Form 5227 Juhised
Vorm 5227, Split-Interest Trust Information Return
Rev. 2023
Seotud vormid
- Form 5227 - Jagatud intresside usaldusteave Tagasi
Department of the Treasury
Internal Revenue Service
2023
Instructions for Form 5227
Split-Interest Trust Information Return
Section references are to the Internal Revenue Code unless
otherwise noted.
4947(a)(2) must file Form 5227 unless the Exception next
applies.
Exception. A split-interest trust described below isn't
Future Developments
required to file Form 5227 if:
For the latest information about developments related to
Form 5227 and its instructions, such as legislation enacted
The split-interest trust was created before May 27, 1969,
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and
All transfers of corpus to the trust occurred before May 27,
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1969, or
What’s New
As to each and every transfer of corpus to the trust made
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Electronic filing. Under final regulations (T.D. 9972) issued
in February 2023, filers are required to file Form 5227
electronically if they file 10 or more returns in the aggregate in
a calendar year. The regulations are effective for returns
required to be filed for tax years ending on or after December
after May 26, 1969, no deduction was allowed under any of
the sections listed in section 4947(a)(2).
If a split-interest trust created before May 27, 1969,
receives a contribution to corpus after May 26, 1969, for
which a deduction is allowed under any of the sections listed
in section 4947(a)(2), the trust will cease to qualify for the
exception described above. In that case, the split-interest
trust must file Form 5227 for the year when the transfer to
corpus occurs and each subsequent year, the same as any
split-interest trust created after May 26, 1969.
Reminders
Don't include social security numbers on publicly dis-
closed forms. With the exception of the items described
below, Form 5227 and its attachments are subject to public
disclosure. Items not subject to disclosure include
Note. Regulations section 1.6012-3(a)(6) references Form
1041-B, Charitable Remainder Trust. Form 5227 replaces
Form 1041-B. Regulations section 1.6034-1 references Form
1041-A, U.S. Information Return Trust Accumulation of
Charitable Amounts. Form 5227 replaces Form 1041-A for
split-interest trusts.
Schedule A (and any related early termination agreement);
Schedule K-1; any K-1 continuation pages and transmittals;
the trust agreement; trust amendments; Form 926, Return by
a U.S. Transferor of Property to a Foreign Corporation; Form
8582, Passive Activity Loss Limitations; Form 8621,
Information Return by a Shareholder of a Passive Foreign
Investment Company or Qualified Electing Fund; and any
attachment that references contributor or donor information.
Which Parts To Complete
The term “split-interest trust” refers to trusts of various types.
See the Definitions section of these instructions below.
Certain parts of Form 5227 apply exclusively to a particular
type of split-interest trust (such as a charitable remainder
trust, also referred to as a “section 664 trust”). Parts or lines
that apply exclusively to a particular type of split-interest trust
are identified in these instructions and on Form 5227 with a
parenthetical identifying the type of trust to which the part or
line applies. Parts or lines that aren't indicated as applying to
a particular type of split-interest trust should be completed by
every type of split-interest trust with one exception. Parts VII
and VIII aren't completed by a charitable remainder or
charitable lead trust whose charitable interests involve only
war veterans' posts or cemeteries (as described in sections
170(c)(3) and 170(c)(5)).
General Instructions
Purpose of Form
Use Form 5227 to:
Report the financial activities of a split-interest trust,
Provide certain information regarding charitable
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deductions and distributions of or from a split-interest trust,
and
Determine if the trust is treated (for chapter 42 excise tax
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purposes) as a private foundation and subject to certain
excise taxes under chapter 42.
Form 5227 is open to public inspection.
Use Schedule A of Form 5227 to report:
Definitions
Split-interest trust. A split-interest trust is a trust that:
Accumulations of income for charitable remainder trusts,
Distributions to noncharitable beneficiaries/recipients, and
Information about donors and assets contributed during
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Is not exempt from tax under section 501(a);
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the year.
Has some unexpired interests that are devoted to
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Schedule A of Form 5227 isn't open for public
inspection.
purposes other than religious, charitable, or similar purposes
described in section 170(c)(2)(B); and
Has amounts transferred in trust after May 26, 1969, for
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Who Must File
which a deduction was allowed under one of the sections
listed in section 4947(a)(2).
All charitable remainder trusts described in section 664 must
file Form 5227. All pooled income funds described in section
642(c)(5) and all other trusts such as charitable lead trusts
that meet the definition of a split-interest trust under section
A split-interest trust is subject to many of the same
requirements and restrictions that are imposed on private
foundations.
Dec 15, 2023
Cat. No. 13228E
The most common forms of a split-interest trust include
the following.
allows for deferral of the unitrust payment (as described
above), but does not provide for deferred distributions to be
made up in future years.
Note. The terms “section 664 trust” and “CRT” are general
references to charitable remainder trusts. These terms
include CRATs and CRUTs.
Pooled income fund. This is a split-interest trust described
in section 642(c)(5), which is created and administered by a
charitable organization described in section 170(b)(1)(A)
(other than in clauses (vii) or (viii)). Donors to the fund
receive a lifetime income interest, based upon the rate of
return earned by the trust (or such other rate as may be
prescribed for a trust in existence for less than 3 years). Upon
the death of the donor and the termination of their income
interest, the charitable organization becomes entitled to the
portion of the trust corpus attributable to the donor’s
contribution, free of trust.
Recipient. A recipient is a beneficiary who receives the
possession or beneficial enjoyment of the unitrust or annuity
amount.
Foundation manager. A foundation manager is an officer,
director, or trustee (or an individual who has powers or
responsibilities similar to those of officers, directors, or
trustees). In the case of any act or failure to act, the term
“foundation manager” may also include an employee of the
trust who has the authority to act.
Charitable lead trust. This is a split-interest trust that
annually pays a fixed annuity or unitrust amount to a
charitable organization for the lead period specified in the
trust instrument. The lead period may be a term of years or it
may be a period determined by the lifetime of one or more
individuals, as described in Regulations sections
1.170A-6(c), 20.2055-2(e)(2)(vi) and (vii), and
25.2522(c)-3(c)(2)(vi) and (vii). The donor to the trust will
have been allowed a deduction under one of the sections
listed in section 4947(a)(2). At the end of the lead period,
annual payments to the charitable organization cease, and
the remaining corpus becomes payable, outright or in trust, to
a noncharitable (private) beneficiary.
Charitable remainder annuity trust (CRAT). This is a
split-interest trust described in section 664(d)(1). It pays a
fixed dollar (annuity) amount, at least annually, to one or
more recipients, at least one of which isn't a charitable
organization. The annuity amount must be at least 5%, but
cannot exceed 50%, of the initial net fair market value (FMV)
of all property contributed to corpus, subject to the further
requirement that the remainder interest in the trust (measured
at the time property is transferred to the trust) must have a
value of at least 10% of the FMV of the initial trust corpus.
Payments to the recipient continue for a period of years. The
period, if stated as a specific number, cannot exceed 20
years. The period can also be determined by the lifespan of
one or more recipients. Whether the period is a fixed number
of years, or is measured by an individual’s lifespan, the value
of the remainder interest must be at least 10% of the FMV of
the property transferred to the trust (as explained above).
Upon termination of the recipient’s entitlement to the annuity
amount, the remainder interest is transferred to, or is used by,
a charitable organization described in section 170(c), or
qualified employer securities are transferred to an employee
stock ownership plan.
Disqualified person. A disqualified person is any of the
following.
1. A substantial contributor.
2. A foundation manager.
3. A person who owns more than 20% of a corporation,
partnership, trust, or unincorporated enterprise, which is itself
a substantial contributor.
4. A member of the family of an individual in the first three
categories.
Charitable remainder unitrust (CRUT). This is a
5. A corporation, partnership, trust, or estate in which
persons described in (1), (2), (3), or (4) above own a total
beneficial interest of more than 35%.
split-interest trust described in section 664(d)(2). It is similar
in many respects to a CRAT except that the amount payable
to the recipient annually (the unitrust amount) is a fixed
percentage (not less than 5% but not more than 50%) of the
net FMV of the trust’s assets, subject further to the
6. For purposes of section 4943 (excess business
holdings), a disqualified person also includes:
a. A private foundation which is effectively controlled
(directly or indirectly) by the same persons who control
the trust in question, or
requirement described above that the remainder interest
must have a value of at least 10% of the value of the initial
trust corpus, determined at the time property is transferred to
the trust. Because the unitrust amount is calculated annually
based upon the FMV of trust corpus, and isn't a fixed amount
determined upon the creation of the trust, the trustee must
determine the FMV of the assets of the trust annually. Upon
termination of the recipient’s entitlement to payments of the
unitrust amount, the remainder interest is transferred to, or is
used by, a charitable organization described in section
170(c), or qualified employer securities are transferred to an
employee stock ownership plan. The trust agreement for a
CRUT may allow the trustee to distribute less than the full
unitrust amount in years when the trust income (as defined
under section 643(b)) is less than the unitrust amount. A
Net-Income Makeup Charitable Remainder Unitrust
b. A private foundation substantially all of the
contributions to which were made (directly or indirectly)
by the same person or persons described in (1), (2), or
(3) above, or members of their families, within the
meaning of section 4946(d), who made (directly or
indirectly) substantially all of the contributions to the trust
in question.
