Specific Instructions

Heading. Items A–M

Complete items A through M.

Item A. Accounting period.   File the 2014 return for calendar year 2014 and fiscal years that began in 2014 and ended in 2015. For a fiscal year return, fill in the tax year space at the top of page 1. See General Instructions, Section D. Accounting Periods and Methods, earlier, for additional information about accounting periods.

Item B. Checkboxes.   The following checkboxes are under Item B.

Address change.

Check this box if the organization changed its address and has not reported the change on its most recently filed Form 990, 990-EZ, 990-N, or 8822-B or in correspondence to the IRS.

If a change in address occurs after the return is filed, use Form 8822-B, Change of Address or Responsible Party—Business, to notify the IRS of the new address.

Name change.

Check this box if the organization changed its legal name (not its “doing business as” name) and if the organization has not reported the change on its most recently filed Form 990 or 990-EZ or in correspondence to the IRS. If the organization changed its name, file Form 990 by paper and attach the following documents:

IF the organization is . . . THEN attach . . .
A corporation A copy of the amendment to the articles of incorporation, and proof of filing with the appropriate state authority.
A trust A copy of the amendment to the trust instrument, or a resolution to amend the trust instrument, showing the effective date of the change of name and signed by at least one trustee.
An unincorporated association A copy of the amendment to the articles of association, constitution, or other organizing document, showing the effective date of the change of name and signed by at least two officers, trustees, or members.

Initial return.

Check this box if this is the first time the organization is filing a Form 990 and it has not previously filed a Form 990-EZ, 990-PF, 990-T, or 990-N.

Final return/terminated.

Check this box if the organization has terminated its existence or ceased to be a section 501(a) or section 527 organization and is filing its final return as an exempt organization or section 4947(a)(1) trust. For example, an organization should check this box when it has ceased operations and dissolved, merged into another organization, or has had its exemption revoked by the IRS. An organization that checks this box because it has liquidated, terminated, or dissolved during the tax year must also attach Schedule N (Form 990 or 990-EZ).

An organization must support any claim to have liquidated, terminated, dissolved, or merged by attaching a certified copy of its articles of dissolution or merger approved by the appropriate state authority. If a certified copy of its articles of dissolution or merger is not available, the organization must submit a copy of a resolution or resolutions of its governing body approving plans of liquidation, termination, dissolution, or merger.

Amended return.

Check this box if the organization previously filed a return with the IRS for a tax year and is now filing another return for the same tax year to amend the previously filed return. Enter in Schedule O (Form 990 or 990-EZ) the parts and schedules of the Form 990 that were amended and describe the amendments. See General Instructions, Section G. Amended Return/Final Return, earlier, for more information.

Application pending.

Check this box if the organization either has filed a Form 1023, 1023-EZ, or 1024 with the IRS and is awaiting a response, or claims tax-exempt status under section 501(a) but has not filed Form 1023, 1023-EZ, or 1024 to be recognized by the IRS as tax-exempt. If this box is checked, the organization must complete all parts of Form 990 and any required schedules. An organization that is required to file an annual information return (Form 990 or Form 990-EZ) or submit an annual electronic notice (Form 990-N) for a tax year (see General Instructions, Section A. Who Must File, earlier) must do so even if it has not yet filed a Form 1023, 1023-EZ, or 1024 with the IRS, if it claims tax-exempt status.

To qualify for tax exemption retroactive to the date of its organization or formation, an organization claiming tax-exempt status under section 501(c)(3), 501(c)(9), or 501(c)(17) generally must file Form 1023, 1023-EZ, or 1024 within 27 months of the end of the month in which it was legally organized or formed.

Item C. Name and address.   Enter the organization's legal name on the “Name of organization” line. If the organization operates under a name different from its legal name, enter the alternate name on the “Doing Business As” (DBA) line. If multiple DBA names will not fit on the line, enter one on the line and enter the others on Schedule O (Form 990 or 990-EZ).

  If the organization receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line “C/O” followed by the third party's name and street address or P.O. box.

  Include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the organization has a P.O. box, enter the box number instead of the street address.

  For foreign addresses, enter the information in the following order: city or town, state or province, the name of the country, and the postal code. Do not abbreviate the country name.

  If a change in address occurs after the return is filed, use Form 8822-B, Change of Address or Responsible Party—Business, to notify the IRS of the new address.

Item D. Employer identification number (EIN).   Use the EIN provided to the organization for filing its Form 990 and federal tax returns. The organization must have only one EIN. If it has more than one and has not been advised which to use, notify the:

Department of the Treasury 
Internal Revenue Service Center 
Ogden, UT 84201-0027

  State the numbers the organization has, the name and address to which each EIN was assigned, and the address of the organization's principal office. The IRS will advise the organization which number to use.

  
A subordinate organization that files a separate Form 990 instead of being included in a group return must use its own EIN, and not that of the central organization.

  
A section 501(c)(9) voluntary employees' beneficiary association must use its own EIN and not the EIN of its sponsor.

Item E. Telephone number.   Enter a telephone number of the organization that members of the public and government personnel can use during normal business hours to obtain information about the organization's finances and activities. If the organization does not have a telephone number, enter the telephone number of an organization official who can provide such information.

Item F. Name and address of principal officer.   The address provided must be a complete mailing address to enable the IRS to communicate with the organization's current (as of the date this return is filed) principal officer, if necessary. If the officer prefers to be contacted at the organization's address listed in item C, enter “same as C above.” For purposes of this item, “principal officer” means an officer of the organization who, regardless of title, has ultimate responsibility for implementing the decisions of the organization's governing body, or for supervising the management, administration, or operation of the organization.

  
If a change in responsible party occurs after the return is filed, use Form 8822-B, Change of Address or Responsible Party—Business, to notify the IRS of the new responsible party.

Item G. Gross receipts.   On Form 990, Part VIII, column A, add line 6b (both columns (i) and (ii)), line 7b (both columns (i) and (ii)), line 8b, line 9b, line 10b, and line 12, and enter the total here. See the exceptions from filing Form 990 based on gross receipts and total assets as described in General Instructions, Sections A and B, earlier.

Item H. Group returns.   If the organization answers “No” to line H(a), it should not check a box in line H(b). If the organization answers “Yes” to line H(a) but “No” to line H(b), attach a list (not on Schedule O (Form 990 or 990-EZ)) showing the name, address, and EIN of each local or subordinate organization included in the group return. A central or subordinate organization filing an individual return should not attach such a list. Enter on line H(c) the four-digit group exemption number (GEN) if the organization is filing a group return, or if the organization is a central or subordinate organization in a group exemption and is filing a separate return. Do not confuse the four-digit GEN number with the nine-digit EIN number reported on item D of the form's Heading. A central organization filing a group return must not report its own EIN in item D, but report the special EIN issued for use with the group return.

  If attaching a list:
  • Enter the form number (“Form 990”) and tax year,

  • Enter the group exemption name and EIN,

  • Enter the four-digit group exemption number (GEN), and

  • Use the same size paper as the form.

Item I. Tax-exempt status.   Check the applicable box. If the organization is exempt under section 501(c) (other than section 501(c)(3)), check the second box and insert the appropriate subsection number within the parentheses (for example, “4” for a 501(c)(4) organization).

Item J. Website.   Enter the organization's current address for its primary website, as of the date of filing this return. If the organization does not maintain a website, enter “N/A” (not applicable).

Item K. Form of organization.   Check the box describing the organization's legal entity form or status under state law in its state of legal domicile. These include corporations, trusts, unincorporated associations, and other entities (for example, partnerships and limited liability companies).

Item L. Year of formation.   Enter the year in which the organization was legally created under state or foreign law. If a corporation, enter the year of incorporation.

Item M. State of legal domicile.   For a corporation, enter the state of incorporation (country of incorporation for a foreign corporation formed outside the United States). For a trust or other entity, enter the state whose law governs the organization's internal affairs (or the foreign country whose law governs for a foreign organization other than a corporation).

Part I. Summary

Because Part I generally reports information reported elsewhere on the form, complete Part I after the other parts of the form are completed. See General Instructions, Section C. Sequencing List to Complete the Form and Schedules, earlier.

Complete lines 3–5 and 7–22 by using applicable references made in Part I to other items.

Line 1.   Describe the organization's mission or its most significant activities for the year, whichever the organization wishes to highlight, on the summary page.

Line 2.   Check this box if the organization answered “Yes,” to Part IV, line 31 or 32, and complete Schedule N (Form 990 or 990-EZ), Part I or Part II.

