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2011 Tax Form 1040ez

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2011 Tax Form 1040ez

2011 tax form 1040ez Internal Revenue Bulletin:  2010-9  March 1, 2010  Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2010-18 Table of Contents SECTION 1. 2011 tax form 1040ez PURPOSE SECTION 2. 2011 tax form 1040ez BACKGROUND SECTION 3. 2011 tax form 1040ez SCOPE SECTION 4. 2011 tax form 1040ez APPLICATION SECTION 5. 2011 tax form 1040ez EFFECTIVE DATE SECTION 6. 2011 tax form 1040ez DRAFTING INFORMATION SECTION 1. 2011 tax form 1040ez PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2010, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2010, including a separate table of inclusion amounts for lessees of trucks and vans. 2011 tax form 1040ez The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. 2011 tax form 1040ez SECTION 2. 2011 tax form 1040ez BACKGROUND . 2011 tax form 1040ez 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. 2011 tax form 1040ez Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. 2011 tax form 1040ez The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. 2011 tax form 1040ez This change reflects the higher rate of price inflation for trucks and vans since 1988. 2011 tax form 1040ez . 2011 tax form 1040ez 02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. 2011 tax form 1040ez The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. 2011 tax form 1040ez Under § 1. 2011 tax form 1040ez 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. 2011 tax form 1040ez One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. 2011 tax form 1040ez Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. 2011 tax form 1040ez SECTION 3. 2011 tax form 1040ez SCOPE . 2011 tax form 1040ez 01 The limitations on depreciation deductions in section 4. 2011 tax form 1040ez 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2010, and continue to apply for each taxable year that the passenger automobile remains in service. 2011 tax form 1040ez . 2011 tax form 1040ez 02 The tables in section 4. 2011 tax form 1040ez 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2010. 2011 tax form 1040ez Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. 2011 tax form 1040ez See Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2005-13, 2005-1 C. 2011 tax form 1040ez B. 2011 tax form 1040ez 759, for passenger automobiles first leased before calendar year 2006; Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2006-18, 2006-1 C. 2011 tax form 1040ez B. 2011 tax form 1040ez 645, for passenger automobiles first leased during calendar year 2006; Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2007-30, 2007-1 C. 2011 tax form 1040ez B. 2011 tax form 1040ez 1104, for passenger automobiles first leased during calendar year 2007; Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2008-22, 2008-12 I. 2011 tax form 1040ez R. 2011 tax form 1040ez B. 2011 tax form 1040ez 658, for passenger automobiles first leased during calendar year 2008; and Rev. 2011 tax form 1040ez Proc. 2011 tax form 1040ez 2009-24, 2009-17 I. 2011 tax form 1040ez R. 2011 tax form 1040ez B. 2011 tax form 1040ez 885, for passenger automobiles first leased during calendar year 2009. 2011 tax form 1040ez SECTION 4. 2011 tax form 1040ez APPLICATION . 2011 tax form 1040ez 01 Limitations on Depreciation Deductions for Certain Automobiles. 2011 tax form 1040ez (1) Amount of the inflation adjustment. 2011 tax form 1040ez (a) Passenger automobiles (other than trucks or vans). 2011 tax form 1040ez Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. 2011 tax form 1040ez The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor. 2011 tax form 1040ez The new car component of the CPI was 115. 2011 tax form 1040ez 2 for October 1987 and 137. 2011 tax form 1040ez 851 for October 2009. 2011 tax form 1040ez The October 2009 index exceeded the October 1987 index by 22. 2011 tax form 1040ez 651. 2011 tax form 1040ez Therefore, the automobile price inflation adjustment for 2010 for passenger automobiles (other than trucks and vans) is 19. 2011 tax form 1040ez 66 percent (22. 2011 tax form 1040ez 651/115. 2011 tax form 1040ez 2 x 100%). 2011 tax form 1040ez The dollar limitations in § 280F(a) are multiplied by a factor of 0. 2011 tax form 1040ez 1966, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2010. 2011 tax form 1040ez This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2010. 2011 tax form 1040ez (b) Trucks and vans. 2011 tax form 1040ez To determine the dollar limitations for trucks and vans first placed in service during calendar year 2010, the new truck component of the CPI is used instead of the new car component. 2011 tax form 1040ez The new truck component of the CPI was 112. 2011 tax form 1040ez 4 for October 1987 and 140. 2011 tax form 1040ez 897 for October 2009. 2011 tax form 1040ez The October 2009 index exceeded the October 1987 index by 28. 2011 tax form 1040ez 497. 2011 tax form 1040ez Therefore, the automobile price inflation adjustment for 2010 for trucks and vans is 25. 2011 tax form 1040ez 35 percent (28. 