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                                                                                                 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         4947(a)(2) must file Form 5227 unless the Exception next 
otherwise noted.                                                   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           • The split-interest trust was created before May 27, 1969, 
Form 5227 and its instructions, such as legislation enacted        and
after they were published, go to IRS.gov/Form5227.                 • All transfers of corpus to the trust occurred before May 27, 
                                                                   1969, or
What’s New                                                           As to each and every transfer of corpus to the trust made 
                                                                   •
Electronic filing. Under final regulations (T.D. 9972) issued      after May 26, 1969, no deduction was allowed under any of 
in February 2023, filers are required to file Form 5227            the sections listed in section 4947(a)(2).
electronically if they file 10 or more returns in the aggregate in 
a calendar year. The regulations are effective for returns           If a split-interest trust created before May 27, 1969, 
required to be filed for tax years ending on or after December     receives a contribution to corpus after May 26, 1969, for 
31, 2023. See Where To File for more information.                  which a deduction is allowed under any of the sections listed 
                                                                   in section 4947(a)(2), the trust will cease to qualify for the 
Reminders                                                          exception described above. In that case, the split-interest 
                                                                   trust must file Form 5227 for the year when the transfer to 
Don't include social security numbers on publicly dis-             corpus occurs and each subsequent year, the same as any 
closed forms. With the exception of the items described            split-interest trust created after May 26, 1969.
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 
Schedule A (and any related early termination agreement);          1041-B, Charitable Remainder Trust. Form 5227 replaces 
Schedule K-1; any K-1 continuation pages and transmittals;         Form 1041-B. Regulations section 1.6034-1 references Form 
the trust agreement; trust amendments; Form 926, Return by         1041-A, U.S. Information Return Trust Accumulation of 
a U.S. Transferor of Property to a Foreign Corporation; Form       Charitable Amounts. Form 5227 replaces Form 1041-A for 
8582, Passive Activity Loss Limitations; Form 8621,                split-interest trusts.
Information Return by a Shareholder of a Passive Foreign 
Investment Company or Qualified Electing Fund; and any             Which Parts To Complete
attachment that references contributor or donor information.       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 
General Instructions
                                                                   type of split-interest trust (such as a charitable remainder 
Purpose of Form                                                    trust, also referred to as a “section 664 trust”). Parts or lines 
                                                                   that apply exclusively to a particular type of split-interest trust 
Use Form 5227 to:                                                  are identified in these instructions and on Form 5227 with a 
• Report the financial activities of a split-interest trust,       parenthetical identifying the type of trust to which the part or 
• Provide certain information regarding charitable                 line applies. Parts or lines that aren't indicated as applying to 
deductions and distributions of or from a split-interest trust,    a particular type of split-interest trust should be completed by 
and                                                                every type of split-interest trust with one exception. Parts VII 
• Determine if the trust is treated (for chapter 42 excise tax     and VIII aren't completed by a charitable remainder or 
purposes) as a private foundation and subject to certain           charitable lead trust whose charitable interests involve only 
excise taxes under chapter 42.                                     war veterans' posts or cemeteries (as described in sections 
Form 5227 is open to public inspection.                            170(c)(3) and 170(c)(5)).
  Use Schedule A of Form 5227 to report:
• Accumulations of income for charitable remainder trusts,         Definitions
• Distributions to noncharitable beneficiaries/recipients, and     Split-interest trust. A split-interest trust is a trust that:
• Information about donors and assets contributed during           • Is not exempt from tax under section 501(a);
the year.                                                          • Has some unexpired interests that are devoted to 
Schedule A of Form 5227 isn't open for public                      purposes other than religious, charitable, or similar purposes 
inspection.                                                        described in section 170(c)(2)(B); and
                                                                   • Has amounts transferred in trust after May 26, 1969, for 
Who Must File                                                      which a deduction was allowed under one of the sections 
All charitable remainder trusts described in section 664 must      listed in section 4947(a)(2).
file Form 5227. All pooled income funds described in section         A split-interest trust is subject to many of the same 
642(c)(5) and all other trusts such as charitable lead trusts      requirements and restrictions that are imposed on private 
that meet the definition of a split-interest trust under section   foundations.

Dec 15, 2023                                                 Cat. No. 13228E

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  The most common forms of a split-interest trust include          allows for deferral of the unitrust payment (as described 
the following.                                                     above), but does not provide for deferred distributions to be 
                                                                   made up in future years.
Charitable lead trust.  This is a split-interest trust that 
annually pays a fixed annuity or unitrust amount to a              Note.  The terms “section 664 trust” and “CRT” are general 
charitable organization for the lead period specified in the       references to charitable remainder trusts. These terms 
trust instrument. The lead period may be a term of years or it     include CRATs and CRUTs.
may be a period determined by the lifetime of one or more 
                                                                   Pooled income fund.    This is a split-interest trust described 
individuals, as described in Regulations sections 
                                                                   in section 642(c)(5), which is created and administered by a 
1.170A-6(c), 20.2055-2(e)(2)(vi) and (vii), and 
                                                                   charitable organization described in section 170(b)(1)(A) 
25.2522(c)-3(c)(2)(vi) and (vii). The donor to the trust will 
                                                                   (other than in clauses (vii) or (viii)). Donors to the fund 
have been allowed a deduction under one of the sections 
                                                                   receive a lifetime income interest, based upon the rate of 
listed in section 4947(a)(2). At the end of the lead period, 
                                                                   return earned by the trust (or such other rate as may be 
annual payments to the charitable organization cease, and 
                                                                   prescribed for a trust in existence for less than 3 years). Upon 
the remaining corpus becomes payable, outright or in trust, to 
                                                                   the death of the donor and the termination of their income 
a noncharitable (private) beneficiary.
                                                                   interest, the charitable organization becomes entitled to the 
Charitable remainder annuity trust (CRAT).      This is a          portion of the trust corpus attributable to the donor’s 
split-interest trust described in section 664(d)(1). It pays a     contribution, free of trust.
fixed dollar (annuity) amount, at least annually, to one or 
                                                                   Recipient.  A recipient is a beneficiary who receives the 
more recipients, at least one of which isn't a charitable 
                                                                   possession or beneficial enjoyment of the unitrust or annuity 
organization. The annuity amount must be at least 5%, but 
                                                                   amount.
cannot exceed 50%, of the initial net fair market value (FMV) 
of all property contributed to corpus, subject to the further      Foundation manager.     A foundation manager is an officer, 
requirement that the remainder interest in the trust (measured     director, or trustee (or an individual who has powers or 
at the time property is transferred to the trust) must have a      responsibilities similar to those of officers, directors, or 
value of at least 10% of the FMV of the initial trust corpus.      trustees). In the case of any act or failure to act, the term 
Payments to the recipient continue for a period of years. The      “foundation manager” may also include an employee of the 
period, if stated as a specific number, cannot exceed 20           trust who has the authority to act.
years. The period can also be determined by the lifespan of        Disqualified person. A disqualified person is any of the 
one or more recipients. Whether the period is a fixed number       following.
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        1. A substantial contributor.
the property transferred to the trust (as explained above).         2. A foundation manager.
Upon termination of the recipient’s entitlement to the annuity      3. A person who owns more than 20% of a corporation, 
amount, the remainder interest is transferred to, or is used by,   partnership, trust, or unincorporated enterprise, which is itself 
a charitable organization described in section 170(c), or          a substantial contributor.
qualified employer securities are transferred to an employee 
                                                                    4. A member of the family of an individual in the first three 
stock ownership plan.
                                                                   categories.
Charitable remainder unitrust (CRUT).  This is a                    5. A corporation, partnership, trust, or estate in which 
split-interest trust described in section 664(d)(2). It is similar persons described in (1), (2), (3), or (4) above own a total 
in many respects to a CRAT except that the amount payable          beneficial interest of more than 35%.
to the recipient annually (the unitrust amount) is a fixed 
percentage (not less than 5% but not more than 50%) of the          6. For purposes of section 4943 (excess business 
net FMV of the trust’s assets, subject further to the              holdings), a disqualified person also includes:
requirement described above that the remainder interest             a.  A private foundation which is effectively controlled 
must have a value of at least 10% of the value of the initial       (directly or indirectly) by the same persons who control 
trust corpus, determined at the time property is transferred to     the trust in question, or
the trust. Because the unitrust amount is calculated annually       b.  A private foundation substantially all of the 
based upon the FMV of trust corpus, and isn't a fixed amount        contributions to which were made (directly or indirectly) 
determined upon the creation of the trust, the trustee must         by the same person or persons described in (1), (2), or 
determine the FMV of the assets of the trust annually. Upon         (3) above, or members of their families, within the 
termination of the recipient’s entitlement to payments of the       meaning of section 4946(d), who made (directly or 
unitrust amount, the remainder interest is transferred to, or is    indirectly) substantially all of the contributions to the trust 
used by, a charitable organization described in section             in question.
170(c), or qualified employer securities are transferred to an      7. For purposes of section 4941 (self-dealing), a 
employee stock ownership plan. The trust agreement for a           disqualified person also includes certain government 
CRUT may allow the trustee to distribute less than the full        officials. (See section 4946(c) and the related regulations.)
unitrust amount in years when the trust income (as defined 
under section 643(b)) is less than the unitrust amount. A          Photographs of Missing Children
Net-Income Makeup Charitable Remainder Unitrust                    The Internal Revenue Service is a proud partner with the 
(NIMCRUT) is a charitable remainder unitrust that allows           National Center for Missing & Exploited Children® (NCMEC). 
payment of the unitrust amount to be deferred in years when        Photographs of missing children selected by the Center may 
the unitrust amount exceeds trust income, with the deferred        appear in instructions on pages that would otherwise be 
distributions being made up in a later year when the trust has     blank. You can help bring these children home by looking at 
sufficient income. A Net Income Charitable Remainder               the photographs and calling 1-800-THE-LOST 
Unitrust (NICRUT) is a charitable remainder unitrust that          (1-800-843-5678) if you recognize a child.