Line 6.   Enter the number of volunteers, full-time and part-time, including volunteer members of the organization's governing body, who provided volunteer services to the organization during the reporting year. Organizations that do not keep track of this information in their books and records or report this information elsewhere (such as in annual reports or grant proposals) can provide a reasonable estimate, and can use any reasonable basis for determining this estimate. Organizations can, but are not required to, provide an explanation on Schedule O (Form 990 or 990-EZ) of how this number was determined, the number of hours those volunteers served during the tax year, and the types of services or benefits provided by the organization's volunteers.

Line 7b.   If the organization is not required to file a Form 990-T for the tax year, enter “0.” If the organization has not yet filed Form 990-T for the tax year, provide an estimate of the amount it expects to report on Form 990-T, line 34, when it is filed.

Lines 8–19.   If this is an initial return, or if the organization filed Form 990-EZ or 990-PF in the prior year, leave the “Prior Year” column blank. Use the same lines from the 2013 Form 990 to determine what to report for prior year revenue and expense amounts.

Line 16a.   Enter the total of (i) the fees for professional fundraising services reported in Part IX, column (A), line 11e, and (ii) the portion of the amount reported in Part IX, column (A), lines 5 and 6, that comprises fees for professional fundraising services paid to officers, directors, trustees, key employees, and disqualified persons, whether or not such persons are employees of the organization. Exclude the latter amount from Part I, line 15.

Part II. Signature Block

The return must be signed by the current president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as a tax officer) who is authorized to sign as of the date this return is filed. A receiver, trustee, or assignee must sign any return he or she files for a corporation or association. See Regulations section 1.6012-3(b)(4). For a trust, the authorized trustee(s) must sign. The definition of “officer” for purposes of Part II is different from the definition of officer (see Glossary) used to determine which officers to report elsewhere on the form and schedules, and from the definition of principal officer for purposes of the Form 990 Heading (see Glossary).

Paid Preparer

Generally, anyone who is paid to prepare the return must sign the return, list the preparer's taxpayer identification number (PTIN), and fill in the other blanks in the Paid Preparer Use Only area. An employee of the filing organization is not a paid preparer.

The paid preparer must:

  • Sign the return in the space provided for the preparer's signature,

  • Enter the preparer information, including the preparer's PTIN, and

  • Give a copy of the return to the organization.

Any paid preparer can apply for and obtain a PTIN online at www.irs.gov/ptin or by filing Form W-12, IRS Paid Preparer Tax Identification Number (PTIN) Application and Renewal.

Enter the paid preparer's PTIN, not his or her social security number (SSN), in the “PTIN” box in the paid preparer's block. The IRS will not redact the paid preparer's SSN if such SSN is entered on the paid preparer's block. Because Form 990 is a publicly disclosable document, any information entered in this block will be publicly disclosed (see Appendix D). For more information about applying for a PTIN online, visit the IRS website at www.irs.gov/taxpros.

Note.

A paid preparer may sign original or amended returns by rubber stamp, mechanical device, or computer software program.

Paid Preparer Authorization

On the last line of Part II, check “Yes” if the IRS can contact the paid preparer who signed the return to discuss the return. This authorization applies only to the individual whose signature appears in the Paid Preparer Use Only section of Form 990. It does not apply to the firm, if any, shown in that section.

By checking “Yes,” to this box, the organization is authorizing the IRS to contact the paid preparer to answer any questions that arise during the processing of the return. The organization is also authorizing the paid preparer to:

  • Give the IRS any information missing from the return,

  • Call the IRS for information about processing the return, and

  • Respond to certain IRS notices about math errors, offsets, and return preparation.

The organization is not authorizing the paid preparer to bind the organization to anything or otherwise represent the organization before the IRS.

The authorization will automatically end no later than the due date (excluding extensions) for filing of the organization's 2015 Form 990. If the organization wants to expand the paid preparer's authorization or revoke it before it ends, see Pub. 947, Practice Before the IRS and Power of Attorney.

Check “No” if the IRS should contact the organization or its principal officer listed in Item F of the Heading rather than the paid preparer.

Part III. Statement of Program Service Accomplishments

Check the box in the heading of Part III if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part. Part III requires reporting regarding the organization's program service accomplishments. A program service is an activity of an organization that accomplishes its exempt purpose. Examples of program service accomplishments can include:

  • A section 501(c)(3) organization's charitable activities such as a hospital's provision of charity care under its charity care policy, a college's provision of higher education to students under a degree program, a disaster relief organization's provision of grants or assistance to victims of a natural disaster, or a nursing home's provision of rehabilitation services to residents;

  • A section 501(c)(5) labor union's conduct of collective bargaining on behalf of its members;

  • A section 501(c)(6) business league's conduct of meetings for members to discuss business issues; or

  • A section 501(c)(7) social club's operation of recreational and dining facilities for its members.

Do not report a fundraising activity as a program service accomplishment unless it is substantially related to the accomplishment of the organization's exempt purposes (other than by raising funds).

Line 1.   Describe the organization's mission as articulated in its mission statement or as otherwise adopted by the organization's governing body, if applicable. If the organization does not have a mission that has been adopted or ratified by its governing body, enter “None.

Line 2.   Answer “Yes,” if the organization undertook any new significant program services prior to the end of the tax year that it did not describe in a prior year's Form 990 or 990-EZ. Describe these items in Schedule O (Form 990 or 990-EZ). If any are among the activities described on Form 990, Part III, line 4, the organization can reference the detailed description on line 4. If the organization has never filed a Form 990 or 990-EZ, answer “No.

Line 3.   Answer “Yes,” if the organization made any significant changes prior to the end of the tax year in how it conducts its program services to further its exempt purposes, or if the organization ceased conducting significant program services that had been conducted in a prior year. Describe these items on Schedule O (Form 990 or 990-EZ).

An organization must report new, significant program services, or significant changes in how it conducts program services on its Form 990, Part III, rather than in a letter to IRS Exempt Organizations Determinations (“EO Determinations”). EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report such new services or significant changes.

Lines 4a–4c.   All organizations must describe their accomplishments for each of their three largest program services, as measured by total expenses incurred (not including donated services or the donated use of materials, equipment, or facilities). If there were three or fewer of such activities, describe each program service activity. The organization can report on Schedule O (Form 990 or 990-EZ) additional activities that it considers of comparable or greater importance, although smaller in terms of expenses incurred (such as activities conducted with volunteer labor).

Code.

For the 2014 tax year, leave this blank.

Expenses and grants.

For each program service reported on lines 4a–4c, section 501(c)(3) and 501(c)(4) organizations must enter total expenses included on Part IX, column (B), line 25, and total grants and allocations (if any) included within such total expenses that were reported on Part IX, on column (B), lines 1–3. For all other organizations, entering these amounts is optional.

Revenue.

For each program service, section 501(c)(3) and 501(c)(4) organizations must report any revenue derived directly from the activity, such as fees for services or from the sale of goods that directly relate to the listed activity. This revenue includes program service revenue reported on Part VIII, column (A), line 2, and includes other amounts reported on Part VIII, lines 3–11, as related or exempt function revenue. Also include unrelated business income from a business that exploits an exempt function, such as advertising in a journal. For this purpose, charitable contributions and grants (including the charitable contribution portion, if any, of membership dues) reported on Part VIII, line 1, are not considered revenue derived from program services. For organizations other than section 501(c)(3) and 501(c)(4) organizations, entering these amounts is optional.

Description of program services.

For each program service reported, include the following.

  • Describe program service accomplishments through specific measurements such as clients served, days of care provided, number of sessions or events held, or publications issued.

  • Describe the activity's objective, for both this time period and the longer-term goal, if the output is intangible, such as in a research activity.

  • Give reasonable estimates for any statistical information if exact figures are not readily available. Indicate that this information is estimated.

  • Be clear, concise, and complete in the description. Use Schedule O (Form 990 or 990-EZ) if additional space is needed.

Donated services or use of equipment, materials, or facilities.

The organization can report the amount of any donated services, or use of materials, equipment, or facilities it received or used in connection with a specific program service, on the lines for the narrative description of the appropriate program service. However, do not include these amounts in revenue, expenses, or grants reported on Part III, lines 4a–4e, even if prepared according to generally accepted accounting principles.

Public interest law firm.

A public interest law firm exempt under section 501(c)(3) or section 501(c)(4) must include a list of all the cases in litigation or that have been litigated during the year. For each case:

  • Describe the matter in dispute,

  • Explain how the litigation will benefit the public generally, and

  • Enter the fees sought and recovered.

See Rev. Proc. 92-59, 1992-2 C.B. 411.

