Part IV. Balance Sheet

Complete the balance sheet using the accounting method the trust uses in keeping its books and records. All filers must complete columns (a) and (b). Also, all CRUTs must complete column (c). A charitable lead unitrust may, but isn't required to, show the FMV of its assets in column (c).

Enter the end-of-year book value where space is provided to the left of column (a) to report receivables and the related allowance for doubtful accounts or depreciable assets and accumulated depreciation. Enter the net amounts in column (b).

Column (c) In computing the net FMV of the unitrust's assets, take into account all assets and liabilities without regard to whether particular items are taken into account in determining the income of the trust. The net FMV of the trust's assets may be determined on any one date during the tax year of the trust, or by taking the average of valuations made on more than one date during the tax year of the trust, as long as the same valuation date or dates and valuation methods are used each year. See Regulations section 1.664-3.

Line 1. Cash—non-interest-bearing. Enter the amount of cash on deposit in checking accounts, deposits in transit, change funds, petty cash funds, or any other non-interest-bearing account. Don't include advances to employees or officers or refundable deposits paid to suppliers or others.

Line 2. Savings and temporary cash investments. Enter the total of cash in savings or other interest-bearing accounts and temporary cash investments, such as money market funds, commercial paper, certificates of deposit, U.S. Treasury bills, or other governmental obligations that mature in less than 1 year.

Line 3. Accounts receivable. Enter the total accounts receivable (reduced by the corresponding allowance for doubtful accounts) that arose from the sale of goods and/or the performance of services. Claims against vendors or refundable deposits with suppliers or others may be reported here if not significant in amount. (Otherwise, report them on line 12.) Any receivables due from officers, directors, trustees, foundation managers, or other disqualified persons must be reported on line 4. Receivables (including loans and advances) due from other employees should be reported on line 12.

Line 4. Receivables due from officers, directors, trust- ees, and other disqualified persons. Enter here (and in an attached statement described below) all receivables due from officers, directors, trustees, and other disqualified persons and all secured and unsecured loans (including advances) to such persons.

Attached statement.

1. In the required statement, report each loan separately, even if more than one loan was made to the same person, or the same terms apply to all loans made.

Salary advances and other advances for personal use and 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.

Instructions for Form 5227 7

2. Receivables that are subject to the same terms and conditions (including credit limits and rate of interest) as receivables due from the general public and that arose in connection with an activity functionally related to the trust's charitable purposes may be reported as a single total for all the officers, directors, etc. Travel advances made in connection with official business of the trust may also be reported as a single total.

For each outstanding loan or other receivable that must be reported separately, the attached statement should use a columnar format and show:

• Borrower's name and title,

• Original amount,

• Balance due,

• Date of note,

• Maturity date,

• Repayment terms,

• Interest rate,

• Security provided by the borrower,

• Purpose of the loan, and

• Description and FMV of the consideration furnished by the lender.

The above detail isn't required for receivables or travel advances that may be reported as a single total (see instruction (2) above). However, report and identify those totals separately in the attachment.

Line 5. Other notes and loans receivable. Enter the combined total of notes receivable and net loans receivable.

Notes receivable. Enter the amount of all notes receivable not listed on line 4 and not acquired as investments. Attach a statement similar to that called for in the line 4 instructions. The statement should also identify the relationship of the borrower to any officer, director, trustee, or other disqualified person.

For a note receivable from any section 501(c)(3) organization, list only the name of the borrower and the balance due on the required statement.

Loans receivable. Enter the gross amount of loans receivable, less the allowance for doubtful accounts, arising from the normal activities of the trust. An itemized list of these loans isn't required, but attach a statement indicating the total amount of each type of loan outstanding. Report loans to officers, directors, trustees, or other disqualified persons on line 4, and loans to other employees on line 12.

Line 6. Inventories for sale or use. Enter the amount of materials, goods, and supplies purchased or manufactured by the trust and held for sale or use in some future period.

Line 7. Prepaid expenses and deferred charges. Enter the amount of short-term and long-term prepayments of future expenses attributable to one or more future accounting periods. Examples include prepayments of rent, insurance, and pension costs, and expenses incurred in connection with a solicitation campaign to be conducted in a future accounting period.

Lines 8a, b, and c. Investments—U.S. and state govern- ment obligations, corporate stock, and corporate bonds. Enter the book value (which may be market value) of these investments. Attach a statement that lists each security held at the end of the year and shows whether the security is listed at cost (including the value recorded at the time of receipt in the case of donated securities) or end-of-year market value. Don't include amounts shown on line 2. Governmental obligations reported on line 8a are those that

mature in 1 year or more. Debt securities of the U.S. Government may be reported as a single total rather than itemized. Obligations of state and municipal governments may also be reported as a lump-sum total. Don't combine U.S. Government obligations with state and municipal obligations on the attached statement.

Line 9. Investments—Land, buildings, and equipment. Enter the book value (cost or other basis less accumulated depreciation) of all land, buildings, and equipment held for investment purposes, such as rental properties. Attach a statement listing these investment fixed assets held at the end of the year and showing, for each item or category listed, the cost or other basis, accumulated depreciation, and book value.

Line 10. Investments—Other. Enter the amount of all other investment holdings not reported on line 8 or line 9. Attach a statement describing each of these investments held at the end of the year. Show the book value for each and indicate whether the investment is listed at cost or end-of-year market value. Don't include program-related investments. See the instructions for line 12.

Line 11. Land, buildings, and equipment. Enter the book value (cost or other basis less accumulated depreciation) of all land, buildings, and equipment owned by the trust and not held for investment. This includes any equipment owned and used by the trust in conducting its charitable activities. Attach a statement listing these fixed assets held at the end of the year and showing for each item or category listed the cost or other basis, accumulated depreciation, and book value.

Line 12. Other assets. List and show the book value of each category of assets not reportable on lines 1 through 11. Attach a separate statement if more space is needed.

One type of asset reportable on line 12 is program-related investments made primarily to accomplish a charitable purpose of the trust rather than to produce income.

Line 13. Total assets. Columns (a) and (b) (and column (c) if a unitrust) must always have an entry, even if it is zero.

Line 14. Accounts payable and accrued expenses. Enter the total accounts payable to suppliers and others, and accrued expenses such as salaries payable, accrued payroll taxes, and interest payable.

Line 15. Deferred revenue. Include revenue that the organization has received but not yet earned as of the balance sheet date under its method of accounting.

Line 16. Loans from officers, directors, trustees, and other disqualified persons. Enter the unpaid balance of loans received from officers, directors, trustees, and other disqualified persons. For loans outstanding at the end of the year, attach a statement that provides (for each loan) the name and title of the lender and the information specified in the line 4 instructions.

Line 17. Mortgages and other notes payable. Enter the amount of mortgages and other notes payable at the beginning and end of the year. Attach a statement showing, as of the end of the year, the total amount of all mortgages payable and, for each nonmortgage note payable, the name of the lender and the other information specified in the line 4 instructions. The statement should also identify the relationship of the lender to any officer, director, trustee, or other disqualified person.

8 Instructions for Form 5227

Line 18. Other liabilities. List and show the amount of each liability not reportable on lines 14 through 17. Attach a separate statement if more space is needed.

CRUTs must include any unitrust amounts applicable to prior periods that are unpaid but required to be paid as of the valuation date, because such amounts reduce the net FMV of the trust's assets. However, don't include any make-up amount for a NIMCRUT.

Line 19. Total liabilities. Columns (a) and (b) (and column (c) if a unitrust) must always have an entry, even if it is zero.

Line 23. Total liabilities and net assets. Columns (a) and (b) must always have an entry, even if it is zero.