foundation's excess holdings in the
holdings if line 1 is more than line 2 in
Supporting organizations. Only
enterprise were largest.
either column (a) or column (b). Do not
certain supporting organizations are
include in column (b) the value of any
subject to the excess business holdings
Line 1. Enter in column (a) the
voting stock included in column (a).
tax under section 4943. These include
percentage of voting stock the
(1) Type III supporting organizations that
A private foundation using the
foundation holds in the business
are not functionally integrated and (2)
section 4943(c)(2) rules has excess
enterprise.
Type II supporting organizations that
holdings if line 1 is more than line 2 in
If the foundation is using the rules or
accept any gift or contribution from a
column (a) or if the private foundation
principles for determining present
person who by himself or in connection
holds nonvoting stock and all
holdings under section 4943(c)(4)(A) or
with a related party controls the
disqualified persons together own more
(D) (or rules similar to that for donor
supported organization that the Type II
than 20% (or 35%, if applicable) of the
advised funds and certain supporting
supporting organization supports. (See
enterprise's voting stock, interest, etc. In
organizations), enter in column (b) the
the 2015 Instructions for Schedule A
the latter case, enter in column (c) the
percentage of value the foundation
(Form 990 or 990-EZ), Part I, question
value of all nonvoting stock the
holds in all outstanding shares of all
11, for help in determining the type of
foundation holds.
classes of stock.
your supporting organization.)
Line 4. Enter the value of excess
Do not include in either column (a) or
Readjustments, distributions, or
holdings disposed of under the 90-day
(b) stock treated as held by disqualified
changes in relative value of different
rule in Regulations section 53.4943-2(a)
persons:
classes of stock. See Regulations
(1)(ii). If other conditions preclude
Under section 4943(c)(6) or
section 53.4943-4(d)(10) for special
imposition of tax on excess business
Regulations sections 53.4943-6 and
rules whereby increases in the
holdings, include the value of the
53.4943-10(d), or
percentage of value of holdings in a
nontaxable amount on this line and
During the first phase if the first phase
corporation that result solely from
attach a statement.
is still in effect (see Regulations
changes in the relative values of
sections 53.4943-4(a), (b), and (c)).
different classes of stock will not result
Schedule D—Initial Taxes
Line 2. If the foundation is using the
in excess business holdings.
on Investments That
rules or principles for determining
See Regulations section
present holdings under section 4943(c)
Jeopardize Charitable
53.4943-6(d) for rules on treatment of
(4) (or rules similar to that for donor
Purpose (Section 4944)
increases in holdings due to
advised funds and certain supporting
readjustments, distributions, or
organizations), refer to that section and
General Instructions
redemptions.
Regulations section 53.4943-4(d) to
See Regulations section 53.4943-7
determine which entries to record in
Requirement. Complete Schedule D if
for special rules for readjustments
columns (a) and (b). Enter in column (a)
you answered “Yes,” to Form 990-PF,
involving grandfathered holdings.
the excess of the substituted combined
Part VII-B, question 4a or b, or Form
voting level over the disqualified person
5227, Part VI-B, question 78a or b.
Exceptions from selfdealing taxes
voting level. Enter in column (b) the
Report each investment separately.
on certain dispositions of excess
excess of the substituted combined
Paying tax and filing a Form 4720 are
business holdings. Section 101(I)(2)
value level over the disqualified person
required for each year or part of a year
(B) of the Tax Reform Act of 1969
value level.
in the taxable period that applies to the
provides for a limited exception from
investments that jeopardize the
self-dealing taxes for private
If the foundation is using the rules or
foundation's charitable purpose.
foundations that dispose of certain
principles for determining permitted
Generally, the taxable period begins
excess business holdings to disqualified
holdings under section 4943(c)(2), refer
with the date of the investment and
persons, as long as the sales price
to that section to determine which
ends with the date corrective action is
equals or is more than fair market value.
entries to record in column (a). Enter in
completed, a notice of deficiency is
column (a) the percentage, using the
The excess business holdings
mailed, or the initial tax is assessed,
general rule (section 4943(c)(2)(A)) or
involved are interests that are subject to
whichever comes first. Therefore, in
the 35% rule (see section 4943(c)(2)
the section 4941 transitional rules for
addition to investments made in 2015,
(B)), if applicable, of permitted holdings
May 26, 1969, holdings. These interests
include all investments subject to tax
the foundation may have in the
would also be subject to the excess
that were made before 2015 if those
enterprise's voting stock. If the
business holdings tax if they were not
investments were not removed from
foundation determines the permitted
reduced by the required amount.
jeopardy before 2015 and the initial tax
holdings under section 4943(c)(2)(B),
Specific Instructions
was not assessed before 2015.
attach a statement showing effective
control by a third party.
Complete columns (a) and (b) of
Taxable investments. An investment
Schedule C if sections 4943(c)(4),
to be taxed on this schedule is an
Line 3. Enter the value of any stock,
4943(c)(3) (using the principles of
investment by a private foundation that
interest, etc., in the business enterprise
4943(c)(4)), or 4943(c)(5) apply.
jeopardizes the carrying out of its
that the foundation is required to
exempt purposes (for example, if it is
dispose of so the foundation's holdings
Complete column (a) and column (c)
determined that the foundation
in the enterprise are permitted. See
(if applicable) if sections 4943(c)(2) or
managers, in making the investment,
section 4943 and related regulations.
4943(c)(3) (using the principles of
did not exercise ordinary business care
A private foundation using the
4943(c)(2)) apply.
and prudence, under prevailing facts
section 4943(c)(4) rules, or a donor
and circumstances, in providing for the
Complete Schedule C for that day
advised fund or supporting organization
long- and short-term financial needs of
during the tax year when the
using rules similar to that, has excess
10
Instructions for Form 4720 (2015)