Form 990-PF Filing Checklist for Tax Year 2014
Overview and Applicability
Form 990-PF is the annual information return for private foundations and Section 4947(a)(1) nonexempt charitable trusts for tax year 2014. This return continues the Section 4940 excise tax framework with reduced rates available for qualifying domestic foundations under Section 4940(e). The five-year base period test covering 2009 through 2013 determines eligibility for the one percent versus two percent tax rate.
No stimulus reconciliation, Affordable Care Act shared responsibility payments, or Tax Cuts and Jobs Act provisions apply to this form in 2014. The return is mandatory for domestic and foreign private foundations and Section 4947(a)(1) nonexempt charitable trusts. Private foundations must file if they have at least one dollar in gross income or assets. Section 4947(a)(1) trusts must file to establish tax status.
The form reports net investment income, capital gains, distributable amounts, and compliance with Section 4942 distribution requirements. No credits are allowed under this form. The only tax relief available is the reduced rate election under Section 4940(e).
Filing Status and Accounting Method
Confirm whether the organization is a domestic private foundation, foreign private foundation, Section 4947(a)(1) nonexempt charitable trust, or taxable private foundation. Select the accounting method (cash, accrual, or other) in the header of Form 990-PF. This method is applied consistently throughout Part I, unless specific lines have different instructions.
Attach a copy of the determination letter if claiming exemption from Section 4940(a) tax. Retain copies of any ruling or determination letters issued by the IRS for organizational records and potential future reference.
Asset and Income Documentation
Obtain bank statements, brokerage statements, and investment account records as of December 31, 2014, and January 1, 201,4 to complete Part II (Balance Sheets). Collect all Forms 1099-INT, 1099-DIV, 1099-OID, and Schedule K-1 forms for passthrough income received during the tax year.
Part VII-A, line 7, asks whether the foundation had at least $5,000 in assets at any time during the year. If yes, complete Part II, column (c), showing fair market values of assets at year-end. If no, column (c) is not required. Fair market value reporting in Part II, column (c), is conditional based on the $5,000 asset threshold and not mandatory for all filers.
Capital Gains and Losses
Complete Part IV to list each asset sold during 2014. Include date acquired, date sold, gross sales price, cost basis, and depreciation allowed for each transaction. For assets held on December 31, 1969, separately compute gains using the Section 1231 basis rules and excess-of-fair-market-value-over-basis limitations shown in Part IV columns (i) through (l).
Transfer the net long-term capital gain to Part I, line 7, and net short-term capital gain to Part I, line 8, column (c) only. These amounts contribute to the overall income calculations used for determining net investment income and adjusted net income on Part I.
Revenue and Expense Analysis
Complete Part I using four columns. Column (a) reports revenue and expenses per book. Column (b) shows net investment income. Column (c) reports adjusted net income. Column (d) shows disbursements for charitable purposes. All columns follow the accounting method elected by the foundation in the header unless specific line instructions indicate otherwise.
Classify contributions, interest, dividends, rents, capital gains, and other income according to the instructions. The four-column structure ensures the proper separation of taxable investment income from gross income and facilitates accurate tracking of charitable disbursements.
Net Investment Income and Adjusted Net Income
Net investment income on Part I, line 27b, column (b) generally includes interest, dividends, annuities, royalties, and net short-term capital gain. It excludes net long-term capital gain.
Rental income from real property is typically excluded from net investment income, unless it is from debt-financed property that produces unrelated business taxable income under Section 512. The calculation follows the specific instructions for column (b), which identify which income items and deductions are included.
Adjusted net income on Part I, line 27c, column (c) is calculated according to specific instructions in the Form 990-PF instructions. It generally includes gross income minus allowable deductions, with particular adjustments as described in the column (c) instructions. Enter zero if either net investment income or adjusted net income is negative.
Section 4940(e) Eligibility
Complete Part V (Qualification Under Section 4940(e)) if the foundation wishes to claim the one percent reduced tax rate. Calculate the distribution ratio for each year in the five-year base period covering 2009 through 2013. The distribution ratio for each year equals qualifying distributions from Part XII, line 6 of prior returns, divided by the net value of noncharitable-use assets from Part X, line 5 of prior returns.