2011 tax form 1040ez 497/112. 2011 tax form 1040ez 4 x 100%). 2011 tax form 1040ez The dollar limitations in § 280F(a) are multiplied by a factor of 0. 2011 tax form 1040ez 2535, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. 2011 tax form 1040ez This adjustment applies to all trucks and vans that are first placed in service in calendar year 2010. 2011 tax form 1040ez (2) Amount of the limitation. 2011 tax form 1040ez Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2010. 2011 tax form 1040ez Use Table 1 for a passenger automobile (other than a truck or van) and Table 2 for a truck or van placed in service in calendar year 2010. 2011 tax form 1040ez REV. 2011 tax form 1040ez PROC. 2011 tax form 1040ez 2010-18 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775 REV. 2011 tax form 1040ez PROC. 2011 tax form 1040ez 2010-18 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010 Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 . 2011 tax form 1040ez 02 Inclusions in Income of Lessees of Passenger Automobiles. 2011 tax form 1040ez A taxpayer must follow the procedures in § 1. 2011 tax form 1040ez 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2010. 2011 tax form 1040ez In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure. 2011 tax form 1040ez REV. 2011 tax form 1040ez PROC. 2011 tax form 1040ez 2010-18 TABLE 3 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $16,700 $17,000 3 7 10 11 14 17,000 17,500 4 8 13 15 16 17,500 18,000 5 10 16 19 21 18,000 18,500 6 13 18 23 26 18,500 19,000 7 15 22 26 31 19,000 19,500 8 17 25 30 35 19,500 20,000 9 19 29 34 39 20,000 20,500 10 21 32 38 44 20,500 21,000 11 23 35 42 48 21,000 21,500 12 26 38 45 53 21,500 22,000 13 28 41 50 57 22,000 23,000 14 31 46 56 63 23,000 24,000 16 36 52 63 73 24,000 25,000 18 40 59 71 81 25,000 26,000 20 44 66 78 90 26,000 27,000 22 49 71 86 100 27,000 28,000 24 53 78 94 108 28,000 29,000 26 57 85 101 118 29,000 30,000 28 61 92 109 126 30,000 31,000 30 66 97 117 135 31,000 32,000 32 70 104 125 144 32,000 33,000 34 74 111 132 153 33,000 34,000 36 79 117 140 161 34,000 35,000 38 83 123 148 171 35,000 36,000 40 87 130 156 179 36,000 37,000 42 92 136 163 188 37,000 38,000 44 96 143 170 198 38,000 39,000 46 100 149 179 206 39,000 40,000 48 105 155 186 215 40,000 41,000 50 109 162 194 224 41,000 42,000 52 113 169 201 233 42,000 43,000 54 118 174 210 241 43,000 44,000 56 122 181 217 251 44,000 45,000 58 126 188 225 259 45,000 46,000 60 131 194 232 269 46,000 47,000 61 135 201 240 277 47,000 48,000 63 140 207 248 286 48,000 49,000 65 144 213 256 295 49,000 50,000 67 148 220 263 304 50,000 51,000 69 153 226 271 313 51,000 52,000 71 157 232 279 322 52,000 53,000 73 161 239 287 331 53,000 54,000 75 166 245 294 340 54,000 55,000 77 170 252 302 348 55,000 56,000 79 174 258 310 358 56,000 57,000 81 178 265 318 366 57,000 58,000 83 183 271 325 375 58,000 59,000 85 187 278 333 384 59,000 60,000 87 191 284 341 393 60,000 62,000 90 198 294 352 406 62,000 64,000 94 207 306 368 424 64,000 66,000 98 215 320 382 443 66,000 68,000 102 224 332 398 460 68,000 70,000 106 232 346 413 478 70,000 72,000 110 241 358 429 496 72,000 74,000 114 250 371 444 513 74,000 76,000 118 258 384 460 531 76,000 78,000 122 267 396 476 549 78,000 80,000 126 276 409 491 566 80,000 85,000 132 291 432 518 598 85,000 90,000 142 313 464 556 643 90,000 95,000 152 334 497 594 687 95,000 100,000 162 356 528 634 731 100,000 110,000 177 388 577 691 798 110,000 120,000 196 432 641 768 887 120,000 130,000 216 475 705 846 976 130,000 140,000 236 518 770 922 1,065 140,000 150,000 256 561 834 1,000 1,154 150,000 160,000 275 605 898 1,077 1,243 160,000 170,000 295 648 963 1,153 1,333 170,000 180,000 315 691 1,027 1,231 1,421 180,000 190,000 334 735 1,091 1,308 1,510 190,000 200,000 354 778 1,155 1,386 1,599 200,000 210,000 374 821 1,220 1,462 1,688 210,000 220,000 393 865 1,284 1,539 1,777 220,000 230,000 413 908 1,348 1,617 1,866 230,000 240,000 433 951 1,413 1,693 1,956 240,000 and up 453 995 1,476 1,771 2,044 REV. 2011 tax form 1040ez PROC. 2011 tax form 1040ez 2010-18 TABLE 4 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later 17,000 17,500 3 6 9 10 11 17,500 18,000 4 8 12 14 16 18,000 18,500 5 10 15 18 21 18,500 19,000 6 12 19 22 24 19,000 19,500 7 15 21 26 29 19,500 20,000 8 17 25 29 34 20,000 20,500 9 19 28 33 38 20,500 21,000 10 21 31 37 43 21,000 21,500 11 23 35 41 47 21,500 22,000 12 25 38 45 51 22,000 23,000 13 29 42 51 58 23,000 24,000 15 33 49 58 67 24,000 25,000 17 37 56 66 76 25,000 26,000 19 42 62 73 85 26,000 27,000 21 46 68 82 93 27,000 28,000 23 50 75 89 103 28,000 29,000 25 55 81 97 111 29,000 30,000 27 59 88 104 121 30,000 31,000 29 63 94 113 129 31,000 32,000 31 68 100 120 138 32,000 33,000 33 72 107 127 148 33,000 34,000 35 76 114 135 156 34,000 35,000 37 81 119 143 165 35,000 36,000 39 85 126 151 174 36,000 37,000 41 89 133 158 183 37,000 38,000 43 94 139 166 191 38,000 39,000 45 98 145 174 201 39,000 40,000 47 102 152 182 209 40,000 41,000 49 106 159 189 218 41,000 42,000 51 111 164 198 227 42,000 43,000 53 115 171 205 236 43,000 44,000 55 119 178 213 245 44,000 45,000 57 