorizing the paid
the use or benefit of the educational from the schedule in line 5, columns (c) preparer to:
institution, unless the related through (e). Give the IRS any information missing
organization is controlled by the from the return,
Line 6. Total the amounts in columns
educational institution, or unless the Call the IRS for information about
(c), (d), and (e). See Notice 2018-55.
related organization is a supporting processing the return, and
organization of the educational Note. Column (d) can reflect capital Respond to certain IRS notices about
institution. losses from sales or other dispositions math errors, offsets, and return
of property in one organization only to preparation.
Net investment income. Net
investment income is the amount by the extent of capital gains from such
The organization isn't authorizing the
which the sum of the gross investment sales or other dispositions in all the
paid preparer to bind the organization to
income and the capital gain net income other organizations (that is, 6(d) can
anything or otherwise represent the
exceeds the administrative expenses never be less than zero). Do not take
organization before the IRS.
allocable to gross investment income into account capital loss carryovers or
and capital gain net income. carrybacks. See Notice 2018-55. The authorization will automatically
To determine net investment income, Add 6(c) and 6(d), subtract 6(e), and end no later than the due date
see section 4940(c) and the section enter the total in 6(f). (excluding extensions) for filing of the
4940(c) regulations. Line 7. Multiply line 6(f) by 0.014 organization's 2019 Form 4720. If the
(1.4%) and enter the amount in box 7f organization wants to expand the paid
Basis. Similar to the rules found in
and on Part I, line 14. preparer's authorization or revoke it
section 4940(c)(4)(B), in the case of
before it ends, see Pub. 947, Practice
property held by an applicable
Before the IRS and Power of Attorney.
educational institution on December 31,
2017, and continuously thereafter to the Paid Preparer
Generally, anyone who is paid to Check “No,” if the IRS should contact
date of its disposition, the basis for the organization listed on the first page
determining gain shall be deemed not to prepare the return must sign the return
and fill in the other blanks in the Paid of the Form 4720, rather than the paid
be less than the fair market value of preparer.
such property on December 31, 2017, Preparer Use Only area. An employee
plus or minus all adjustments after of the filing organization isn't a paid
preparer. Phone Help
December 31, 2017, and before the
If you have questions and/or need help
date of disposition consistent with the The paid preparer must: completing this form, please call
regulations under section 4940(c). Sign the return in the space provided 877-829-5500. This toll-free telephone
However, for purposes of determining for the preparer's signature, service is available Monday through
loss, basis rules that are consistent with Enter the preparer information, Friday.
the regulations under section 4940(c) Enter the preparer tax identification
will apply. number (PTIN), and Photographs of Missing
Specific Instructions Give a copy of the return to the
organization, in addition to the copy to Children
Line 1. Use Line 1 to report the gross be filed with the IRS. The Internal Revenue Service is a proud
investment income, capital gain net partner with the National Center for
income, and associated allocable Any paid preparer whose Missing & Exploited Children®
administrative expenses of the filing ! identifying number must be (NCMEC). Photographs of missing
CAUTION listed on Form 990-PF can
organization. children selected by the Center may
apply for and obtain a PTIN. You can appear in instructions on pages that
Lines 2–5. Use Lines 2–5 to report the apply for a PTIN online or by filing Form would otherwise be blank. You can help
gross investment income, capital gain W-12, IRS Paid Preparer Tax bring these children home by looking at
net income, and associated allocable Identification Number (PTIN) the photographs and calling
administrative expenses from related Application and Renewal. For more 1-800-THE-LOST (1-800-843-5678) if
organizations during the related information about applying for a PTIN you recognize a child.
organizations’ tax years that end with or online, visit the IRS website at IRS.gov/
within the tax year of the organization. If PTIN.
a related organization is a partner in a How To Get Forms and
partnership or a shareholder of an S Paid Preparer Authorization Publications
corporation, include the pertinent items Internet. You can access the IRS
On the “Sign Here” line, check “Yes,” if
of income, gain, loss, or deduction from website 24 hours a day, 7 days a week,
the IRS can contact the paid preparer
the entity's Schedule K-1 (Form 1065 or at IRS.gov to:
who signed the return to discuss the
1120S) for the tax year of the entity Download forms, including talking tax
return. This authorization applies only to
ending with or within the tax year of the forms, instructions, and publications.
the individual whose signature appears
filing organization. Order IRS products online.
in the Paid Preparer Use Only section of
Report income from related Form 4720. It doesn't apply to the firm, if Research your tax questions online.
organizations in descending order from any, shown in that section. Search publications online by topic or
most income to least income. If there keyword.
are more than three related By checking the “Yes box,” the Sign up to receive local and national
organizations, attach a schedule to your organization is authorizing the IRS to tax news by email.
contact the paid preparer to answer any

