Instructions For Form 4720 (2015) (Page 11 of 19) in pdf

the foundation to carry out its exempt

I and II of Schedule E only for

expenditure of the foundation, a tax of

purposes). See Regulations section

expenditures that are subject to tax.

5% of the expenditure will be imposed

53.4944-1(a)(2). An investment is not

on any foundation manager who agreed

Note. Also, see Schedule F, Initial

taxed on this schedule if it is a

to the expenditure and who knew that it

Taxes on Political Expenditures.

program-related investment; that is, one

was a taxable expenditure. Foundation

whose primary purpose is one or more

managers whose participation was not

Taxable expenditures. With certain

of those described in section 170(c)(2)

willful and was due to reasonable cause

exceptions, this means any amount a

(B) (religious, charitable, educational,

are not liable for the tax. Any foundation

private foundation pays or incurs:

etc.). A significant purpose of such an

manager who took part in the

1. To carry on propaganda or

investment cannot be the production of

expenditure and is liable for the tax must

otherwise influence any legislation

income or the appreciation of property.

pay the tax. The maximum total amount

through:

See section 4944(c) and Regulations

of tax on all foundation managers for

a. An attempt to influence general

section 53.4944-3.

any one taxable expenditure is $10,000.

public opinion or any segment of it, and

If more than one foundation manager is

Initial taxes on foundation. The initial

liable for tax on a taxable expenditure,

b. Communication with any member

tax is 10% of the amount invested for

all those foundation managers are

or employee of a legislative body, or

each year or part of a year in the taxable

jointly and severally liable for the tax.

with any other government official or

period.

employee who may take part in

Specific Instructions

Initial taxes on foundation manag

formulating legislation;

ers. When a tax is imposed on a

Part I. Complete this part for all taxable

2. To influence the outcome of any

jeopardy investment of the foundation,

expenditures. Enter in column (f) the

specific public election, or to conduct,

the tax will be 10% of the investment for

number designation from Form 990-PF,

directly or indirectly, any voter

each year or part of a year in the taxable

Part VII-B, question 5a, or Form 5227,

registration drive;

period, up to $10,000 for any one

Part VI-B, question 79a, that applies to

3. As a grant to an individual for

investment. It is imposed on all

the act; for example, “5a(1).”

travel, study, or other purposes;

foundation managers who took part in

Part II. Enter in column (a) the names

the act, knowing that it was such an act,

4. As a grant to an organization not

of all foundation managers who agreed

except for foundation managers whose

described in section 509(a)(1), (2), or

to make the taxable expenditure. See

participation was not willful and was due

(3) or that is not an exempt operating

Initial tax on foundation managers,

to reasonable cause. Any foundation

foundation (as defined in section

earlier. If more than one foundation

manager who took part in making the

4940(d)(2)). This includes grants to:

manager is listed in column (a), each is

investment must pay the tax.

a. Type I, Type II, and Type III

individually liable for the entire tax in

functionally integrated supporting

Specific Instructions

connection with the expenditure.

organizations (as described in section

However, the foundation managers who

Part I. Complete this part for all taxable

4942(g)(4)(B) and (C)) if a disqualified

are liable for the tax may prorate the

investments.

person of the foundation controls such

payment among themselves. Enter in

supporting organization or the

Part II. Enter in column (a) the names

column (c) the tax each foundation

supported organizations of such

of all foundation managers who took

manager will pay.

supporting organizations, and

part in making the investments listed in

Carry the total amount in column (d)

Part I. See Initial taxes on foundation

b. Type III supporting organizations

for each foundation manager to Part

managers, earlier.

(as described in section 4943(f)(5)(A))

II-A, column (e).

that are not functionally integrated with

If more than one foundation manager

their supported organizations; or

is listed in column (a), each is

Schedule F—Initial Taxes

individually liable for the entire amount

5. For any purpose other than

on Political Expenditures

of tax in connection with the investment.

religious, charitable, scientific, literary,

However, the foundation managers who

educational, or public purposes, or the

(Section 4955)

are liable for the tax may prorate

prevention of cruelty to children or

General Instructions

payment among themselves. Enter in

animals.

column (c) the tax each foundation

Requirement. Complete Schedule F if

Exceptions. Section 4945(d)(4)(B)

manager will pay.

you answered “Yes,” to question 5a(2)

provides an exception to taxable

Carry the total amount in column (d)

and 5b of Form 990-PF, Part VII-B.

expenditures that applies to certain

for each foundation manager to Part

Complete Schedule F if you entered an

grants to organizations when the

II-A, column (d).

amount on line 2 of Schedule C (Form

granting foundation exercises

990 or 990-EZ), Part 1-A. Complete

expenditure responsibility described in

Schedule E—Initial Taxes

Schedule F if you are otherwise a

section 4945(h). Additional information

section 501(c)(3) organization that

on special rules and exceptions to the

on Taxable Expenditures

made a political expenditure.

definition of taxable expenditures given

(Section 4945)

above can be found at

Political expenditures. These include

part7/irm_07-027-019.html.

any amount paid or incurred by a

General Instructions

section 501(c)(3) organization that

Initial tax on foundation. An initial tax

Requirement. Complete Schedule E if

participates or intervenes in (including

of 20% is imposed on each taxable

you answered “Yes,” to Form 990-PF,

the publication or distribution of

expenditure of the foundation.

Part VII-B, question 5b, or Form 5227,

statements) any political campaign on

Part VI-B, question 79b. Complete Parts

Initial tax on foundation managers.

behalf of, or in opposition to, any

When a tax is imposed on a taxable

Instructions for Form 4720 (2015)

Instructions For Form 4720 (2015) Page 11

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