Instructions for Form 1023 (6/2006)

Specific Instructions

Table of Contents

Part I. Identification of Applicant

Line 1. Full name of organization. Enter your complete name exactly as it appears in your organizing document, including amendments.

Line 2. c/o Name. If you have an “in care of” name, enter it here.

Line 3. Mailing address. Enter your complete address where all correspondence will be sent. If mail is not delivered to the street address and you have a P.O. Box, show the box number instead of the street address.

For a foreign address, enter the information in the following order: city, province or state, and country. Follow the country's practice in placing the postal code in the address. Do not abbreviate the country name.

Line 4. Employer Identification Number (EIN). Enter the nine-digit EIN assigned to you.

Do not submit this application until you have obtained an EIN.

An EIN is your account number with us and is required regardless of whether you have employees. If you need an EIN, you can apply for one by:

Calling 1-800-829-4933.
Calling 1-215-516-6999, if you are located outside the United States.
Mailing Form SS-4 to the IRS.
Faxing Form SS-4 to a location provided in the Instructions for Form SS-4.

You can get Form SS-4 online at www.irs.gov, or by calling 1-800-829-3676, to order IRS tax forms and publications.

If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance.

Line 5. Month the annual accounting period ends (01-12). Enter the month that your annual accounting period ends, using a two-digit number format. For example, if your annual accounting period ends December 31, enter “12.” Your annual accounting period is the 12-month period on which your annual financial records are based. Your first tax year could be less than 12 months.

Check your bylaws or other rules of operation for consistency with the annual accounting period entered in line 5.

Line 6a. Primary contact. Your primary contact person may be an officer, director, trustee, or other individual who is permitted to speak with us according to your bylaws or other rules of operation. Your primary contact person may also be an “authorized representative,” such as an attorney or certified public accountant for whom you have submitted a completed Form 2848, with the Form 1023.

Line 7. If you wish to be represented by an authorized representative, a completed Form 2848 must be attached to the Form 1023.

Line 8. Provide information about persons, other than your officers, directors, trustees, employees, or authorized representative(s), whom you paid, or promised to pay, to assist you in establishing your organization, developing programs to solicit funds, or otherwise advising you about organizational, financial, or tax matters.

For example, provide information about a paid consultant who advised you about obtaining tax exemption.

Line 9a. Organization's website. Enter your complete website address if you have one. Also, list any websites maintained on your behalf. The information on your website should be consistent with the information in your Form 1023.

Line 9b. Email (optional). Enter your email address to receive educational information from us in the future. Because of security concerns, we cannot send confidential information via email. However, we can use a fax to contact you.

Line 10. Generally, organizations not required to file Form 990 (or Form 990-EZ) include churches, certain church affiliated organizations, certain affiliates of a governmental unit, and organizations with annual gross receipts normally not more than $25,000. For more information, see the Instructions for Form 990 and Form 990-EZ.

Private foundations must file Form 990-PF regardless of the amount of their gross receipts.

Line 11. List the date you were legally created by month, day, and year (for example, 02/01/2004). The date should be consistent with your organizing document described in Part II.

Line 12. For purposes of completing this application, you are formed under the laws of a foreign country if you are not formed under the laws of (1) the United States, its territories and possessions, (2) federally recognized Indian tribal or Alaska Native governments, or (3) the District of Columbia.

Part II. Organizational Structure

Only trusts, unincorporated associations, or corporations (including limited liability companies) are eligible for tax-exempt status under section 501(c)(3) of the Code. Sole proprietorships, partnerships, or loosely affiliated groups of individuals are not eligible.

To qualify for tax-exempt status, you must check “Yes” on either line 1, 2, 3, or 4 and submit a copy of your organizing document.

Line 1. A “corporation” is an entity organized under a Federal or state statute, or a statute of a federally recognized Indian tribal or Alaskan native government. A corporation's organizing document is its “articles of incorporation.”

Certification of filing. If formed under state statute, your articles of incorporation must show certification of filing. This means your articles show evidence that on a specific date they were filed with and approved by an appropriate state authority. The document must be an exact copy of what is on file with your state.

