Part XI. Qualifying Distributions

“Qualifying distributions” are amounts spent or set aside for religious, educational, or similar charitable purposes. The total amount of qualifying distributions for any year is used to reduce the distributable amount for specified years to arrive at the undistributed income (if any) for those years. Foreign foundations described in section 4948(b) not claiming operating foundation status need not complete this part.

Line 1a. Expenses, contributions, gifts, etc. Enter the amount from Part I, line 26, column (d).

Line 1b. Program-related investments. Enter the total of the Amount column from Part VIII-B. See the Part VIII-B instructions for the definition of “program-related investments.”

Line 3. Amounts set aside. Amounts set aside may be treated as qualifying distributions only if the private foundation establishes to the satisfaction of the IRS that the amount will be

paid for the specific project within 60 months from the date of the first set-aside and meets (1) or (2) below.

1. The project can be better accomplished by a set-aside than by the immediate payment of funds (suitability test).

2. The private foundation meets the requirements of section 4942(g)(2)(B)(ii) (cash distribution test).

Set-aside under item 1. For any set-aside under (1) above, the private foundation must apply for IRS approval by the end of the tax year in the amount of the set-aside. The request for approval is submitted with Form 8940, Request for Miscellaneous Determination, under sections 507, 509(a), 4940, 4942, 4945, and 6033. The Instructions for Form 8940 provide what information is required to be included with the set-aside ruling request. Submit the completed Form 8940, user fee payment, and all other required information as directed in the Instructions for Form 8940.

Set-aside under item 2. For any set-aside under (2) above, the private foundation must attach a schedule to its annual information return showing how the requirements are met. A schedule is required for the year of the set-aside and for each subsequent year until the set-aside amount has been distributed. See Regulations section 53.4942(a)-3(b)(7)(ii) for specific requirements.