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Form 4720 Private Foundation Excise Tax Return: Reporting Taxable Violations

Tying Excise Tax Return to Form 990-PF, Calculating Tax on Foundation and Individuals

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, July 12, 2018

Recorded event now available

This course will provide tax advisers to private foundations with a thorough and practical guide to completing Form 4720 Private Foundation Excise Tax Return. The panel will discuss how to identify acts in violation of tax codes 4941-4946 by a private foundation, consider requirement that acts be “corrected,” detail how to calculate excise tax arising from taxable spending both for the foundation and involved persons, and outline where to report taxable transactions on Form 4720.

Description

Perhaps the most significant challenge for tax advisers serving private foundations, as well as non-exempt charitable trusts treated as private foundations, is identifying and reporting transactions that result in an excise tax liability for the foundation. Everyday taxable situations for the foundations include instances of prohibited self-dealing, failure to make required distribution of foundation income, purchase of risky investments, payments for lobbying efforts, and excess business holdings. Each of these issues carries significant tax consequences to the foundation and potentially its insiders.

A private foundation that has engaged in any taxable transaction or situation must report the value of the violation on Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, to report and pay the tax arising from the violation. Additionally, a transaction may create liability for officers or related parties, and the individual involved may also have to file a separate Form 4720.

The form presents several complexities for advisers, from identifying violations and determining the reporting period, to calculating the excise tax due from both the foundation and impacted parties. The form lists violations and references the appropriate Code Section to determine filing duties. Failure to report the tax carries substantial penalties, potentially including loss of exempt status.

Listen as our experienced panel provides a thorough and practical guide to completing Form 4720 Return of Excise Taxes for Private Foundations.

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Outline

  1. Identify transactions that may cause imposition of excise tax and the exceptions that may lift the obligation to pay excise tax.
  2. Study and learn how to respond to complex questions on Form 990-PF, Part VII-B.
  3. Discuss issues presented by Form 4720 layout and schedules.
  4. Understand how to calculate tax on organization.
  5. Learn to identify persons subject to tax – managers, self-dealers, disqualified persons, donors, donor advisors, and related persons

Benefits

The panel will discuss these and other important topics:

  • Determining whether the foundation has met the minimum distribution requirements
  • Identifying triggers in the foundation’s records and Form 990-PF filings that lead to a Form 4720 reporting and calculation requirement
  • Referencing back violations to the Code Section to ensure accurate calculation of the tax
  • Knowing what violations require filings by related persons as well as the private foundation

Faculty

Blazek, Jody
Jody Blazek, CPA
Partner
Blazek & Vetterling

Ms. Blazek's firm specializes in tax and financial services for exempt organization clients and their...  |  Read More

McGlamery, Nancy
Nancy E. McGlamery
Principal
Adler & Colvin

Ms. McGlamery's clients include public charities, private foundations, grantmakers, nonprofit service providers,...  |  Read More