If you do not have a copy of your articles of incorporation showing evidence of having been filed and approved by an appropriate state official, you may submit a substitute copy of your articles of incorporation. This substitute copy may be handwritten, typed, printed, or otherwise reproduced. It must be accompanied by a declaration, signed by an officer authorized to sign for you, that it is a complete and correct copy of the articles of incorporation and that it contains all the powers, principles, purposes, functions, and other provisions by which you currently govern yourself.

Line 2. A “limited liability company (LLC)” that files its own exemption application is treated as a corporation rather than a partnership. Instead of articles of incorporation, an LLC's organizing document is its state-approved “articles of organization.” If it has adopted an “operating agreement,” then this document is also part of its organizing document.

An LLC may only have 501(c)(3) member(s) to qualify for an exemption. An LLC should not file an exemption application if it wants to be treated as a disregarded entity by its tax-exempt member.

Line 3. An “unincorporated association” formed under state law must have at least two members who have signed a written document for a specifically defined purpose.

The articles of organization of an unincorporated association must include the name of your organization, your purpose, the date the document was adopted, and the signatures of at least two individuals. If your copy does not contain the proper signatures and date of adoption, you may submit a written declaration that states your copy is a complete and accurate copy of the signed and dated original. Your declaration should clearly indicate the original date of adoption.

Bylaws may be considered an organizing document only if they are properly structured (includes name, purpose, signatures, and intent to form an organization).

Line 4a. A trust may be formed by a trust agreement or declaration of trust. A trust may also be formed through a will.

If your trust agreement copy does not contain the proper signatures, you may submit a written declaration that states your copy is a complete and accurate copy of the signed and dated original. Your declaration should clearly indicate the original date that it was signed.

Trust created by a will. For trusts created by a will, include a copy of the death certificate or a statement indicating the date of death, and a copy of the relevant portions of the will.

Trust agreement and non-charitable interests. If your trust agreement provided for distributions for non-charitable interests, indicate the date on which these interests expired. If your trust agreement continues to provide for these interests, you will not qualify for tax-exempt status.

Line 4b. Generally, a trust must be funded with property, such as money, real estate, or personal property to be legally created.

Line 5. “Bylaws” are generally the internal rules and regulations of an organization. If you have bylaws, you should submit a current copy.

Bylaws do not need to be signed unless they are the organizing document as described in line 3 above.

Part III. Required Provisions in Your Organizing Document

Line 1. Purpose clause. Your organizing document must limit your purposes to those described in section 501(c)(3). Those purposes are: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.

The generally accepted legal definition of “charitable” includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency. Therefore, the phrase “relief of the poor” in your organizing document properly limits your purposes.

If your purposes are limited in some way by referring to section 501(c)(3), your organizing document also properly limits your purposes. For example, the phrase “relief of the elderly within the meaning of section 501(c)(3)” in your organizing document also properly limits your purposes.

However, if the purposes listed in your organizing document are broader than those listed in section 501(c)(3), you should amend your organizing document before applying. A reference to section 501(c)(3) will not ensure that your purposes are limited to those described in section 501(c)(3). All of the language in your organizing document must be considered. The following is an example of an acceptable purpose clause:

The organization is organized exclusively for charitable, religious, educational, and scientific purposes under section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code.

See Publication 557 for further information and examples of how to limit your purposes.

Any amendment to your articles of organization you submit should show evidence that it was signed, dated, and certified as described in Part II.

Line 2a. Dissolution clause. Your organizing document must permanently dedicate your assets for a section 501(c)(3) purpose. This means that if you dissolve your organization in the future, your assets must be distributed for an exempt purpose described in section 501(c)(3), or to the federal government, or to a state or local government for a public purpose.

If your organizing document states that your assets would be distributed to members or private individuals or for any purpose other than those provided in section 501(c)(3), you must amend your organizing document to remove such statements.

If multiple amendments are required, they may be done at the same time. For example, if you are a corporation and are required to amend both your purpose and dissolution clauses, you may file a single amending document with your appropriate government authority.

