S. Organizations Organized or Created in a Foreign Country

If the organization applies any provision of any U.S. tax treaty to figure the foundation's taxable income, tax liability, or tax credits in a manner different from these instructions, attach an explanation.

Section 4948(a) imposes a 4% tax on the gross investment income (but not capital gain net income) of an exempt foreign private foundation from U.S. sources, such as dividends; interest; rents; payments received on securities loans, as defined in section 512(a)(5); and royalties. Amounts taken into income on Form 990-T are excepted. The section 4948(a) tax replaces the section 4940 tax on the net investment income of a domestic private foundation. A foreign foundation doesn't complete Form 990-PF, Part IV.

Under section 4948(b), sections 507 and 508 and chapter 42 (other than section 4948) don't apply to a foreign organization

Additional requirements. For a complete corporate liquidation or trust termination, attach a statement as to whether a final distribution of assets was made and the date it was made (if applicable).

Also, an organization must indicate:

• That it has ceased to exist and check Final return in Item G of the Heading section on page 1 of the return; or

• That it is terminating its private foundation status under section 507(b)(1)(B), according to U. Section 507(b)(1)(B) Termination Notice and Filing Requirements and V. Payment of Section 4940 Tax During Section 507(b)(1)(B) Termination , later;

or

• That it is voluntarily terminating its private foundation status under section 507(a)(1) and owes a termination tax and must send the notice (and tax payment, if applicable) required by Rev. Rul. 2003-13, 2003-4 I.R.B. 305, and Rev. Rul. 2002-28, 2002-20 I.R.B. 941, to the Manager, Exempt Organizations Determinations.

Relief from public inspection requirements. If the organization has terminated its private foundation status under section 507(b)(1)(A), it doesn't have to comply with the notice and public inspection requirements of the return for the termination year.

Filing date. See J. When and How To File , earlier, for the filing date.

Definitions. The term “substantial contraction” includes any partial liquidation or any other significant disposition of assets. However, this doesn't include transfers for full and adequate consideration or distributions of current income.

that from the date of its creation has received at least 85% of its support (as defined in section 509(d), excluding gross investment income) from sources outside the United States. The foreign foundation's section 501(c)(3) status can be revoked, however, if it commits a violation of chapter 42 (other than section 4942) after receiving a warning of a violation from the IRS, or if it commits a willful and flagrant violation. A foreign foundation described in section 4948(b) doesn't complete Form 990-PF, Parts IX (unless claiming status as an operating foundation), X, XII, and XIV; isn't required to send a copy of its annual return to a state official; and isn't required to comply with the public inspection requirements for annual returns (see G. Furnishing Copies of Form 990-PF to State Officials and Q. Public Inspection Requirements , earlier). The foundation must attach a computation of the 85% test to the return.

Taxable foreign private foundations and foreign section 4947(a)(1) nonexempt charitable trusts aren't subject to excise tax under section 4948(a) or 4940, but are subject to income tax under subtitle A of the Code.

For these purposes, U.S. territories are considered part of the United States, and thus territories' organizations aren't considered foreign organizations.