2                                                                                                     Instructions for Form 5227

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Phone Help                                                      When To File
If you have questions and/or need help completing this form,    For calendar year 2023, file Form 5227 by April 15, 2024. In 
please call 877-829-5500. This toll-free telephone service is   the case of a final short-year period, the return is due by the 
available Monday through Friday.                                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 
For additional information on private foundations and           automatic extension of time to file. The request for an 
foundation managers, visit                                      automatic extension must be filed by the due date of the 
IRS.gov/charities/non-profits/private foundations.              return.

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 
•  Form 56, Notice Concerning Fiduciary Relationship.           10 returns of any type during the calendar year ending with or 
•  Form 1041, U.S. Income Tax Return for Estates and Trusts.    within the tax year must file their returns electronically. 
•  Form 1041-ES, Estimated Income Tax for Estates and           “Returns” for purposes of these instructions include 
Trusts.                                                         information returns (for example, Forms W-2 and Forms 
•  Form 4720, Return of Certain Excise Taxes Under              1099), income tax returns, employment tax returns (including 
Chapters 41 and 42 of the Internal Revenue Code.                quarterly Forms 941, Employer's Quarterly Federal Tax 
•  Form 8275, Disclosure Statement. Use this form to            Return), and excise tax returns. The failure to file a return 
disclose items or positions (except those contrary to a         electronically when required is deemed a failure to file the 
regulation—see Form 8275-R, next) that aren't otherwise         return even if the filer submits a paper return.
adequately disclosed on the tax return. The disclosure is       Waivers and exemptions.    On a year-by-year and 
made to avoid parts of the accuracy-related penalty for         form-by-form basis, the IRS may waive the requirement to file 
disregard of rules or substantial understatement of tax. Form   electronically in cases of undue hardship. In certain 
8275 is also used for disclosures relating to preparer          circumstances, a filer may be administratively exempt from 
penalties for understatements due to unrealistic positions or   the requirement to file electronically. The filer should keep 
for willful or reckless conduct.                                documentation supporting their undue hardship or other 
•  Form 8275-R, Regulation Disclosure Statement. Use this       applicable reason for not filing electronically in the filer's 
form to disclose any item on a tax return for which a position  records. For more information about mandatory electronic 
has been taken that is contrary to Treasury regulations.        filing, waivers, and exemptions, see Regulation section 
•  Form 8822-B, Change of Address or Responsible                301.6011-13.
Party—Business.
•  Form 8868, Application for Automatic Extension of Time To    U.S. address. If you use the U.S. Postal Service, and are 
File an Exempt Organization Return or Excise Taxes Related      located in the United States, file Form 5227 at the following 
to Employee Benefit Plans.                                      address:
•  Form 8870, Information Return for Transfers Associated 
With Certain Personal Benefit Contracts.                        Department of the Treasury
•  Form 8886, Reportable Transaction Disclosure Statement.      Internal Revenue Service Center
                                                                Ogden, UT 84201-0027
  Getting tax forms, instructions, and publications.     Go 
to IRS.gov/Forms to download current and prior-year forms, 
instructions, and publications.                                 Outside the United States  If you use a designated Private 
  Ordering tax forms, instructions, and publications.           Delivery Service (or are located outside the United States in 
Go to IRS.gov/OrderForms to order current forms,                a foreign country or a U.S. territory), file Form 5227 at this 
instructions, and publications; call 800-829-3676 to order      address:
prior-year forms and instructions. Your order should arrive 
within 10 business days.                                        Internal Revenue Service Center
                                                                1973 Rulon White Blvd.
Period To Be Covered by Return                                  M/S 6054
File Form 5227 for each calendar year. This revision of the     Ogden, UT 84201
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 
Trust income must be computed using the method of               meet the “timely mailing as timely filing” rule for tax returns. 
accounting regularly used in keeping the trust's books and      Go to IRS.gov/PDS for the current list of designated services.
records. Generally, permissible methods include the cash        The PDS can tell you how to get written proof of the 
method, the accrual method, or any other method authorized      mailing date.
by the Internal Revenue Code. The method used must clearly      PDSs deliver to:
reflect income.
   Unless otherwise allowed by law, the trust may not change    Internal Revenue Service Center
the accounting method used to report income (for income as      1973 Rulon White Blvd.
a whole or for any material item) without first getting consent M/S 6054
on Form 3115, Application for Change in Accounting Method.      Ogden, UT 84201
See Pub. 538, Accounting Periods and Methods, for more 
details.

Instructions for Form 5227                                                                                                       3

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        PDSs can’t deliver items to P.O. boxes. You must use 
                                                                     Attachments
  !     the U.S. Postal Service to mail any item to an IRS           If you need more space, attach separate sheets showing the 
CAUTION P.O. box address.
                                                                     same information in the same order as on the printed form. 
                                                                     Show the totals on the printed form.
Penalty for Failure To File Timely, 
                                                                       Enter the trust's name and employer identification number 
Completely, or Correctly                                             on each sheet. Also, use sheets that are the same size as the 
The failure-to-file penalty under section 6652(c)(2)(C) is           forms and indicate clearly the line of the printed form to which 
imposed on a split-interest trust unless the failure is due to       the information relates.
reasonable cause. The penalty is imposed on the trust for 
failure to:
• Timely file a return,                                              Specific Instructions
• File a complete return, or
• Furnish correct information.                                       Heading Items

  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          Complete the information called for in the name of the trust a 
for each day the failure continues with a maximum of $60,000         exactly as it appears on Form SS-4, Application for Employer 
for any one return.                                                  Identification Number. The name of the person or institution 
                                                                     currently serving as trustee, should be entered in the lines 
  The IRS may make a written demand that the delinquent              below the name of the trust.
return be filed or information be furnished specifying a time to 
comply with the demand. If the trustee fails to comply with the        Include the suite, room, or other unit number after the 
demand by the specified date, the trustee will be charged a          street address. If the Post Office does not deliver mail to the 
penalty of $10 for each day the failure continues with a             street address and the trustee has a P.O. box, show the box 
maximum of $6,000 for any one return.                                number instead.
  If the trustee required to file the return knowingly fails to file   If you receive mail for the trust in care of a third party (such 
the return, the same penalty that is imposed on the trust will       as an accountant or an attorney), enter on the street address 
also be imposed on such trustee. Also, penalties for filing a        line “C/O” followed by the third party's name and street 
false or fraudulent return apply.                                    address or P.O. box.

Trust Instrument                                                     Item B. Employer Identification Number (EIN)
When you file the first return for a charitable remainder            Every trust that completes this return must have an EIN. You 
annuity trust or unitrust, or charitable lead annuity or unitrust,   can use one of the following methods to apply for an EIN.
include:                                                             • Online—Go to IRS.gov/EIN. The EIN is issued immediately 
                                                                     once the application information is validated.
  1. A copy of the trust instrument, and                             • By mailing or faxing Form SS-4.
  2. A written declaration under penalties of perjury that it is 
a true and complete copy.                                            Note. The online application process isn't yet available for 
                                                                     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               Item C. Type of Entity
through 2005-59, 2005-2 C.B. 326, 339, 353, 367, 383, 392, 
                                                                     Check the appropriate box to indicate the type of trust. See 
402, and 412.
                                                                     Definitions in the General Instructions, earlier, for detailed 
  For sample forms of trusts that meet the requirements of a         descriptions of the types of split-interest trusts that file Form 
charitable remainder annuity trust, see Rev. Procs. 2003-53          5227.
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         Item E. Gross Income
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              Enter the trust's gross income for the tax year. Gross income 
testamentary charitable lead annuity trust, see Rev. Proc.           is all income from whatever source derived, including:
2007-46, 2007-29 I.R.B. 102, and Rev. Proc. 2016-42,                 • Interest,
2016-2 C.B. 269.                                                     • Dividends,
                                                                     • Rents (such as the amount on line 3 of Schedule E (Form 
Rounding Off to Whole Dollars                                        1040)),
You may round off cents to whole dollars on your return and          • Royalties (such as the amount on line 4 of Schedule E 
attached statements. If you do round dollars, you must round         (Form 1040)),
all amounts. To round, drop amounts under 50 cents and               • Gross income derived from business (such as the amount 
increase amounts from 50 to 99 cents to the next dollar. For         on line 7 of Schedule C (Form 1040)), and
example, $1.39 becomes $1 and $2.50 becomes $3.                      • Gains (not losses) derived from dealings in property 
                                                                     (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.