7. For purposes of section 4941 (self-dealing), a
disqualified person also includes certain government
officials. (See section 4946(c) and the related regulations.)
Photographs of Missing Children
The Internal Revenue Service is a proud partner with the
Photographs of missing children selected by the Center may
appear in instructions on pages that would otherwise be
blank. You can help bring these children home by looking at
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(NIMCRUT) is a charitable remainder unitrust that allows
payment of the unitrust amount to be deferred in years when
the unitrust amount exceeds trust income, with the deferred
distributions being made up in a later year when the trust has
sufficient income. A Net Income Charitable Remainder
Unitrust (NICRUT) is a charitable remainder unitrust that
(1-800-843-5678) if you recognize a child.
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Instructions for Form 5227
Phone Help
When To File
If you have questions and/or need help completing this form,
please call 877-829-5500. This toll-free telephone service is
available Monday through Friday.
For calendar year 2023, file Form 5227 by April 15, 2024. In
the case of a final short-year period, the return is due by the
15th day of the 4th month following the date of the trust's
termination.
Additional Information
Extension of time to file. Use Form 8868 to request an
automatic extension of time to file. The request for an
automatic extension must be filed by the due date of the
return.
For additional information on private foundations and
foundation managers, visit
Other Forms You May Have To File
Where To File
You may also be required to file one or more of the following
forms.
Mandatory electronic filing. A filer required to file at least
10 returns of any type during the calendar year ending with or
within the tax year must file their returns electronically.
“Returns” for purposes of these instructions include
information returns (for example, Forms W-2 and Forms
1099), income tax returns, employment tax returns (including
quarterly Forms 941, Employer's Quarterly Federal Tax
Return), and excise tax returns. The failure to file a return
electronically when required is deemed a failure to file the
return even if the filer submits a paper return.
Form 56, Notice Concerning Fiduciary Relationship.
Form 1041, U.S. Income Tax Return for Estates and Trusts.
Form 1041-ES, Estimated Income Tax for Estates and
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Trusts.
Form 4720, Return of Certain Excise Taxes Under
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Chapters 41 and 42 of the Internal Revenue Code.
Form 8275, Disclosure Statement. Use this form to
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disclose items or positions (except those contrary to a
regulation—see Form 8275-R, next) that aren't otherwise
adequately disclosed on the tax return. The disclosure is
made to avoid parts of the accuracy-related penalty for
disregard of rules or substantial understatement of tax. Form
8275 is also used for disclosures relating to preparer
penalties for understatements due to unrealistic positions or
for willful or reckless conduct.
Waivers and exemptions. On a year-by-year and
form-by-form basis, the IRS may waive the requirement to file
electronically in cases of undue hardship. In certain
circumstances, a filer may be administratively exempt from
the requirement to file electronically. The filer should keep
documentation supporting their undue hardship or other
applicable reason for not filing electronically in the filer's
records. For more information about mandatory electronic
filing, waivers, and exemptions, see Regulation section
301.6011-13.
Form 8275-R, Regulation Disclosure Statement. Use this
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form to disclose any item on a tax return for which a position
has been taken that is contrary to Treasury regulations.
Form 8822-B, Change of Address or Responsible
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Party—Business.
U.S. address. If you use the U.S. Postal Service, and are
located in the United States, file Form 5227 at the following
address:
Form 8868, Application for Automatic Extension of Time To
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File an Exempt Organization Return or Excise Taxes Related
to Employee Benefit Plans.
Form 8870, Information Return for Transfers Associated
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Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
With Certain Personal Benefit Contracts.
Form 8886, Reportable Transaction Disclosure Statement.
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Getting tax forms, instructions, and publications. Go
instructions, and publications.
Outside the United States If you use a designated Private
Delivery Service (or are located outside the United States in
a foreign country or a U.S. territory), file Form 5227 at this
address:
Ordering tax forms, instructions, and publications.
instructions, and publications; call 800-829-3676 to order
prior-year forms and instructions. Your order should arrive
within 10 business days.
Internal Revenue Service Center
1973 Rulon White Blvd.
M/S 6054
Period To Be Covered by Return
Ogden, UT 84201
File Form 5227 for each calendar year. This revision of the
form is for the 2023 calendar year.
Private delivery services (PDSs). Tax-exempt
Accounting Methods
organizations can use certain PDSs designated by the IRS to
meet the “timely mailing as timely filing” rule for tax returns.
Trust income must be computed using the method of
accounting regularly used in keeping the trust's books and
records. Generally, permissible methods include the cash
method, the accrual method, or any other method authorized
by the Internal Revenue Code. The method used must clearly
reflect income.
The PDS can tell you how to get written proof of the
mailing date.
PDSs deliver to:
Internal Revenue Service Center
1973 Rulon White Blvd.
M/S 6054
Unless otherwise allowed by law, the trust may not change
the accounting method used to report income (for income as
a whole or for any material item) without first getting consent
on Form 3115, Application for Change in Accounting Method.
See Pub. 538, Accounting Periods and Methods, for more
details.
Ogden, UT 84201
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Instructions for Form 5227
PDSs can’t deliver items to P.O. boxes. You must use
the U.S. Postal Service to mail any item to an IRS
P.O. box address.
Attachments
!
If you need more space, attach separate sheets showing the
same information in the same order as on the printed form.
Show the totals on the printed form.
CAUTION
Penalty for Failure To File Timely,
Completely, or Correctly
Enter the trust's name and employer identification number
on each sheet. Also, use sheets that are the same size as the
forms and indicate clearly the line of the printed form to which
the information relates.
The failure-to-file penalty under section 6652(c)(2)(C) is
imposed on a split-interest trust unless the failure is due to
reasonable cause. The penalty is imposed on the trust for
failure to:
Specific Instructions
Heading Items
Timely file a return,
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File a complete return, or
Furnish correct information.
The penalty is $20 for each day the failure continues with a
Item A. Trust and trustee names and address
maximum of $12,000 for any one return. However, if the trust
has gross income greater than $302,000, the penalty is $120
for each day the failure continues with a maximum of $60,000
for any one return.
Complete the information called for in the name of the trust a
exactly as it appears on Form SS-4, Application for Employer
Identification Number. The name of the person or institution
currently serving as trustee, should be entered in the lines
below the name of the trust.
The IRS may make a written demand that the delinquent
return be filed or information be furnished specifying a time to
comply with the demand. If the trustee fails to comply with the
demand by the specified date, the trustee will be charged a
penalty of $10 for each day the failure continues with a
maximum of $6,000 for any one return.
Include the suite, room, or other unit number after the
street address. If the Post Office does not deliver mail to the
street address and the trustee has a P.O. box, show the box
number instead.
If you receive mail for the trust in care of a third party (such
as an accountant or an attorney), enter on the street address
line “C/O” followed by the third party's name and street
address or P.O. box.
If the trustee required to file the return knowingly fails to file
the return, the same penalty that is imposed on the trust will
also be imposed on such trustee. Also, penalties for filing a
false or fraudulent return apply.
Item B. Employer Identification Number (EIN)
Trust Instrument
Every trust that completes this return must have an EIN. You
can use one of the following methods to apply for an EIN.
When you file the first return for a charitable remainder
annuity trust or unitrust, or charitable lead annuity or unitrust,
include:
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once the application information is validated.
By mailing or faxing Form SS-4.
1. A copy of the trust instrument, and
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2. A written declaration under penalties of perjury that it is
Note. The online application process isn't yet available for
a true and complete copy.
trusts with addresses in foreign countries.
For sample forms of trusts that meet the requirements of a
charitable remainder unitrust, see Rev. Procs. 2005-52
through 2005-59, 2005-2 C.B. 326, 339, 353, 367, 383, 392,
402, and 412.
Item C. Type of Entity
Check the appropriate box to indicate the type of trust. See
Definitions in the General Instructions, earlier, for detailed
descriptions of the types of split-interest trusts that file Form
5227.
For sample forms of trusts that meet the requirements of a
charitable remainder annuity trust, see Rev. Procs. 2003-53
through 2003-60, 2003-2 C.B. 230, 236, 242, 249, 257, 262,
268, and 274.