The following is an example of an acceptable dissolution clause:

Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.

Naming a specific organization to receive your assets upon dissolution will only be acceptable if your articles state that the specific organization must be exempt under section 501(c)(3) at the time your dissolution takes place and your articles provide for an acceptable alternative if the specific organization is not exempt. See Publication 557 for further information and examples of acceptable language for dedication of assets in your organizing document.

Line 2c. Operation of state law. If you are a corporation formed in the following states, then you do not need a specific provision in your articles of incorporation providing for the distribution of assets upon dissolution.

	Arkansas		Minnesota
	California		Missouri
	Louisiana		Ohio
	Massachusetts		Oklahoma

If you are a testamentary charitable trust formed in the following states, then you do not need a specific provision in your trust agreement or declaration of trust providing for the distribution of assets upon dissolution.

	Alabama		South Dakota
	Louisiana		Virginia
	Pennsylvania

If you are a testamentary charitable trust formed in the states listed below and the language of your trust instrument provides for a general intent to benefit charity, then you do not need a specific provision in your trust agreement or declaration of trust providing for the distribution of assets upon dissolution.

Arkansas	Minnesota
California	Mississippi
Colorado	Missouri
Connecticut	Nebraska
Delaware	New Hampshire
District of Columbia	New Jersey
Florida	North Carolina
Georgia	Ohio
Illinois	Oklahoma
Indiana	Oregon
Iowa	Rhode Island
Kansas	Tennessee
Kentucky	Texas
Maine	Vermont
Maryland	Washington
Massachusetts	Wisconsin
Michigan

Operation of state law is based on Rev. Proc. 82-2, 1982-1 C.B. 367.

Foreign organizations. Foreign organizations may be able to rely upon the applicable laws of their jurisdiction in a similar manner. You must provide a copy of the applicable law with an English translation.

Part IV. Narrative Description of Your Activities

Describe completely and in detail your past, present, and planned activities. Do not refer to or repeat the purposes in your organizing document. You may refer to other parts of the application rather than repeat information provided elsewhere.

For each past, present, or planned activity, include information that answers the following questions.

What is the activity?
Who conducts the activity?
When is the activity conducted?
Where is the activity conducted (for example: Los Angeles and San Francisco, California)?
How does the activity further your exempt purposes?
What percentage of your total time is allocated to the activity?
How is the activity funded? (This should agree with the financial data in Part IX.)
List any alternate names under which you operate, including any “aka” (also known as) or “dba” (doing business as) names.

If you have a website, you may attach a paper copy to support your narrative description of activities.

Part V. Compensation and Other Financial Arrangements With Your Officers, Directors, Trustees, Employees, and Independent Contractors

Compensation. For purposes of Part V, compensation includes salary or wages, deferred compensation, retirement benefits, whether in the form of a qualified or non-qualified employee plan (pensions or annuities), fringe benefits (personal vehicle, meals, lodging, personal and family educational benefits, low interest loans, payment of personal travel, entertainment, or other expenses, athletic or country club membership, and personal use of your property), and bonuses.

Example.

Assume an organization compensates its director as follows:

Wages
Director Compensation	$ 2,500
Salary as Chief Executive Officer	40,000
Deferred retirement	2,000
Health insurance policy	5,000
Use of a vehicle	5,000
Total Compensation	$ 54,500

Information in Part V must be consistent with the information provided in Part IX. Financial Data.

Line 1a. For each person listed, state their total annual compensation, or proposed compensation, for all services to the organization, whether as an officer, employee, or other position. Use actual figures, if available. Officers, directors, and trustees may use the organization's address for mailing.

Line 1b. Employees may use the organization's address for mailing. Report total compensation. For employees who are also officers, directors, or trustees, their compensation as employees and for all other services should be reported in line 1a.

Line 1c. “Independent contractors” are persons who are not treated as employees for employment tax purposes. For information on determining if an individual is an employee or an independent contractor, see Publication 15-A, Employer's Supplemental Tax Guide.

Line 2a. Describe family or business relationships between your officers, directors, or trustees. “Related” refers to both family and business relationships.

