Example.
Example.
Example. Z, an organization described in section 501(c)(3), is controlled by A, its president. Z received $500,000 during the period consisting of the current taxable year and the four immediately preceding taxable years under a contract with the Department of Transportation, pursuant to which Z has engaged in research to improve a particular vehicle used primarily by the Federal government. During this same period, the only other support received by Z consisted of $5,000 in small contributions primarily from Z's employees and business associates. The $500,000 amount constitutes support under sections 509(d)(2) and 509(a)(2)(A). Under these circumstances, Z meets the conditions of paragraphs (f)(7)(iii)(A)(1) and (f)(7)(iii)(A)(2) of this section and will not be treated as meeting the requirements of either the 331/3 percent support test or the facts and circumstances test. As to the rules applicable to organizations that fail to qualify under section 170(b)(1)(A)(vi) because of the provisions of this paragraph (f)(7)(iii), see section 509(a)(2) and the related regulations. For the distinction between gross receipts (as referred to in section 509(d)(2)) and gross investment income (as referred to in section 509(d)(4)), see § 1.509(a)-3(m) .
Investment income | $300,000 |
City R (a governmental unit described in section 170(c)(1)) | 40,000 |
United Fund (an organization described in section 170(b)(1)(A)(vi)) | 40,000 |
Contributions (including six contributions in excess of the two-percent limit, totaling $170,000) | 220,000 |
Total support | 600,000 |
Support from a governmental unit described in section 170(c)(1) | $40,000 |
Indirect contributions from the general public (United Fund) | 40,000 |
Contributions by various donors that were not in excess of $12,000, or two percent of total support | 50,000 |
Six contributions that were each in excess of $12,000, or two percent of total support, up to the two-percent limitation, 6 * $12,000 | 72,000 |
Total support | 202,000 |
Contributions | $520,000 |
Receipts from performances | 100,000 |
Total support | 620,000 |
Less: | |
Receipts from performances (excluded under paragraph (f)(7)(i)(A) of this section) | 100,000 |
Total support for purposes of paragraphs (f)(2) and (f)(3)(i) of this section | 520,000 |
T Community Chest (indirect support from the general public) | 120,000 |
Two contributions from A & B (each in excess of $10,400 - 2 percent of total support) 2 * $10,400 | 20,800 |
Total | 140,800 |
Investment income | $60,000 |
Contributions | 40,000 |
Total support | 100,000 |
Contributions from the general public | $ 15,000 |
C's contribution (in excess of $ 2,000 - 2 percent of total support) 1 * $2,000 | 2,000 |
Total | 17,000 |
(i) an organization controlled directly or indirectly by the foundation or by one or more disqualified persons (as defined in section 4946) with respect to the foundation or (ii) a private foundation which is not an operating foundation (as defined in section 4942(j)(3)). The phrase "after the application of section 4942(g)(3)" means that every contribution described in section 4942(g)(3) received by a private foundation described in this subparagraph in a particular taxable year must be distributed (within the meaning of section 4942(g)(3)(A)) by such foundation not later than the 15th day of the third month after the close of such taxable year in order for any other distribution by such foundation to be counted toward the 100-percent requirement described in this subparagraph.
26 C.F.R. §1.170A-9