Line 4d. Other program services.   Enter on Schedule O (Form 990 or 990-EZ) the organization's other program services. The detailed description required for the three largest program services need not be provided for these other program services. Section 501(c)(3) and 501(c)(4) organizations must report on line 4d their total revenues reported on Part VIII, column (A), line 2, and their total expenses (including grants) reported in Part IX, column (B) that are attributable to these other program services, and must report on Part III, line 4e their total program service expenses from Part III, lines 4a–4d. For all other organizations, entering these amounts is optional. The organization may report the non-contribution portion of membership dues in line 4d or allocate that portion among lines 4a–4c.

Part IV. Checklist of Required Schedules

For each “Yes” answer to a question on Form 990, Part IV, complete the applicable schedule (or part or line of the schedule). See the Glossary and instructions for the pertinent schedules for definitions of terms and explanations that are relevant to questions in this part.

The organization is not required to answer “Yes” to a question on Form 990, Part IV, or complete the schedule (or part of a schedule) to which the question is directed if the organization is not required to provide any information in the schedule (or part of the schedule). Thus, a minimum dollar threshold for reporting information on a schedule may be relevant in determining whether the organization must answer “Yes” to a question on Form 990, Part IV.

All pages of a required schedule should be filed by Form 990 paper filers, even if the filer is only required to complete certain parts but not all of the schedule.

Line 1.   Answer “Yes,” if the organization is a section 501(c)(3) organization that is not a private foundation. Answer “Yes,” if the organization claims section 501(c)(3) status but has not yet filed a Form 1023 or Form 1023-EZ application or received a determination letter recognizing its section 501(c)(3) status. All other organizations answer “No.

Line 2.    Answer “Yes,” if any of the following are satisfied.
  • A section 501(c)(3) organization met the 331/3% support test of the regulations under sections 509(a)(1) and 170(b)(1)(A)(vi), checks the box on Schedule A (Form 990 or 990-EZ), Part II, line 13, 16a, or 16b, and received from any one contributor, during the year, contributions of the greater of $5,000 (in money or property) or 2% of the amount on Form 990, Part VIII, line 1h. An organization filing Schedule B can limit the contributors it reports on Schedule B using this greater-than-$5,000/2% threshold only if it checks the box on Schedule A (Form 990 or 990-EZ), Part II, line 13, 16a, or 16b.

  • A section 501(c)(3) organization did not meet the 331/3% support test of the regulations under sections 509(a)(1)/170(b)(1)(A)(vi), and received during the year contributions of $5,000 or more from any one contributor.

  • A section 501(c)(7), 501(c)(8), or 501(c)(10) organization received, during the year, (a) contributions of any amount for use exclusively for religious, charitable, scientific, literary, or educational purposes, or the prevention of cruelty to children or animals, or (b) contributions of $5,000 or more not exclusively for such purposes from any one contributor.

  • Any other organization that received, during the year, contributions of $5,000 or more from any one contributor.

    Do not attach substitutes for Schedule B. Parts I, II, and III of Schedule B (Form 990, 990-EZ, or 990-PF) may be photocopied as needed to provide adequate space for listing all contributors.

Line 3.   All organizations must answer this question, even if they are not subject to a prohibition against political campaign activities. Answer “Yes,” whether the activity was conducted directly or indirectly through a disregarded entity or a joint venture or other arrangement treated as a partnership for federal income tax purposes and in which the organization is an owner.

Line 4.   Complete only if the organization is a section 501(c)(3) organization. Other organizations leave this line blank. Answer “Yes,” if the organization engaged in lobbying activities or had a section 501(h) election in effect during the tax year. All section 501(c)(3) organizations that had a section 501(h) election in effect during the tax year must complete Schedule C (Form 990 or 990-EZ), Part II-A, whether or not they engaged in lobbying activities during the tax year.

Line 5.    Answer “Yes” only if the organization is a section 501(c)(4), 501(c)(5), or 501(c)(6) organization that receives membership dues, assessments, or similar amounts as defined in Rev. Proc. 98-19, 1998-1 C.B. 547. Other organizations answer “No.

Line 6.   Answer “Yes,” if the organization maintained at any time during the organization's tax year a donor advised fund or another similar fund or account (that is, any account over which the donor or a person appointed by the donor had advisory privileges over the use or investment of any portion of the account, but which is not a donor advised fund). Examples of other similar funds or accounts include, but are not limited to, the types of funds or accounts described as exceptions to the Glossary definition of a donor advised fund.

Line 7.   Answer “Yes,” if the organization received or held any conservation easement at any time during the year, regardless of how the organization acquired the easement or whether a charitable deduction was claimed by a donor of the easement.

Line 8.   Answer “Yes,” if at any time during the year the organization maintained collections of works of art, historical treasures, and other similar assets as described in SFAS 116 (ASC 958-360-20), whether or not the organization reported revenue and assets related to such collections in its financial statements.

  
Organizations that answer “Yes” to line 8 often will answer “Yes” to Part IV, line 30, which addresses current-year noncash contributions of such items.

Line 9.   Answer “Yes,” if at any time during the organization's tax year the organization (1) had an escrow or custodial account, (2) provided credit counseling services and/or debt management plan services , such as credit repair or debt negotiations, or (3) acted as an agent, trustee, custodian, or other intermediary for contributions or other assets not included in Part X.

Line 10.   Answer “Yes,” if the organization, a related organization, or an organization formed and maintained exclusively to further one or more exempt purposes of the organization (such as a foundation formed and maintained exclusively to hold endowment funds to provide scholarships and other funds for a college or university described within section 501(c)(3)), held assets in temporarily restricted endowment, permanent endowment, or quasi-endowment funds at any time during the year, whether or not the organization follows SFAS 117 (ASC 958) or reports endowments in Part X, line 32. See the instructions for Schedule D (Form 990), Part V, for the definitions of these types of endowments.

Line 11.    Answer “Yes,” if the organization reported an amount for land, buildings, or equipment on Part X, line 10; an amount for other liabilities on Part X, line 25; or if its financial statements for the tax year included a footnote that addresses its liability for uncertain tax positions under FIN 48 (ASC 740) (including a statement that the organization had no liability for uncertain tax positions). Also, answer “Yes,” if the organization reported in Part X an amount for investments-other securities, investments-program related, or other assets, in any of lines 12,13, or 15, that is 5% or more of the total assets reported on Part X, line 16.

Line 12a.   Answer “Yes,” if the organization received separate, independent audited financial statements for the year for which it is completing this return, or if the organization is reporting for a short year that is included in, but not identical to, the period for which the audited financial statements were obtained. All other organizations answer “No.” Answer “No” if the organization was included in consolidated audited financial statements, unless the organization also received separate audited financial statements.

  An accountant's compilation or review of financial statements is not considered to be an audit and does not produce audited financial statements. If the organization answers “No,” but has prepared, for the year for which it is completing this return, a financial statement that was not audited, the organization can (but is not required to) provide the reconciliations contained on Schedule D (Form 990), Parts XI–XII.

Line 12b.   Answer “Yes,” if the organization was included in consolidated, independent audited financial statements for the year for which it is completing this return. All other organizations answer “No.” Answer “Yes,” if the organization is reporting for a short year that is included in, but not identical to, the period for which the audited financial statements were obtained.

Line 13.   Answer “Yes,” if the organization checked the box on Schedule A (Form 990 or 990-EZ), Part I, line 2, indicating that it is a school.

Lines 14a–14b.   Answer “Yes” to line 14a if the organization maintained an office, or had employees or agents, outside the United States. Answer “Yes,” to line 14b if the organization had aggregate revenue or expenses of more than $10,000 from or attributable to grantmaking, fundraising activities, business, investment, and program service activities outside the United States, or if the book value of the organization's aggregate investments in foreign partnerships, foreign corporations, and other foreign entities was $100,000 or more at any time during the tax year.

  In the case of indirect investments made through investment entities, the extent to which revenue or expenses are taken into account in determining whether the $10,000 threshold is exceeded will depend upon whether the investment entity is treated as a partnership or corporation for U.S. tax purposes. For example, an organization with an interest in a foreign partnership would need to take into account its share of the partnership's revenue and expenses in determining whether the $10,000 threshold is exceeded. An organization with an investment in a foreign corporation would need to take into account dividends it receives from the corporation, but would not need to take into account or report any portion of the revenues, expenses, or expenditures of a foreign corporation in which it holds an investment, provided that the corporation is treated as a separate corporation for U.S. tax purposes.