“Family relationships” include the individual's spouse, ancestors, children, grandchildren, great grandchildren, siblings (whether by whole or half blood), and the spouses of children, grandchildren, great grandchildren, and siblings.
“Business relationships” include employment and contractual relationships, and common ownership of a business where any officers, directors, or trustees, individually or together, possess more than a 35% ownership interest in common. “Ownership” means voting power in a corporation, profits interest in a partnership, or beneficial interest in a trust.

Line 2b. Describe family or business relationships between you and any of your officers, directors, or trustees other than their position with you as an officer, director, or trustee.

Line 2c. Describe family or business relationships between your officers, directors, or trustees and your five highest compensated employees or five highest compensated independent contractors who will receive more than $50,000 in taxable or non-taxable compensation per year.

Line 3b. “Common control” means that you and one or more other organizations have (1) a majority of your governing boards or officers appointed or elected by the same organization(s), or (2) a majority of your governing boards or officers consist of the same individuals. Common control also occurs when you and one or more commonly controlled organizations have a majority ownership interest in a corporation, partnership, or trust. See the instructions for line 2a, above, for a definition of ownership.

Line 4. By adopting these recommended compensation-setting practices, such as by resolution of your governing board, you will be establishing procedures aimed at helping to prevent your top officials from receiving excess compensation benefits.

Line 4e. “Similarly situated organizations” means tax-exempt or taxable organizations of a comparable size, purpose, and resources. Adjustments due to geographic area, and other specific conditions are appropriate, but should be documented. The source(s) of comparable compensation data, both taxable and non-taxable, should be documented and copies retained in your permanent records.

Line 4g. “Reasonable compensation” is the amount that would ordinarily be paid for like services by like organizations under like circumstances as of the date the compensation arrangement is made. Establishing and documenting reasonable compensation is important because excessive compensation may result in excise taxes on both the individual and the organization. In addition, this may jeopardize the organization's tax exemption.

Line 5a. A “conflict of interest” arises when a person in a position of authority over an organization, such as a director, officer, or manager, may benefit personally from a decision he or she could make. A Sample Conflict of Interest Policy is included as Appendix A.

Adoption of a conflict of interest policy is not required to obtain tax-exempt status. However, by adopting the sample policy or a similar policy, you will be choosing to put in place procedures that will help you avoid the possibility that those in positions of authority over you may receive an inappropriate benefit.

Line 6a. A “fixed payment” means a payment that is either a set dollar amount or fixed through a specific formula where the amount does not depend on discretion. For example, a base salary of $200,000 that is adjusted annually based on the increase in the Consumer Price Index is a fixed payment.

A “non-fixed payment” means a payment that depends on discretion. For example, a bonus of up to $100,000 that is based on an evaluation of performance by the governing board is a non-fixed payment because the governing body has discretion over whether the bonus is paid and the amount of the bonus.

Line 7a. Do not include purchases of goods and services in your normal course of operations that are available to the general public under similar terms and conditions.

Arm's length. An arm's length standard exists where the parties have an adverse (or opposing) interest. For example, a seller wants to sell his goods at the highest possible price, while a buyer wants to buy at the lowest possible price. These are adverse interests.

In negotiating with a person, an adverse interest is assumed if that person is otherwise unrelated to you in the sense of not being in a position to exercise substantial influence over you or your affairs. If the person is in a position to exercise substantial influence over your affairs, then an arm's length standard requires additional precautions to eliminate the effect of the relationship.

Using a conflict of interest policy, information about comparable transactions between unrelated parties, and reliable methods for evaluating the transaction, are examples of precautions that would help make the negotiation process equivalent to one between unrelated persons.

Fair market value. This is the price at which property or the right to use property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts.

Line 7b. Do not include sales of goods and services in your normal course of operations that are available to the general public under similar terms and conditions.