4                                                                                                  Instructions for Form 5227

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Item F. Initial Return, Final Return, Amended                        Line 2b. Qualified dividends. Report on this line all 
Return; or Change of Name or Address                                 qualified dividends received by the trust. In general, a 
                                                                     qualified dividend is a dividend received during the tax year 
Initial return. Check this box if this is the initial return for the from (a) a domestic corporation, or (b) a qualified foreign 
split-interest trust. Charitable remainder trusts must also          corporation. A qualified dividend does not include any 
complete Part IX, line 13 and attach a copy of the trust             dividend from a corporation if the corporation is (or was) 
instrument.                                                          exempt from income tax under section 501 or 521 for the 
Final return. Check this box if this is a final return because       corporation's current or preceding tax year during which the 
the trust has terminated. If the trust or a recipient's interest in  distribution was made.
the trust has terminated, check the “Final K-1” box at the top       Generally, these dividends are reported to the trust in 
of the Schedule K-1 (Form 1041).                                     box 1b of Form(s) 1099-DIV, Dividends and Distributions.
  For charitable remainder trusts. If you check the final            Qualified dividends are treated as a separate class of 
return box, be sure to answer the questions for Part IX, lines       ordinary income for purposes of ordering distributions. See 
15a-c and complete Part III, line 3 if you answered “Yes” to         Ordering Rules for Ordinary Income, later, for more 
Part IX, line 15b.                                                   information on distributions. See Pub. 550 for additional 
Amended return.    If you are filing an amended 2023 Form            information on qualified dividends, including holding period 
5227, check the “Amended return” box. Complete the entire            requirements.
return and correct the appropriate lines with the new                Line 3. Business income or (loss). If the trust operated a 
information. On an attachment, explain the reason for the            business, report the income and expenses on Schedule C 
changes and identify the lines and amounts being changed.            (Form 1040), Profit or Loss From Business. Enter the net 
  For charitable remainder trusts. If the amended return             profit or loss from Schedule C on line 3. (Section 664 trusts, 
results in a change to income, or a change in distribution of        see Part VIII, Line 7, later).
any income or other information provided to a recipient, an 
amended Schedule K-1 (Form 1041) must be filed with the              Line 4. Rents, royalties, partnerships, other estates and 
amended Form 5227 and a copy given to each recipient.                trusts, etc. Use Schedule E (Form 1040), Supplemental 
Check the “Amended K-1” box at the top of the Schedule K-1           Income and Loss, to report the trust's income or losses from 
(Form 1041).                                                         rents, royalties, partnerships, S corporations, other estates 
                                                                     and trusts, and REMICs. Enter the net profit or loss from 
Change of name or address.    If there has been a change in          Schedule E on line 4. See the Instructions for Schedule E 
the trustee's name or address from the one used on the prior         (Form 1040) for reporting requirements. If the trust received a 
year's return (including a change to an “in care of” name and        Schedule K-1 from a partnership, S corporation, or other 
address), check the appropriate box(es).                             flow-through entity, use the corresponding lines on Form 
  If the address shown on Form 5227 changes after you file           5227 to report the interest, dividends, capital gains, etc., from 
the form (including a change to an “in care of” name and             the flow-through entity. (Section 664 trusts, see Part VIII, 
address), file Form 8822-B to notify the IRS of the change.          Line 7, later).
Item G. Date Trust Created                                           Line 5. Farm income or (loss). If the trust operated a farm, 
                                                                     use Schedule F (Form 1040), Profit or Loss From Farming, to 
Enter the date the trust was created. This is generally the          report farm income and expenses. Enter the net profit or loss 
date the trustee first received property to administer under         from Schedule F on line 5. (Section 664 trusts, see Part VIII, 
the terms of the trust document.                                     Line 7, later).
Part I. Income and Deductions                                        Note. If the trust has farm rental income and expenses 
                                                                     based on crops or livestock produced by a tenant, report the 
Section A—Ordinary Income                                            income and expenses on Schedule E (Form 1040) and 
Report the trust's ordinary income on lines 1 through 7.             include it on line 4. Don't use Form 4835, Farm Rental 
Line 1. Interest income. Report all taxable interest income          Income and Expenses, or Schedule F (Form 1040) to report 
that was received by the trust. Examples of taxable interest         such income and expenses and don't include the net profit or 
include interest from:                                               (loss) from such income and expenses on line 5.
• Accounts (including certificates of deposit and money              Line 6. Ordinary gain or (loss). Enter from Form 4797, 
market accounts) with banks, credit unions, and thrifts;             Sales of Business Property, the gain or loss from the sale or 
• Notes, loans, and mortgages;                                       exchange of property (other than capital assets) and also 
• U.S. Treasury bills, notes, and bonds;                             from involuntary conversions (other than casualty or theft). 
• U.S. savings bonds;                                                For more information, see the Instructions for Form 4797.
• Original issue discount; and
                                                                     Line 7. Other income. List any other item and its amount 
• Income received as a regular interest holder of a real 
                                                                     that is includible in gross income but not included on lines 1 
estate mortgage investment conduit (REMIC).
                                                                     through 6 (or Section B), on the dashed line to the left of the 
  For taxable bonds acquired after December 31, 1987,                entry space. If more space is needed, attach a statement. 
amortizable bond premium is treated as an offset to the              Enter the total of these items in the entry space to the right.
interest income instead of as a separate interest deduction. 
See Pub. 550, Investment Income and Expenses.                        Section B—Capital Gains (Losses)
Line 2a. Ordinary dividends.  Enter on line 2a the total of          Use Schedule D (Form 1041), Capital Gains and Losses, as 
all ordinary dividends, including the qualified dividends            directed below. You may also need to complete Form 8949, 
reported on line 2b.                                                 Sales and Other Dispositions of Capital Assets. Lines 15 and 

Instructions for Form 5227                                                                                                           5

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16 of Schedule D (Form 1041) applies only to a charitable         Line 21. Attached statement.   List any other deductible 
remainder trust (section 664 trust).                              expense that is attributable to the gross income of the trust 
Line 9. Total short-term capital gain or (loss). Complete         and isn't included on lines 17 through 20 and line 23 and 
lines 1a through 5 and line 7 of the 2023 Schedule D (Form        show the amount of the deduction. Total the amounts listed 
1041). Don't make an entry on line 6 of Schedule D (Form          and enter the total on line 21.
1041). Enter the amount from line 7 of the Schedule D (Form 
1041) on line 9.                                                  Line 23. Charitable Deduction
Line 10. Total long-term capital gain or (loss). Complete 
                                                                  Enter the amount of any charitable deduction or other 
lines 8a through 14 and line 16 of the 2023 Schedule D (Form 
                                                                  deduction taken under section 642(c) for the tax year.
1041). Don't make an entry on line 15 of Schedule D (Form 
1041). Enter the amount from line 16 of Schedule D (Form          Section E—Deductions Allocable to Income 
1041) on line 10.
  For section 664 trusts only. Line 10 is the total of all        Categories (Section 664 trust only)
classes (described below) of long-term capital gain. The          Deductions are allocated as follows.
following is a summary of the classes.                            1. Allowable deductions directly attributable to one or 
• 28% long-term capital gain class. This class consists of        more classes of income items (that is, interest, dividends, or 
collectibles gains and losses and the taxable gain (but not       rents) or corpus are allocated to such income classes or 
more than the section 1202 exclusion) on the sale or              corpus.
exchange of qualified small business stock. Enter these           2. Allowable deductions not allocated under (1) above 
gains or losses on line 12.                                       are allocated on the basis of gross income after directly 
• Section 1250 long-term capital gain class. This class           attributable deductions, to the extent of such income.
consists of unrecaptured section 1250 gain (generally the 
part of real estate capital gain attributable to depreciation) on 3. Deductions not allocated under either (1) or (2) above 
sales, exchanges, etc., of assets held more than 1 year.          may be allocated in any manner.
Undistributed, unrecaptured section 1250 gain on sales,           Add the deductions that were allocated to all the classes 
exchanges, etc., after May 6, 1997, is included in this class.    of income items within each category and enter the amount 
Enter this gain on line 11.                                       on the appropriate line. (Note. Any deduction allocated to 
• All other long-term capital gain class. This class              corpus isn't shown on any line in Section E.)
consists of all other gains or losses from sales, exchanges, 
and conversions (including installment payments received) of      For a discussion of the allocation of deductions to 
assets held more than 12 months.                                  tax-exempt income, see Allocation of Deductions for 
                                                                  Tax-Exempt Income in the Instructions for Form 1041.
Section C—Nontaxable Income
                                                                  Part II. Schedule of Distributable 
In this section, include other income that isn't included in 
Section A or B. This section includes income excluded under       Income (Section 664 trust only)
Subtitle A, Chapter 1, Subchapter B, Part III, of the Internal    Report the income (both current and cumulative undistributed 
Revenue Code, such as interest on state and municipal             income) of the trust for purposes of determining the character 
bonds.                                                            of distributions in three categories.
                                                                  1. Ordinary income.
Section D—Deductions
                                                                  2. Capital gains and losses.
For Section 664 Trusts
                                                                  3. Nontaxable income.
Include all allowable deductions and any expense that would       A loss in any one of the three categories may not be used 
be allowable but for the fact that it must be allocated to        to reduce a gain in any other category. For example, a capital 
tax-exempt income. No deduction is ever allowed for:              loss may not be used to reduce ordinary income. However, a 
• The personal exemption under section 151 (see section           loss in any one category may be used to reduce 
642(b)),                                                          undistributed gain for earlier years within that same category, 
• Charitable contributions under section 170(a) (see section      and any excess may be carried forward to reduce gain in 
642(c)),                                                          future years within that same category.
• Net operating losses under section 642(d),
• Income distribution deductions under section 661,               For information on recordkeeping for long-term capital 
• Capital loss carryforwards under section 1212,                  gains or ordinary income, see the Capital Gains Distribution 
• Federal income taxes, or                                        Worksheet or the Ordinary Income Distribution Worksheet, 
• Federal excise taxes under chapter 42.                          later.
                                                                  Net investment income (NII).   Beginning in 2013, 
  Any expense that isn't deductible in determining taxable        charitable remainder trusts must begin tracking Excluded 
income (or not otherwise deductible but for the fact that it      Income and NII received and distributed. For 2013 and later 
must be allocated to nontaxable income) must be allocated         years, columns (a), (b), and (c) of Part II, line 1, have been 
to corpus.                                                        divided into NII and Excluded Income.
                                                                  The term “Excluded Income” is income received (or losses 
For Split-Interest Trusts Other Than Section 664                  incurred) by the charitable remainder trust not taken into 
Trusts                                                            account in computing NII. For charitable remainder trusts 
                                                                  (CRTs) in existence before 2013, all undistributed income as 
Include all expenses attributable to gross income that are        of the end of 2012 is Excluded Income. For 2013 and later 
deductible for the tax year.                                      years, the CRT must determine whether the items of income, 

