Part VI-B. Statements Regarding — 2025 Inst 990-PF (PDF)

The purpose of these questions is to determine whether there is any initial excise tax due under sections 4941–4945, 170(f)(10), 4960, and 4965. If the answer is “Yes” to the question on line 1b, 1c, 2b, 3b, 4a, 4b, 5b, 6b, 7b, or 8, complete and file Form 4720 unless an exception applies. Foundations described in section 4948(b) must complete Part VI-B (except line 2) and file Form 4720, but chapter 42 taxes don't apply to such foundations (except section 4948). Organizations in a 60-month termination under section 507(b)(1)(B) must complete this part but might not be liable for private foundation excise taxes—see 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 , earlier.

Line 1. Self-dealing. The activities listed in lines 1a(1)–(6) are considered self-dealing under section 4941 unless one of the exceptions applies. See IRS.gov/Charities/Foundations/Acts-of- Self-Dealing .

The terms “disqualified person” and “foundation manager” are defined under C. Definitions , earlier.

Line 1b. If you answered “Yes” to any of the questions in line 1a, you should answer “Yes” to line 1b unless all of the acts engaged in were acts excepted by the regulations under section 4941 or other guidance, including notices published in the Internal Revenue Bulletin relating to disaster assistance.

Line 2a. Under section 4942, a foundation (other than an operating foundation) must make qualifying distributions of its distributable amount for a tax year by the end of the following tax year. Otherwise, the foundation’s undistributed income as of the end of the following tax year is generally subject to tax until corrected. Parts IX through XII are used in determining whether the foundation has met its requirements under section 4942.

Line 2b. Taxes on failure to distribute income. If you answer “No” to the question on line 2b, attach a statement explaining:

All the facts regarding the incorrect valuation of assets; and
The actions taken (or planned) to comply with section 4942(a) (2)(B), (C), and (D) and the related regulations.

Foreign foundations described in section 4948(b) need not complete line 2.

Line 3a. A private foundation is generally subject to tax under section 4943 if it owns any excess business holdings. In general, the holdings of a private foundation, combined with the holdings of related foundations and other disqualified persons, can't exceed 20% of the voting stock of a corporation, the profits interest in a partnership, or the beneficial remainder interest in a trust. (See “disqualified person” under C. Definitions, earlier.) Regardless of the holdings of disqualified persons, however, a foundation is permitted to own holdings that don't exceed 2% of either the voting stock or value of all outstanding shares of all classes of stock in a corporation. A similar exception applies to a beneficial or profits interest in any business enterprise that is a trust or partnership.

Section 4943(g), added by the Bipartisan Budget Act of 2018, P.L. 115-123, 132 Stat. 64 (2018), provides an exception for certain limited holdings to independently operated businesses. In general, the excess business holdings provisions of section 4943(a) shall not apply with respect to the holdings of a private foundation in any business enterprise that meets all the requirements of section 4943(g)(2), (3), and (4). Accordingly, answer “No” to line 3a if the following requirements are met.

The requirements of section 4943(g)(2) are met if:

100% of the voting stock in the business enterprise is held by the private foundation at all times during the tax year; and
All of the private foundation’s ownership interests were acquired by means other than purchase, such as a gift or bequest.

The requirements of section 4943(g)(3) are met if the business enterprise, no later than 120 days after the close of the tax year, distributes an amount equal to its net operating income for such tax year to the private foundation. For purposes of this paragraph, the net operating income of any business enterprise for any tax year is an amount equal to the gross income of the business enterprise for the tax year, reduced by the sum of:

The deductions allowed by chapter 1 for the tax year that are directly connected with the production of such income,
The tax imposed by chapter 1 on the business enterprise for the tax year, and
An amount for a reasonable reserve for working capital and other business needs of the business enterprise.

The requirements of section 4943(g)(4) are met if, at all times during the tax year:

No substantial contributor (as defined in section 4958(c) (3)(C)) to the private foundation or family member (as determined under section 4958(f)(4)) of such a contributor is a director, officer, trustee, manager, employee, or contractor of the business enterprise (or an individual having powers or responsibilities similar to any of the foregoing);
At least a majority of the board of directors of the private foundation are persons who are not (i) directors or officers of the business enterprise, or (ii) family members of a substantial contributor to the private foundation; and
There is no loan outstanding from the business enterprise to a substantial contributor to the private foundation or to any family member of such a contributor.

This provision does not apply to any donor-advised fund treated as a private foundation by section 4943(e), a supporting organization treated as a private foundation by section 4943(f), a trust described in section 4947(a)(1), or a trust described in section 4947(a)(2).

Section 4943(g) shall apply to tax years beginning after December 31, 2017.

For more information about excess business holdings, see the Instructions for Form 4720.

Line 4. Taxes on investments that jeopardize charitable purposes. In general, an investment that jeopardizes any of the charitable purposes of a private foundation is one for which a foundation manager didn't exercise ordinary business care to provide for the long- and short-term financial needs of the foundation in carrying out its charitable purposes. For more details, see the regulations under section 4944.

Line 5. Taxes on taxable expenditures and political expen- ditures. In general, payments made for the activities described on lines 5a(1)–(5) are taxable expenditures.

Line 5a(2). Under section 4955, a section 501(c)(3) organization must pay an excise tax for any amount paid or incurred on behalf of or in opposition to any candidate for public office. The organization must pay an additional excise tax if it doesn't correct the expenditure timely.