Line 9a. Answer “Yes” if any of your officers, directors, or trustees:

Is an officer, director, or trustee in another organization (other than a section 501(c)(3) organization) that has a lease, contract, loan, or other agreement with you.
Possess more than a 35% ownership interest in any organization that has a lease, contract, loan, or other agreement with you. For example, you would answer “Yes” if one of your directors were an officer for a section 501(c)(4) organization with whom you had a lease for office space. You would also answer “Yes” if one of your directors owns more than 35% of the voting stock of a corporation to which you made a loan.

Part VI. Your Members and Other Individuals, and Organizations That Receive Benefits From You

Line 1a. Benefits to individuals. Describe any programs where you provide goods, services, or funds to individuals. For example, describe programs by which you provide food to the homeless, employment counseling to senior citizens, or grants to victims of a disaster.

Line 1b. Benefits to organizations. Describe any programs where you provide goods, services, or funds to organizations. For example, programs where you provide equipment, accounting assistance, or grants to other organizations.

Line 2. For programs that are available only for members, include a sample membership application and a schedule of membership dues. Also, describe any different membership levels and the benefits each membership level receives.

Line 3. Describe any business or family relationship between individuals who receive goods, services, or funds through your programs with any officer, director, trustee, or with any of the five-highest compensated employees or independent contractors listed in Part V, lines 1a, 1b, or 1c.

Part VII. Your History

Line 1. You are a “successor” if you have:

Substantially taken over all of the assets or activities of another organization,
Been converted or merged from another organization, or
Installed the same officers, directors, or trustees as another organization that no longer exists and that had purpose(s) similar to your purpose(s).

The predecessor organization may be or may not have been a tax-exempt or non-exempt organization.

Part VIII. Your Specific Activities

Line 1. You participate in a political campaign if you promote or oppose the candidacy of an individual for public office. Your explanation should include representative copies of your political literature, brochures, pamphlets, etc. Candidate debates and nonpartisan voter education are permitted.

Organizations described in section 501(c)(3) are prohibited from supporting or opposing candidates for public office in any political campaign. If you answer “Yes,” you are not qualified for tax exemption under section 501(c)(3) and should reconsider whether the filing of application Form 1023 is appropriate for your organization. See Publication 557 for a description of other Internal Revenue Code sections under which you may qualify.

Line 2a. You are attempting to “influence legislation” if you directly contact or urge the public to contact members of a legislative body for the purpose of proposing, supporting, or opposing legislation. You are also attempting to influence legislation if you advocate the adoption or rejection of legislation. If you answer “Yes,” your explanation should include the percentage of your total time and total funds spent on such legislative activities. Also, submit representative copies of your legislative literature, brochures, pamphlets, etc.

Organizations described in section 501(c)(3) are prohibited from engaging in a substantial amount of legislative activities. Whether you are engaged in substantial legislative activities depends on all of the facts and circumstances.

Line 2b. By filing Form 5768 your legislative activities will be measured solely by expenditure limits under section 501(h) rather than by whether legislative activity is considered substantial. Form 5768 is included in Package 1023 for your convenience. It describes the types of organizations that are eligible to make an election. For a discussion of the requirements of section 501(h), see Publication 557. If you are an organization that elects to use expenditure limits in influencing legislation:

Attach a copy of Form 5768 that has already been separately filed with us, or
Provide a completed Form 5768 with your exemption application.

Churches and private foundations are not eligible to make this election.

Line 3a. For purposes of this application, “bingo” is a game of chance played with cards that are generally printed with 5 rows of 5 squares each on which participants place markers to form a preselected pattern to win the game. Other gaming activities include pull-tabs, raffles, keno, split-the-pot, and other games of chance.

Describe these activities, including how often your bingo or other gaming activities are conducted, where they are conducted, and who conducts them. Also describe whether your workers are compensated. If workers are compensated, describe who receives compensation and how the amount is determined.

Revenue associated with these activities means gross revenue amounts.

Expenses associated with these activities means direct and indirect expenses. The dollar value of prizes should be included in expenses.

Gaming may be subject to unrelated business income tax. See Publication 3079 for further information about gaming.

Line 3c. Local jurisdictions include cities, counties, towns, municipalities, and similar government jurisdictions within a state. A local jurisdiction also includes an Indian Reservation.