124 184 220 254 45,000 46,000 59 128 190 228 263 46,000 47,000 60 133 197 235 272 47,000 48,000 62 137 203 244 280 48,000 49,000 64 142 209 251 290 49,000 50,000 66 146 216 259 298 50,000 51,000 68 150 223 266 308 51,000 52,000 70 154 229 275 316 52,000 53,000 72 159 235 282 325 53,000 54,000 74 163 242 290 334 54,000 55,000 76 167 249 297 343 55,000 56,000 78 172 254 305 352 56,000 57,000 80 176 261 313 361 57,000 58,000 82 180 268 320 370 58,000 59,000 84 185 274 328 378 59,000 60,000 86 189 280 336 388 60,000 62,000 89 195 291 347 401 62,000 64,000 93 204 303 363 418 64,000 66,000 97 213 315 379 436 66,000 68,000 101 221 329 394 454 68,000 70,000 105 230 341 410 472 70,000 72,000 109 239 354 424 490 72,000 74,000 113 247 367 440 508 74,000 76,000 117 256 380 455 526 76,000 78,000 121 264 393 471 543 78,000 80,000 125 273 406 486 561 80,000 85,000 131 289 428 513 592 85,000 90,000 141 310 461 552 636 90,000 95,000 151 332 492 591 681 95,000 100,000 161 353 525 629 726 100,000 110,000 176 386 573 686 793 110,000 120,000 195 430 637 763 882 120,000 130,000 215 473 701 841 971 130,000 140,000 235 516 766 918 1,059 140,000 150,000 255 559 830 995 1,149 150,000 160,000 274 603 894 1,072 1,238 160,000 170,000 294 646 958 1,150 1,326 170,000 180,000 314 689 1,023 1,226 1,416 180,000 190,000 333 733 1,087 1,303 1,505 190,000 200,000 353 776 1,151 1,381 1,594 200,000 210,000 373 819 1,216 1,457 1,683 210,000 220,000 392 863 1,280 1,534 1,772 220,000 230,000 412 906 1,344 1,612 1,861 230,000 240,000 432 949 1,409 1,689 1,949 240,000 and up 452 992 1,473 1,766 2,039 SECTION 5. 2011 tax form 1040ez EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010. 2011 tax form 1040ez SECTION 6. 2011 tax form 1040ez DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. 2011 tax form 1040ez Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). 2011 tax form 1040ez For further information regarding this revenue procedure, contact Mr. 2011 tax form 1040ez Harvey at (202) 622-4930 (not a toll-free call). 2011 tax form 1040ez Prev  Up  Next   Home   More Internal Revenue Bulletins
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The 2011 Tax Form 1040ez

2011 tax form 1040ez 5. 2011 tax form 1040ez   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. 2011 tax form 1040ez A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. 2011 tax form 1040ez Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. 2011 tax form 1040ez Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. 2011 tax form 1040ez  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. 2011 tax form 1040ez Tax-exempt entities. 2011 tax form 1040ez   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). 2011 tax form 1040ez Religious or apostolic associations or corporations described in section 501(d). 2011 tax form 1040ez Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). 2011 tax form 1040ez Indian tribal governments within the meaning of section 7701(a)(40). 2011 tax form 1040ez Entity manager. 2011 tax form 1040ez    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. 2011 tax form 1040ez Prohibited tax shelter transaction. 2011 tax form 1040ez   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. 2011 tax form 1040ez A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. 2011 tax form 1040ez 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. 2011 tax form 1040ez 6011-4(b)(4). 2011 tax form 1040ez See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. 2011 tax form 1040ez Subsequently listed transaction. 2011 tax form 1040ez   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. 2011 tax form 1040ez Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). 2011 tax form 1040ez The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. 2011 tax form 1040ez The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. 2011 tax form 1040ez To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. 2011 tax form 1040ez For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. 2011 tax form 1040ez Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. 2011 tax form 1040ez The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. 2011 tax form 1040ez To report this tax, file Form 4720. 2011 tax form 1040ez Excess Benefit Transactions Excise tax on excess benefit transactions. 2011 tax form 1040ez   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. 2011 tax form 1040ez A manager of the organization may also have to pay an excise tax under section 4958. 2011 tax form 1040ez These taxes are reported on Form 4720. 2011 tax form 1040ez   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. 2011 tax form 1040ez   There are three taxes under section 4958. 2011 tax form 1040ez Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. 2011 tax form 1040ez    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. 2011 tax form 1040ez Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. 2011 tax form 1040ez The disqualified person who benefited from the transaction is liable for the tax. 2011 tax form 1040ez See definition of Disqualified person, later at Disqualified person. 