Instructions For Form 4720 - 2016 (Page 7 of 19) in pdf

advisors, related persons, or

Sale, exchange, or leasing of

VI-B, question 75a, that applies to the

disqualified persons who are liable for

property between a private foundation

act. For example, “1a(1)” or “1a(4).”

tax on a particular transaction under

and a disqualified person (see

Part II. Enter in column (a) the names

sections 4912, 4941, 4944, 4945, 4955,

definitions in Form 990-PF instructions),

of all disqualified persons who took part

4958, 4966, or 4967 pay less than the

Lending of money or other extension

in the acts of self-dealing listed in Part I.

total tax due on that transaction, then

of credit between a private foundation

If more than one disqualified person

the IRS may charge the amount owed to

and a disqualified person,

took part in an act of self-dealing, each

one or more of them regardless of the

Furnishing of goods, services, or

is individually liable for the entire tax in

tax apportionment shown on this return.

facilities between a private foundation

connection with the act. But the

and a disqualified person,

Part IIB

disqualified persons who are liable for

Payment of compensation (or

the tax may prorate the payment among

payment or reimbursement of

Line 1. If there is more than one signer

themselves. Enter in column (c) the tax

expenses) by a private foundation to a

for this return, see Tax Payments,

to be paid by each disqualified person.

disqualified person,

earlier.

Carry the total amount in column (d)

Transfer to, or use by or for the

Line 3. List total payments here,

for each self-dealer to Part II-A,

benefit of, a disqualified person of the

including amounts paid on extension(s)

column (c).

income or assets of a private

with Form 8868. See the discussion on

foundation, and

Part III. Enter in column (a) the names

Extensions, earlier, for details on

Agreement by a private foundation to

of all foundation managers who took

amounts paid with extensions.

make any payment of money or other

part in the acts of self-dealing listed in

property to a government official other

Line 4. Enter the tax due on this line.

Part I, and who knew that they were acts

than an agreement to employ or make a

(Make check(s) or money order(s)

of self-dealing (except for foundation

grant to that individual for any period

payable to the United States Treasury.)

managers whose participation was not

after the end of government service if

willful and was due to reasonable

Line 5. This is your refund. If various

that individual will be ending

cause).

persons (individuals or organizations)

government service within a 90-day

have overpaid their taxes, please have

If more than one foundation manager

period.

each person request only his, her, or its

took part in the act of self-dealing,

knowing that it was such an act, and

legal share of the refund. This can be

Exceptions to self-dealing. Go to

participation was willful and not due to

shown on an attachment to the Form

reasonable cause, each is individually

4720. Only persons with a legal right to

irm_07-027-015.html#d0e272

for a

liable for the entire tax in connection

a refund should file a refund request

description of acts that aren't

with the act. But the foundation

here.

considered self-dealing.

managers liable for the tax may prorate

Initial taxes on selfdealer. An initial

the payment among themselves. Enter

Schedule A—Initial Taxes

tax of 10% of the amount involved is

in column (c) the tax to be paid by each

charged for each act of self-dealing

on SelfDealing (Section

foundation manager.

between a disqualified person and a

4941)

Carry the total amount in column (d)

private foundation for each year or part

for each foundation manager to Part

of a year in the taxable period. Any

General Instructions

II-A, column (c).

disqualified person (other than a

foundation manager acting only as

Requirement. All organizations that

such) who takes part in the act of

answered “Yes,” to question 1b or 1c in

Schedule B—Initial Tax on

self-dealing must pay the tax.

Part VII-B of Form 990-PF, or “Yes,” to

Undistributed Income

question 75b or 75c in Part VI-B of Form

Initial taxes on foundation manag

(Section 4942)

5227, must complete Schedule A.

ers. When a tax is imposed on a

Complete Parts I, II, and III of

Complete Schedule B if you answered

foundation manager for an act of

Schedule A only in connection with acts

“Yes,” to Form 990-PF, Part VII-B,

self-dealing, the tax will be 5% of the

that are subject to the tax on

question 2b.

amount involved in the act of

self-dealing.

self-dealing for each year or part of a

An initial excise tax of 30% is

Paying the tax and filing a Form 4720

year in the taxable period. However, the

imposed on a private foundation's

is required for each year or part of a

total tax imposed for all years in the

undistributed income on the first day of

year in the taxable period that applies to

taxable period is limited to $20,000 for

the second or any succeeding tax year

the act of self-dealing. Generally, the

each act of self-dealing. The tax is

after the tax year in connection with

taxable period begins with the date on

imposed on any foundation manager

which income remains undistributed.

which the self-dealing occurs and ends

who took part in the act knowing that it

on the earliest of:

Use the 2016 Form 4720 to report

was self-dealing except those

The date a notice of deficiency is

the initial tax on undistributed income for

foundation managers whose

mailed under section 6212, in

tax years beginning in 2015 or earlier

participation was not willful and was due

connection with the initial tax imposed

that remains undistributed at the end of

to reasonable cause.

on the self-dealer,

the foundation's current tax year

Specific Instructions

The date the initial tax on the

beginning in 2016. The initial tax won't

self-dealer is assessed, or

apply to a private foundation's

Part I. List each act of self-dealing in

The date correction of the act of

undistributed income:

Part I. Enter in column (d) the number

self-dealing is completed.

For any tax year it is an operating

designation from Form 990-PF, Part

foundation (as defined in section 4942(j)

VII-B, question 1a, or Form 5227, Part

Selfdealing. Self-dealing includes any

direct or indirect:

Instructions for Form 4720 (2016)

Instructions For Form 4720 - 2016 Page 7

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