Calculate the average of these five ratios. If the average meets or exceeds the applicable percentage and the foundation had no Section 4942 tax liability in the base period, the foundation qualifies for the one percent rate. Select the appropriate box on Part VI, line 1.
Excise Tax Calculation
Complete Part VI to calculate the excise tax on net investment income. If the foundation qualifies under Section 4940(e), enter one percent of Part I, line 27b (net investment income). Otherwise, enter two percent for all domestic foundations. Exempt foreign organizations are exempt from four percent based on Part I, line 12 (total gross income).
Add any Section 511 tax on line 2 for unrelated business income. Report Subtitle A: income tax liabilities on line 4. Subtract income tax from the combined amount and enter the result as tax based on investment income on line 5. This amount represents the foundation’s excise tax liability for the year.
Minimum Investment Return
Compute Part X (Minimum Investment Return) by calculating the average monthly fair market value of noncharitable-use securities, cash, and other assets. Deduct acquisition indebtedness and subtract 1.5 percent or a greater documented amount for money held for charitable operations.
Calculate five percent of the net value of noncharitable-use assets. This becomes the minimum investment return that determines the required distributable amount on Part XI, line 1. The minimum investment return establishes the baseline for mandatory distribution requirements under Section 4942 of the Internal Revenue Code.
Distributable Amount Calculation
Part XI calculates the distributable amount, which is the minimum the foundation must distribute for charitable purposes. Start with the minimum investment return from Part X, line 1. Subtract taxes on investment income and other applicable taxes to determine the distributable amount before adjustments.
Add recoveries of qualifying distributions made in prior years. Subtract any permitted deductions. The resulting adjusted distributable amount on Part XI, line 7, represents the minimum distribution requirement for the current year and is carried forward to Part XIII, line 1.
Qualifying Distributions
List all qualifying distributions on Part XII. These include amounts paid to accomplish charitable purposes as shown in Part I, column (d), program-related investments, and amounts set aside for specific charitable projects with prior IRS approval for suitability tests.
The sum on line 4 determines whether the foundation met its Section 4942 distribution requirement. The foundation must distribute at least the distributable amount calculated in Part XI to avoid excise taxes under Section 4942. Document all qualifying distributions thoroughly to support compliance.
Undistributed Income Tracking
Use Part XIII to carry over unused distributions from prior years and reconcile undistributed income for 2013 and 2014 separately. Enter the distributable amount from Part XI, line 7, on Part XIII, line 1. Show undistributed income from 2013 and prior years requiring distribution.
List excess distribution carryovers from 2009 through 2013 that may be applied to reduce the current year distributable amount. Allocate qualifying distributions from Part XII in the proper order among prior year undistributed income, corpus, and current year distributable amount. Calculate any remaining undistributed income requiring distribution in the following year.
Activity and Compliance Disclosures
Answer all questions in Part VII-A regarding political activities, changes to governing instruments, business enterprise holdings, and Section 508(e) compliance. Part VII-A, line 7, regarding the $5,000 asset threshold, determines whether Part II, column (c), fair market value reporting is required.
Disclose any Form 4720 liabilities on Part VII-B, including self-dealing, failure to distribute, excess business holdings, jeopardy investments, taxable expenditures, and personal benefit contracts. If any Part VII-B question is answered yes and no exception applies, file Form 4720 with Form 990-PF or separately by the return due date. Attach detailed statements explaining the circumstances.
Compensation Reporting
Complete Part VIII to list officers, directors, trustees, and foundation managers. Provide name, address, title, average hours per week, compensation, including deferred compensation, contributions to employee benefit plans, and expense account allowances for each individual.
List the five highest-compensated employees other than those included as officers who received compensation of $50,000 or more. Report the five highest-compensated independent contractors for professional services who received compensation of $50,000 or more. Include complete details for all compensation arrangements to demonstrate reasonable and appropriate payments.
Required Schedules and Attachments
Attach all required schedules referenced in the instructions. Include a contributions schedule showing details of gifts and grants received, if applicable. Provide rental schedules for rental income and expenses. Include professional fee schedules detailing payments to attorneys, accountants, and other professionals.
Attach depreciation schedules showing basis, accumulated depreciation, and current year depreciation for depreciable assets. Include any other schedules specifically referenced in line-by-line instructions throughout the form.
