Instructions For Form 5227 (Page 5 of 8) in pdf

Ordering Rules

arising from transactions not functionally

Column (c)

related to the trust’s charitable purposes

The following rules apply to undistributed

In computing the net fair market value

must be reported as separate loans for

long-term capital gains on assets held

(FMV) of the unitrust’s assets, take into

each officer, director, etc.

more than 1 year:

account all assets and liabilities without

2. Receivables that are subject to the

regard to whether particular items are

1. Undistributed pre-1997 long-term

same terms and conditions (including

taken into account in determining the

capital gains are included in the 20%

credit limits and rate of interest) as

income of the trust. The net FMV of the

group.

receivables due from the general public

trust’s assets may be determined on any

2. Undistributed long-term capital

and that arose in connection with an

one date during the taxable year of the

gains and losses realized by the trust in

activity functionally related to the trust’s

trust, or by taking the average of

1997, other than on collectibles, are

charitable purposes may be reported as a

valuations made on more than one date

included in the 20% group.

single total for all the officers, directors,

during the tax year of the trust, so long as

3. Undistributed, unrecaptured section

etc. Travel advances made in connection

the same valuation date or dates and

1250 gain on sales, exchanges, etc., after

with official business of the trust may also

valuation methods are used each year.

May 6, 1997, is included in the 25%

be reported as a single total.

See Regulations section 1.664-3.

group.

For each outstanding loan or other

Line 25—Cash—Non-Interest-

If, in any tax year of the trust, the trust

receivable that must be reported

has both undistributed short-term capital

Bearing

separately, the attached schedule should

gain and undistributed long-term capital

Enter the amount of cash on deposit in

show the following information. Use

gain, the short-term capital gain is

columnar format:

checking accounts, deposits in transit,

deemed distributed before any long-term

•

Borrower’s name and title.

change funds, petty cash funds, or any

capital gain. Any long-term capital gains

•

Original amount.

other non-interest-bearing account. Do

are deemed to be distributed in the

•

not include advances to employees or

Balance due.

following order:

•

officers or refundable deposits paid to

Date of note.

•

1. The 28% group is deemed

suppliers or others.

Maturity date.

•

distributed prior to any other group.

Repayment terms.

•

Line 26—Savings and

2. The 25% group is deemed

Interest rate.

•

distributed prior to the 20% group.

Temporary Cash Investments

Security provided by the borrower.

•

3. The Other 20% gain within the 20%

Purpose of the loan.

Enter the total of cash in savings or other

•

group is deemed distributed next.

Description and FMV of the

interest-bearing accounts and temporary

4. The qualified 5-year gain within the

consideration furnished by the lender.

cash investments, such as money market

20% group is deemed distributed last of

The above detail is not required for

funds, commercial paper, certificates of

any group.

receivables or travel advances that may

deposit, and U.S. Treasury bills or other

be reported as a single total (see

governmental obligations that mature in

instruction 2 above). However, report and

Carryover Rules

less than 1 year.

identify those totals separately in the

1. If the trust has capital losses in

Line 27—Accounts Receivable

attachment.

excess of capital gains for any tax year:

Enter the total accounts receivable

Line 29—Other Notes and

a. The excess of the net short-term

(reduced by the corresponding allowance

Loans Receivable

capital loss over the net long-term capital

for doubtful accounts) that arose from the

gain for that year is a short-term capital

sale of goods and/or the performance of

Enter the combined total of notes

loss carryover to the next tax year.

services. Claims against vendors or

receivable and net loans receivable.

b. The excess of the net long-term

refundable deposits with suppliers or

Notes receivable. Enter the amount of

capital loss over the net short-term capital

others may be reported here if not

all notes receivable not listed on line 28

gain for that year is a long-term capital

significant in amount. (Otherwise, report

and not acquired as investments. Attach a

loss carryover to the next tax year.

them on line 36, Other Assets.) Any

schedule similar to that called for in the

2. If the trust has capital gains in

receivables due from officers, directors,

line 28 instructions. The schedule should

excess of capital losses for any tax year:

trustees, foundation managers, or other

also identify the relationship of the

a. The excess of the net short-term

disqualified persons must be reported on

borrower to any officer, director, trustee,

line 28. Receivables (including loans and

capital gain over the net long-term capital

or other disqualified person.

loss for that year is, to the extent not

advances) due from other employees

deemed distributed, a short-term capital

should be reported on line 36.

For a note receivable from any section

gain carryover to the next tax year.

501(c)(3) organization, list only the name

Line 28—Receivables Due

b. The excess of the net long-term

of the borrower and the balance due on

From Officers, Directors,

capital gain over the net short-term capital

the required schedule.

Trustees, and Other

loss for that year is, to the extent not

Loans receivable. Enter the gross

deemed distributed, a long-term capital

Disqualified Persons

amount of loans receivable, less the

gain carryover to the next tax year.

Enter here (and in an attached schedule

allowance for doubtful accounts, arising

described below) all receivables due from

from the normal activities of the trust. An

officers, directors, trustees, and other

itemized list of these loans is not required,

Part IV—Balance Sheet

disqualified persons and all secured and

but attach a schedule indicating the total

Complete the balance sheet using the

unsecured loans (including advances) to

amount of each type of loan outstanding.

accounting method the trust uses in

such persons.

Report loans to officers, directors,

keeping its books and records. All filers

trustees, or other disqualified persons on

Attached Schedule

must complete columns (a) and (b). All

line 28, and loans to other employees on

unitrusts must also complete column (c).

1. In the required schedule, report

line 36.

each loan separately, even if more than

Enter the end-of-year book value

Line 30—Inventories for Sale or

one loan was made to the same person,

where space is provided to the left of

Use

or the same terms apply to all loans

column (a) to report receivables and the

made.

related allowance for doubtful accounts or

Enter the amount of materials, goods, and

depreciable assets and accumulated

Salary advances and other advances

supplies purchased or manufactured by

depreciation. Enter the net amounts in

for personal use and benefit, and

the trust and held for sale or use in some

column (b).

receivables subject to special terms or

future period.

-5-

Instructions For Form 5227 Page 5

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