Line 15.   Answer “Yes,” if the organization reported on Part IX, column (A), line 3, more than $5,000 of grants and other assistance to any foreign organization or entity, (including a foreign government) or to a domestic organization or domestic individual for the purpose of providing grants or other assistance to a designated foreign organization or organizations.

Line 16.   Answer “Yes,” if the organization reported on Part IX, column (A), line 3, more than $5,000 of aggregate grants and other assistance to foreign individuals, or to domestic organizations or domestic individuals for the purpose of providing grants or other assistance to a designated foreign individual or individuals.

Lines 17–19.   Answer “Yes” to line 17 if the total amount reported for professional fundraising services in Part IX (line 11e, plus the portion of line 6 amount attributable to professional fundraising services) exceeds $15,000.

  Answer “Yes” to line 18 if the sum of the amounts reported on lines 1c and 8a of Form 990, Part VIII exceeds $15,000. An organization that answers “No” should consider whether to complete Schedule G (Form 990 or 990-EZ) in order to report its fundraising activities or gaming activities for state or other reporting purposes.

Line 20a.   Answer “Yes,” if the organization, directly or indirectly through a disregarded entity or joint venture treated as a partnership for federal income tax purposes, operated one or more hospital facilities at any time during the tax year. Except in the case of a group return, do not include hospital facilities operated by another organization that is treated as a separate taxable or tax-exempt corporation for federal income tax purposes. For group returns, answer “Yes” if any subordinate included in the group return operated such a hospital facility.

Line 20b.    If the organization operated one or more hospital facilities at any time during the tax year, then it must attach a copy of its most recent audited financial statements. If the organization was included in consolidated audited financial statements but not separate audited financial statements for the tax year, then it must attach a copy of the consolidated financial statements, including details to consolidation (whether or not audited).

Line 21.   Answer “Yes,” if the organization reported on Part IX, column (A), line 1, more than $5,000 of grants and other assistance to any domestic organization, or to any domestic government. For instance, answer “No” if the organization made a $4,000 grant to each of two domestic organizations and no other grants. Do not report grants or other assistance provided to domestic organizations or domestic governments for the purpose of providing grants or other assistance to designated foreign organizations or foreign individuals.

Line 22.   Answer “Yes,” if the organization reported on Part IX, column (A), line 2, more than $5,000 of aggregate grants and other assistance to or for domestic individuals. Do not report grants or other assistance provided to or for domestic individuals for the purpose of providing grants or other assistance to designated foreign organizations or foreign individuals.

Line 23.   Answer “Yes,” if the organization:
  • Listed in Part VII a former officer, director , trustee, key employee, or highest compensated employee; or

  • Reported for any person listed in Part VII more than $150,000 of reportable compensation and other compensation.

   Also answer “Yes,” if, under the circumstances described in the instructions to Part VII, Section A, line 5, the filing organization had knowledge that any person listed in Part VII, Section A, received or accrued compensation from an unrelated organization for services rendered to the filing organization.

Line 24.   Lines 24a–24d involve questions regarding tax-exempt bonds. All organizations must answer “Yes” or “No” on line 24a. Those organizations that answer “Yes” on line 24a must also answer lines 24b through 24d and complete Schedule K (Form 990), Supplemental Information on Tax-Exempt Bonds. Those that answer “No” to line 24a can skip to line 25a.

Line 24a.

Answer “Yes” and complete Schedule K (Form 990) for each tax-exempt bond issued by or for the benefit of the organization after December 31, 2002 (including refunding bonds) with an outstanding principal amount of more than $100,000 as of the last day of the organization's tax year. For this purpose, bonds that have been legally defeased, and as a result are no longer treated as a liability of the organization, are not considered outstanding.

Line 24b.

For purposes of line 24b, the organization need not include the following as investments of proceeds.

  • Any investment of proceeds relating to a reasonably required reserve or replacement fund as described in section 148(d).

  • Any investment of proceeds properly characterized as replacement proceeds as defined in Regulations section 1.148-1(c).

  • Any investment of net proceeds relating to a refunding escrow as defined in Regulations section 1.148-1(b).

 
Temporary period exceptions are described in section 148(c) and Regulations section 1.148-2(e). For example, there is a 3-year temporary period applicable to proceeds spent on expenditures for capital projects and a 13-month temporary period applicable to proceeds spent on working capital expenditures.

Line 24c.

For purposes of line 24c, the organization is treated as maintaining an escrow account if such account is maintained by a trustee for tax-exempt bonds issued for the benefit of the organization.

Line 24d.

Answer “Yes,” if the organization has received a letter ruling that its obligations were issued on behalf of a state or local governmental unit; meets the conditions for issuing tax-exempt bonds as set forth in Rev. Rul. 63-20, 1963-1 C.B. 24 (see Rev. Proc. 82-26, 1982-1 C.B. 476); or is a constituted authority organized by a state or local governmental unit to issue tax-exempt bonds in order to further public purposes (see Rev. Rul. 57-187, 1957-1 C.B. 65). Also answer “Yes,” if the organization has outstanding qualified scholarship funding bonds under section 150(d) or bonds of a qualified volunteer fire department under section 150(e).

Lines 25a–25b.   Complete lines 25a and 25b only if the organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization. If the organization is not described in sections 501(c)(3), 501(c)(4), or 501(c)(29), skip lines 25a and 25b and leave them blank. In line 25b, answer “Yes,” if the organization became aware, prior to filing this return, that it engaged in an excess benefit transaction with a disqualified person in a prior year, and if the transaction has not been reported on any of the organization’s prior Forms 990 or 990-EZ.

  
An excess benefit transaction can have serious implications for the disqualified person that entered into the transaction with the organization, any organization managers that knowingly approved of the transaction, and the organization itself. A section 501(c)(3), 501(c)(4), or 501(c)(29) organization that becomes aware that it may have engaged in an excess benefit transaction should obtain competent advice regarding section 4958, pursue correction of any excess benefit, and take other appropriate steps to protect its interests with regard to such transaction and the potential impact it could have on the organization's continued exempt status. See Appendix G. Section 4958 Excess Benefit Transactions, for a discussion of section 4958, and Schedule L (Form 990 or 990-EZ), Transactions With Interested Persons, Part I, regarding reporting of excess benefit transactions.

Lines 26–28.   Lines 26 through 28 ask questions about loans and other receivables and payables between the organization and certain interested persons, grants, or other assistance provided by the organization to certain interested persons, and certain direct and indirect business transactions between the organization and governance and management officials of the organization or their associated businesses or family members. All organizations must answer these questions. The organization should review carefully the instructions for Schedule L (Form 990 or 990-EZ), Parts II–IV, before answering these questions and completing Schedule L (Form 990 or 990-EZ).

Line 29.   The organization is required to answer “Yes” to line 29 if it received during the year more than $25,000 in fair market value (FMV) of donations, gifts, grants, or other contributions of property other than cash, regardless of the manner received (such as for use in a charity auction). Do not include contributions of services or use of facilities.

Line 30.   The organization is required to answer “Yes” to line 30 if during the year it received as a donation, gift, grant, or other contribution:
  • any work of art, historical treasure, historical artifact, scientific specimen, archeological artifact, or similar asset, including a fractional interest, regardless of amount or whether the organization maintains collections of such items; or

  • any qualified conservation contributions regardless of whether the contributor claimed a charitable contribution deduction for such contribution.

 
See the Instructions for Schedule M (Form 990), Noncash Contributions, for definitions of these terms.

Lines 31–32.   The organization must answer “Yes,” if it liquidated, terminated, dissolved, ceased operations, or engaged in a significant disposition of net assets during the year. See the Instructions for Schedule N (Form 990 or 990-EZ) for definitions and explanations of these terms and transactions or events, and a description of articles of dissolution and other information that must be filed with Form 990.

  Note that a significant disposition of net assets may result from either an expansion or contraction of operations. Organizations that answer “Yes” to either of these questions must also check the box in Part I, line 2, and complete Schedule N (Form 990 or 990-EZ), Part I or Part II.

Lines 33–34.   The organization is required to report on Schedule R (Form 990), Related Organizations and Unrelated Partnerships, certain information regarding ownership or control of, and transactions with, its disregarded entities and tax-exempt and taxable related organizations. An organization that answers “Yes” to line 33 or 34 must enter its disregarded entities and related organizations on Schedule R (Form 990) and provide specified information regarding such organizations.

  Report disregarded entities in Schedule R, Part I; related tax-exempt organizations in Part II; related organizations taxable as partnerships in Part III; and any related organizations taxable as C or S corporations or trusts in Part IV.