6                                                                                                Instructions for Form 5227

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gain, loss, and deduction reported on sections A through D of      Don't merely enter the category (that is, religious, 
Part I constitute NII or Excluded Income.                         charitable, scientific, literary, or educational). The purpose of 
                                                                  the deduction must be entered as shown in the examples in 
Line 1. Enter the amounts of undistributed Excluded Income 
                                                                  Section A.
and undistributed accumulated NII from post-2012 tax years.
Line 2. Allocate the items of income or loss from the current     Part IV. Balance Sheet
year between Excluded Income and NII.                             Complete the balance sheet using the accounting method 
        The allocation of items of income or loss from the        the trust uses in keeping its books and records. All filers must 
                                                                  complete columns (a) and (b). Also, all charitable remainder 
  !     current year between Excluded Income and NII              unitrusts must complete column (c). A charitable lead unitrust 
CAUTION should be reported on line 2 after the application of 
the gain and loss netting rules outlined in Part III of           may, but isn't required to, show the FMV of its assets in 
Schedule A, later. In certain situations, NII losses may reduce   column (c).
Excluded Income due to the netting rules. Therefore, those         Enter the end-of-year book value where space is provided 
rules should be applied before entering amounts on line 2.        to the left of column (a) to report receivables and the related 
                                                                  allowance for doubtful accounts or depreciable assets and 
Note. If the CRT elects to use the Simplified Net Investment      accumulated depreciation. Enter the net amounts in column 
Income Calculation, then report all income or loss from Part I    (b).
in the Excluded Income column and leave the NII column 
empty. See the instructions for the Simplified Net Investment     Column (c)
Income Calculation Election in Part II of Schedule A, later.      In computing the net FMV of the unitrust's assets, take into 
                                                                  account all assets and liabilities without regard to whether 
Part III. Distributions for Charitable                            particular items are taken into account in determining the 
Purposes                                                          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, 
Section A—Distributions of Principal                              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 
Line 2. Provide the information requested for columns A           valuation date or dates and valuation methods are used each 
through C and enter the amount on the line to the right. In       year. See Regulations section 1.664-3.
column C, list in sufficient detail each class of activity for 
amounts paid out of principal to the same payee for               Line 1. Cash—non-interest-bearing.     Enter the amount of 
charitable purposes.                                              cash on deposit in checking accounts, deposits in transit, 
                                                                  change funds, petty cash funds, or any other 
  Examples.  “Cash payments to buy library material” or           non-interest-bearing account. Don't include advances to 
“Grant, paid in cash, to equip the chemistry lab at Magnolia      employees or officers or refundable deposits paid to 
University.”                                                      suppliers or others.
  Don't merely enter the category (that is, religious,            Line 2. Savings and temporary cash investments.         Enter 
charitable, scientific, literary, or educational). The purpose of the total of cash in savings or other interest-bearing accounts 
the deduction must be entered as shown in the examples            and temporary cash investments, such as money market 
above.                                                            funds, commercial paper, certificates of deposit, U.S. 
                                                                  Treasury bills, or other governmental obligations that mature 
Section B—Accumulated Income Set Aside and                        in less than 1 year.
Income Distributions for Charitable Purposes
                                                                  Line 3. Accounts receivable. Enter the total accounts 
Complete Section B of Part III if any of the following apply.
                                                                  receivable (reduced by the corresponding allowance for 
• The trust claimed a deduction in a prior year under section 
                                                                  doubtful accounts) that arose from the sale of goods and/or 
642(c) for an amount permanently set aside and at the 
                                                                  the performance of services. Claims against vendors or 
beginning of the year the set aside amount was not fully 
                                                                  refundable deposits with suppliers or others may be reported 
distributed.
                                                                  here if not significant in amount. (Otherwise, report them on 
• The trust claimed a deduction during the year under 
                                                                  line 12.) Any receivables due from officers, directors, 
section 642(c) whether the amount was set-aside or paid.
                                                                  trustees, foundation managers, or other disqualified persons 
• The trust made payment for charitable purposes during the 
                                                                  must be reported on line 4. Receivables (including loans and 
year but claimed the section 642(c) deduction in the prior 
                                                                  advances) due from other employees should be reported on 
year.
                                                                  line 12.
• The trust is treated as a grantor trust and made a payment 
for charitable purposes during the year, and the grantor          Line 4. Receivables due from officers, directors, trust-
(during the year or a prior year) claimed a charitable            ees, and other disqualified persons.   Enter here (and in 
deduction as described in Regulations section 1.170A-6(c)         an attached statement described below) all receivables due 
upon contribution to the trust.                                   from officers, directors, trustees, and other disqualified 
                                                                  persons and all secured and unsecured loans (including 
Note. The grantor trust completes only lines 7, 8, and 9 for      advances) to such persons.
this part.                                                         
Line 7. Provide the information requested for columns A            Attached statement. 
through C and enter the amount on the line to the right. In        1. In the required statement, report each loan separately, 
column C, list in sufficient detail each class of activity to the even if more than one loan was made to the same person, or 
same payee for charitable purposes for amounts distributed        the same terms apply to all loans made.
in which a section 642(c) deduction was claimed.

Instructions for Form 5227                                                                                                      7

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  Salary advances and other advances for personal use and          held at the end of the year and shows whether the security is 
benefit, and receivables subject to special terms or arising       listed at cost (including the value recorded at the time of 
from transactions not functionally related to the trust's          receipt in the case of donated securities) or end-of-year 
charitable purposes must be reported as separate loans for         market value. Don't include amounts shown on line 2. 
each officer, director, etc.                                       Governmental obligations reported on line 8a are those that 
  2. Receivables that are subject to the same terms and            mature in 1 year or more. Debt securities of the U.S. 
conditions (including credit limits and rate of interest) as       Government may be reported as a single total rather than 
receivables due from the general public and that arose in          itemized. Obligations of state and municipal governments 
connection with an activity functionally related to the trust's    may also be reported as a lump-sum total. Don't combine 
charitable purposes may be reported as a single total for all      U.S. Government obligations with state and municipal 
the officers, directors, etc. Travel advances made in              obligations on the attached statement.
connection with official business of the trust may also be         Line 9. Investments—Land, buildings, and equipment. 
reported as a single total.                                        Enter the book value (cost or other basis less accumulated 
  For each outstanding loan or other receivable that must be       depreciation) of all land, buildings, and equipment held for 
reported separately, the attached statement should use a           investment purposes, such as rental properties. Attach a 
columnar format and show the following information:                statement listing these investment fixed assets held at the 
• Borrower's name and title,                                       end of the year and showing, for each item or category listed, 
• Original amount,                                                 the cost or other basis, accumulated depreciation, and book 
• Balance due,                                                     value.
• Date of note,                                                    Line 10. Investments—Other. Enter the amount of all other 
• Maturity date,                                                   investment holdings not reported on line 8 or line 9. Attach a 
• Repayment terms,                                                 statement describing each of these investments held at the 
• Interest rate,                                                   end of the year. Show the book value for each and indicate 
• Security provided by the borrower,                               whether the investment is listed at cost or end-of-year market 
• Purpose of the loan, and                                         value. Don't include program-related investments. See the 
• Description and FMV of the consideration furnished by the        instructions for line 12.
lender.
                                                                   Line 11. Land, buildings, and equipment. Enter the book 
  The above detail isn't required for receivables or travel        value (cost or other basis less accumulated depreciation) of 
advances that may be reported as a single total (see               all land, buildings, and equipment owned by the trust and not 
instruction (2) above). However, report and identify those         held for investment. This includes any equipment owned and 
totals separately in the attachment.                               used by the trust in conducting its charitable activities. Attach 
Line 5. Other notes and loans receivable. Enter the                a statement listing these fixed assets held at the end of the 
combined total of notes receivable and net loans receivable.       year and showing for each item or category listed, the cost or 
  Notes receivable. Enter the amount of all notes                  other basis, accumulated depreciation, and book value.
receivable not listed on line 4 and not acquired as                Line 12. Other assets.   List and show the book value of 
investments. Attach a statement similar to that called for in      each category of assets not reportable on lines 1 through 11. 
the line 4 instructions. The statement should also identify the    Attach a separate statement if more space is needed.
relationship of the borrower to any officer, director, trustee, or 
                                                                   One type of asset reportable on line 12 is program-related 
other disqualified person.
                                                                   investments made primarily to accomplish a charitable 
  For a note receivable from any section 501(c)(3)                 purpose of the trust rather than to produce income.
organization, list only the name of the borrower and the 
balance due on the required statement.                             Line 13. Total assets.   Columns (a) and (b) (and column (c) 
  Loans receivable. Enter the gross amount of loans                if a unitrust) must always have an entry, even if it is zero.
receivable, less the allowance for doubtful accounts, arising      Line 14. Accounts payable and accrued expenses.              Enter 
from the normal activities of the trust. An itemized list of these the total accounts payable to suppliers and others, and 
loans isn't required, but attach a statement indicating the total  accrued expenses such as salaries payable, accrued payroll 
amount of each type of loan outstanding. Report loans to           taxes, and interest payable.
officers, directors, trustees, or other disqualified persons on 
                                                                   Line 15. Deferred revenue.  Include revenue that the 
line 4, and loans to other employees on line 12.
                                                                   organization has received but not yet earned as of the 
Line 6. Inventories for sale or use. Enter the amount of           balance sheet date under its method of accounting.
materials, goods, and supplies purchased or manufactured 
                                                                   Line 16. Loans from officers, directors, trustees, and 
by the trust and held for sale or use in some future period.
                                                                   other disqualified persons. Enter the unpaid balance of 
Line 7. Prepaid expenses and deferred charges.        Enter        loans received from officers, directors, trustees, and other 
the amount of short-term and long-term prepayments of              disqualified persons. For loans outstanding at the end of the 
future expenses attributable to one or more future accounting      year, attach a statement that provides (for each loan) the 
periods. Examples include prepayments of rent, insurance,          name and title of the lender and the information specified in 
and pension costs, and expenses incurred in connection with        the line 4 instructions.
a solicitation campaign to be conducted in a future 
                                                                   Line 17. Mortgages and other notes payable. Enter the 
accounting period.
                                                                   amount of mortgages and other notes payable at the 
Lines 8a, b, and c. Investments—U.S. and state govern-             beginning and end of the year. Attach a statement showing, 
ment obligations, corporate stock, and corporate                   as of the end of the year, the total amount of all mortgages 
bonds. Enter the book value (which may be market value) of         payable and, for each nonmortgage note payable, the name 
these investments. Attach a statement that lists each security     of the lender and the other information specified in the line 4 

