Instructions For Form 5227 - 2016 (Page 7 of 20) in pdf

Part IV. Balance Sheet

The allocation of items of income or loss from the

current year between Excluded Income and NII

Complete the balance sheet using the accounting method

should be reported on line 28 after the application of

the trust uses in keeping its books and records. All filers must

CAUTION

the gain and loss netting rules outlined in Part II-A of

complete columns (a) and (b). Also, all charitable remainder

Schedule A, later. In certain situations, NII losses may reduce

unitrusts must complete column (c). A charitable remainder

Excluded Income due to the netting rules. Therefore, those

unitrust must complete column (c). A charitable lead unitrust

rules should be applied before entering amounts on line 28.

may, but isn't required to, show the fair market value of its

assets in column (c).

Note. If the CRT elects to use the Simplified Net Investment

Enter the end-of-year book value where space is provided

Income Calculation, then report all income or loss from Part I

to the left of column (a) to report receivables and the related

in the Excluded Income column and leave the NII column

allowance for doubtful accounts or depreciable assets and

empty. See the instructions for the Simplified Net Investment

accumulated depreciation. Enter the net amounts in column

Income Calculation Election in Part I-B of Schedule A, later.

(b).

Part III-A. Distributions of Principal

Column (c)

for Charitable Purposes

In computing the net FMV of the unitrust's assets, take into

account all assets and liabilities without regard to whether

Line 31. Provide the information requested for columns A

particular items are taken into account in determining the

through C and enter the amount on the line to the right. In

income of the trust. The net FMV of the trust's assets may be

column C, list in sufficient detail each class of activity for

determined on any one date during the tax year of the trust,

amounts paid out of principal to the same payee for

or by taking the average of valuations made on more than

charitable purposes.

one date during the tax year of the trust, as long as the same

Examples. “Cash payments to buy library material” or

valuation date or dates and valuation methods are used each

“Grant, paid in cash, to equip the chemistry lab at Magnolia

year. See Regulations section 1.664-3.

University.”

Line 38. Cash—non-interest-bearing. Enter the amount of

Don't merely enter the category (that is, religious,

cash on deposit in checking accounts, deposits in transit,

charitable, scientific, literary, or educational). The purpose of

change funds, petty cash funds, or any other

the deduction must be entered as shown in the examples

non-interest-bearing account. Don't include advances to

above.

employees or officers or refundable deposits paid to

Part III-B. Accumulated Income Set

suppliers or others.

Line 39. Savings and temporary cash investments.

Aside and Income Distributions for

Enter the total of cash in savings or other interest-bearing

Charitable Purposes

accounts and temporary cash investments, such as money

market funds, commercial paper, certificates of deposit, U.S.

Complete Part III-B if any of the following apply.

Treasury bills, or other governmental obligations that mature

The trust claimed a deduction in a prior year under section

in less than 1 year.

642(c) for an amount permanently set aside and at the

beginning of the year the set aside amount was not fully

Line 40. Accounts receivable. Enter the total accounts

distributed.

receivable (reduced by the corresponding allowance for

The trust claimed a deduction during the year under

doubtful accounts) that arose from the sale of goods and/or

section 642(c) whether the amount was set aside or paid.

the performance of services. Claims against vendors or

The trust made payment for charitable purposes during the

refundable deposits with suppliers or others may be reported

year but claimed the section 642(c) deduction in the prior

here if not significant in amount. (Otherwise, report them on

year.

line 49.) Any receivables due from officers, directors,

The trust is treated as a grantor trust and made a payment

trustees, foundation managers, or other disqualified persons

for charitable purposes during the year, and the grantor

must be reported on line 41. Receivables (including loans

(during the year or a prior year) claimed a charitable

and advances) due from other employees should be reported

deduction as described in Regulations section 1.170A-6(c)

on line 49.

upon contribution to the trust.

Line 41. Receivables due from officers, directors, trust-

ees, and other disqualified persons. Enter here (and in

Note. The grantor trust completes only lines 35 and 36 for

an attached statement described below) all receivables due

this part.

from officers, directors, trustees, and other disqualified

Line 35. Provide the information requested for columns A

persons and all secured and unsecured loans (including

through C and enter the amount on the line to the right. In

advances) to such persons.

column C, list in sufficient detail each class of activity to the

same payee for charitable purposes for amounts distributed

Attached statement.

in which a section 642(c) deduction was claimed.

1. In the required statement, report each loan separately,

Don't merely enter the category (that is, religious,

even if more than one loan was made to the same person, or

charitable, scientific, literary, or educational). The purpose of

the same terms apply to all loans made.

the deduction must be entered as shown in the examples in

Salary advances and other advances for personal use and

Part III-A.

benefit, and receivables subject to special terms or arising

from transactions not functionally related to the trust's

charitable purposes must be reported as separate loans for

each officer, director, etc.

-7-

Instructions for Form 5227

Instructions For Form 5227 - 2016 Page 7

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