2011 tax form 1040ez Additional tax on the disqualified person. 2011 tax form 1040ez   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. 2011 tax form 1040ez   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. 2011 tax form 1040ez If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. 2011 tax form 1040ez   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. 2011 tax form 1040ez The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. 2011 tax form 1040ez Taxable period. 2011 tax form 1040ez   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. 2011 tax form 1040ez Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. 2011 tax form 1040ez This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. 2011 tax form 1040ez There is also joint and several liability for this tax. 2011 tax form 1040ez A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. 2011 tax form 1040ez Organization Manager. 2011 tax form 1040ez   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. 2011 tax form 1040ez An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. 2011 tax form 1040ez For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. 2011 tax form 1040ez A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. 2011 tax form 1040ez Knowing does not mean having reason to know. 2011 tax form 1040ez The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. 2011 tax form 1040ez Participation by an organization manager is willful if it is voluntary, conscious, and intentional. 2011 tax form 1040ez An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. 2011 tax form 1040ez Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. 2011 tax form 1040ez The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. 2011 tax form 1040ez To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. 2011 tax form 1040ez For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. 2011 tax form 1040ez Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. 2011 tax form 1040ez Donor advised fund transactions occurring after August 17, 2006. 2011 tax form 1040ez   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. 2011 tax form 1040ez   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. 2011 tax form 1040ez For additional information, see the Instructions for Form 4720. 2011 tax form 1040ez Supporting organization transactions occurring after July 25, 2006. 2011 tax form 1040ez   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. 2011 tax form 1040ez   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). 2011 tax form 1040ez   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. 2011 tax form 1040ez For additional information, see the Instructions for Form 4720. 2011 tax form 1040ez   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. 2011 tax form 1040ez Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. 2011 tax form 1040ez However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. 2011 tax form 1040ez In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. 2011 tax form 1040ez In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. 2011 tax form 1040ez Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. 2011 tax form 1040ez Correcting the excess benefit. 2011 tax form 1040ez   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. 2011 tax form 1040ez   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. 2011 tax form 1040ez The correction amount equals the excess benefit plus the interest on the excess benefit. 2011 tax form 1040ez The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. 2011 tax form 1040ez   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. 2011 tax form 1040ez In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. 2011 tax form 1040ez   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. 2011 tax form 1040ez   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. 2011 tax form 1040ez Exception. 2011 tax form 1040ez   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. 2011 tax form 1040ez Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. 2011 tax form 1040ez An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. 2011 tax form 1040ez An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. 2011 tax form 1040ez Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. 2011 tax form 1040ez For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. 2011 tax form 1040ez   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. 2011 tax form 1040ez Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. 2011 tax form 1040ez For certain supporting organization transactions occurring after July 25, 2006. 2011 tax form 1040ez   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. 2011 tax form 1040ez Investment advisor. 2011 tax form 1040ez   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. 2011 tax form 1040ez Substantial contributor. 2011 tax form 1040ez   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. 2011 tax form 1040ez A substantial contributor includes the grantor of a trust. 2011 tax form 1040ez Family members. 2011 tax form 1040ez   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). 