Lines 35a–35b.   If an organization was a controlled entity of the filing organization under section 512(b)(13) during the tax year, the filing organization must answer “Yes” to line 35a. It must answer “Yes” to line 35b and complete Schedule R, Part V, line 2, if it either (1) received or accrued from its controlled entity any interest, annuities, royalties, or rent, regardless of amount, during the tax year; or (2) engaged in another type of transaction (see Schedule R for a list of transactions) with the controlled entity, if the amounts involved during the tax year for that type of transaction exceeded $50,000. See the Glossary and the Instructions for Schedule R (Form 990).

  Controlled entities are a subset of related organizations. Answer “No” to line 35a if the organization had no related organizations during the tax year. If the answer to line 35a is no, leave line 35b blank.

Line 36.   Complete line 36 only if the organization is a section 501(c)(3) organization and engaged in a transaction over $50,000 during the tax year with a related organization that was tax-exempt under a section other than section 501(c)(3). All other organizations leave this line blank and go to line 37. See the Instructions for Schedule R (Form 990) for more information on what needs to be reported on Schedule R (Form 990), Part V, line 2.

Line 37.   Answer “Yes,” if at any time during the year the organization conducted more than 5 percent of its activities, measured by total gross revenue for the tax year or total assets of the organization at the end of its tax year, whichever is greater, through an unrelated organization that is treated as a partnership for federal income tax purposes, and in which the organization was a partner or member at any time during the tax year. The 5 percent test is applied on a partnership by partnership basis, although direct ownership by the organization and indirect ownership through disregarded entities or tiered entities treated as partnerships are aggregated for this purpose. The organization need not report on Schedule R (Form 990) Part VI, either (1) the conduct of activities through an organization treated as a taxable or tax-exempt corporation for federal income tax purposes, or (2) unrelated partnerships that meet both of the following conditions.
  • 95% or more of the filing organization's gross revenue from the partnership for the partnership's tax year ending with or within the organization's tax year is described in sections 512(b)(1), 512(b)(2), 512(b)(3), and 512(b)(5), such as interest, dividends, royalties, rents, and capital gains (including unrelated debt-financed income); and

  • The primary purpose of the filing organization's investment in the partnership is the production of income or appreciation of property and not the conduct of a section 501(c)(3) charitable activity such as program-related investing.

Line 38.   Answer “Yes,” if the organization completed Schedule O (Form 990).

  
Schedule O (Form 990 or 990-EZ) must be completed and filed by all organizations that file Form 990. All filers must provide narrative responses to certain questions (for example, Part VI, lines 11b and 19) on Schedule O. Certain filers must provide narrative responses to other questions (for example, Part III, line 4d; Part V, line 3b; Part VI, lines 2-7b, 9, 12c, and 15a-b for “Yes” responses; Part VI, lines 8a-b and 10b for “No” responses; Part XII, line 3b for “No” response). All filers can supplement their answers to other Form 990 questions on Schedule O.

Part V. Statements Regarding Other IRS Filings and Tax Compliance

If an organization makes a distribution from a donor advised fund resulting from the advice of a donor, donor advisor, family member, or a 35% controlled entity of any of these persons, which distribution directly or indirectly provides a more than incidental benefit to one of such persons, section 4967 imposes a tax on (1) the person upon whose advice the distribution was made, (2) the beneficiary of the distribution, and (3) the fund manager for knowingly agreeing to make the distribution. The persons liable for the section 4967 tax must file Form 4720 to pay the tax. No section 4967 tax will be imposed on a distribution if a tax has been imposed for the distribution under section 4958. If an organization makes a distribution from a donor advised fund to a donor, donor advisor, family member, or 35% controlled entity of these persons, then the transaction might be a section 4958 transaction. Such transactions include any grant, loan, compensation, or other similar payment to these persons, as well as any other payment resulting in excess benefit.

Check the box in the heading of Part V if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

See Glossary for definition of terms used in the questions in this section.

Some questions in this part pertain to other IRS forms. Forms are available by calling 1-800-TAX-FORM (1-800-829-3676) or by downloading from the IRS website at IRS.gov. Most forms and publications are also available at your local IRS office. See also Appendix H. Forms and Publications To File or Use.

Line 1a.   The organization must use Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to transmit to the IRS paper Forms 1099, 1098, 5498, and W-2G, which are information returns reporting certain amounts paid or received by the organization. Report all such returns filed for the calendar year ending with or within the organization's tax year. If the organization transmits any of these forms electronically, add this number to the total reported. Examples of payments requiring Form 1099 reporting include certain payments to independent contractors for services rendered. Report on this line Forms 1099, 1098, 5498, and W-2G filed by reporting agents of the filing organization, including common paymasters and payroll agents, for the calendar year ending with or within the organization's tax year. Enter -0- if the organization did not file any such forms for the calendar year ending with or within its tax year, or if the organization is filing for a short year and no calendar year ended within its tax year.

Line 1b.   Form W-2G pertains to certain gambling winnings.

Line 1c.   For more information on backup withholding for missing or incorrect names or taxpayer identification numbers, see Pub. 1281, Backup Withholding for Missing and Incorrect Name/TIN(s). If backup withholding rules did not apply to the organization because it did not make a reportable payment to a vendor or provide reportable gaming (gambling) winnings to a prize winner, then leave line 1c blank.

Line 2a.   Include on this line the number of the organization's employees (not the number of Forms W-2) reported on a Form W-3 by both the filing organization and reporting agents of the filing organization, including common paymasters and payroll agents, for the calendar year ending with or within the filing organization's tax year. Enter -0- if the organization did not have any employees during the calendar year ending with or within its tax year, or if the organization is filing for a short year and no calendar year ended within its tax year.

Line 2b.   If the organization reported at least one employee on line 2a, answer whether the organization or reporting agents of the organization filed all required federal employment tax returns (which include Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, and Form 941, Employer's QUARTERLY Federal Tax Return) relating to such employees. For more information, see the discussion of employment taxes in Pub. 557. The organization may leave line 2b blank if it did not report any employees on line 2a.

Line 3a.   Check “Yes” on line 3a if the organization's total gross income from all of its unrelated trades or businesses is $1,000 or more for the year. See Pub. 598, Tax on Unrelated Business Income of Exempt Organizations, for a description of unrelated business income and the Form 990-T filing requirements for organizations having such income.

Neither Form 990-T nor Form 990 is a substitute for the other. Report on Form 990 items of income and expense that are also required to be reported on Form 990-T when the organization is required to file both forms.

Line 3b.   Answer “Yes,” if the organization checked “Yes” to line 3a and filed Form 990-T by the time this Form 990 is filed. Check “No” if the organization answered “Yes” to line 3a but has not filed Form 990-T by the time this Form 990 is filed, even if the organization has applied for an extension to file Form 990-T. If “No” to line 3b, provide an explanation on Schedule O (Form 990 or 990-EZ).

  
All tax-exempt organizations must pay estimated taxes for their unrelated business income if they expect their tax liability to be $500 or more. Use Form 990-W, Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations, to compute these amounts.

Line 4a.   Answer “Yes,” if either (1) or (2) below applies.
  1. At any time during the calendar year ending with or within the organization's tax year, the organization had an interest in, or signature or other authority over, a financial account in a foreign country (such as a bank account, securities account, or other financial account); and

    1. The combined value of all such accounts was more than $10,000 at any time during the calendar year; and

    2. The accounts were not with a U.S. military banking facility operated by a U.S. financial institution.

  2. The organization owns more than 50% of the stock in any corporation that would answer “Yes” to item 1 above.

If “Yes,” electronically file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), by June 30, 2015, with the Department of the Treasury using the FinCEN's BSA E-Filing System. Because FinCEN is not a tax form, do not file it with Form 990.

  See www.fincen.gov for more information.

Line 4b.   Enter the name of each foreign country in which a foreign account described on line 4a is located. Use Schedule O if more space is needed.

Line 5.   Answer “Yes” on line 5a if the organization was party to a prohibited tax shelter transaction as described in section 4965(e) at any time during the organization's tax year. A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transaction. A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1.6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1.6011-4(b)(4). For more information on prohibited tax shelter transactions, see IRS.gov.

  An organization that files Form 990 (other than a section 527 political organization) and that is a party to a prohibited tax shelter transaction must file Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction, and may also have to file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, and pay an excise tax imposed by section 4965. For more information, see the instructions to Forms 8886-T and 4720.

Line 6.   Answer “Yes” on line 6a only if the organization has annual gross receipts that are normally greater than $100,000 and if it solicited contributions not deductible under section 170 during the tax year.