Item D. Fair Market Value (FMV) of Assets
Enter the FMV of trust assets at the end of the tax year.
For sample forms of trusts that meet the requirements of
an inter vivos grantor or nongrantor charitable lead annuity
trust, see Rev. Proc. 2007-45, 2007-29 I.R.B. 89. For a
sample form of a trust that meets the requirements of a
testamentary charitable lead annuity trust, see Rev. Proc.
2007-46, 2007-29 I.R.B. 102, and Rev. Proc. 2016-42,
2016-2 C.B. 269.
Item E. Gross Income
Enter the trust's gross income for the tax year. Gross income
is all income from whatever source derived, including:
Interest,
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Dividends,
Rents (such as the amount on line 3 of Schedule E (Form
1040)),
Rounding Off to Whole Dollars
Royalties (such as the amount on line 4 of Schedule E
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You may round off cents to whole dollars on your return and
attached statements. If you do round dollars, you must round
all amounts. To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the next dollar. For
example, $1.39 becomes $1 and $2.50 becomes $3.
(Form 1040)),
Gross income derived from business (such as the amount
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on line 7 of Schedule C (Form 1040)), and
Gains (not losses) derived from dealings in property
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(figured on each transaction).
If you have to add two or more amounts to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.
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Instructions for Form 5227
Item F. Initial Return, Final Return, Amended
Return; or Change of Name or Address
Initial return. Check this box if this is the initial return for the
split-interest trust. Charitable remainder trusts must also
complete Part IX, line 13 and attach a copy of the trust
instrument.
Final return. Check this box if this is a final return because
the trust has terminated. If the trust or a recipient's interest in
the trust has terminated, check the “Final K-1” box at the top
of the Schedule K-1 (Form 1041).
For charitable remainder trusts. If you check the final
return box, be sure to answer the questions for Part IX, lines
15a-c and complete Part III, line 3 if you answered “Yes” to
Part IX, line 15b.
Amended return. If you are filing an amended 2023 Form
5227, check the “Amended return” box. Complete the entire
return and correct the appropriate lines with the new
information. On an attachment, explain the reason for the
changes and identify the lines and amounts being changed.
For charitable remainder trusts. If the amended return
results in a change to income, or a change in distribution of
any income or other information provided to a recipient, an
amended Schedule K-1 (Form 1041) must be filed with the
amended Form 5227 and a copy given to each recipient.
Check the “Amended K-1” box at the top of the Schedule K-1
(Form 1041).
Change of name or address. If there has been a change in
the trustee's name or address from the one used on the prior
year's return (including a change to an “in care of” name and
address), check the appropriate box(es).
If the address shown on Form 5227 changes after you file
the form (including a change to an “in care of” name and
address), file Form 8822-B to notify the IRS of the change.
Line 2b. Qualified dividends. Report on this line all
qualified dividends received by the trust. In general, a
qualified dividend is a dividend received during the tax year
from (a) a domestic corporation, or (b) a qualified foreign
corporation. A qualified dividend does not include any
dividend from a corporation if the corporation is (or was)
exempt from income tax under section 501 or 521 for the
corporation's current or preceding tax year during which the
distribution was made.
Generally, these dividends are reported to the trust in
box 1b of Form(s) 1099-DIV, Dividends and Distributions.
Qualified dividends are treated as a separate class of
ordinary income for purposes of ordering distributions. See
Ordering Rules for Ordinary Income, later, for more
information on distributions. See Pub. 550 for additional
information on qualified dividends, including holding period
requirements.
Line 3. Business income or (loss). If the trust operated a
business, report the income and expenses on Schedule C
(Form 1040), Profit or Loss From Business. Enter the net
profit or loss from Schedule C on line 3. (Section 664 trusts,
see Part VIII, Line 7, later).
Line 4. Rents, royalties, partnerships, other estates and
trusts, etc. Use Schedule E (Form 1040), Supplemental
Income and Loss, to report the trust's income or losses from
rents, royalties, partnerships, S corporations, other estates
and trusts, and REMICs. Enter the net profit or loss from
Schedule E on line 4. See the Instructions for Schedule E
(Form 1040) for reporting requirements. If the trust received a
Schedule K-1 from a partnership, S corporation, or other
flow-through entity, use the corresponding lines on Form
5227 to report the interest, dividends, capital gains, etc., from
the flow-through entity. (Section 664 trusts, see Part VIII,
Line 7, later).
Line 5. Farm income or (loss). If the trust operated a farm,
use Schedule F (Form 1040), Profit or Loss From Farming, to
report farm income and expenses. Enter the net profit or loss
from Schedule F on line 5. (Section 664 trusts, see Part VIII,
Line 7, later).
Item G. Date Trust Created
Enter the date the trust was created. This is generally the
date the trustee first received property to administer under
the terms of the trust document.
Part I. Income and Deductions
Section A—Ordinary Income
Report the trust's ordinary income on lines 1 through 7.
Line 1. Interest income. Report all taxable interest income
that was received by the trust. Examples of taxable interest
include interest from:
Note. If the trust has farm rental income and expenses
based on crops or livestock produced by a tenant, report the
income and expenses on Schedule E (Form 1040) and
include it on line 4. Don't use Form 4835, Farm Rental
Income and Expenses, or Schedule F (Form 1040) to report
such income and expenses and don't include the net profit or
(loss) from such income and expenses on line 5.
Line 6. Ordinary gain or (loss). Enter from Form 4797,
Sales of Business Property, the gain or loss from the sale or
exchange of property (other than capital assets) and also
from involuntary conversions (other than casualty or theft).
For more information, see the Instructions for Form 4797.
Line 7. Other income. List any other item and its amount
that is includible in gross income but not included on lines 1
through 6 (or Section B), on the dashed line to the left of the
entry space. If more space is needed, attach a statement.
Enter the total of these items in the entry space to the right.
Accounts (including certificates of deposit and money
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market accounts) with banks, credit unions, and thrifts;
Notes, loans, and mortgages;
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U.S. Treasury bills, notes, and bonds;
U.S. savings bonds;
Original issue discount; and
Income received as a regular interest holder of a real
estate mortgage investment conduit (REMIC).
For taxable bonds acquired after December 31, 1987,
amortizable bond premium is treated as an offset to the
interest income instead of as a separate interest deduction.
See Pub. 550, Investment Income and Expenses.
Line 2a. Ordinary dividends. Enter on line 2a the total of
all ordinary dividends, including the qualified dividends
reported on line 2b.
Section B—Capital Gains (Losses)
Use Schedule D (Form 1041), Capital Gains and Losses, as
directed below. You may also need to complete Form 8949,
Sales and Other Dispositions of Capital Assets. Lines 15 and
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Instructions for Form 5227
16 of Schedule D (Form 1041) applies only to a charitable
remainder trust (section 664 trust).
Line 9. Total short-term capital gain or (loss). Complete
lines 1a through 5 and line 7 of the 2023 Schedule D (Form
1041). Don't make an entry on line 6 of Schedule D (Form
1041). Enter the amount from line 7 of the Schedule D (Form
1041) on line 9.
Line 21. Attached statement. List any other deductible
expense that is attributable to the gross income of the trust
and isn't included on lines 17 through 20 and line 23 and
show the amount of the deduction. Total the amounts listed
and enter the total on line 21.
Line 23. Charitable Deduction
Line 10. Total long-term capital gain or (loss). Complete
lines 8a through 14 and line 16 of the 2023 Schedule D (Form
1041). Don't make an entry on line 15 of Schedule D (Form
1041). Enter the amount from line 16 of Schedule D (Form
1041) on line 10.
Enter the amount of any charitable deduction or other
deduction taken under section 642(c) for the tax year.
Section E—Deductions Allocable to Income
Categories (Section 664 trust only)
Deductions are allocated as follows.
1. Allowable deductions directly attributable to one or
more classes of income items (that is, interest, dividends, or
rents) or corpus are allocated to such income classes or
corpus.
2. Allowable deductions not allocated under (1) above
are allocated on the basis of gross income after directly
attributable deductions, to the extent of such income.
For section 664 trusts only. Line 10 is the total of all
classes (described below) of long-term capital gain. The
following is a summary of the classes.
28% long-term capital gain class. This class consists of
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collectibles gains and losses and the taxable gain (but not
more than the section 1202 exclusion) on the sale or
exchange of qualified small business stock. Enter these
gains or losses on line 12.
Section 1250 long-term capital gain class. This class
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consists of unrecaptured section 1250 gain (generally the
part of real estate capital gain attributable to depreciation) on
sales, exchanges, etc., of assets held more than 1 year.
Undistributed, unrecaptured section 1250 gain on sales,
exchanges, etc., after May 6, 1997, is included in this class.