Line 4a. “Fundraising” includes efforts to raise funds through appeals for financial support. Fundraising may be conducted by your employees or volunteers, through an agent, or through an independent contractor. If you answer “Yes,” check all the boxes that apply and complete lines 4b through 4e.

Line 4d. Local jurisdictions include cities, counties, towns, municipalities, and similar government jurisdictions within a state. A local jurisdiction also includes an Indian Reservation.

Line 4e. This line is intended to obtain information from you regarding donor-advised funds that you may maintain. A “donor-advised fund” is maintained if you establish separate accounts for a donor whereby the donor may exercise a right to make a recommendation on either uses of the account, such as providing advice about how to invest, or distributions from the account, such as providing advice about how to make expenditures.

Line 5. You are “affiliated” with a governmental unit if you were created by, controlled by, or closely related to a governmental unit. Identify each governmental unit and describe your relationship with it. Include details of any financial reports or audits required by the governmental unit. Also, describe any power or authority given to you by the governmental unit.

For purposes of this question, a “governmental unit” includes a State, a possession of the United States, or any political subdivision of a State or a possession of the United States, or the United States, or the District of Columbia.

A governmental unit would generally not qualify for exemption under section 501(c)(3). Also, if you can exercise certain sovereign powers, such as the power to tax or police powers, you would generally not qualify for exemption under section 501(c)(3).

Line 6a. “Economic development” organizations are generally formed to combat community deterioration by assisting businesses located in a particular geographic area whose economy is economically depressed or deteriorating. Their varieties of activities include grants, loans, provision of information and expertise, or creation of industrial parks. Economic development organizations may also be formed to eliminate prejudice and discrimination or lessen the burdens of government through involvement with business development.

If your exempt purpose is to combat community deterioration, describe whether the area or areas in which you will operate have been declared blighted or economically depressed by a government finding. If the area has not been declared blighted or economically depressed, a more suitable exemption may be under sections 501(c)(4) or 501(c)(6). See Publication 557 for more information.

If your exempt purpose is to eliminate prejudice and discrimination, describe how your activities further this purpose.

If your exempt purpose is to lessen the burdens of government, describe whether the government has recognized your activities as those for which it would otherwise be responsible, and any involvement you have with governmental entities that demonstrates that you are actually lessening governmental burdens.

Line 7a. “Develop” means the planning, financing, construction, or provision of similar services involved in the acquisition of real property, such as land or a building. For example, you should provide information regarding the services of a consultant who puts together an arrangement for you to acquire a nursing home through the issuance of tax-exempt bonds.

Line 7b. “Manage” means to direct or administer. For example, you would provide information about an organization hired to administer a museum gift shop. See the instructions for Part V, line 2a, for a description of the term business or family relationships.

Line 7c. See the instructions for Part V, line 2a, for a description of the term business or family relationships. See the instructions for Part V, line 7a, for a description of the term arm's length.

Line 8. A “joint venture” is a legal agreement in which the persons jointly undertake a transaction for mutual profit. Generally, each person contributes assets and shares risks. Like a partnership, joint ventures can involve any type of business transaction and the persons involved can be individuals, groups of individuals, companies, or corporations.

Line 9a. Childcare services provide care for children away from their homes. An organization providing childcare services may qualify for tax-exempt status as either a:

School under IRC 170(b)(1)(A)(ii).
Childcare organization under IRC 501(k).

Refer to the instructions for Part VII, line 19, to determine if you qualify as a school.

A childcare organization qualifies under IRC 501(k) if it provides care for children away from their homes; substantially all of the childcare enables individuals to be gainfully employed; and the services provided by the organization are available to the general public.

Line 9b. “Gainfully employed” includes enabling individuals to work or to seek work.

Line 9c. Section 501(k) states that to qualify as a childcare organization, substantially all of the care you provide should be to permit individuals to be gainfully employed. If less than 85% of your services are for children of working parents or caretakers:

Describe the percentage of the children for whom you provide services to permit parents or caretakers to work, and
Describe any efforts you are taking to increase the percentage of the children for whom you provide services to permit parents or caretakers to work.