8                                                                                              Instructions for Form 5227

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instructions. The statement should also identify the 
                                                                 Part VII. Statements Regarding 
relationship of the lender to any officer, director, trustee, or 
other disqualified person.                                       Activities
Line 18. Other liabilities. List and show the amount of each     Answer every question in this section. If a line does not apply, 
liability not reportable on lines 14 through 17. Attach a        enter “N/A.”
separate statement if more space is needed.                      Line 1. A split-interest trust must have a governing 
Charitable remainder unitrusts must include any unitrust         instrument that requires the trust to act or refrain from acting 
amounts applicable to prior periods that are unpaid but          so as not to engage in an act of self-dealing under section 
required to be paid as of the valuation date, since such         4941 or subject it to the excise taxes under section 4943, 
amounts reduce the net FMV of the trust's assets. However,       4944, or 4945. The trust may satisfy the requirements either 
don't include any make-up amount for a NIMCRUT.                  by express language in its governing instrument or by the 
                                                                 operation of state law which imposes the above requirements 
Line 19. Total liabilities. Columns (a) and (b) (and column 
                                                                 on the trust or treats these requirements as being contained 
(c) if a unitrust) must always have an entry, even if it is zero.
                                                                 in the governing instrument. If a trust claims it satisfies the 
Line 23. Total liabilities and net assets.  Columns (a) and      requirements of section 508(e) by operation of state law, the 
(b) must always have an entry, even if it is zero.               provisions of state law must effectively impose the 
                                                                 requirements of section 508(e) on the trust.
Part V. Charitable Remainder Annuity                                If, however, the state law does not apply to a governing 
Trust Information                                                instrument which contains mandatory directions conflicting 
                                                                 with any of its requirements and the trust has such mandatory 
Line 1b. To figure the total annual annuity amounts for a        directions in its governing instrument, then the trust has not 
short tax year, see Short tax years, later.                      satisfied the requirements of section 508(e) by the operation 
                                                                 of that state law.
Part VI. Charitable Remainder 
Unitrust Information                                             Part VIII. Statements Regarding 
Line 4a. Enter the unitrust fixed percentage (which may not      Activities for Which Form 4720 May 
be less than 5% or more than 50%).                               Be Required
If there is more than one unitrust recipient, attach a           Complete Part VIII to determine whether the trust has 
statement showing the percentage of the total unitrust dollar    complied with the applicable chapter 42 rules relating to 
amount payable to each recipient. The sum of these               private foundations and whether the trust, trustee, 
individual shares should be 100%.                                disqualified persons, or some combination of these may be 
Line 4b. This line must always have an entry, even if it is      liable for certain foundation excise taxes. These excise taxes 
zero.                                                            include:
                                                                 •  The section 4941 tax on self-dealing between the trust and 
Line 5a. Enter the trust's 2023 (fiduciary) accounting income    “disqualified persons,”
determined under the terms of the governing instrument and       •  The section 4943 tax on excess business holdings,
applicable local law. See section 643(b) and Regulations         •  The section 4944 tax on investments that jeopardize the 
sections 1.664-3(a)(1)(i)(b)(3) and 1.643(b)-1 for more          trust's charitable purposes, and
information.                                                     •  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 
If the amount entered isn't the same as line 69 from the         Instructions for Form 4720.
prior year's form, attach an explanation and a statement that 
supports the balance in the make-up account. Figure the total       The excise taxes on private foundations don't apply to any 
deficiencies from previous years as follows.                     amounts:
1. Aggregate the unitrust's net asset FMV for each                  1. Payable under the terms of the trust to income 
previous year.                                                   beneficiaries, unless a deduction was allowed under section 
                                                                 170(f)(2)(B), 2055(e)(2)(B), or 2522(c)(2)(B);
2. Multiply (1) above by the unitrust's fixed percentage.
                                                                    2. In trust for which a charitable contribution deduction 
3. From the result in (2), subtract the aggregate trust          was not allowed under any section listed in section 4947(a)
income that was distributed for previous years.                  (2)(B), if the amounts are segregated from amounts for which 
Line 8. Use this amount to determine future accrued              a deduction was allowable; or
accumulated distribution deficiencies.                              3. Transferred in trust before May 27, 1969.
Short tax years. To figure the annuity amount (Part V,           Line 1. The activities listed on lines 1a(1) through (6) are 
line 1b) or the unitrust amount (Part VI, line 7) for short tax  considered self-dealing under section 4941 unless one of the 
years, multiply the annuity or unitrust amount by the number     exceptions described in section 4941(d)(2)(D), (E), (F), or (G) 
of days in the trust's tax year, and then divide the result by   applies. You may also access information about self-dealing 
365 (or 366 for leap years).                                     at IRS.gov/charities/foundations/index.html by clicking on the 
For a unitrust whose governing instrument provides for an        link for Life Cycle of a Private Foundation.
income exception, if no valuation date occurs before the end        The terms “disqualified person” and “foundation manager” 
of the trust's tax year, value the trust's assets as of the last are defined under Definitions, earlier.
day of the trust's tax year.

Instructions for Form 5227                                                                                                       9

