Tax990 Knowledge Base

What is Undistributed Income?

Undistributed income refers to the amount of income that a private foundation has not yet distributed to fulfill its distributable amount threshold by the end of its tax year. Foundations are required to make certain qualifying distributions each year. If they fail to do so, the undistributed income carries forward and may be subject to penalties or excise taxes. 
Specifically, if a private foundation doesn’t distribute enough income to meet IRS requirements (typically 5% of its non-charitable use assets), this undistributed income can result in excise taxes.