Enter this gain on line 11.
3. Deductions not allocated under either (1) or (2) above
may be allocated in any manner.
Add the deductions that were allocated to all the classes
of income items within each category and enter the amount
on the appropriate line. (Note. Any deduction allocated to
corpus isn't shown on any line in Section E.)
For a discussion of the allocation of deductions to
tax-exempt income, see Allocation of Deductions for
Tax-Exempt Income in the Instructions for Form 1041.
All other long-term capital gain class. This class
•
consists of all other gains or losses from sales, exchanges,
and conversions (including installment payments received) of
assets held more than 12 months.
Section C—Nontaxable Income
Part II. Schedule of Distributable
Income (Section 664 trust only)
In this section, include other income that isn't included in
Section A or B. This section includes income excluded under
Subtitle A, Chapter 1, Subchapter B, Part III, of the Internal
Revenue Code, such as interest on state and municipal
bonds.
Report the income (both current and cumulative undistributed
income) of the trust for purposes of determining the character
of distributions in three categories.
1. Ordinary income.
2. Capital gains and losses.
3. Nontaxable income.
Section D—Deductions
For Section 664 Trusts
Include all allowable deductions and any expense that would
be allowable but for the fact that it must be allocated to
tax-exempt income. No deduction is ever allowed for:
A loss in any one of the three categories may not be used
to reduce a gain in any other category. For example, a capital
loss may not be used to reduce ordinary income. However, a
loss in any one category may be used to reduce
The personal exemption under section 151 (see section
•
642(b)),
undistributed gain for earlier years within that same category,
and any excess may be carried forward to reduce gain in
future years within that same category.
Charitable contributions under section 170(a) (see section
•
642(c)),
Net operating losses under section 642(d),
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•
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For information on recordkeeping for long-term capital
gains or ordinary income, see the Capital Gains Distribution
Worksheet or the Ordinary Income Distribution Worksheet,
later.
Net investment income (NII). Beginning in 2013,
charitable remainder trusts must begin tracking Excluded
Income and NII received and distributed. For 2013 and later
years, columns (a), (b), and (c) of Part II, line 1, have been
divided into NII and Excluded Income.
Income distribution deductions under section 661,
Capital loss carryforwards under section 1212,
Federal income taxes, or
Federal excise taxes under chapter 42.
Any expense that isn't deductible in determining taxable
income (or not otherwise deductible but for the fact that it
must be allocated to nontaxable income) must be allocated
to corpus.
The term “Excluded Income” is income received (or losses
incurred) by the charitable remainder trust not taken into
account in computing NII. For charitable remainder trusts
(CRTs) in existence before 2013, all undistributed income as
of the end of 2012 is Excluded Income. For 2013 and later
years, the CRT must determine whether the items of income,
For Split-Interest Trusts Other Than Section 664
Trusts
Include all expenses attributable to gross income that are
deductible for the tax year.
6
Instructions for Form 5227
gain, loss, and deduction reported on sections A through D of
Part I constitute NII or Excluded Income.
Don't merely enter the category (that is, religious,
charitable, scientific, literary, or educational). The purpose of
the deduction must be entered as shown in the examples in
Section A.
Line 1. Enter the amounts of undistributed Excluded Income
and undistributed accumulated NII from post-2012 tax years.
Part IV. Balance Sheet
Line 2. Allocate the items of income or loss from the current
year between Excluded Income and NII.
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 charitable remainder
unitrusts must complete column (c). A charitable lead unitrust
may, but isn't required to, show the FMV of its assets in
column (c).
The allocation of items of income or loss from the
current year between Excluded Income and NII
!
CAUTION
should be reported on line 2 after the application of
the gain and loss netting rules outlined in Part III of
Schedule A, later. In certain situations, NII losses may reduce
Excluded Income due to the netting rules. Therefore, those
rules should be applied before entering amounts on line 2.
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).
Note. If the CRT elects to use the Simplified Net Investment
Income Calculation, then report all income or loss from Part I
in the Excluded Income column and leave the NII column
empty. See the instructions for the Simplified Net Investment
Income Calculation Election in Part II of Schedule A, later.
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.
Part III. Distributions for Charitable
Purposes
Section A—Distributions of Principal
Line 2. Provide the information requested for columns A
through C and enter the amount on the line to the right. In
column C, list in sufficient detail each class of activity for
amounts paid out of principal to the same payee for
charitable purposes.
Examples. “Cash payments to buy library material” or
“Grant, paid in cash, to equip the chemistry lab at Magnolia
University.”
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.
Don't merely enter the category (that is, religious,
charitable, scientific, literary, or educational). The purpose of
the deduction must be entered as shown in the examples
above.
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.
Section B—Accumulated Income Set Aside and
Income Distributions for Charitable Purposes
Complete Section B of Part III if any of the following apply.
The trust claimed a deduction in a prior year under section
•
642(c) for an amount permanently set aside and at the
beginning of the year the set aside amount was not fully
distributed.
The trust claimed a deduction during the year under
•
section 642(c) whether the amount was set-aside or paid.
The trust made payment for charitable purposes during the
•
year but claimed the section 642(c) deduction in the prior
year.
The trust is treated as a grantor trust and made a payment
•
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.
for charitable purposes during the year, and the grantor
(during the year or a prior year) claimed a charitable
deduction as described in Regulations section 1.170A-6(c)
upon contribution to the trust.
Note. The grantor trust completes only lines 7, 8, and 9 for
this part.
Attached statement.
Line 7. Provide the information requested for columns A
through C and enter the amount on the line to the right. In
column C, list in sufficient detail each class of activity to the
same payee for charitable purposes for amounts distributed
in which a section 642(c) deduction was claimed.
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.
7
Instructions for Form 5227
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.
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.
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.
For each outstanding loan or other receivable that must be
reported separately, the attached statement should use a
columnar format and show the following information:
Borrower's name and title,
Original amount,
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•
•
•
•
•
•
•
•
•
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.
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
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
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
8
Instructions for Form 5227
instructions. The statement should also identify the
relationship of the lender to any officer, director, trustee, or
other disqualified person.
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.
Part VII. Statements Regarding
Activities
Answer every question in this section. If a line does not apply,
enter “N/A.”
Line 1. A split-interest trust must have a governing
Charitable remainder unitrusts must include any unitrust
amounts applicable to prior periods that are unpaid but
required to be paid as of the valuation date, since such
amounts reduce the net FMV of the trust's assets. However,
don't include any make-up amount for a NIMCRUT.
instrument that requires the trust to act or refrain from acting
so as not to engage in an act of self-dealing under section
4941 or subject it to the excise taxes under section 4943,
4944, or 4945. The trust may satisfy the requirements either
by express language in its governing instrument or by the
operation of state law which imposes the above requirements
on the trust or treats these requirements as being contained
in the governing instrument. If a trust claims it satisfies the
requirements of section 508(e) by operation of state law, the
provisions of state law must effectively impose the
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.
requirements of section 508(e) on the trust.
Part V. Charitable Remainder Annuity
Trust Information
Line 1b. To figure the total annual annuity amounts for a
short tax year, see Short tax years, later.
If, however, the state law does not apply to a governing
instrument which contains mandatory directions conflicting
with any of its requirements and the trust has such mandatory
directions in its governing instrument, then the trust has not
satisfied the requirements of section 508(e) by the operation
of that state law.
Part VI. Charitable Remainder
Unitrust Information
Part VIII. Statements Regarding
Activities for Which Form 4720 May
Be Required
Line 4a. Enter the unitrust fixed percentage (which may not
be less than 5% or more than 50%).
If there is more than one unitrust recipient, attach a
statement showing the percentage of the total unitrust dollar
amount payable to each recipient. The sum of these
individual shares should be 100%.
Complete Part VIII to determine whether the trust has
complied with the applicable chapter 42 rules relating to
private foundations and whether the trust, trustee,
disqualified persons, or some combination of these may be
liable for certain foundation excise taxes. These excise taxes
include:
Line 4b. This line must always have an entry, even if it is
zero.
The section 4941 tax on self-dealing between the trust and
•
Line 5a. Enter the trust's 2023 (fiduciary) accounting income
determined under the terms of the governing instrument and
applicable local law. See section 643(b) and Regulations
sections 1.664-3(a)(1)(i)(b)(3) and 1.643(b)-1 for more
information.
“disqualified persons,”
The section 4943 tax on excess business holdings,
The section 4944 tax on investments that jeopardize the
•
•
trust's charitable purposes, and
The section 4945 tax on taxable expenditures.
•
Line 6a. Enter the amount, if any, from line 69 of the 2022
The split-interest trust pays these taxes on Form 4720. For
Form 5227.
a detailed explanation of each of these taxes, see the
Instructions for Form 4720.
