Revised Form 990: A Line-by-Line Preparation Guide

Preface ix

Acknowledgments xiii

About the Authors xv

Chapter 1: Redesigned Form 990 1

§ 1.1 History of Redesign Project 3

§ 1.2 Highlights of Revised Form 990 5

§ 1.3 Filing of New Form Delayed for Many 9

§ 1.4 Find Out Why Organization Qualifies for Tax Exemption 10

§ 1.5 Who Is Required to File What 11

§ 1.6 Filing for New Organizations 12

§ 1.7 Who Is Not Required to File 12

§ 1.8 Filing Deadline and Fiscal Year 13

§ 1.9 New Form 990-N (e-Postcard) 13

§ 1.10 Electronic Filing of Returns 14

§ 1.11 Group Returns and Annual Affidavit 15

§ 1.12 Public Inspection of Forms 990 and 1023/1024 16

Notes 17

Appendix 1A: 6/14/07 Draft of Core Form 19

Appendix 1B: BV Suggested Revisions 29

Appendix 1C: Form 990-EZ 30

Chapter 2: Good Accounting Makes a Good 990 35

§ 2.1 Tax Accounting Methods 37

§ 2.2 Professional Accounting Standards 38

§ 2.3 Chart of Differences Between GAAP and IRS Rules 42

Notes 45

Chapter 3: The Core 47

§ 3.1 2008 Form 990 Core 47

§ 3.2 Part I Summary 48

§ 3.3 Part II Signature Block 50

§ 3.4 Part III Statement of Program Service Accomplishments 50

§ 3.5 Part IV Checklist of Required Schedules 53

§ 3.6 Part V Statements Regarding Other IRS Filings and Tax Compliance 56

§ 3.7 Part VI Governance, Management, and Disclosure 64

§ 3.8 Part VII Compensation of Officers, Directors, Trustees,Key Employees, Highest Compensated Employees, and Independent Contractors 73

§ 3.9 Part VIII Statement of Revenue 81

§ 3.10 Part IX Statement of Functional Expenses 88

§ 3.11 Part X Balance Sheet 95

§ 3.12 Part XI Financial Statements and Reporting 97

Notes 97

Appendix 3A: Transactions with Interested Parties Questionaire 100

Chapter 4: Form 990, Schedules A through R 103

§ 4.1 Schedule A 103

§ 4.2 Schedule B 120

§ 4.3 Schedule C 125

§ 4.4 Schedule D 132

§ 4.5 Schedule E 146

§ 4.6 Schedule F 149

§ 4.7 Schedule G 155

§ 4.8 Schedule H 160

§ 4.9 Schedule I 165

§ 4.10 Schedule J 170

§ 4.11 Schedule K 173

§ 4.12 Schedule L 174

§ 4.13 Schedule M 182

§ 4.14 Schedule N 188

§ 4.15 Schedule O 192

§ 4.16 Schedule R 195

Notes 200

Appendix 4A: State Unified Registration Statement 204

Appendix 4B: Interested Party by Part and Type 223

Chapter 5: Form 990-T: Exempt Organization Business Income Tax Return 225

§ 5.1 What Is Unrelated Business Income? 226

§ 5.2 Exceptions and Modifications from Tax 228

§ 5.3 Unrelated Debt-Financed Income 231

§ 5.4 Who Files Form 990-T? 233

§ 5.5 Due Dates, Tax Rates, and Other Filing Issues 234

§ 5.6 Normal Income Tax Rules Apply 236

§ 5.7 The Unique Design of the 990-T 238

§ 5.8 Categories of Deductions 243

§ 5.9 Cost Allocations 246

§ 5.10 In-Kind Donations 248

Notes 248

Appendix 5A: Analysis of Corporation versus Trust 990-T Issues 252

Chapter 6: The Private Foundation Return 253

§ 6.1 Successful Completion of Form 990-PF 253

§ 6.2 The Part I Columns 255

§ 6.3 Line-by-Line Instructions for Revenues 257

§ 6.4 Line-by-Line Instructions for Expenditures 261

§ 6.5 Part II: Balance Sheets 265

§ 6.6 Part III: Analysis of Changes in Net Worth or Fund Balances 266

§ 6.7 Part IV: Capital Gains and Losses for Tax on Investment Income 267

§ 6.8 Reports Unique to Private Foundations 268

§ 6.9 Part V: Reducing the Tax Rate 268

§ 6.10 Part VI: Calculating the Excise Tax 269

§ 6.11 Part VII-A: Proof of Ongoing Qualification for Exemption 270

§ 6.12 Part VII-B: Questions Seeking Evidence That No Sanctions Apply 275

§ 6.13 Part VIII: Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors 276

§ 6.14 Part IX-A and B: Summary of Direct Charitable Activities and Program-Related Investments 278

§ 6.15 Part X: Minimum Investment Return 279

§ 6.16 Part XI: Distributable Amount 279

§ 6.17 Part XII: Qualifying Distributions 280

§ 6.18 Part XIII: Undistributed Income 280

§ 6.19 Part XIV: Private Operating Foundations 282

§ 6.20 Part XV: Supplementary Information (Lines 1–2) 282

§ 6.21 Part XV: Grants and Contributions Paid During the Year or Approved for Future Payment (Line 3) 283

§ 6.22 Part XVI-A: Analysis of Income-Producing Activity 285

§ 6.23 Part XVII: Information Regarding Transfers to and Transactions and Relationships with Noncharitable Exempt Organizations 286

Notes 287

Index 289