Signature and Filing
Sign and date the return under penalties of perjury. The officer or trustee authorized to sign must provide their title. If a paid preparer completed the return, include the preparer declaration with signature, date, PTIN, firm name, address, and phone number.
Include the foundation’s EIN on all pages of the return. Verify all attachments are appropriately labeled and referenced. Ensure fair market value figures are consistent between Part II, column (c), and Part X calculations.
Form 990-PF for tax year 2014 is due by the 15th day of the 5th month following the end of the tax year. For calendar year 2014, the return is due by May 15, 2015. An automatic six-month extension is available by filing Form 8868 by the original due date.
Consult the IRS Where to File page for Form 990-PF 2014 to determine the correct mailing address based on the state where the foundation is located. Private delivery services designated by the IRS also meet the timely filing requirements when used in accordance with IRS guidelines.
Ten-Step Filing Process
Step 1:
Verify the filing status and establish an accounting method. Confirm the organization qualifies as a domestic private foundation, a foreign private foundation, a nonexempt charitable trust under Section 4947(a)(1), or a taxable private foundation. Select the accounting method in the header and apply it consistently throughout Part I.
Step 2:
Gather and reconcile year-end asset and income documentation. Obtain bank statements, brokerage statements, and investment records for both the beginning and end of the year. Collect all Forms 1099 and Schedule K-1 for income received. Answer Part VII-A, line 7, regarding the $5,000 asset threshold to determine Part II, column (c), fair market value reporting requirements.
Step 3:
Calculate capital gains and losses using Part IV with December 31, 196,9, adjustments. List each asset sale with acquisition method, dates, sales price, cost basis, and depreciation. For assets held on December 31, 1969, complete columns (i) through (l) for special basis computations. Transfer net long-term capital gain to Part I, line 7, and net short-term capital gain to Part I, line 8, column (c).
Step 4:
Prepare Part I revenue and expense analysis by column classification. Complete columns (a) through (d) following the elected accounting method. Classify contributions, interest, dividends, rents, capital gains, and other income according to specific column instructions.
Step 5:
Determine net investment income and adjusted net income. Calculate net investment income on Part I, line 27b, column (b), following the specific instructions for included and excluded items. Calculate adjusted net income on Part I, line 27c, column (c) according to the detailed computational rules in the instructions.
Step 6:
Determine Section 4940(e) eligibility and tax rate. Complete Part V if claiming the reduced one percent rate. Calculate distribution ratios for each year in the five-year base period 2009 through 2013. Average these ratios and verify the foundation had no Section 4942 tax liability in the base period. If qualified, check the appropriate box on Part VI, line 1.
Step 7:
Calculate excise tax on net investment income in Part VI. Enter one percent of net investment income if Section 4940(e) qualified; otherwise, enter two percent for domestic foundations or four percent for exempt foreign organizations. Add the Section 511 tax and subtract. Subtitle A: income tax to determine tax based on investment income on line 5.
Step 8:
Complete the minimum investment return and distributable amount. Calculate Part X using average monthly fair market values of noncharitable-use assets. Deduct acquisition indebtedness and 1.5 percent for cash held for operations. Calculate five percent of the net value for the minimum investment return. In Part XI, subtract taxes from the minimum investment return to determine the distributable amount on line 7.
Step 9:
Report qualifying distributions and test distribution compliance. Complete Part XII listing amounts paid for charitable purposes, program-related investments, and set-asides. Sum these on line 4 to verify the foundation met Section 4942 requirements. Complete Part XIII to track undistributed income from prior years and apply excess distribution carryovers from 2009 through 2013.
Step 10:
Complete mandatory disclosures, certify accuracy, and assemble for filing. Answer all Part VII-A and Part VII-B questions. Complete Part VIII compensation reporting. Attach all required schedules for contributions, rentals, professional fees, and depreciation. Sign and date under penalties of perjury. Include a preparer declaration if applicable. Verify EIN appears on all pages. File by May 15, 2015, for calendar year 2014, or request an extension on Form 8868.
This checklist ensures accurate completion of Form 990-PF for tax year 2014, covering filing requirements, excise taxes, minimum distribution obligations, and undistributed income carryovers.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