If the amount entered isn't the same as line 69 from the
prior year's form, attach an explanation and a statement that
supports the balance in the make-up account. Figure the total
deficiencies from previous years as follows.
The excise taxes on private foundations don't apply to any
amounts:
1. Payable under the terms of the trust to income
beneficiaries, unless a deduction was allowed under section
170(f)(2)(B), 2055(e)(2)(B), or 2522(c)(2)(B);
2. In trust for which a charitable contribution deduction
was not allowed under any section listed in section 4947(a)
(2)(B), if the amounts are segregated from amounts for which
a deduction was allowable; or
1. Aggregate the unitrust's net asset FMV for each
previous year.
2. Multiply (1) above by the unitrust's fixed percentage.
3. From the result in (2), subtract the aggregate trust
income that was distributed for previous years.
Line 8. Use this amount to determine future accrued
3. Transferred in trust before May 27, 1969.
accumulated distribution deficiencies.
Short tax years. To figure the annuity amount (Part V,
line 1b) or the unitrust amount (Part VI, line 7) for short tax
years, multiply the annuity or unitrust amount by the number
of days in the trust's tax year, and then divide the result by
365 (or 366 for leap years).
For a unitrust whose governing instrument provides for an
income exception, if no valuation date occurs before the end
of the trust's tax year, value the trust's assets as of the last
day of the trust's tax year.
Line 1. The activities listed on lines 1a(1) through (6) are
considered self-dealing under section 4941 unless one of the
exceptions described in section 4941(d)(2)(D), (E), (F), or (G)
applies. You may also access information about self-dealing
link for Life Cycle of a Private Foundation.
The terms “disqualified person” and “foundation manager”
are defined under Definitions, earlier.
9
Instructions for Form 5227
A similar exception applies to a beneficial or profits interest in
any business enterprise that is a trust or partnership.
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 “excepted” acts. Excepted acts are
described in Regulations sections 53.4941(d)-3 and -4 or
appear in Notices published in the Internal Revenue Bulletin,
relating to disaster assistance. At the time this form went to
print, there were no Notices currently in effect relating to
disaster assistance for “excepted” acts to self-dealing.
Line 4. In general, an investment which jeopardizes any of
the charitable purposes of a trust is one in which a foundation
manager did not exercise ordinary business care in making
the investment to provide for the long- and short-term
financial needs of the trust in carrying out its charitable
purposes.
Line 2. Under section 4947(b)(3)(A), a split-interest trust
isn't subject to the excess business holdings tax (section
4943) or tax on investments that jeopardize the trust's
charitable purpose (section 4944) if all the income interest
(and none of the remainder interest) of the trust is devoted
solely to one or more of the charitable purposes described in
section 170(c)(2)(B). In addition, all amounts in the trust for
which a charitable contribution deduction was allowed under
section 170 (for individual taxpayers) or a similar section for
personal holding companies, foreign personal holding
companies, or estates or trusts (including a deduction for
estate or gift tax purposes) cannot have a total value of more
than 60% of the total FMV of all amounts in the trust. For the
purposes of section 4947(b)(3)(A), the term “income interest”
includes the right to receive an annuity or unitrust payment,
as described in Regulations section 53.4947-2(b)(2)(i).
Under section 4947(b)(3)(B), a split-interest trust isn't
subject to the section 4943 or 4944 taxes if a deduction was
allowed under section 170 (and related provisions for other
entities) for amounts payable under the terms of the trust to
every remainder beneficiary but not to any income
beneficiary. For the purposes of section 4947(b)(3)(B), the
term “income beneficiary” includes the recipient entitled to
receive an annuity or unitrust payment under a CRT, as well
as the donor entitled to payments from a pooled income fund.
The term “remainder beneficiary” includes the charitable
organization entitled to the remainder interest under a CRT or
a pooled income fund.
Line 3. In general, excess business holdings are the amount
of stock or other interest in a business enterprise that the
trust must dispose of to a person other than a disqualified
person in order for the trust's remaining holdings in the
enterprise to be permitted holdings.
In general, the combined permitted holdings of a trust and
all disqualified persons may not be more than 20% of the
voting power (or beneficial or profits interest, in the case of a
trust or a partnership) in any business enterprise.
In general, a business enterprise means the active
conduct of a trade or business, including any activity that is
regularly conducted to produce income from selling goods or
performing services that is an unrelated trade or business
under section 513.
For more information on investments that jeopardize
charitable purposes, see Regulations section 53.4944-1.
Line 5. Grants by a trust to a public charity aren't taxable
expenditures if the grants aren't earmarked for use for any of
the activities described on lines 5a(1) through (5) and there is
no oral or written agreement by which the trust may cause the
public charity to engage in any such prohibited activity or to
select the grant grantee.
Grants made to exempt operating foundations (as defined
in section 4940(d)(2)) aren't subject to the expenditure
responsibility provisions of section 4945. If the trust made
grants to such organizations, you don't have to file Form 4720
for those grants. See the section 4945 regulations 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 or appear in Notices published in the Internal
Revenue Bulletin, relating to disaster assistance. At the time
this form went to print, there were no Notices currently in
effect relating to disaster assistance for “excepted”
transactions to taxable expenditures.
Line 6a. A personal benefit contract is, in general, any life
insurance, annuity, or endowment contract that benefits,
directly or indirectly, a transferor, a transferor's family
member, or a transferor designee that isn't an organization
described in section 170(c).
Line 6b. Enter the total of all premiums paid by the
split-interest trust on any personal benefit contract if the
payment of premiums is in connection with a transfer for
which a deduction isn't allowed under section 170(f)(10)(A).
Also, if there is an understanding or expectation that any
person will directly or indirectly pay any premium on a
personal benefit contract for the transferor, include those
premium payments in the amount entered on this line. For
more information, see the instructions for Form 8870.
Line 7. If a charitable remainder trust has any unrelated
business taxable income (within the meaning of section 512
and related regulations) for 2023, the trust is liable for a tax
under section 664(c)(2), which is treated as a Chapter 42
excise tax. The amount of the excise tax is equal to the
amount of the trust's unrelated business taxable income. If
the trust has any unrelated business taxable income, answer
“Yes” and file Form 4720, in addition to Form 5227, to report
the trust's unrelated business taxable income and the tax
due.
The term “business enterprise” does not include:
1. A functionally related business, defined in section
4942(j)(4); or
2. A trade or business if at least 95% of its gross income
is derived from passive sources.
See section 4943(d)(3)(B) for additional items that are
included in gross income from passive sources.
Line 3a. A private foundation isn't treated as having excess
business holdings in any enterprise if, together with related
foundations, it owns 2% or less of the voting stock and 2% or
less in value of all outstanding shares of all classes of stock.
Part IX. Questionnaire for Charitable
Lead Trusts, Pooled Income Funds,
and Charitable Remainder Trusts
Section A—All Trusts
All trusts are required to answer lines 1 and 2.
10
Instructions for Form 5227
This election must be made on an entity-by-entity basis,
and applies only to the particular CFCs and QEFs for which
an election is made. If the CRT owns a CFC or QEF through
certain domestic pass-through entities, such as a domestic
partnership or common trust fund, the domestic pass-through
entity may make the election with respect to the CFC or QEF
and you will be considered as having made the election. If the
entity does not make the election, you may make the election
with respect to the CFC or QEF owned through the entity.
Section B—Charitable Lead Trusts
Line 3. The information on this line is used to determine
whether sections 4943 and 4944 apply for 2023.
Line 5. Enter the amount for payments described in sections
170(f)(2)(B), 2055(e)(2)(B), and 2522(c)(2)(B).
Section C—Pooled Income Funds
Line 7. Upon termination of the income interest retained or
created by a donor, the trustee is required to sever from the
fund an amount equal to the value of the remainder interest in
the property upon which the income interest is based. The
amount severed from the fund must either be paid to, or
retained for the use of, the designated public charity, as
provided in the governing instrument. See Regulations
section 1.642(c)-5(b)(8) for valuation procedures.
When to make the election. The election applies to the tax
year for which it is made and later tax years, and applies to all
interests in the CFC or QEF that the CRT later acquires. The
CRT cannot revoke the election. The election must be made
no later than the first tax year beginning after December 31,
2013, in which the CRT includes an amount in income for
regular tax purposes under section 951(a) or 1293(a) with
respect to the CFC or QEF. The election may be made on an
original or an amended return, provided that the tax year for
which the election is made, and all tax years affected by the
election, aren't closed by the period of limitations on
Section D—Charitable Remainder Trusts
Line 11. If a charitable remainder annuity trust or certain
charitable remainder unitrusts pay the annuity or unitrust
amount after the close of the tax year, and:
assessments under section 6501. For more information, see
Regulations section 1.1411-10(g).
