Exempt Organizations Technical Guide›TG 57: Taxes on Net Investment Income – IRC Section 4940›Table of Contents
A. Issue Indicators
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(1) Investment income reported on the filed Form 990-PF, and there are no Section
4940 excise taxes reported.
(2) If the foundation allocated 100% of its expenses on Part I of the filed Form 990 PF against the investment income.
(3) Look to see if the Form 990-PF indicates investment type income or “other
income” just in column a, and not show it in column b of Part I. Also, on Part II, the foundation indicates significant investment type assets, such as savings, and no investment income reported on Part I.
(4) Foundation status discrepancy based on internal records and filed Form 990-PF.
An organization may incorrectly claim to be a private operating foundation to avoid paying the applicable excise tax.
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