2011 tax form 1040ez 35% controlled entity. 2011 tax form 1040ez   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. 2011 tax form 1040ez   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. 2011 tax form 1040ez Persons having substantial influence. 2011 tax form 1040ez   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. 2011 tax form 1040ez Treasurers and chief financial officers. 2011 tax form 1040ez Persons with a material financial interest in a provider-sponsored organization. 2011 tax form 1040ez Persons not considered to have substantial influence. 2011 tax form 1040ez   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. 2011 tax form 1040ez Facts and circumstances. 2011 tax form 1040ez   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. 2011 tax form 1040ez Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. 2011 tax form 1040ez The person founded the organization. 2011 tax form 1040ez The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. 2011 tax form 1040ez The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. 2011 tax form 1040ez The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. 2011 tax form 1040ez The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. 2011 tax form 1040ez The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. 2011 tax form 1040ez The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. 2011 tax form 1040ez   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. 2011 tax form 1040ez The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. 2011 tax form 1040ez The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. 2011 tax form 1040ez Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. 2011 tax form 1040ez The direct supervisor of the person is not a disqualified person. 2011 tax form 1040ez The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. 2011 tax form 1040ez   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. 2011 tax form 1040ez A person may be a disqualified person with respect to transactions with more than one organization. 2011 tax form 1040ez Reasonable Compensation. 2011 tax form 1040ez    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. 2011 tax form 1040ez The section 162 standard will apply in determining the reasonableness of compensation. 2011 tax form 1040ez The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. 2011 tax form 1040ez   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). 2011 tax form 1040ez Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. 2011 tax form 1040ez    Intent to treat benefits as compensation. 2011 tax form 1040ez An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. 2011 tax form 1040ez   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. 2011 tax form 1040ez Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. 2011 tax form 1040ez Exception. 2011 tax form 1040ez   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. 2011 tax form 1040ez Rebuttable presumption that a transaction is not an excess benefit transaction. 2011 tax form 1040ez   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. 2011 tax form 1040ez The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. 2011 tax form 1040ez Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. 2011 tax form 1040ez (There is a special safe harbor for small organizations. 2011 tax form 1040ez If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. 2011 tax form 1040ez ) The authorized body adequately documents the basis for its determination concurrently with making that determination. 2011 tax form 1040ez The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. 2011 tax form 1040ez Disregarded benefits. 2011 tax form 1040ez   The following economic benefits are disregarded for section 4958 purposes. 2011 tax form 1040ez Nontaxable fringe benefits that are excluded from income under section 132. 2011 tax form 1040ez Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. 2011 tax form 1040ez Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. 2011 tax form 1040ez Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. 2011 tax form 1040ez A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. 2011 tax form 1040ez Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. 2011 tax form 1040ez   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. 2011 tax form 1040ez   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). 2011 tax form 1040ez   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. 2011 tax form 1040ez   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. 2011 tax form 1040ez Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. 2011 tax form 1040ez More information. 2011 tax form 1040ez   For more information, see the Instructions to Forms 990 and 4720. 2011 tax form 1040ez Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. 2011 tax form 1040ez They may be subject to an excise tax on the amount of any excess business holdings. 2011 tax form 1040ez For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. 2011 tax form 1040ez Donor advised fund. 2011 tax form 1040ez   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. 