1. The payment is made within a reasonable time after
the close of the tax year; and
Note. CRTs that make the Simplified Net Investment Income
Calculation Election may also make the Regulations section
1.1411-10(g) election. See Part II of Schedule A, later.
For more information on the NII treatment of income from
certain CFCs and PFICs within the section 664 category and
class system, see Regulations section 1.1411-10 and
Proposed Regulations section 1.1411-3(d)(2)(ii).
2. To the extent the payment is characterized as corpus
from a property distribution (other than cash), the trustee
treats any income generated by the distribution as occurring
on the last day of the tax year for which the annuity or unitrust
amount is due, then the annuity trust or certain unitrusts won't
be deemed to have:
Contents of the election. In order to make the election, the
CRT must check the “Yes” box on line 12 and must attach a
statement to its Form 5227, which must include:
Engaged in self-dealing (section 4941),
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•
•
Unrelated debt-financed income (section 514),
Received an additional contribution (Regulations sections
Name of the CRT and its EIN;
•
1.664-2(b) and 1.664-3(b)), or
A declaration that the CRTs elect under Regulations
•
Failed to function exclusively as a charitable remainder
•
section 1.1411-10(g) to apply the rules in Regulations section
1.1411-10(g) to the CFCs and QEFs identified in the
statement; and
trust (Regulations section 1.664-1(a)(4)).
See Regulations sections 1.664-2(a)(1) and 1.664-3(a)(1)
for more information.
The following information with respect to each CFC and
•
Under Regulations section 1.664-1(d)(5), a distribution of
property (other than cash) is treated as a sale by the trust.
QEF for which an election is made:
The name of the CFC or QEF; and
•
•
Either the EIN of the CFC or QEF, or, if the CFC or QEF
Note. You must report income (gain) generated by the
property distribution (discussed above) on Part I of Form
5227 for the current tax year.
Trusts created before December 10, 1998. The election in
Regulations sections 1.664-2(a)(1)(i)(a)(2) and 1.664-3(a)(1)
(i)(g)(2) does not apply to charitable remainder annuity trusts
and certain charitable remainder unitrusts whose annuity or
unitrust amount is 15% or less.
does not have an EIN, the reference ID number of the CFC or
QEF.
Line 16. Check the “Yes” box and enter the name of the
foreign country if either (1) or (2) below applies.
1. The trust owns more than 50% of the stock in any
corporation that owns one or more foreign bank accounts.
2. At any time during the year, the trust had an interest in
or signature or other authority over a bank, securities, or
other financial account in a foreign country.
Line 12. Net investment income tax (NIIT)—Regulations
section 1.1411-10(g) election. In general, a CRT that owns
stock of a controlled foreign corporation (CFC) (within the
meaning of section 953(c)(1)(B) or 957(a)) or a passive
foreign investment company (PFICs)(within the meaning of
section 1297(a)) that it treats as a qualified electing fund
(QEF) under section 1295 may make the election provided in
Regulations section 1.1411-10(g). For NIIT purposes, if an
election is in effect with respect to a CFC or QEF, then, in
general, the amounts included in income for regular tax
purposes under section 951 and section 1293 from the CFC
or QEF are also included in NII, and distributions of
Exception. Check “No” if either of the following applies to
the trust.
The combined value of the accounts was $10,000 or less
•
during the whole year.
The accounts were with a U.S. military banking facility
•
operated by a U.S. financial institution.
See FinCEN Form 114, Report of Foreign Bank and
Financial Accounts (FBAR), and its instructions to determine
whether the trust is considered to have an interest in or
signature or other authority over a bank, securities, or other
financial account in a foreign country. If “Yes,” electronically
file FinCEN Form 114 with the Department of the Treasury
previously taxed income to the CRT from the CFC or QEF
described in section 959(d) or 1293(c) are excluded from NII.
11
Instructions for Form 5227
using the FinCEN's BSA E-Filing System. Because FinCEN
Form 114 isn't a tax form, don't file it with Form 5227. See
Fincen.gov for more information.
Part II. Simplified Net Investment Income
Calculation Election (SNIIC Election) (Section
664 trust only)
If you are required to file FinCEN Form 114 but don't,
The CRT may make an election to calculate receipts and
distributions of NII using a simplified method that is
independent of the section 664 category and class system.
Once made, the SNIIC election is irrevocable. If a CRT
makes the SNIIC election, the CRT computes the NII in the
same manner as an individual. When using the SNIIC, a
CRT’s accumulated NII is a separate and independent
tracking system within the CRT and isn't assigned,
combined, or taken into account in any of the CRT's existing
categories (ordinary income, capital gain, nontaxable
income).
you may have to pay a penalty of up to $10,000
!
CAUTION
(more in some cases).
Signature
Form 5227 must be signed by the trustee or by an authorized
representative.
If you, as trustee (or an employee or officer of the trust), fill
in Form 5227, the Paid Preparer Use Only space should
remain blank. If someone prepares this return without charge,
that person should not sign the return.
Paid preparer. Generally, anyone who is paid to prepare a
tax return for a charitable remainder trust must sign the return
and fill in the other blanks in the Paid Preparer Use Only area
of the return. For all other trusts, completion of Form 5227's
Paid Preparer Use Only area is optional.
Amount of NII Allocable to Income Recipients
If a CRT makes the SNIIC election, distributions from a CRT
to a recipient for a tax year consist of NII equal to the lesser
of:
1. The total amount of the distributions to that recipient
for that year, or
If you have questions about whether a preparer is required
to sign the return, please contact an IRS office.
2. The current and accumulated NII of the CRT.
The person required to sign the return as the preparer
must:
With this election, the classification of a distribution as
consisting of NII or Excluded Income is independent from the
character of the income distributed to the recipient for regular
tax purposes using the section 664 category and class
system. However, see Effect of the SNIIC Election on Netting
and Ordering Rules, later.
Complete the required preparer information,
•
Sign it in the space provided for the preparer's signature (a
•
facsimile signature is acceptable), and
Give the trustee a copy of the return in addition to the copy
•
to be filed with the IRS.
Calculation of NII
Enter the paid preparer’s PTIN, not their social
security number (SSN), in the “PTIN” box in the paid
preparer’s block. Because Form 5227 is publicly
In computing the CRT’s NII, if in a tax year a CRT’s properly
allocable deductions described in section 1411(c)(1)(B)
exceed the gross investment income and net gain described
in section 1411(c)(1)(A), then such excess deductions shall
reduce the NII for that tax year and, to the extent of any
remaining excess deductions, reduce NII in subsequent tax
years of the CRT.
!
CAUTION
disclosable, any information entered in this block will become
public. For more information about PTINs, visit the IRS
Schedule A—Distributions, Assets,
Example. A CRT has dividend income of $1,000 and a
long-term capital loss of $10,000 in 2022; and $11,000
long-term capital gains in 2023. The CRT would have
($9,000) of accumulated NII in 2022, so any 2022
distributions to income recipients would not include any NII.
In 2023, the CRT would have $2,000 of NII available for
distribution in 2023 and after.
and Donor Information
Note. Schedule A isn't open to public inspection.
Qualified Business Income Deduction
A CRT is not entitled to a qualified business income (QBI)
deduction. However, a taxable recipient of a unitrust or
annuity amount from a CRT may take into account QBI,
qualified REIT dividends, and qualified PTP income received
from a CRT to the extent that the unitrust or annuity amount
distributed consists of such items. For additional information
on how to report QBI and other section 199A items to
beneficiaries/recipients, see the instructions for Schedule K-1
that are found in the Instructions for Form 1041.
Note. The SNIIC election is available for the 2023 tax year
under Proposed Regulations section 1.1411-3(d)(3). When
finalized, Proposed Regulations section 1.1411-3(d)(3) is
proposed to apply to tax years of the CRT beginning after
December 31, 2012. However, if, after consideration of all
comments received in response to those proposed
regulations, it appears that there is no significant interest
among taxpayers in having the option of using the simplified
method, the IRS may omit this election from the regulations
when finalized. If the SNIIC election is omitted, the CRT won't
have to amend the 2023 return. The Instructions for Form
5227 in a later year will describe the actions that the CRT
must take to transition from the SNIIC to calculating NII using
the section 664 category and class system.
Part I. Accumulation Schedule (Section 664
trust only)
The following information applies to lines 2a and 2b.
Line 2a. Enter the total of all distributions for 2023 on the
short line to the immediate right of the “2023.”
Line 2b. Enter the amount distributed from each income
category.
When To Make the SNIIC Election
CRTs established after December 31, 2012. In the case
of a CRT established after December 31, 2012, a CRT
12
Instructions for Form 5227
wanting to make the SNIIC election must do so on its Form
5227 return for the tax year in which the CRT is established.