  Any fundraising solicitation (including solicitation of member dues) by or on behalf of any section 501(c) or 527 organization that is not eligible to receive contributions deductible as charitable contributions for federal income tax purposes must include an explicit statement that contributions or gifts to it are not deductible as charitable contributions. The statement must be in an easily recognizable format whether the solicitation is made in written or printed form, by television or radio, or by telephone.

  Failure to disclose that contributions are not deductible could result in a penalty of $1,000 for each day on which a failure occurs. The maximum penalty for failures by any organization, during any calendar year, shall not exceed $10,000. In cases where the failure to make the disclosure is due to intentional disregard of the law, more severe penalties apply. No penalty will be imposed if the failure is due to reasonable cause.

  All organizations that qualify under section 170(c) to receive contributions that are deductible as charitable contributions for federal income tax purposes (such as domestic section 501(c)(3) organizations other than organizations that test for public safety) should answer “No” on line 6a.

Line 7.   Line 7 is directed only to organizations that can receive deductible charitable contributions under section 170(c). See Pub. 526, Charitable Contributions, for a description of such organizations. All other organizations should leave lines 7a through 7h blank and go to line 8.

Lines 7a and 7b.

If a donor makes a payment in excess of $75 partly as a contribution and partly in consideration for goods or services provided by the organization, the organization generally must notify the donor of the value of goods and services provided.

Example.

A donor gives a charity $100 in consideration for a concert ticket valued at $40 (a quid pro quo contribution). In this example, $60 would be deductible. Because the donor's payment exceeds $75, the organization must furnish a disclosure statement even though the taxpayer's deductible amount does not exceed $75. Separate payments of $75 or less made at different times of the year for separate fundraising events will not be aggregated for purposes of the $75 threshold.

  
See section 6113 and Notice 88-120, 1988-2 C.B. 454.

Lines 7c and 7d.

If the organization is required to file Form 8282, Donee Information Return, to report information to the IRS and to donors about dispositions of certain donated property made within 3 years after the donor contributed the property, it must answer “Yes” and indicate the number of Forms 8282 filed.

Lines 7e and 7f.

If, in connection with a transfer to or for the use of the organization, the organization directly or indirectly pays premiums on any personal benefit contract, or there is an understanding or expectation that any person will directly or indirectly pay such premiums, the organization must report on Form 8870, Information Return for Transfers Associated with Certain Personal Benefit Contracts, the premiums it paid, and the premiums paid by others but treated as paid by the organization. The organization must report and pay an excise tax, equal to premiums paid, on Form 4720. A personal benefit contract is generally any life insurance, annuity, or endowment contract that benefits, directly or indirectly, the transferor, a member of the transferor's family, or any other person designated by the transferor (other than an organization described in section 170(c)).

Line 7g.

Form 8899, Notice of Income from Donated Intellectual Property, must be filed by certain organizations that received a charitable gift of qualified intellectual property that produces net income. The organization should check “Yes,” if it provided all required Forms 8899 for the year for net income produced by donated qualified intellectual property. Qualified intellectual property is any patent, copyright (other than certain self-created copyrights), trademark, trade name, trade secret, know-how, software (other than certain “canned” or “off-the-shelf” software or self-created software), or similar property, or applications or registrations of such property. If the organization did not receive a contribution of qualified intellectual property, leave line 7g blank.

Line 7h.

A donor of (1) a motor vehicle for use on public roads, (2) a boat, or (3) an airplane cannot claim a charitable contribution deduction in excess of $500 unless the donee organization provides the donor with a Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the donation (or a written acknowledgment with the same information). See the Instructions for Form 1098-C for more information. If the organization did not receive a contribution of a car, boat, airplane, or other vehicle, leave line 7h blank.

Line 8.   A sponsoring organization of a donor advised fund must answer “Yes” if any one of its donor advised funds had excess business holdings at any time during the organization's tax year. All other organizations should leave this line blank and go to line 9. If “Yes,” see the instructions for Schedule C of Form 4720 to determine whether the organization is subject to the excess business holdings tax under section 4943 and is required to file Form 4720.

For purposes of the excise tax on excess business holdings under section 4943, a donor advised fund is treated as a private foundation.

Line 9.   Line 9 is required to be completed by sponsoring organizations maintaining a donor advised fund. All other organizations can leave this line blank and go to line 10.

Line 9a.

Answer “Yes,” if the organization made any taxable distributions under section 4966 during the organization's tax year.

Under section 4966, a taxable distribution includes a distribution from a donor advised fund to an individual. A taxable distribution also includes a distribution from a donor advised fund to an estate, partnership, association, company, or corporation unless:

  • The distribution is for a charitable purpose (for example, a purpose described in section 170(c)(2)(B)), and

  • The organization exercises expenditure responsibility for the distribution.

The above does not apply to distributions to any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization, defined in section 4966(d)(4)), to the sponsoring organization of such donor advised fund, or to any other donor advised fund.

Line 9b.

Answer “Yes,” if the organization made a distribution from a donor advised fund to a donor, donor advisor, or related person during the organization's tax year. For purposes of this question, a related person is any family member of the donor or donor advisor and any 35% controlled entity (as defined in section 4958(f)) of the donor or donor advisor.

Line 10.   Answer lines 10a and 10b only if the organization is exempt under section 501(c)(7).

  
A section 501(c)(7) organization is not exempt from income tax if any written policy statement, including the governing instrument and bylaws, allows discrimination on the basis of race, color, or religion.

  
However, section 501(i) allows social clubs to retain their exemption under section 501(c)(7) even though their membership is limited (in writing) to members of a particular religion if the social club:
  1. Is an auxiliary of a fraternal beneficiary society exempt under section 501(c)(8), and

  2. Limits its membership to the members of a particular religion; or the membership limitation is:

    1. A good-faith attempt to further the teachings or principles of that religion, and

    2. Not intended to exclude individuals of a particular race or color.

Line 10a.

Enter the amount of initiation fees, capital contributions, and unusual amounts of income included in Part VIII. Statement of Revenue, line 12, Total Revenue, but not included in the definition of gross receipts for section 501(c)(7) exemption purposes as discussed in Appendix C. However, if the organization is a college fraternity or sorority that charges membership initiation fees but not annual dues, do not include such initiation fees.

Line 10b.

Enter the amount of gross receipts included in Part VIII. Statement of Revenue, line 12, Total Revenue, derived from the general public for use of the organization's facilities, that is, from persons other than members or their spouses, dependents, or guests.

Include the amount entered on line 10b of Form 990 on the club's Form 990-T if required to be filed. Investment income earned by a section 501(c)(7) organization is not tax-exempt income unless set aside for the following purposes: religious, charitable, scientific, literary, educational, or prevention of cruelty to children or animals.

If the combined amount of an organization's gross investment income and other unrelated business income exceeds $1,000, it must report the investment income and other unrelated business income on Form 990-T.

Line 11.   Answer lines 11a and 11b only if the organization is exempt under section 501(c)(12).

  One of the requirements that an organization must meet to qualify under section 501(c)(12) is that at least 85% of its gross income consists of amounts collected from members for the sole purpose of meeting losses and expenses. For purposes of section 501(c)(12), the term gross income means gross receipts without reduction for any cost of goods sold.

  Member income for purposes of this 85% Member Income Test is income derived directly from the members to pay for services that form the basis for tax exemption under section 501(c)(12), and includes payments for purchases of water, electricity, and telephone service. Member income does not include interest income, gains from asset or security sales, or dividends from another cooperative (unless that cooperative is also a member).

  Members are those individuals or entities that have the right to elect the governing board of the organization, are involved in the operations of the organization, and receive a share of its excess operating revenues.

  When calculating the member income percentage to determine whether an organization meets the 85% Member Income Test, the organization may exclude specific sources of income from both the numerator and the denominator of the fraction. For example, if an organization is a corporation and it receives an amount that qualifies as a contribution to capital under section 118, then that amount is not included in either the numerator or the denominator because it is not considered to be income for tax purposes. However, the payment must meet the following conditions (see Rev. Rul. 93-16, 1993-1 C.B. 26) to qualify as a contribution to capital:
  • It must become a permanent part of the organization’s working capital;

  • It must not be compensation for specific quantifiable services;

  • It must be bargained for;

  • It must benefit the organization commensurately with its value; and

  • It must ordinarily be used in or contribute to the production of additional income.

  Gross income for mutual or cooperative electric companies is figured by excluding any income received or accrued from the following.
  1. Qualified pole rentals.