2011 tax form 1040ez Supporting organizations. 2011 tax form 1040ez   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. 2011 tax form 1040ez These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. 2011 tax form 1040ez Taxes. 2011 tax form 1040ez   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. 2011 tax form 1040ez The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. 2011 tax form 1040ez The excess holdings are determined on the day during the tax year when they were the largest. 2011 tax form 1040ez   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. 2011 tax form 1040ez   For more information on the tax on excess business holdings, see the Instructions for Form 4720. 2011 tax form 1040ez Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. 2011 tax form 1040ez An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. 2011 tax form 1040ez Taxable distribution. 2011 tax form 1040ez   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). 2011 tax form 1040ez    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. 2011 tax form 1040ez The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. 2011 tax form 1040ez Sponsoring organization. 2011 tax form 1040ez   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. 2011 tax form 1040ez Donor advised fund. 2011 tax form 1040ez    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. 2011 tax form 1040ez Exception. 2011 tax form 1040ez A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. 2011 tax form 1040ez The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). 2011 tax form 1040ez Disqualified supporting organization. 2011 tax form 1040ez   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. 2011 tax form 1040ez Tax on sponsoring organization. 2011 tax form 1040ez   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. 2011 tax form 1040ez Tax on fund manager. 2011 tax form 1040ez   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. 2011 tax form 1040ez Any fund manager who took part in the distribution and is liable for the tax must pay the tax. 2011 tax form 1040ez The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. 2011 tax form 1040ez If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. 2011 tax form 1040ez   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. 2011 tax form 1040ez Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. 2011 tax form 1040ez   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. 2011 tax form 1040ez The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. 2011 tax form 1040ez Donor advisor. 2011 tax form 1040ez   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. 2011 tax form 1040ez Related party. 2011 tax form 1040ez   A related party includes any family member or 35% controlled entity. 2011 tax form 1040ez See the definition of those terms under Disqualified Person , earlier. 2011 tax form 1040ez Tax on donor, donor advisor, or related person. 2011 tax form 1040ez    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). 2011 tax form 1040ez The advisor and the party who received the benefit are jointly and severally liable for the tax. 2011 tax form 1040ez Tax on fund managers. 2011 tax form 1040ez   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. 2011 tax form 1040ez Any fund manager who took part in the distribution and is liable for the tax must pay the tax. 2011 tax form 1040ez The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. 2011 tax form 1040ez If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. 2011 tax form 1040ez Exception. 2011 tax form 1040ez   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. 2011 tax form 1040ez   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. 2011 tax form 1040ez Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. 2011 tax form 1040ez Capital gains from appreciation are included in the tax base on private foundation net investment income. 2011 tax form 1040ez This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. 2011 tax form 1040ez Form 990-W is used to calculate the estimated tax. 2011 tax form 1040ez In addition, there are several other rules that apply to excise taxes on private foundations. 2011 tax form 1040ez These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. 2011 tax form 1040ez Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. 2011 tax form 1040ez For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. 2011 tax form 1040ez Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. 2011 tax form 1040ez If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. 2011 tax form 1040ez Both of these excise taxes are reported on Schedule A (Form 990-BL). 2011 tax form 1040ez See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. 2011 tax form 1040ez Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. 2011 tax form 1040ez These entities must meet section 501(r)(3) requirements at all times during their tax year. 2011 tax form 1040ez Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). 2011 tax form 1040ez See Schedule H, Hospitals (Form 990), for details. 2011 tax form 1040ez Prev  Up  Next   Home   More Online Publications