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Line 1b. If you answered “Yes” to any of the questions in         A similar exception applies to a beneficial or profits interest in 
line 1a, you should answer “Yes” to line 1b unless all of the     any business enterprise that is a trust or partnership.
acts engaged in were “excepted” acts. Excepted acts are           Line 4. In general, an investment which jeopardizes any of 
described in Regulations sections 53.4941(d)-3 and -4 or          the charitable purposes of a trust is one in which a foundation 
appear in Notices published in the Internal Revenue Bulletin,     manager did not exercise ordinary business care in making 
relating to disaster assistance. At the time this form went to    the investment to provide for the long- and short-term 
print, there were no Notices currently in effect relating to      financial needs of the trust in carrying out its charitable 
disaster assistance for “excepted” acts to self-dealing.          purposes.
Line 2. Under section 4947(b)(3)(A), a split-interest trust       For more information on investments that jeopardize 
isn't subject to the excess business holdings tax (section        charitable purposes, see Regulations section 53.4944-1.
4943) or tax on investments that jeopardize the trust's 
                                                                  Line 5. Grants by a trust to a public charity aren't taxable 
charitable purpose (section 4944) if all the income interest 
                                                                  expenditures if the grants aren't earmarked for use for any of 
(and none of the remainder interest) of the trust is devoted 
                                                                  the activities described on lines 5a(1) through (5) and there is 
solely to one or more of the charitable purposes described in 
                                                                  no oral or written agreement by which the trust may cause the 
section 170(c)(2)(B). In addition, all amounts in the trust for 
                                                                  public charity to engage in any such prohibited activity or to 
which a charitable contribution deduction was allowed under 
                                                                  select the grant grantee.
section 170 (for individual taxpayers) or a similar section for 
personal holding companies, foreign personal holding              Grants made to exempt operating foundations (as defined 
companies, or estates or trusts (including a deduction for        in section 4940(d)(2)) aren't subject to the expenditure 
estate or gift tax purposes) cannot have a total value of more    responsibility provisions of section 4945. If the trust made 
than 60% of the total FMV of all amounts in the trust. For the    grants to such organizations, you don't have to file Form 4720 
purposes of section 4947(b)(3)(A), the term “income interest”     for those grants. See the section 4945 regulations for more 
includes the right to receive an annuity or unitrust payment,     information.
as described in Regulations section 53.4947-2(b)(2)(i).           Line 5b. If you answered “Yes” to any of the questions in 
Under section 4947(b)(3)(B), a split-interest trust isn't         line 5a, you should answer “Yes” to line 5b unless all of the 
subject to the section 4943 or 4944 taxes if a deduction was      transactions engaged in were “excepted” transactions. 
allowed under section 170 (and related provisions for other       Excepted transactions are described in Regulations section 
entities) for amounts payable under the terms of the trust to     53.4945 or appear in Notices published in the Internal 
every remainder beneficiary but not to any income                 Revenue Bulletin, relating to disaster assistance. At the time 
beneficiary. For the purposes of section 4947(b)(3)(B), the       this form went to print, there were no Notices currently in 
term “income beneficiary” includes the recipient entitled to      effect relating to disaster assistance for “excepted” 
receive an annuity or unitrust payment under a CRT, as well       transactions to taxable expenditures.
as the donor entitled to payments from a pooled income fund.      Line 6a. A personal benefit contract is, in general, any life 
The term “remainder beneficiary” includes the charitable          insurance, annuity, or endowment contract that benefits, 
organization entitled to the remainder interest under a CRT or    directly or indirectly, a transferor, a transferor's family 
a pooled income fund.                                             member, or a transferor designee that isn't an organization 
Line 3. In general, excess business holdings are the amount       described in section 170(c).
of stock or other interest in a business enterprise that the      Line 6b. Enter the total of all premiums paid by the 
trust must dispose of to a person other than a disqualified       split-interest trust on any personal benefit contract if the 
person in order for the trust's remaining holdings in the         payment of premiums is in connection with a transfer for 
enterprise to be permitted holdings.                              which a deduction isn't allowed under section 170(f)(10)(A). 
In general, the combined permitted holdings of a trust and        Also, if there is an understanding or expectation that any 
all disqualified persons may not be more than 20% of the          person will directly or indirectly pay any premium on a 
voting power (or beneficial or profits interest, in the case of a personal benefit contract for the transferor, include those 
trust or a partnership) in any business enterprise.               premium payments in the amount entered on this line. For 
In general, a business enterprise means the active                more information, see the instructions for Form 8870.
conduct of a trade or business, including any activity that is    Line 7. If a charitable remainder trust has any unrelated 
regularly conducted to produce income from selling goods or       business taxable income (within the meaning of section 512 
performing services that is an unrelated trade or business        and related regulations) for 2023, the trust is liable for a tax 
under section 513.                                                under section 664(c)(2), which is treated as a Chapter 42 
The term “business enterprise” does not include:                  excise tax. The amount of the excise tax is equal to the 
1. A functionally related business, defined in section            amount of the trust's unrelated business taxable income. If 
4942(j)(4); or                                                    the trust has any unrelated business taxable income, answer 
                                                                  “Yes” and file Form 4720, in addition to Form 5227, to report 
2. A trade or business if at least 95% of its gross income        the trust's unrelated business taxable income and the tax 
is derived from passive sources.                                  due.
See section 4943(d)(3)(B) for additional items that are 
included in gross income from passive sources.                    Part IX. Questionnaire for Charitable 
Line 3a. A private foundation isn't treated as having excess      Lead Trusts, Pooled Income Funds, 
business holdings in any enterprise if, together with related 
                                                                  and Charitable Remainder Trusts
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. 
                                                                  Section A—All Trusts
                                                                  All trusts are required to answer lines 1 and 2.

10                                                                                            Instructions for Form 5227

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Section B—Charitable Lead Trusts                                    This election must be made on an entity-by-entity basis, 
                                                                  and applies only to the particular CFCs and QEFs for which 
Line 3. The information on this line is used to determine         an election is made. If the CRT owns a CFC or QEF through 
whether sections 4943 and 4944 apply for 2023.                    certain domestic pass-through entities, such as a domestic 
Line 5. Enter the amount for payments described in sections       partnership or common trust fund, the domestic pass-through 
170(f)(2)(B), 2055(e)(2)(B), and 2522(c)(2)(B).                   entity may make the election with respect to the CFC or QEF 
                                                                  and you will be considered as having made the election. If the 
Section C—Pooled Income Funds                                     entity does not make the election, you may make the election 
                                                                  with respect to the CFC or QEF owned through the entity.
Line 7. Upon termination of the income interest retained or 
created by a donor, the trustee is required to sever from the     When to make the election. The election applies to the tax 
fund an amount equal to the value of the remainder interest in    year for which it is made and later tax years, and applies to all 
the property upon which the income interest is based. The         interests in the CFC or QEF that the CRT later acquires. The 
amount severed from the fund must either be paid to, or           CRT cannot revoke the election. The election must be made 
retained for the use of, the designated public charity, as        no later than the first tax year beginning after December 31, 
provided in the governing instrument. See Regulations             2013, in which the CRT includes an amount in income for 
section 1.642(c)-5(b)(8) for valuation procedures.                regular tax purposes under section 951(a) or 1293(a) with 
                                                                  respect to the CFC or QEF. The election may be made on an 
Section D—Charitable Remainder Trusts                             original or an amended return, provided that the tax year for 
                                                                  which the election is made, and all tax years affected by the 
Line 11. If a charitable remainder annuity trust or certain       election, aren't closed by the period of limitations on 
charitable remainder unitrusts pay the annuity or unitrust        assessments under section 6501. For more information, see 
amount after the close of the tax year, and:                      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 
  2. To the extent the payment is characterized as corpus         Calculation Election may also make the Regulations section 
from a property distribution (other than cash), the trustee       1.1411-10(g) election. See Part II of Schedule A, later.
treats any income generated by the distribution as occurring        For more information on the NII treatment of income from 
on the last day of the tax year for which the annuity or unitrust certain CFCs and PFICs within the section 664 category and 
amount is due, then the annuity trust or certain unitrusts won't  class system, see Regulations section 1.1411-10 and 
be deemed to have:                                                Proposed Regulations section 1.1411-3(d)(2)(ii).
• Engaged in self-dealing (section 4941),                         Contents of the election. In order to make the election, the 
• Unrelated debt-financed income (section 514),                   CRT must check the “Yes” box on line 12 and must attach a 
• Received an additional contribution (Regulations sections       statement to its Form 5227, which must include:
1.664-2(b) and 1.664-3(b)), or                                    • Name of the CRT and its EIN;
• Failed to function exclusively as a charitable remainder        • A declaration that the CRTs elect under Regulations 
trust (Regulations section 1.664-1(a)(4)).                        section 1.1411-10(g) to apply the rules in Regulations section 
  See Regulations sections 1.664-2(a)(1) and 1.664-3(a)(1)        1.1411-10(g) to the CFCs and QEFs identified in the 
for more information.                                             statement; and
                                                                  • The following information with respect to each CFC and 
  Under Regulations section 1.664-1(d)(5), a distribution of      QEF for which an election is made:
property (other than cash) is treated as a sale by the trust.     • The name of the CFC or QEF; and
Note. You must report income (gain) generated by the              • Either the EIN of the CFC or QEF, or, if the CFC or QEF 
                                                                  does not have an EIN, the reference ID number of the CFC or 
property distribution (discussed above) on Part I of Form 
                                                                  QEF.
5227 for the current tax year.
                                                                  Line 16.  Check the “Yes” box and enter the name of the 
Trusts created before December 10, 1998.     The election in 
                                                                  foreign country if either (1) or (2) below applies.
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     1. The trust owns more than 50% of the stock in any 
and certain charitable remainder unitrusts whose annuity or       corporation that owns one or more foreign bank accounts.
unitrust amount is 15% or less.                                     2. At any time during the year, the trust had an interest in 
Line 12. Net investment income tax (NIIT)—Regulations             or signature or other authority over a bank, securities, or 
section 1.1411-10(g) election.  In general, a CRT that owns       other financial account in a foreign country.
stock of a controlled foreign corporation (CFC) (within the       Exception. Check “No” if either of the following applies to 
meaning of section 953(c)(1)(B) or 957(a)) or a passive           the trust.
foreign investment company (PFICs)(within the meaning of            The combined value of the accounts was $10,000 or less 
section 1297(a)) that it treats as a qualified electing fund      •
                                                                  during the whole year.
(QEF) under section 1295 may make the election provided in          The accounts were with a U.S. military banking facility 
Regulations section 1.1411-10(g). For NIIT purposes, if an        •
                                                                  operated by a U.S. financial institution.
election is in effect with respect to a CFC or QEF, then, in 
general, the amounts included in income for regular tax             See FinCEN Form 114, Report of Foreign Bank and 
purposes under section 951 and section 1293 from the CFC          Financial Accounts (FBAR), and its instructions to determine 
or QEF are also included in NII, and distributions of             whether the trust is considered to have an interest in or 
previously taxed income to the CRT from the CFC or QEF            signature or other authority over a bank, securities, or other 
described in section 959(d) or 1293(c) are excluded from NII.     financial account in a foreign country. If “Yes,” electronically 
                                                                  file FinCEN Form 114 with the Department of the Treasury 