  2. Any provision or sale of electric energy transmission services or ancillary services if the services are provided on a nondiscriminatory open access basis under an open access transmission tariff; approved or accepted by the Federal Energy Regulatory Commission (FERC) or under an independent transmission provider agreement approved or accepted by FERC (other than income received or accrued directly or indirectly from a member).

  3. The provision or sale of electric energy distribution services or ancillary services, if the services are provided on a nondiscriminatory, open-access basis to distribute electric energy not owned by the mutual or electric cooperative company:

    1. To end-users who are served by distribution facilities not owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), or

    2. Generated by a generation facility not owned or leased by the company or any of its members and which is directly connected to distribution facilities owned by such company or any of its members (other than income received or accrued directly or indirectly from a member).

  4. From any nuclear decommissioning transaction.

  5. From any asset exchange or conversion transaction.

For a mutual or cooperative telephone company, gross income does not include amounts received or accrued either from another telephone company for completing long distance calls to or from or between the telephone company's members, from qualified pole rentals, from the sale of display listings in a directory furnished to the telephone company's members, or from prepayment of a loan under section 306A, section 306B, or section 311 of the Rural Electrification Act of 1936 (as in effect on January 1, 1987).

If the calculated member income percentage for a section 501(c)(12) organization is less than 85% for the tax year, then the organization fails to qualify for tax-exempt status for that year, and it must file Form 1120, U.S. Corporation Income Tax Return, in lieu of Form 990 or 990-EZ for the year. However, failing the 85% Member Income Test in one year does not cause permanent loss of tax-exempt status under section 501(c)(12). So long as the organization's member income percentage is equal to or greater than 85% in any subsequent tax year, the organization may file Form 990 or Form 990-EZ for that year, even if Form 1120 was filed in a prior year.

Line 12.   All organizations that are not section 4947(a)(1) trusts are to leave line 12 blank.

If a section 4947(a)(1) nonexempt charitable trust has no taxable income under Subtitle A, its filing of Form 990 can be used to meet its income tax return filing requirement under section 6012. Such a trust must, if it answers “Yes” on line 12a, report its tax-exempt interest received or accrued (if reporting under the accrual method) during the tax year on line 12b.

Section 4947(a)(1) trusts must complete all sections of the Form 990 and schedules that section 501(c)(3) organizations must complete. All references to a section 501(c)(3) organization in the Form 990, schedules, and instructions shall include a section 4947(a)(1) trust (for instance, such a trust must complete Schedule A (Form 990 or 990-EZ), unless expressly excepted).

Line 13.   Answer lines 13a, 13b, and 13c only if the organization has received a loan or grant under the Department of Health and Human Services CO-OP program.

Line 13a.

If the organization is licensed to issue qualified health plans in more than one state, check “Yes.” If the organization is licensed to issue qualified health plans in only one state, check “No.” In either case, report on Schedule O (Form 990 or 990-EZ) each state in which the organization is licensed to issue qualified health plans, the dollar amount of reserves each state requires the organization to maintain, and the dollar amount of reserves the organization maintains and reports to each state.

Line 13b.

Report the highest dollar amount of reserves the organization is required to maintain by any of the states in which the organization is licensed to issue qualified health plans.

Line 13c.

Report the highest dollar amount of reserves the organization maintains on hand and reports to a state in which the organization is licensed to issue qualified health plans.

Line 14a.

Answer line 14a “Yes” if the organization received any payments during the year for indoor tanning services. “Indoor tanning services are services employing any electronic product designed to incorporate one or more ultraviolet lamps and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.

Line 14b.

If an organization received a payment for services for indoor tanning services during the year, it must collect from the recipient of the services a tax equal to 10% of the amount paid for such service, whether paid by insurance or otherwise, and remit such tax quarterly to the IRS by filing Form 720. If the organization filed Form 720 during the year, it should check “Yes” to line 14b. If it answers “No” to line 14b, it should explain in Schedule O (Form 990 or 990-EZ) why it did not file Form 720.

Part VI. Governance, Management, and Disclosure

Check the box in the heading of Part VI if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part. All organizations must complete Part VI. Use Schedule O (Form 990 or 990-EZ) to provide required supplemental information as described in this part, and to provide any additional information that the organization considers relevant to this part.

Part VI requests information regarding an organization's governing body and management, governance policies, and disclosure practices. Although federal tax law generally does not mandate particular management structures, operational policies, or administrative practices, every organization is required to answer each question in Part VI. For example, all organizations must answer lines 11a and 11b, which ask about the organization's process, if any, it uses to review Form 990, even though the governing body is not required by federal tax law to review Form 990.

Even though the information on policies and procedures requested in Section B generally is not required under the Internal Revenue Code, the IRS considers such policies and procedures to generally improve tax compliance. The absence of appropriate policies and procedures can lead to opportunities for excess benefit transactions, inurement, operation for non-exempt purposes, or other activities inconsistent with exempt status. Whether a particular policy, procedure, or practice should be adopted by an organization depends on the organization's size, type, and culture. Accordingly, it is important that each organization consider the governance policies and practices that are most appropriate for that organization in assuring sound operations and compliance with tax law. For more governance information relating to charities, see www.irs.gov/eo and click on life cycle.

Section A. Governing Body and Management

Line 1a.   The governing body is the group of one or more persons authorized under state law to make governance decisions on behalf of the organization and its shareholders or members, if applicable. The governing body is, generally speaking, the board of directors (sometimes referred to as board of trustees) of a corporation or association, or the trustee or trustees of a trust (sometimes referred to as the board of trustees).

  Enter the number, as of the end of the organization's tax year, of members of the governing body of the organization with power to vote on all matters that come before the governing body (other than when a conflict of interest disqualifies the member from voting). If members of the governing body do not all have the same voting rights, explain material differences on Schedule O (Form 990 or 990-EZ).

  If the organization's governing body or governing documents delegated authority to act on its behalf to an executive committee or similar committee with broad authority to act on behalf of the governing body, and the committee held such authority at any time during the organization's tax year, describe on Schedule O (Form 990 or 990-EZ) the composition of the committee, whether any of the committee's members are not on the governing body, and the scope of the committee's authority. The organization need not describe on Schedule O (Form 990 or 990-EZ) delegations of authority that are limited in scope to particular areas or matters, such as delegations to an audit committee, investment committee, or compensation committee of the governing body.

Example.

A voluntary employees' beneficiary association (VEBA) is a trust under state law. Bank B is the sole trustee of the trust. In completing line 1a, the VEBA will report one voting member of the governing body.

Line 1b.   Enter the number of independent voting members of the governing body as of the end of the organization's tax year. A member of the governing body is considered “independent” only if all four of the following circumstances applied at all times during the organization's tax year.
  1. The member was not compensated as an officer or other employee of the organization or of a related organization (see the Instructions for Schedule R (Form 990)) except as provided in the religious exception discussed below. Nor was the member compensated by an unrelated organization or individual for services provided to the filing organization or to a related organization, if such compensation is required to be reported in Part VII, Section A.

  2. The member did not receive total compensation exceeding $10,000 during the organization's tax year (including a short year, regardless of whether such compensation is reported in Part VII) from the organization and related organizations as an independent contractor, other than reasonable compensation for services provided in the capacity as a member of the governing body. For example, a person who receives reasonable expense reimbursements and reasonable compensation as a director of the organization does not cease to be independent merely because he or she also receives payments of $7,500 from the organization for other arrangements.

  3. Neither the member, nor any family member of the member, was involved in a transaction with the organization (whether directly or indirectly through affiliation with another organization) that is required to be reported on Schedule L (Form 990 or 990-EZ) for the organization's tax year.

  4. Neither the member, nor any family member of the member, was involved in a transaction with a taxable or tax-exempt related organization (whether directly or indirectly through affiliation with another organization) of a type and amount that would be reportable on Schedule L (Form 990 or 990-EZ) if required to be filed by the related organization.

Note.

The independence standard for purposes of Part VI is not the same as the “absence of conflict of interest” standard for purposes of the rebuttable presumption under Treas. Reg. section 53.4958-6, which focuses on conflicts with respect to a particular transaction.

  A member of the governing body is not considered to lack independence merely because of the following circumstances.
  1. The member is a donor to the organization, regardless of the amount of the contribution.

  2. Religious exception: The member has taken a bona fide vow of poverty and either (a) receives compensation as an agent of a religious order or a section 501(d) religious or apostolic organization, but only under circumstances in which the member does not receive taxable income (see Rev. Rul. 77-290, 1977-2 C.B. 26 and Rev. Rul. 80-332, 1980-2 C.B. 34) or (b) belongs to a religious order that receives sponsorship or payments from the organization or a related organization which do not constitute taxable income to the member.