CRTs established before January 1, 2013. In the case
of a CRT established before January 1, 2013, the CRT
wanting to make the election must do so on its Form 5227
return for its first tax year beginning on or after January 1,
2013.
Making a SNIIC election on an amended return. The
CRT may make the election on an amended Form 5227
return for that year only if the tax year for which the SNIIC
election is made, and all tax years that are affected by the
election, for both the CRT and its recipients, aren't closed by
the period of limitations on assessments under section 6501.
Form 5227. See the Instructions for Schedule K-1 (Form
1041) for more information.
Column (b). Recipient's Identifying Number
As a payer of income, the trust is required under section 6109
to request and provide a proper identifying number for each
recipient of income. Enter the recipient's number on the
respective Schedule K-1. Individuals and business recipients
are responsible for giving you their taxpayer identification
numbers upon request. You may use Form W-9, Request for
Taxpayer Identification Number and Certification, to request
the recipient's identifying number.
Penalty
How To Make the SNIIC Election and Completing
the Form 5227 With a SNIIC Election
The trust may incur a penalty under section 6723 if it fails to
provide the taxpayer identification number of each recipient
or income beneficiary identified on Schedule A. The penalty
is $50 for each failure to provide a required taxpayer
identification number, unless reasonable cause can be
established for the failure. If you are unable to provide the
taxpayer identification number for any recipient or income
beneficiary, explain the circumstances in a signed affidavit
and attach it to this return.
A CRT makes the SNIIC election by:
Completing lines 1 through 3 of Part II by reporting all
•
income received as Excluded Income;
Completing lines 1 through 3 of Part I of Schedule A by
•
reporting all income distributed as Excluded Income;
Completing Part II of Schedule A; and
•
•
Reporting the allocable share of NII to recipients
consistent with the election.
Substitute Forms
Instructions for Part I of Schedule A
You don't need prior IRS approval for a substitute
Column (a). Enter the amount from the prior year Form
Schedule K-1 if it is an exact copy of the IRS statement. The
boxes must use the same numbers and titles and must be in
the same order and format as on the comparable IRS
Schedule K-1. The substitute schedule must include the
OMB number. You must request IRS approval to use other
substitute Schedules K-1. To request approval, write to:
5227, Schedule A, Part I-B, line 4(d).
Column (b). Enter the CRT’s current year NII.
Using Form 8960 as a worksheet, include the
amounts of income, gain, loss, and deductions
TIP
reported on lines 1–12 of Form 8960 to compute NII
Internal Revenue Service
Attention: Substitute Forms Program
SE:W:CAR:MP:P:TP
(line 12 of Form 8960). Don't file the Form 8960 with the Form
5227.
Column (c). Enter the lesser of (i) the sum of columns (a)
and (b), or (ii) the total distributions for the year (reported on
line 2a of Part I of Schedule A). If the sum of columns (a) and
(b) is zero or less, enter -0- in column (c).
Column (d). Subtract column (c) from the sum of columns
(a) and (b). This amount will be reported in column (a) of the
2024 Form 5227.
5000 Ellin Road, C6-440
Lanham, MD 20706
You may be subject to a penalty if you file a
Schedule K-1 that does not conform to the
!
CAUTION
specifications in Pub. 1167, General Rules and
Specifications for Substitute Forms and Schedules.
For updates on the Substitute Forms Program after this
publication went to print, go to the product page for Pub.
Effect of the SNIIC Election on Netting and
Ordering Rules
The SNIIC election will change the netting and ordering rules
for ordinary income and capital gains or losses. See Ordering
Rules for Ordinary Income and Additional Rules for Capital
Gains and Losses, later, for illustrative charts.
Inclusion of Amounts in Recipients' Income
If there are two or more recipients, each will be treated as
receiving their pro rata share of the various classes of income
or corpus.
You may want to read the Part III instructions and
complete all worksheets (as necessary) before you
make an entry on Part III of Schedule A.
TIP
Amounts distributed by a charitable remainder annuity
trust or a charitable remainder unitrust have the following
characteristics in the hands of the recipients.
Part III. Current Distributions
First, as ordinary income to the extent of ordinary income
•
Schedule (Section 664 trust only)
for the current year and undistributed ordinary income for
prior years of the trust. Ordinary income is computed without
regard to any net operating loss deductions under section
172. See the Ordering Rules for Ordinary Income, later.
You must give each recipient listed in Part III a Schedule K-1
(Form 1041) that reflects that recipient's current distribution.
The following rules and worksheets will help you figure the
type of income a recipient receives from the trust's
Second, as capital gains to the extent of the trust's
•
distributions. Also, attach a copy of each Schedule K-1 to
undistributed capital gains. Undistributed capital gains of the
13
Instructions for Form 5227
trust are determined on a cumulative net basis without regard
to any capital loss carrybacks and carryovers. See the
Netting Rules, Ordering Rules for Capital Gains and Losses,
and Carryover Rules, later, for capital gains.
For each recipient, enter the difference between the
amount in column (j) and the sum of the amounts in columns
(d) through (f) using code H in box 14 of the Schedule K-1
(Form 1041).
Third, as nontaxable income to the extent of the trust's
If the amount in column (j) is less than the sum of the
•
•
nontaxable income for the current year and undistributed
nontaxable income for prior years.
amounts in columns (d) through (f), enter the difference as a
negative amount under code H in box 14 of the Schedule K-1
(Form 1041).
Fourth, as a distribution of trust corpus. For this purpose,
•
trust corpus means the net FMV of the trust assets less the
total undistributed income (but not loss) in each of the above
categories.
If the amount in column (j) is greater than the sum of the
•
amounts in columns (d) through (f), enter the difference as a
positive amount under code H in box 14 of the Schedule K-1
(Form 1041).
Column (j). NII
Ordering rules for ordinary income. Ordinary income is
composed of two classes for purposes of characterizing and
ordering distributions: (a) qualified dividends, and (b) all other
ordinary income. If the trust has both classes of ordinary
income, distributions are treated as made first from all the
other ordinary income class, and second from the qualified
dividends class.
If the CRT has not made a SNIIC election, then enter the total
amount of NII allocated to each recipient in column (j) that is
included in columns (d) through (g) for that recipient.
If the CRT has made a SNIIC election, then, for each
recipient, multiply the amount in column (c) of Part II by the
percentage reported in column (c) of line 4 of Part III of
Schedule A, and enter the amount in column (j) for each
recipient.
The following chart highlights the difference in ordering
rules depending on whether the CRT elects to use the SNIIC
method.
Ordering Rules for Ordinary Income
Section 664 Method
SNIIC Election Method
1. Distributions of all other ordinary income:
First, ordinary income that is NII (40.8% rate), then
Ordinary income that is Excluded Income (37% rate)
2. Distributions from the qualified dividends class:
First, qualified dividends that are NII (23.8% rate), then
Qualified dividends that are Excluded Income (20% rate)
All ordinary income class
All qualified dividends
tax purposes. If the CRT uses the section 664 method for
calculating NII and Excluded Income, the netting and
ordering rules are expanded to take into account additional
classes within the ordinary income and capital gain
categories that are created due to the imposition of an
additional 3.8% tax on NII but not on Excluded Income.
Netting rules. Gains and losses are netted within each
class to arrive at a net gain or loss for that class. After you net
within a class, the following additional netting rules apply to
the capital gains category.
Additional rules for capital gains and losses. The
following charts highlight the difference in netting and
ordering rules for capital gains and losses depending on
whether the CRT elects to use the Simplified Net Investment
Income Calculation (SNIIC) method. In general, if the CRT
elects to use the SNIIC method, the netting and ordering
rules will be essentially the same as those applicable before
the 2013 tax year; every dollar distributed will carry out the
CRT’s NII, to the extent of the CRT’s accumulated NII, without
regard to the class or category of that distribution for regular
Netting Rules
Section 664 Method
SNIIC Election Method
1.
Among the long-term capital gain and loss classes:
(a)
A net loss from the 28% long-term capital gain class that is NII (31.8% rate) reduces net gains in the following order:
First, gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
Not Applicable
(b)
A net loss from the 28% long-term capital gain class that is Excluded Income (28% rate) reduces net gains in the following order:
First, net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
First, gain from the section
1250 long-term capital
gain class, then
14
Instructions for Form 5227
Section 664 Method
SNIIC Election Method
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
Net gain from all the other
long-term capital gain
class.
(c)
(d)
A net loss from all the other long-term capital gain class that is NII (23.8% rate) reduces net gains in the following order:
First, net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
Not Applicable
A net loss from all the other long-term capital gain class that is Excluded Income (20% rate) reduces net gains in the following order:
First, net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
First, net gain from the
28% long-term capital
gain class, then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), and finally
Net gain from all the other long-term capital gain class that is NII (23.8% rate).
