Instructions For Form 5227 printable pdf download

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Department of the Treasury

Internal Revenue Service

Instructions for Form 5227

Split-Interest Trust Information Return

Section references are to the Internal Revenue Code unless otherwise noted.

Exception. Generally, a split-interest trust created

Changes To Note

before May 27, 1969, is not required to file Form 5227.

•

However, if any amounts were transferred to the trust

We have added a new line 2a to report qualified

after May 26, 1969, for which a deduction was allowed

dividends. Qualified dividends are in the ordinary income

under any of the sections listed under section 4947(a)(2),

category, but are in their own class. The maximum tax

Form 5227 must be filed for the year of the transfer and

rate for qualified dividends is generally 15%, and they are

all subsequent years regardless of whether additional

considered distributed after all other items of ordinary

transfers are made in subsequent years.

income. See the instructions for Line 2a on page 4.

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The 20% maximum tax rate on net capital gain (the

Charitable lead trusts and charitable remainder trusts

excess of net long-term capital gain over net short-term

whose charitable interests involve only war veterans’

capital loss) has been reduced to 15%, and the 10% rate

posts or cemeteries described in sections 170(c)(3) and

has been reduced to 5%, for sales and other dispositions

170(c)(5), respectively, are not required to complete

after May 5, 2003 (and installment payments received

Parts VI and VII of Form 5227.

after that date). The 25% rate on unrecaptured section

Note: Regulations section 1.6012-3(a)(6) references

1250 gain and the 28% rate on collectibles gain and

Form 1041-B. Form 5227 replaces Form 1041-B.

section 1202 gain have not changed.

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The 8% maximum capital gains tax rate for qualified

5-year gain has been repealed for sales and other

Definitions

dispositions after May 5, 2003 (and installment payments

Split-interest trust. A split-interest trust is a trust that:

received after that date).

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Is not exempt from tax under section 501(a);

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Photographs of Missing Children

Has some unexpired interests that are devoted to

purposes other than religious, charitable, or similar

The Internal Revenue Service is a proud partner with the

purposes described in section 170(c)(2)(B); and

National Center for Missing and Exploited Children.

•

Has amounts transferred in trust after May 26, 1969,

Photographs of missing children selected by the Center

for which a deduction was allowed under one of the Code

may appear in instructions on pages that would otherwise

sections listed in section 4947(a)(2).

be blank. You can help bring these children home by

looking at the photographs and calling 1-800-THE-LOST

A split-interest trust is subject to many of the same

(1-800-843-5678) if you recognize a child.

requirements and restrictions that are imposed on private

foundations.

Recipient. A recipient is a beneficiary who receives the

General Instructions

possession or beneficial enjoyment of the unitrust or

annuity amount.

Purpose of Form

Foundation manager. A foundation manager is an

Use Form 5227 to report the financial activities of a

officer, director, or trustee (or an individual who has

split-interest trust described in section 4947(a)(2); and to

powers or responsibilities similar to those of officers,

determine whether the trust is treated as a private

directors, or trustees). In the case of any act or failure to

foundation and is subject to the excise taxes under

act, the term foundation manager may also include an

Chapter 42.

employee of the trust who has the authority to act.

A charitable remainder annuity trust or unitrust is

Disqualified person. A disqualified person is:

exempt from Federal income tax for any tax year if it:

1. A substantial contributor;

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Was created after July 31, 1969, and

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2. A foundation manager;

Has no unrelated business taxable income for the tax

3. A person who owns more than 20% of a

year.

corporation, partnership, trust, or unincorporated

Even though the trust is exempt from Federal income

enterprise, which is itself a substantial contributor;

tax, it must file Form 5227 each year.

4. A member of the family of an individual in the first

three categories; or

Who Must File

5. A corporation, partnership, trust, or estate in which

persons described in 1, 2, 3, or 4 above own a total

All charitable remainder trusts described in section 664,

beneficial interest of more than 35%.

pooled income funds described in section 642(c)(5), and

charitable lead trusts (see Exception below) must file

6. For purposes of section 4943 (excess business

Form 5227.

holdings), a disqualified person also includes:

Cat. No. 13228E

Instructions For Form 5227

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