A manager of a section 501(c)(3) organization who knowingly agrees to a political expenditure must pay an excise tax unless the agreement isn't willful and there is reasonable cause. A manager who doesn't agree to a correction of the political expenditure may have to pay an additional excise tax.

Instructions for Form 990-PF (2025) 27

A section 501(c)(3) organization will lose its exempt status if it engages in political activity.

A political expenditure that is treated as an expenditure under section 4955 isn't treated as a taxable expenditure under section 4945. For purposes of the section 4955 tax, when an organization promotes a candidate for public office (or is used or controlled by a candidate or prospective candidate), amounts paid or incurred for the following purposes are political expenditures.

Remuneration to the individual (or candidate or prospective candidate) for speeches or other services.
Travel expenses of the individual.
Expenses of conducting polls, surveys, or other studies, or preparing papers or other material for use by the individual.
Expenses of advertising, publicity, and fundraising for such individual.
Any other expense that has the primary effect of promoting public recognition or otherwise primarily accruing to the benefit of the individual.

See the regulations under section 4945 for more information.

Line 5a(3). Answer “Yes” if the organization made a grant to an individual for travel, study, or similar purposes. Such purposes include scholarships, fellowships, certain prizes and awards, and grants to achieve a specific objective, produce a report or similar product, or improve a literary, artistic, musical, scientific, teaching, or other similar skill of the grantee. Similar purposes don't include grants to individuals in relief of poverty or distress (other than grants of the type described above), or prizes or awards that don't finance any future activities of the recipient.

A grant to an individual for travel, study, or similar purposes is a taxable expenditure under section 4945(d)(3) unless the foundation awarded the grant on an objective and nondiscriminatory basis under a procedure approved in advance by the IRS, as required under section 4945(g). The foundation may request approval of its procedure in the process of applying for exemption with Form 1023 (Schedule H), or thereafter with Form 8940, Request for Miscellaneous Determination.

Line 5a(4). Except as discussed below, a grant by a private foundation to a public charity described in section 509(a)(1), (2), or (3) or to an exempt operating foundation (as defined in section 4940(d)(2) and the instructions for Part VI) isn't a taxable expenditure if the private foundation doesn't earmark the grant for any of the activities described in lines 5a(1)–(5), and there is no oral or written agreement by which the grantor foundation may cause the grantee to engage in any such prohibited activity or to select the grant recipient.

A grant made to a section 509(a)(3) Type III supporting organization (as defined in section 4943(f)(5)) that isn't a functionally integrated supporting organization (as defined in section 4943(f)(5)(B)) is a taxable expenditure unless you exercise expenditure responsibility. Check “Yes” on line 5a(4) if you made a grant to such an organization. See Regulations section 1.509(a)-4(i), for more information about whether an organization is functionally integrated.

A grant made to any other supporting organization (including a functionally integrated Type III), if a disqualified person of the private foundation controls the supporting organization or any of its supported organizations, is also a taxable expenditure unless you exercise expenditure responsibility. Check “Yes” on line 5a(4) if you made a grant to such an organization. In addition, check “Yes” on line 5a(4) if you made a grant in a prior year with respect to which you have a continuing obligation to exercise expenditure responsibility. See Regulations sections 53.4942(a)-3(a)(3) and 53.4945-5(a) for more information.

Line 5b. If you answered “Yes” to any of the questions in line 5a, you should answer “Yes” to line 5b unless all of the transactions

engaged in were “excepted” transactions. Excepted transactions are described in Regulations section 53.4945-2 through 53.4945-5 and appear in Notices published in the Internal Revenue Bulletin relating to disaster assistance. For example, see Pub. 3833, Disaster Relief.

Line 6b. Check “Yes” if, in connection with any transfer of funds to a private foundation, the foundation directly or indirectly pays premiums on any personal benefit contract, or there is an understanding or expectation that any person will directly or indirectly pay these premiums.

Report the premiums it paid and the premiums paid by others, but treated as paid by the private foundation, on Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts, and pay the excise tax (which is equal to premiums paid) on Form 4720.

For more information, see Form 8870 and Notice 2000-24, 2000-17 I.R.B. 952.

Line 7a. Answer “Yes” if the foundation was a party to a prohibited tax shelter transaction (PTST) as described in section 4965(e) at any time during the tax year.

PTST. In general, a PTST means any listed transaction and any prohibited reportable transaction.

Listed transaction. A listed transaction, within the meaning of section 6707A(c)(2), is a transaction that is the same as, or substantially similar to, any transaction that has been specifically identified by the Secretary in published guidance as a tax avoidance transaction for purposes of section 6011.

Prohibited reportable transaction. Prohibited reportable transaction means any confidential transaction or any transaction with contractual protection (as defined under regulations prescribed by the Secretary) (see Regulations section 1.6011-4(b)(3) and (4)) that is a reportable transaction (as defined in section 6707A(c)(1)).

If the answer to this question is “Yes,” the foundation must also file Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction.

Line 7b. Answer “Yes” if the foundation answered “Yes” to line 7a, and it had net income or received proceeds attributable to the PTST during the tax year.

If the foundation answers “Yes” to both lines 7a and 7b, it may be required to file Form 4720 and pay tax with respect to each PTST. The foundation's managers may also be required to file Form 4720 and pay tax with respect to the relevant PTSTs.

Line 8. See the instructions for Form 4720, Schedule N, to determine if you paid to any covered employee more than $1 million in remuneration or paid an excess parachute payment during the year. Remuneration paid to a covered employee includes any remuneration paid by a related organization.