Gain from the section
1250 long-term capital
gain class.
2.
Among the short-term and long-term gain and loss classes:
(a) A net short-term capital loss that is NII (40.8% rate) is applied to reduce the net short-term and net long-term capital gain classes as follows:
First, short-term capital gain class that is Excluded Income (37% rate), then
Net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
First, net gain from the
28% long-term capital
gain class, then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
Gain from the section
1250 long-term capital
gain class, and finally
Net gain from all the other
long-term capital gain
class.
(b)
A net short-term capital loss that is Excluded Income (37% rate) is applied to reduce the net short-term and net long-term capital gain classes
as follows:
First, short-term capital gain class that is NII (40.8% rate), then
Net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
First, net gain from the
28% long-term capital
gain class, then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
Gain from the section
1250 long-term capital
gain class, and finally
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
Net gain from all the other
long-term capital gain
class.
3.
An overall net long-term capital loss reduces any net short-term capital gain as follows:
First, any net short-term capital gain that is NII (40.8% rate), then
Overall net long-term
capital loss reduces any
net short-term capital gain.
Any net short-term capital gain that is Excluded Income (37% rate).
and undistributed long-term capital gain, the short-term
capital gain is deemed distributed before any long-term
capital gain.
Ordering rules for capital gains and losses. The
following rules apply to undistributed long-term capital gains
on assets held more than 1 year. If, in any tax year of the
trust, the trust has both undistributed short-term capital gain
Ordering Rules for Capital Gains and Losses
Section 664 Method
SNIIC Election Method
1. Any short-term capital gains are deemed to be distributed in the following order:
First, short-term capital gain class that is NII (40.8% rate), then
Short-term capital gains
Short-term capital gain class that is Excluded Income (37% rate).
15
Instructions for Form 5227
Section 664 Method
SNIIC Election Method
2. Any long-term capital gains are deemed to be distributed in the following order:
The 28% long-term capital gain class that is NII (31.8% rate) is deemed distributed, then
The section 1250 long-term capital gain class that is NII (28.8% rate) is deemed distributed, then
The 28% long-term capital
gain class is deemed
distributed, then
The 28% long-term capital gain class that is Excluded Income (28% rate) is deemed distributed, then
The section 1250 long-term capital gain class that is Excluded Income (25% rate) is deemed distributed, then
The section 1250 long-term
capital gain class is
deemed distributed, and
finally
All other long-term capital gain class that is NII (23.8% rate) is deemed distributed, and finally
All other long-term capital gain class is deemed distributed.
All other long-term capital
gain class.
Carryover Rules
Section 664 Method
SNIIC Election Method
1. If the trust has capital losses in excess of capital gains for any tax year:
The excess of the 40.8% rate net short-term capital loss over the net long-term capital gain for that year is a 40.8%
rate short-term capital loss carryover to the next tax year.
The excess of the net
short-term capital loss
over the net long-term
capital gain for that year
is a short-term capital
loss carryover to the next
tax year.
The excess of the 37% rate net short-term capital loss over the net long-term capital gain for that year is a 37%
rate short-term capital loss carryover to the next tax year.
The excess of the 23.8% net long-term capital loss over the net short-term capital gain for that year is a 23.8%
long-term capital loss carryover to the next tax year.
The excess of the net
long-term capital loss
over the net short-term
capital gain for that year
is a long-term capital loss
carryover to the next tax
year.
The excess of the 20% net long-term capital loss over the net short-term capital gain for that year is a 20%
long-term capital loss carryover to the next tax year.
2. If the trust has capital gains in excess of capital losses for any tax year:
The excess of the 40.8% rate net short-term capital gain over the net long-term capital loss for that year is, to the
extent not deemed distributed, a 40.8% rate short-term capital gain carryover to the next tax year.
The excess of the net
short-term capital gain
over the net long-term
capital loss for that year
is, to the extent not
deemed distributed, a
short-term capital gain
carryover to the next tax
year.
The excess of the 37% rate net short-term capital gain over the net long-term capital loss for that year is, to the
extent not deemed distributed, a 37% rate short-term capital gain carryover to the next tax year.
The excess of the 31.8% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 31.8% rate long-term capital gain carryover to the next tax year.
The excess of the 28.8% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 28.8% rate long-term capital gain carryover to the next tax year.
The excess of the net
long-term capital gain
over the net short-term
capital loss for that year
is, to the extent not
deemed distributed, a
long-term capital gain
carryover to the next tax
year.
The excess of the 28% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 28% rate long-term capital gain carryover to the next tax year.
The excess of the 25% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 25% rate long-term capital gain carryover to the next tax year.
The excess of the 23.8% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 23.8% rate long-term capital gain carryover to the next tax year.
The excess of the 20% rate net long-term capital gain over the net short-term capital loss for that year is, to the
extent not deemed distributed, a 20% rate long-term capital gain carryover to the next tax year.
16
Instructions for Form 5227
information. We need it to ensure that you are complying with
these laws and to allow us to figure and collect the right
amount of tax.
Part IV. Current Distributions
(Charitable lead trusts or pooled income funds only)
Line 1. A charitable lead trust uses line 1 of Part IV to report
the aggregate amount of distributions made during the year
to one or more noncharitable (private) beneficiaries. For
example, when the lead period terminates, all future
distributions are payable to the noncharitable beneficiary.
However, because charitable lead trusts can vary
You aren't required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.
considerably, the expiration of the lead period isn't the only
context within which the trust may provide for payments to a
noncharitable (private) beneficiary. See the annotations to
the sample charitable lead trusts in Rev. Proc. 2007-45,
2007-29 I.R.B. 89, and Rev. Proc. 2007-46, 2007-29 I.R.B.
102, for examples of other situations in which amounts may
be payable to a noncharitable beneficiary.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
average time is:
Recordkeeping
.
.
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89 hr., 11 min.
A pooled income fund uses line 1 of Part IV to report the
amount distributable annually among one or more
noncharitable (private) beneficiaries who hold income
interests in the fund.
Learning about the law or the
form
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21 hr., 54 min.
44 hr., 47 min.
Preparing the form .
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Part V. Assets and Donor Information
Line 2. Pooled income funds don't complete lines 1 and 2.
Copying, assembling, and
sending the form to IRS .
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5 hr., 54 min.
For trusts that answered “Yes” to question 1, complete all
columns on line 2 for all donors to the trust in 2023. For
additional donors to the trust that did not contribute to the
trust in 2023, complete column (a) only.
If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
we would be happy to hear from you. You can send us
the Internal Revenue Service, Tax Forms and Publications
Division, 1111 Constitution Ave. NW, IR-6526, Washington,
DC 20224. Don't send the form to this office.
For trusts that answered “No” to question 1, complete only
column (a) for all donors to the trust.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
17
Instructions for Form 5227
Capital Gains Distribution Worksheet (KEEP FOR YOUR RECORDS)
Use this worksheet to determine the ordering of any capital gains distributions.
Short-term
Long-term
Excluded Accumulated 28% long-term capital
Section 1250 long-term
capital gain class
All other long-term capital gain
classes
Net
gain class
Investment
Income
(ANII) post-
2012
ANII
post-2012
ANII
post-2012
Excluded
Excluded
Excluded ANII post-2012
1. Prior years
undistributed
gain or
(loss) . . . .
2. Current year
net gain or
(loss) . . . .
3. Total
combined
gain or (loss)
by class . .
4. Adjustments
for netting any
long-term
capital
(losses) on
line 3 . . . .
5. Total . . . . .
6. Adjustments
for netting any
short-term
capital gain or
(loss) on
line 3 (see
Netting
Rules,
earlier) . . .
7. Total
undistributed
gains . . . .
8. 2023
distributions...
9. Carryforward
to 2024 (line 7
less line 8)...
18
Instructions for Form 5227
Ordinary Income Distribution Worksheet (KEEP FOR YOUR RECORDS)
Use this worksheet to determine the ordering of any ordinary income distributions.
All other ordinary income
Qualified dividends
Accumulated NII post-2012
Excluded Accumulated NII
Excluded
post-2012
1. Prior years
undistributed
ordinary income or
(loss) . . . . . . . .
2. Current year
ordinary income or
(loss) . . . . . . . .
3. Total combined
ordinary income or
(loss) by
class . . . . . . . .
4. Adjustments for
netting any
ordinary (losses)
on line 3 . . . . .
5. Total undistributed
ordinary
income . . . . . .
6. 2023
distributions...
7. Carryforward to
2024 (line 5 less
line 6) . . . . . . .
19
Instructions for Form 5227