Instructions For Form 4720 (2015) (Page 5 of 19) in pdf

which you answered “Yes,” to Form

Any other period the IRS determines

organization in a financial position not

990-PF, Part VII-B, question 4a or b, or

worse than that in which it would be if

is reasonable and necessary to correct

Form 5227, Part VI-B, question 78a or b.

the disqualified person had been

the taxable event.

dealing under the highest fiduciary

The taxable event will be treated as

Amended Return

standards.

occurring:

To correct a previously filed Form 4720

For the tax on failure to distribute

If, when the return is filed, the

(including the reporting of additional

income, on the first day of the tax year

foundation, entity, managers,

excise taxes discovered after the

for which there was a failure to distribute

self-dealers, disqualified persons,

original Form 4720 filing), use the same

income,

donors, donor advisors, or related

year form as the form you are

For the tax on excess business

persons have corrected any acts or

correcting, and:

holdings, on the first day on which there

transactions resulting in liability for tax

Write “Amended Return,” at the top of

were excess business holdings, or

under Chapter 42, answer “Yes,” to

page 1.

In any other case, on the date the

question B and give the following

Complete the entire return (not just

event occurred.

information separately for each

the part that changed) following the form

correction:

Generally, the term “correction” has

and instructions for the amended year.

Schedule and item number of the act

the following meanings.

Include a statement that identifies the

or transaction that has been corrected,

1. Section 4941 (Schedule A)

lines and amounts being changed and

A description of the act or transaction

Undoing the transaction to the extent

the reason for each change.

that resulted in the tax,

possible, but in any case placing the

Write the entity's name and EIN at the

A detailed description of the

private foundation in a financial position

top of each page of the statement.

correction made,

not worse than that in which it would be

The amount of any political

If the amended return is claiming a

if the disqualified person were dealing

expenditure recovered,

refund or requesting an abatement,

under the highest fiduciary standards.

Description of safeguards to prevent

write “Claim for Refund” or “Request for

2. Section 4942 (Schedule B)

future political expenditures, and

Abatement,” whichever is applicable,

Making sufficient qualifying distributions

The date of correction.

near the top of the statement discussed

to compensate for deficient qualifying

above.

For any acts or transactions the

distributions for a prior tax year.

foundation, entity, managers,

3. Section 4943 (Schedule C)

Note. If you are claiming a refund or

self-dealers, disqualified persons,

Action that results in the foundation no

requesting an abatement, you may use

donors, donor advisors, or related

longer having excess business holdings

Form 843, Claim for Refund and

persons have not corrected, give the

in a business enterprise.

Request for Abatement, instead of Form

following information separately for

4. Section 4944 (Schedule D)

4720.

each act:

An investment is considered to be

Schedule and item number of the act

removed from jeopardy when the

or transaction that has not been

Specific Instructions for

investment is sold or otherwise

corrected,

Page 1

disposed of, and the proceeds of such

A description of the act or

sale or other disposition are not

transaction, and

Question B. To avoid additional taxes

investments that jeopardize the carrying

A detailed explanation of why

and penalties under sections 4941

out of the foundation's exempt

correction has not been made and what

through 4945, 4955, and 4958, and in

purposes.

steps are being taken to make the

some cases further initial taxes on the

5. Section 4945 (Schedule E)

correction.

foundation, organization, and related

a. Recovering part or all of the

persons, a foundation, organization,

If you are correcting deficient

expenditure to the extent recovery is

disqualified person, or manager must

distributions under section 4942 where

possible, and where full recovery is not

correct the taxable event within the

an election under section 4942(h)(2)

possible, such additional corrective

correction period. The taxable event is

was filed with the IRS, provide a copy of

action as is prescribed by regulations,

the act, failure to act, or transaction that

the election. See the instructions for

resulted in the liability for initial taxes

Form 990-PF, Part XIII, lines 4b and 4c

under these provisions.

for more information.

b. Obtaining or making the report in

question for a case that fails to comply

Generally, the correction period

Part I

begins on the date the event occurs and

with section 4945(h)(2) or (3)

Line 8

ends 90 days after the mailing date of a

(expenditure responsibility).

notice of deficiency, under section

6. Section 4955 (Schedule F)

If the organization has an entry

6212, in connection with the second tier

Recovering part or all of the expenditure

on this line, it must also file

tax imposed on that taxable event. That

TIP

to the extent recovery is possible,

Form 8870.

time is extended by:

establishment of safeguards to prevent

Any period in which a deficiency

Enter the total of all premiums paid by

future political expenditures, and where

cannot be assessed under section

the organization on any personal benefit

full recovery is not possible, such

6213(a) because a petition to the Tax

contract if the payment of premiums is in

additional corrective action as is

Court for redetermination of the

connection with a transfer for which a

prescribed by the regulations.

deficiency is pending, not extended by

deduction is not allowed under section

7. Section 4958 (Schedule I)

any supplemental proceeding by the

170(f)(10)(A). Also, if there is an

Undoing the excess benefit to the extent

Tax Court under section 4961(b),

understanding or expectation that any

possible and taking any additional

regarding whether correction was made,

person will directly or indirectly pay any

measures necessary to place the

and

Instructions for Form 4720 (2015)

Instructions For Form 4720 (2015) Page 5

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