Instructions for Form 5227                                                                                                    11

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using the FinCEN's BSA E-Filing System. Because FinCEN              Part II. Simplified Net Investment Income 
Form 114 isn't a tax form, don't file it with Form 5227. See        Calculation Election (SNIIC Election) (Section 
Fincen.gov for more information.
                                                                    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 
  !     you may have to pay a penalty of up to $10,000              distributions of NII using a simplified method that is 
CAUTION (more in some cases).
                                                                    independent of the section 664 category and class system. 
                                                                    Once made, the SNIIC election is irrevocable. If a CRT 
Signature                                                           makes the SNIIC election, the CRT computes the NII in the 
Form 5227 must be signed by the trustee or by an authorized         same manner as an individual. When using the SNIIC, a 
representative.                                                     CRT’s accumulated NII is a separate and independent 
                                                                    tracking system within the CRT and isn't assigned, 
  If you, as trustee (or an employee or officer of the trust), fill combined, or taken into account in any of the CRT's existing 
in Form 5227, the Paid Preparer Use Only space should               categories (ordinary income, capital gain, nontaxable 
remain blank. If someone prepares this return without charge,       income).
that person should not sign the return.
Paid preparer.  Generally, anyone who is paid to prepare a          Amount of NII Allocable to Income Recipients
tax return for a charitable remainder trust must sign the return    If a CRT makes the SNIIC election, distributions from a CRT 
and fill in the other blanks in the Paid Preparer Use Only area     to a recipient for a tax year consist of NII equal to the lesser 
of the return. For all other trusts, completion of Form 5227's      of:
Paid Preparer Use Only area is optional.                               1. The total amount of the distributions to that recipient 
  If you have questions about whether a preparer is required        for that year, or
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 
• Complete the required preparer information,                       consisting of NII or Excluded Income is independent from the 
• Sign it in the space provided for the preparer's signature (a     character of the income distributed to the recipient for regular 
facsimile signature is acceptable), and                             tax purposes using the section 664 category and class 
• Give the trustee a copy of the return in addition to the copy     system. However, see Effect of the SNIIC Election on Netting 
to be filed with the IRS.                                           and Ordering Rules, later.

        Enter the paid preparer’s PTIN, not their social            Calculation of NII
  !     security number (SSN), in the “PTIN” box in the paid        In computing the CRT’s NII, if in a tax year a CRT’s properly 
CAUTION preparer’s block. Because Form 5227 is publicly             allocable deductions described in section 1411(c)(1)(B) 
disclosable, any information entered in this block will become      exceed the gross investment income and net gain described 
public. For more information about PTINs, visit the IRS             in section 1411(c)(1)(A), then such excess deductions shall 
website at IRS.gov/PTIN.                                            reduce the NII for that tax year and, to the extent of any 
                                                                    remaining excess deductions, reduce NII in subsequent tax 
Schedule A—Distributions, Assets,                                   years of the CRT.
and Donor Information                                                  Example. A CRT has dividend income of $1,000 and a 
Note. Schedule A isn't open to public inspection.                   long-term capital loss of $10,000 in 2022; and $11,000 
                                                                    long-term capital gains in 2023. The CRT would have 
Qualified Business Income Deduction                                 ($9,000) of accumulated NII in 2022, so any 2022 
                                                                    distributions to income recipients would not include any NII. 
A CRT is not entitled to a qualified business income (QBI)          In 2023, the CRT would have $2,000 of NII available for 
deduction. However, a taxable recipient of a unitrust or            distribution in 2023 and after.
annuity amount from a CRT may take into account QBI, 
qualified REIT dividends, and qualified PTP income received         Note. The SNIIC election is available for the 2023 tax year 
from a CRT to the extent that the unitrust or annuity amount        under Proposed Regulations section 1.1411-3(d)(3). When 
distributed consists of such items. For additional information      finalized, Proposed Regulations section 1.1411-3(d)(3) is 
on how to report QBI and other section 199A items to                proposed to apply to tax years of the CRT beginning after 
beneficiaries/recipients, see the instructions for Schedule K-1     December 31, 2012. However, if, after consideration of all 
that are found in the Instructions for Form 1041.                   comments received in response to those proposed 
                                                                    regulations, it appears that there is no significant interest 
Part I. Accumulation Schedule (Section 664                          among taxpayers in having the option of using the simplified 
trust only)                                                         method, the IRS may omit this election from the regulations 
The following information applies to lines 2a and 2b.               when finalized. If the SNIIC election is omitted, the CRT won't 
                                                                    have to amend the 2023 return. The Instructions for Form 
Line 2a. Enter the total of all distributions for 2023 on the       5227 in a later year will describe the actions that the CRT 
short line to the immediate right of the “2023.”                    must take to transition from the SNIIC to calculating NII using 
Line 2b. Enter the amount distributed from each income              the section 664 category and class system.
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 

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wanting to make the SNIIC election must do so on its Form          Form 5227. See the Instructions for Schedule K-1 (Form 
5227 return for the tax year in which the CRT is established.      1041) for more information.
  CRTs established before January 1, 2013.       In the case 
of a CRT established before January 1, 2013, the CRT               Column (b). Recipient's Identifying Number
wanting to make the election must do so on its Form 5227           As a payer of income, the trust is required under section 6109 
return for its first tax year beginning on or after January 1,     to request and provide a proper identifying number for each 
2013.                                                              recipient of income. Enter the recipient's number on the 
  Making a SNIIC election on an amended return.      The           respective Schedule K-1. Individuals and business recipients 
CRT may make the election on an amended Form 5227                  are responsible for giving you their taxpayer identification 
return for that year only if the tax year for which the SNIIC      numbers upon request. You may use Form W-9, Request for 
election is made, and all tax years that are affected by the       Taxpayer Identification Number and Certification, to request 
election, for both the CRT and its recipients, aren't closed by    the recipient's identifying number.
the period of limitations on assessments under section 6501.
                                                                   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 
A CRT makes the SNIIC election by:                                 or income beneficiary identified on Schedule A. The penalty 
• Completing lines 1 through 3 of Part II by reporting all         is $50 for each failure to provide a required taxpayer 
income received as Excluded Income;                                identification number, unless reasonable cause can be 
• Completing lines 1 through 3 of Part I of Schedule A by          established for the failure. If you are unable to provide the 
reporting all income distributed as Excluded Income;               taxpayer identification number for any recipient or income 
• Completing Part II of Schedule A; and                            beneficiary, explain the circumstances in a signed affidavit 
• Reporting the allocable share of NII to recipients               and attach it to this return.
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 
5227, Schedule A, Part I-B, line 4(d).                             boxes must use the same numbers and titles and must be in 
Column (b). Enter the CRT’s current year NII.                      the same order and format as on the comparable IRS 
                                                                   Schedule K-1. The substitute schedule must include the 
      Using Form 8960 as a worksheet, include the                  OMB number. You must request IRS approval to use other 
 TIP  amounts of income, gain, loss, and deductions                substitute Schedules K-1. To request approval, write to:
      reported on lines 1–12 of Form 8960 to compute NII 
(line 12 of Form 8960). Don't file the Form 8960 with the Form       Internal Revenue Service
5227.                                                                Attention: Substitute Forms Program
                                                                     SE:W:CAR:MP:P:TP
Column (c). Enter the lesser of (i) the sum of columns (a)           5000 Ellin Road, C6-440
and (b), or (ii) the total distributions for the year (reported on   Lanham, MD 20706
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).                              You may be subject to a penalty if you file a 
Column (d). Subtract column (c) from the sum of columns              !     Schedule K-1 that does not conform to the 
(a) and (b). This amount will be reported in column (a) of the     CAUTION specifications in Pub. 1167, General Rules and 
2024 Form 5227.                                                    Specifications for Substitute Forms and Schedules.

Effect of the SNIIC Election on Netting and                          For updates on the Substitute Forms Program after this 
Ordering Rules                                                     publication went to print, go to the product page for Pub. 
                                                                   1167 at IRS.gov/Pub1167.
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         Inclusion of Amounts in Recipients' Income
Gains and Losses, later, for illustrative charts.
                                                                   If there are two or more recipients, each will be treated as 
                                                                   receiving their pro rata share of the various classes of income 
      You may want to read the Part III instructions and           or corpus.
 TIP  complete all worksheets (as necessary) before you 
      make an entry on Part III of Schedule A.                       Amounts distributed by a charitable remainder annuity 
                                                                   trust or a charitable remainder unitrust have the following 
Part III. Current Distributions                                    characteristics in the hands of the recipients.
                                                                   • First, as ordinary income to the extent of ordinary income 
Schedule (Section 664 trust only)                                  for the current year and undistributed ordinary income for 
You must give each recipient listed in Part III a Schedule K-1     prior years of the trust. Ordinary income is computed without 
(Form 1041) that reflects that recipient's current distribution.   regard to any net operating loss deductions under section 
The following rules and worksheets will help you figure the        172. See the Ordering Rules for Ordinary Income, later.
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 

Instructions for Form 5227                                                                                                       13