Line 9d. Describe any eligibility requirements, such as employment with a particular employer.

Line 10. “ Intellectual property” includes:

Patents (for inventions).
Copyrights (for literary and artistic works such as novels, poems, plays, films, musical works, drawings, paintings, photographs, sculptures, architectural designs, performances, recordings, film, and radio or television programs).
Trade names, trade marks, and service marks (for symbols, names, images, and designs).
Formulas, know-how, and trade secrets.

Line 12a. A “foreign country” is a country other than the United States, its territories and possessions, and the District of Columbia.

Line 13d. A “relationship” between you and the recipient organization includes the following situations:

You control the recipient organization or it controls you through common officers, directors, or trustees, or through authority to approve budgets or expenditures.
You and the recipient organization were created at approximately the same time and by the same persons.
You and the recipient organization operate in a coordinated manner with respect to facilities, programs, employees, or other activities.
Persons who exercise substantial influence over you also exercise substantial influence over the other organization.

Line 14a. Answer “Yes” if you make grants, loans, or other distributions, such as goods, to a foreign organization. For purposes of completing this application, a domestic organization is one that is formed under the laws of the United States, its territories and possessions, federally recognized Indian Tribal and Alaska Native governments (including political subdivisions), or the District of Columbia. A “foreign organization” is one that is not a domestic organization.

A list of federally recognized Indian tribes is provided in Rev. Proc. 2002-64, 2002-2 C.B. 717. A list of entities that are treated as political subdivisions of Indian tribal governments is provided in Rev. Proc. 86-17, 1986-1 C.B. 550 and Rev. Proc. 84-36, 1984-1 C.B. 510.

Line 15. A “close connection” between you and another organization includes the following situations:

You control the organization or it controls you through common officers, directors, or trustees, or through authority to approve budgets or expenditures.
You and the organization were created at approximately the same time and by the same persons.
For example, you were formed within months of the time that a social welfare organization and a political action committee were established by the same persons who were instrumental in your formation.
You and the organization operate in a coordinated manner with respect to facilities, programs, employees, or other activities.
For example, you share rental expenses for office space and employees with a for-profit corporation.
Persons who exercise substantial influence over you also exercise substantial influence over the other organization and (1) you either conduct activities in common or (2) have a financial relationship.
For example, a voting member of your governing body is also a voting member of the governing body of a business league with which you intend to cooperate in planning an advertising campaign that will inform the public about the benefits of a particular program.
For example, a voting member of your governing body is also a voting member of the governing body of a business league that has made a loan to you.

Line 16. A “cooperative hospital service organization” described in section 501(e) is organized and operated on a cooperative basis to provide its section 501(c)(3) hospital members one or more of the following activities.

• Data processing.

• Purchasing (including purchasing insurance on a group basis).

• Warehousing.

• Billing and collection (including purchasing patron accounts receivable on a recourse basis).

• Food.

• Clinical.

• Industrial engineering.

• Laboratory.

• Printing.

• Communications.

• Record center.

• Personnel (including selecting, testing, training, and educating personnel) services.

A cooperative hospital service organization must also meet certain other requirements specified in section 501(e). For additional information, see Publication 557.

Line 17. A cooperative service organization of operating educational organizations described in section 501(f) is organized and operated to provide investment services to its members. Those members must be organizations described in section 170(b)(1)(A)(ii) or (iv), and either tax exempt under section 501(a) or whose income is excluded from taxation under section 115(a).

See Publication 557 for additional information.

Line 18. A “charitable risk pool” described in section 501(n) is organized and operated to pool insurable risks of its section 501(c)(3) members (other than risks related to medical malpractice). A section 501(n) organization must be organized under state law provisions authorizing risk pooling arrangements for charitable organizations and also meet certain other requirements provided by section 501(n).

See Publication 557 for additional information.

Line 19. “A school” is an educational organization whose primary function is the presentation of formal instruction and which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. A school may include a:

Primary, secondary, preparatory, or high school.
College or university.
Trade or technical school.
Nursery or pre-school.
School that you operate as an activity, such as a school that is operated as an activity of a museum, historical society, or church.