Form 4720 Instructions -19-


You can order forms and publications don't sign the Form 4720 of the information are confidential, as required
by downloading from the IRS website at foundation or organization, must file a by section 6103.
IRS.gov/OrderForms. separate Form 4720 showing the tax
owed and the name of the foundation or The time needed to complete and file
this form will vary depending on
IRS e-Services Makes organization for which they owe tax.
individual circumstances. The estimated
Taxes Easier Sections 6001 and 6011 of the Internal
average time is:
Revenue Code require you to provide
Now more than ever before, businesses
the requested information if the tax Form 4720 Schedule I
can enjoy the benefits of filing and
applies to you. Section 6109 requires
paying their federal taxes electronically.
you to provide your identifying number. Recordkeeping . 56 hr., 26 9 hr., 48
Whether you rely on a tax professional
Routine uses of this information include min. min.
or handle your own taxes, the IRS offers
disclosing it to the Department of
you convenient programs to make taxes Learning about
Justice for civil and criminal litigation the law or the 16 hr., 42
easier. Use these electronic options to
and to other federal agencies, as form . . . . . . . . min. 30 min.
make filing and paying easier.
provided by law. We may disclose the
You can e-file your Form 990 or Form Preparing the 23 hr., 57
information to cities, states, the District
990-PF; Form 940 and 941 employment form . . . . . . . . min. 40 min
of Columbia, and U.S. Commonwealths
tax returns; Forms 1099; and other
and possessions to administer their Copying,
information returns. Visit IRS.gov/E-File assembling, and
laws. We may also disclose this
for details. sending the form 1 hr., 36
information to other countries under a
You can pay taxes online or by phone to the IRS . . . . . min.
tax treaty, to federal and state agencies
using the free Electronic Federal Tax
to enforce federal nontax criminal laws,
Payment System (EFTPS). Visit
or to federal law enforcement and
EFTPS.gov or call 1-800-555-4477 for If you have comments concerning the
intelligence agencies to combat
details. Electronic Funds Withdrawal accuracy of these time estimates or
terrorism. If you don't file this
(EFW) from a checking or savings suggestions for making Form 4720
information, you may be subject to
account also is available to those who simpler, we would be happy to hear
interest, penalties, and/or criminal
file electronically. from you. You can send us comments
prosecution.
from IRS.gov/FormComments. Or you
Privacy Act and Paperwork Reduc- You aren't required to provide the can send your comments to Internal
tion Act Notice. information requested on a form that is Revenue Service, Tax Forms and
We ask for the information on this form subject to the Paperwork Reduction Act Publications Division, 1111 Constitution
to carry out the Internal Revenue laws of unless the form displays a valid OMB Ave. NW, IR-6526, Washington, DC
the United States. We need it to ensure control number. Books or records 20224. Don't send Form 4720 to this
that you are complying with these laws relating to a form or its instructions must address. Instead, see Where To File,
and to allow us to figure and collect the be retained as long as their contents earlier.
right amount of tax. Certain individuals may become material in the
who owe tax under Chapter 41 or 42 of administration of any Internal Revenue
the Internal Revenue Code, and who law. Generally, tax returns and return

-20- Instructions for Form 4720 (2018)


Index

section 4958 13 Jeopardize Charitable Schedule O; Excess Tax


A sponsoring Purpose 11 on Net Investment
Amended return 5 organizations 14 Schedule E; Initial Taxes Income of Private
Attorney 19 supporting on Taxable Colleges and
organizations 14 Expenditures 11 Universities (Section
Initial taxes on investments Schedule F; Initial Taxes 4968) 18
C that jeopardize charitable on Political Signature and Verification 4
Charitable Remainder Trust: purpose: Expenditures 12 Summary of Taxes 7
Form 990-T 6 section 4944 11 Schedule G; Tax on
Unrelated business Initial taxes on political Excess Lobbying
taxable income 6 expenditures: Expenditures 13 T
Correction Period 5 section 4955 12 Schedule H; Taxes on Taxes on being a party to
Initial taxes on taxable Disqualifying Lobbying Prohibited Tax Shelter
expenditures: Expenditures 13 Transactions:
D section 4945 11 Schedule I; Initial Taxes listed transaction 15
Disqualified person 14 on Excess Benefit section 4965 15
Donor advised funds 16 Transactions 13 Taxes on disqualifying
P Schedule J; Taxes on lobbying expenditures:
Paid Preparer 19 Being a Party to section 4912 13
E Paid Preparer Prohibited Tax Shelter Taxes on Managers,
Excess business holdings: Authorization 19 Transactions (Section Self-Dealers, etc. 7
Exceptions to tax 9 Preparer Tax identification 4965) 15 Taxes on Prohibited Benefits
Schedule C 8 Number (PTIN) 19 Schedule K; Taxes on Distributed From Donor
Extension 3 Publications: Taxable Distributions of Advised Funds:
Pub. 947, Practice Before Sponsoring section 4967 16
the IRS and Power of Organizations Taxes on Taxable
F Attorney 19 Maintaining Donor Distributions of
Filing requirements: Advised Funds 16 Sponsoring Organizations
When to file 3 Schedule L; Taxes on Maintaining Donor
Where to file 3 S Prohibited Benefits Advised Funds:
Who must file 2 Schedule: Distributed From Donor section 4966 16
Foreign Organizations or Schedule A; Initial Taxes Advised Funds 16 Tax on excess lobbying
U.S. Possession 4 on Self-Dealing 7 Schedule M; Tax on expenditures:
Schedule B; Initial Tax on Failure to Meet the section 4911 13
Undistributed Community Health Tax Payments 4
I Income 8 Needs Assessment
Initial Taxes on Excess Schedule C; Initial Tax on Requirements (Section
Benefit Transactions: Excess Business 501(r)(3)) 17
disqualified person 14 Holdings 8 Schedule N; Tax on
donor advised funds 14 Schedule D; Initial Taxes Excess Executive
excess benefit on Investments That Compensation (Section
transaction 14 4960) 17

-21-

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