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trust are determined on a cumulative net basis without regard            For each recipient, enter the difference between the 
to any capital loss carrybacks and carryovers. See the                 amount in column (j) and the sum of the amounts in columns 
Netting Rules, Ordering Rules for Capital Gains and Losses,            (d) through (f) using code H in box 14 of the Schedule K-1 
and Carryover Rules, later, for capital gains.                         (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               amounts in columns (d) through (f), enter the difference as a 
nontaxable income for prior years.                                     negative amount under code H in box 14 of the Schedule K-1 
• Fourth, as a distribution of trust corpus. For this purpose,         (Form 1041).
trust corpus means the net FMV of the trust assets less the            • If the amount in column (j) is greater than the sum of the 
total undistributed income (but not loss) in each of the above         amounts in columns (d) through (f), enter the difference as a 
categories.                                                            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 
If the CRT has not made a SNIIC election, then enter the total         ordering distributions: (a) qualified dividends, and (b) all other 
amount of NII allocated to each recipient in column (j) that is        ordinary income. If the trust has both classes of ordinary 
included in columns (d) through (g) for that recipient.                income, distributions are treated as made first from all the 
                                                                       other ordinary income class, and second from the qualified 
  If the CRT has made a SNIIC election, then, for each                 dividends class.
recipient, multiply the amount in column (c) of Part II by the 
percentage reported in column (c) of line 4 of Part III of               The following chart highlights the difference in ordering 
Schedule A, and enter the amount in column (j) for each                rules depending on whether the CRT elects to use the SNIIC 
recipient.                                                             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 
                                                                              All ordinary income class
    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
                                                                              All qualified dividends
    Qualified dividends that are Excluded Income (20% rate)
Additional rules for capital gains and losses.                The      tax purposes. If the CRT uses the section 664 method for 
following charts highlight the difference in netting and               calculating NII and Excluded Income, the netting and 
ordering rules for capital gains and losses depending on               ordering rules are expanded to take into account additional 
whether the CRT elects to use the Simplified Net Investment            classes within the ordinary income and capital gain 
Income Calculation (SNIIC) method. In general, if the CRT              categories that are created due to the imposition of an 
elects to use the SNIIC method, the netting and ordering               additional 3.8% tax on NII but not on Excluded Income.
rules will be essentially the same as those applicable before          Netting rules.                    Gains and losses are netted within each 
the 2013 tax year; every dollar distributed will carry out the         class to arrive at a net gain or loss for that class. After you net 
CRT’s NII, to the extent of the CRT’s accumulated NII, without         within a class, the following additional netting rules apply to 
regard to the class or category of that distribution for regular       the capital gains category.

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                       Not Applicable
           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).
    (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                               First, gain from the section 
           Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then                                 1250 long-term capital 
                                                                                                                                  gain class, then

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                           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 
       Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally          long-term capital gain 
       Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).            class.
   (c) 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                                  Not Applicable
       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).
   (d) 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                First, net gain from the 
       Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then                  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 
       Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), and finally 1250 long-term capital 
                                                                                                               gain class.
       Net gain from all the other long-term capital gain class that is NII (23.8% rate). 
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                           First, net gain from the 
       Net gain from the 28% long-term capital gain class that is NII (31.8% rate), then                       28% long-term capital 
                                                                                                               gain class, then
       Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then                  Gain from the section 
       Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then             1250 long-term capital 
                                                                                                               gain class, and finally
       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 
       Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).            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                       First, net gain from the 
       Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then                  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 
       Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then        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 
       Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).            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 
       Any net short-term capital gain that is Excluded Income (37% rate).                                     capital loss reduces any 
                                                                                                               net short-term capital gain.
Ordering rules for capital gains and losses. The                             and undistributed long-term capital gain, the short-term 
following rules apply to undistributed long-term capital gains               capital gain is deemed distributed before any long-term 
on assets held more than 1 year. If, in any tax year of the                  capital gain.
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).

Instructions for Form 5227                                                                                                                              15

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               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 28% long-term capital 
   The section 1250 long-term capital gain class that is NII (28.8% rate) is deemed distributed, then                    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 
   The section 1250 long-term capital gain class that is Excluded Income (25% rate) is deemed distributed, then          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 
   All other long-term capital gain class is deemed distributed.                                                         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% The excess of the net 
   rate short-term capital loss carryover to the next tax year.                                                          short-term capital loss 
   The excess of the 37% rate net short-term capital loss over the net long-term capital gain for that year is a 37%     over the net long-term 
   rate short-term capital loss carryover to the next tax year.                                                          capital gain for that year 
                                                                                                                         is a 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%      The excess of the net 
   long-term capital loss carryover to the next tax year.                                                                long-term capital loss 
   The excess of the 20% net long-term capital loss over the net short-term capital gain for that year is a 20%          over the net short-term 
   long-term capital loss carryover to the next tax year.                                                                capital gain for that year 
                                                                                                                         is a 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 The excess of the net 
   extent not deemed distributed, a 40.8% rate short-term capital gain carryover to the next tax year.                   short-term capital gain 
   The excess of the 37% rate net short-term capital gain over the net long-term capital loss for that year is, to the   over the net long-term 
   extent not deemed distributed, a 37% rate short-term capital gain carryover to the next tax year.                     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 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 The excess of the net 
   extent not deemed distributed, a 28.8% rate long-term capital gain carryover to the next tax year.                    long-term capital gain 
   The excess of the 28% rate net long-term capital gain over the net short-term capital loss for that year is, to the   over the net short-term 
   extent not deemed distributed, a 28% rate long-term capital gain carryover to the next tax year.                      capital loss for that year 
                                                                                                                         is, to the extent not 
   The excess of the 25% rate net long-term capital gain over the net short-term capital loss for that year is, to the   deemed distributed, a 
   extent not deemed distributed, a 25% rate long-term capital gain carryover to the next tax year.                      long-term capital gain 
   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 carryover to the next tax 
   extent not deemed distributed, a 23.8% rate long-term capital gain carryover to the next tax year.                    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

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                                                                 information. We need it to ensure that you are complying with 
Part IV. Current Distributions
                                                                 these laws and to allow us to figure and collect the right 
(Charitable lead trusts or pooled income funds only)             amount of tax.
Line 1. A charitable lead trust uses line 1 of Part IV to report 
the aggregate amount of distributions made during the year       You aren't required to provide the information requested 
to one or more noncharitable (private) beneficiaries. For        on a form that is subject to the Paperwork Reduction Act 
example, when the lead period terminates, all future             unless the form displays a valid OMB control number. Books 
distributions are payable to the noncharitable beneficiary.      or records relating to a form or its instructions must be 
However, because charitable lead trusts can vary                 retained as long as their contents may become material in the 
considerably, the expiration of the lead period isn't the only   administration of any Internal Revenue law. Generally, tax 
context within which the trust may provide for payments to a     returns and return information are confidential, as required by 
noncharitable (private) beneficiary. See the annotations to      section 6103.
the sample charitable lead trusts in Rev. Proc. 2007-45, 
                                                                 The time needed to complete and file this form will vary 
2007-29 I.R.B. 89, and Rev. Proc. 2007-46, 2007-29 I.R.B. 
                                                                 depending on individual circumstances. The estimated 
102, for examples of other situations in which amounts may 
                                                                 average time is:
be payable to a noncharitable beneficiary.
A pooled income fund uses line 1 of Part IV to report the        Recordkeeping . . . . . . . . .      89 hr., 11 min.
amount distributable annually among one or more                  Learning about the law or the 
noncharitable (private) beneficiaries who hold income            form . . . . . . . . . . . . . . . . 21 hr., 54 min.
interests in the fund.
                                                                 Preparing the form. . . . . . .      44 hr., 47 min.
Part V. Assets and Donor Information                             Copying, assembling, and 
                                                                 sending the form to IRS. . . .        5 hr., 54 min. 
Line 2. Pooled income funds don't complete lines 1 and 2.
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    If you have comments concerning the accuracy of these 
trust in 2023, complete column (a) only.                         time estimates or suggestions for making this form simpler, 
For trusts that answered “No” to question 1, complete only       we would be happy to hear from you. You can send us 
column (a) for all donors to the trust.                          comments from IRS.gov/FormComments. Or you can write to 
                                                                 the Internal Revenue Service, Tax Forms and Publications 
Paperwork Reduction Act Notice.         We ask for the           Division, 1111 Constitution Ave. NW, IR-6526, Washington, 
information on this form to carry out the Internal Revenue       DC 20224. Don't send the form to this office.
laws of the United States. You are required to give us the 

Instructions for Form 5227                                                                                                  17

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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    All other long-term capital gain 
                              Net          gain class             capital gain class        classes
                              Investment 
                              Income 
                              (ANII) post- 
                              2012 

                                                       ANII                      ANII 
                                            Excluded   post-2012  Excluded       post-2012  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

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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

                            Excluded  Accumulated NII     Excluded                  Accumulated NII post-2012 
                                       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) . . . . . . .

Instructions for Form 5227                                                                                               19

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Index
 
C                                  N                                    S
Capital Gains Distribution         Net Investment Income Tax (NIIT)   6 Schedule of Distributable Income                 6
  Worksheet 18                       Reg. Sec. 1.1411–10(g) Election 11
Carryover rules 16                   Simplified Net Investment Income   T
Current Distributions:               Calculation (SNIIC) Election  12   Type of Entity 4
  Netting Rules 14
  Ordering Rules for Capital Gains O
  and Losses    15                 Ordinary Income Distribution 
  Ordering Rules for Ordinary        Worksheet 19
  Income 14

     20                                                                  Instructions for Form 5227