Part III. Enter in column (a) the names of all managers who

knowingly took part in the excess benefit transactions listed in Part I. If more than one manager knowingly took part in an excess benefit transaction, each is individually liable for the entire tax in connection with the transaction. But the managers liable for the tax may prorate the payment among

themselves. Enter in column (c) the tax to be paid by each organization manager.

A manager filing this Form 4720 should carry the appropriate amount in column (d) to Part II, line 6.

General Instructions

Requirement.

1. Complete Schedule J if you are an entity described in section 501(c), 501(d), or 170(c) (other than the United States) or an Indian tribal government (within the meaning of section 7701(a)(40)) and you received proceeds from or have net income attributable to a prohibited tax shelter transaction (PTST).

2. Complete Schedule J if you are an entity manager of such an entity who approved the entity listed in section 4965(c) as (or otherwise caused the entity to be) a party to a PTST at any time during the tax year and who knew (or had reason to know) that the transaction is a PTST.

See the following guidance and any future guidance for details.

• Notice 2006-65, 2006-31 I.R.B. 102;

• Notice 2007-18, 2007-9 I.R.B. 608;

• T.D. 9334, 2007-34 I.R.B. 382; and

• T.D. 9492, 2010-33 I.R.B. 242.

Tip: Managers of tax favored retirement plans, individual retirement arrangements, and savings arrangements described in sections 401(a), 403(a), 403(b), 529, 457(b), 408(a), 220(d), 408(b), 530, or 223(d) must report and pay tax due under section 4965(a)(2) on Form 5330.

Prohibited tax shelter transaction. In general, a prohibited tax shelter transaction means any listed transaction (including a subsequently listed transaction) and any prohibited reportable transaction.

Listed transaction. A listed transaction includes any transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction. These transactions are identified by notice, regulation, or other form of published guidance as a listed transaction. For existing guidance, see Notice 2009-59, 2009-31 I.R.B. 170. For updates to this list, go to the IRS website at IRS.gov/ businesses/corporations/abusive-tax-shelters-and- transactions . The listed transactions in the above notices and rulings will also be periodically updated in future issues of the Internal Revenue Bulletin.

Subsequently listed transaction. A subsequently listed transaction is a transaction that is identified in published guidance as a listed transaction after the entity has entered into the transaction and that was not a confidential transaction or transaction with contractual protection at the time the entity entered into the transaction.

Prohibited reportable transaction. A prohibited reportable transaction is any confidential transaction or any transaction with contractual protection that is a reportable transaction. See Regulations sections 1.6011-4(b)(3) and (4), and the Instructions for Form 8886-T, Disclosure by Tax-Exempt

Instructions for Form 4720 (2025) 17

Entity Regarding Prohibited Tax Shelter Transaction, for more information.

Allocation of net income and proceeds to a tax year. The net income and proceeds attributable to a prohibited tax shelter transaction must be allocated to a particular tax year in a manner consistent with the entity's established method of accounting for federal income tax purposes. If an entity hasn't established a method of accounting for federal income tax purposes, the entity must use the cash receipts and disbursements method to determine the amount and timing of net income and proceeds attributable to a prohibited tax shelter transaction.

If an entity has an established method of accounting other than the cash method, the entity may use the cash method to determine the amount of the net income and proceeds attributable to a prohibited tax shelter transaction.

Specific Instructions