If you are a nursery or pre-school that meets the description of a school, you would answer “Yes” to line 19 and complete Schedule B. You would also answer “No” to Part VIII, line 9a.

If you are a nursery or pre-school that does not meet the description of a school, you would answer “No” to line 19. You would answer “Yes” to Part VIII, line 9a, if you are applying for exemption as a childcare organization.

See Publication 557 for additional information.

Line 20. “Hospital or medical care” includes the treatment of any physical or mental disability or condition, whether as an inpatient or outpatient. A hospital includes:

Hospitals and rehabilitation institutions, outpatient clinics, or community mental health or drug treatment centers if the principal purpose or function is the providing of medical or hospital care or medical education or research.
Medical research organizations, if the principal purpose or function is the continuous active conduct of medical research in conjunction with a hospital.

See Publication 557 for additional information.

Line 21. “Low-income housing” refers to rental or ownership housing provided to persons based on financial need. “Elderly housing” refers to rental or ownership housing provided to persons based on age, including retirement, assisted-living, independent living, continuous care, and life care arrangements. “Handicapped housing” refers to rental or ownership housing provided to persons based on physical or mental disabilities, including nursing homes.

If you are a skilled nursing facility, you should also complete Schedule C.

Line 22. Answer “Yes” if you pay monies to an individual as a scholarship, fellowship, or educational loan, for travel, study, or other similar purposes. Also answer “Yes” if you pay such amounts on behalf of an individual to a school or a tuition or educational savings program.

Travel, study, or other similar purposes include payments made to enhance a literary, artistic, musical, scientific, teaching or other similar capacity, skill, or talent of the individual recipient. For example amounts paid to:

Vocational high school students to be used to purchase basic tools.
Teachers to induce them to teach in an economically depressed, public school system.
A scientific researcher to underwrite that individual's research project.

Educational grants do not include amounts you pay to an individual as compensation, such as payments made to a consultant for personal services or to produce a report for you.

Educational grants do not include amounts paid to another organization that distributes your funds as a scholarship to an individual if you have no role in the selection process.

If you are a “private foundation” as described in Part X, you can request advance approval of your grant-making procedures by completing Schedule H and avoid the possible imposition of excise taxes under section 4945.

Part IX. Financial Data

A. Statement of Revenues and Expenses

Existed 4 years or more. If you have been in existence for 4 or more years, complete the A. Statement of Revenues and Expenses for your most recently completed year and each of the three years immediately before it for a total of four years of financial information. Place financial information for your most recently completed year in the column marked Current tax year.

We may request financial information for more than four years if necessary.

Existed more than one year, less than 4 years. If you have been in existence for more than 1 year and less than 4 years, provide your actual income and expenses for each completed year you have existed and projections of your likely income and expenses based on a reasonable and good faith estimate of your future finances for your current year and each year you have not existed for a total of 3 years of financial information. Place financial information for the year you are filing this application in the column marked Current tax year.

Existed less than 1 year. If you have existed for less than 1 year, you must provide projections of your likely income and expenses for your current year and projections of your likely income and expenses for the next 2 years based on a reasonable and good faith estimate of your future finances. Place financial information for the year you are filing this application in the column marked Current tax year.

Preparing the statement. Prepare the statements using the method of accounting you use in keeping your books and records. If you use a method other than the cash receipts and disbursements method, attach a statement explaining the method used. For example, state whether you used the accrual method of accounting to prepare the financial statements included with this application.

Prepare the statements using the accounting period entered on Part I, line 5. Financial information should reflect projected activities reported elsewhere in this application.

Line 1. Include funds or other items of value that you receive as gifts, grants, or contributions. For example, if one of your activities is a food drive, the value of the donated food must be included on this line. Also include on this line payments a governmental unit makes to enable you to both:

Accomplish your exempt purpose(s), and
Provide a service or facility directly to the general public.

See the instructions to line 9 if you are uncertain whether revenue should be included as a grant in line 1 or as gross receipts in line 9. Unusual grants are not included on this line, but are included on line 12.