  3. The member receives financial benefits from the organization solely in the capacity of being a member of the charitable or other class served by the organization in the exercise of its exempt function, such as being a member of a section 501(c)(6) organization, so long as the financial benefits comply with the organization's terms of membership.

Example 1.

B is a voting member of the organization's board of directors. B is also a partner with a profits and capital interest greater than 5% in a law firm, C, that charged $120,000 to the organization for legal services in a court case. The transaction between C and the organization must be reported on Schedule L (Form 990 or 990-EZ) because it is a transaction between the organization and an entity of which B is a more than 5% owner, and because the payment to C from the organization exceeded $100,000 (see the Instructions to Schedule L (Form 990 or 990-EZ), Part IV, regarding both factors). Accordingly, B is not an independent member of the governing body because the $120,000 payment must be reported on Schedule L (Form 990 or 990-EZ) as an indirect business transaction with B. If B were an associate attorney (an employee) rather than a partner with a greater than 5% interest, and not an officer, director, trustee, or owner of the law firm, the transaction would not affect B's status as an independent member of the organization's governing body.

Example 2.

D is a voting member of both the organization's governing body and the governing body of C, a related organization. D's daughter, E, received $40,000 in taxable compensation as a part-time employee of C. D is not an independent member of the governing body, because E received compensation from C, a related organization to D, and the compensation was of a type (compensation to a family member of a member of C's governing body) and amount (over $10,000) that would be reportable on Schedule L (Form 990 or 990-EZ) if the related organization, C, were required to file Schedule L (Form 990 or 990-EZ).

Example 3.

C was Board Chair of X school during the tax year. X's bylaws designate the following as officer positions: Board Chair, Secretary, and Treasurer. C set the agenda for board of directors meetings, officiated board meetings, coordinated development of board policy and procedure, was an ex officio member of all committees of the board, conducted weekly staff meetings, and performed teacher and staff evaluations. X compensated C during the tax year for C's services. This compensation was attributable to C's board and committee activities, and to C's non-director activities involving staff meetings and evaluations. Because X compensated C for services as an officer/employee, C is not an independent member of the governing body. See Rev. Rul. 68-597 and Rev. Rul. 57-246 for a description of the distinction between director services and officer services.

Example 4.

Same facts as in Example 3, except that the Board Chair position was not designated as an officer position under X's Bylaws, board resolutions, or state law. Nevertheless, because X compensated C for non-director activities involving staff meetings and evaluations during the tax year, C is deemed to have received compensation as an employee—not as a governing body member— for those activities. Therefore, C is not an independent member of the governing body.

Example 5.

Same facts as in Example 3, except that: (1) C conducted only director and committee activities during the tax year; (2) C did not conduct staff meetings and evaluations; and (3) X compensated C a reasonable amount for C's Board Chair services during the tax year, but did not provide any other compensation to C in any other capacity. C's independence as a Board member is not compromised by receiving compensation from X as a Board member (and not as an officer or employee).

See also Examples 2 and 3 in the Instructions for Part VII, Section A, line 5, later.

Reasonable effort.

The organization need not engage in more than a reasonable effort to obtain the necessary information to determine the number of independent voting members of its governing body and can rely on information provided by such members. For instance, the organization can rely on information it obtains in response to a questionnaire sent annually to each member of the governing body that includes the member's name and title, blank lines for the member's signature and signature date, and the pertinent instructions and definitions for line 1b, to determine whether the member is or is not independent.

Line 2.   Answer “Yes,” if any of the organization's current officers, directors, trustees, or key employees, as reported in Part VII, Section A, had a family relationship or business relationship with another of the organization's current officers, directors, trustees, or key employees, as reported in Part VII, Section A, at any time during the organization's tax year. For each family and business relationship, identify the persons and describe their relationship on Schedule O (Form 990 or 990-EZ). It is sufficient to enter “family relationship” or “business relationship” without greater detail.

Business relationship.

Business relationships between two persons include any of the following.

  1. One person is employed by the other in a sole proprietorship or by an organization with which the other is associated as a trustee, director, officer, or greater-than-35% owner, even if that organization is tax-exempt. However, do not report a person’s employment by the filing organization as a business relationship.

  2. One person is transacting business with the other (other than in the ordinary course of either party's business on the same terms as are generally offered to the public), directly or indirectly, in one or more contracts of sale, lease, license, loan, performance of services, or other transaction involving transfers of cash or property valued in excess of $10,000 in the aggregate during the organization's tax year. Indirect transactions are transactions with an organization with which the one person is associated as a trustee, director, officer, or greater-than-35% owner. Such transactions do not include charitable contributions to tax-exempt organizations.

  3. The two persons are each a director, trustee, officer, or greater than 10% owner in the same business or investment entity (but not in the same tax-exempt organization).

Ownership is measured by stock ownership (either voting power or value, whichever is greater) of a corporation, profits or capital interest in a partnership or limited liability company (whichever is greater), membership interest in a nonprofit organization, or beneficial interest in a trust. Ownership includes indirect ownership (for example, ownership in an entity that has ownership in the entity in question); there may be ownership through multiple tiers of entities.

Privileged relationship exception.

For purposes of line 2, a “business relationship does not include a relationship between an attorney and client, a medical professional (including psychologist) and patient, or a priest/clergy and penitent/communicant.

Example 1.

B is an officer of the organization, and C is a member of the organization's governing body. B is C's sister's spouse. The organization must report that B and C have a family relationship.

Example 2.

D and E are officers of the organization. D is also a partner in an accounting firm with 300 partners (with a 1/300 interest in the firm's profits and capital) but is not an officer, director or trustee of the accounting firm. D's accounting firm provides services to E in the ordinary course of the accounting firm's business, on terms generally offered to the public, and receives $100,000 in fees during the year. The relationship between D and E is not a reportable business relationship, either because (1) it is in the ordinary course of business on terms generally offered to the public, or (2) D does not hold a greater-than-35% interest in the accounting firm's profits or capital.

Example 3.

F and G are trustees of the organization. F is the owner and CEO of an automobile dealership. G purchased a $45,000 car from the dealership during the organization's tax year in the ordinary course of the dealership's business, on terms generally offered to the public. The relationship between F and G is not a reportable business relationship because the transaction was in the ordinary course of business on terms generally offered to the public.

Example 4.

H and J are members of the organization's board of directors. Both are CEOs of publicly traded corporations and serve on each other's boards. The relationship between H and J is a reportable business relationship because each is a director or officer in the same business entity.

Example 5.

K is an officer of the organization, and L is on its board of directors. L is a greater-than-35% partner of a law firm that charged $60,000 during the organization's tax year for legal services provided to K that were worth $600,000 at the law firm's ordinary rates. Thus, the ordinary course of business exception does not apply. However, the relationship between K and L is not a reportable business relationship, because of the privileged relationship of attorney and client.

Reasonable effort.

The organization is not required to provide information about a family or business relationship between two officers, directors, trustees, or key employees if it is unable to secure the information after making a reasonable effort to obtain it. An example of a reasonable effort would be for the organization to distribute a questionnaire annually to each such person that includes the name and title of each person reporting information, blank lines for those persons' signatures and signature dates, and the pertinent instructions and definitions for line 2.

Line 3.   Answer “Yes,” if at any time during the organization's tax year the organization used a management company or other person (other than persons acting in their capacities as officers, directors, trustees, or key employees) to perform any management duties customarily performed by or under the direct supervision of officers, directors, trustees, or key employees. Such management duties include, but are not limited to, hiring, firing, and supervising personnel, planning or executing budgets or financial operations, or supervising exempt operations or unrelated trades or businesses of the organization. Management duties do not include administrative services (such as payroll processing) that do not involve significant managerial decision-making. Management duties also do not include investment management unless the filing organization conducts investment management services for others.

  If “Yes,” on Schedule O list the name(s) of the management company or companies or other person(s) performing management duties; describe the services they provided to the organization; list any of the organization’s current or former officers, directors, trustees, key employees, and highest compensated employees listed in Part VII, Section A; who were compensated by the management company or companies or other person(s) during the calendar year ending with or within the organization's tax year; and list the amounts of reportable and other compensation they received from the management company or companies or other person(s) for services provided to the filing organization and related organizations during that year.

Line 4.   The organization must report significant changes to its organizing or enabling document by which it was created (articles of incorporation, association, or organization; trust instrument; constitution; or similar document), and to its rules governing its affairs commonly known as bylaws (or regulations, operating agreement, or similar document). Report significant changes that were not reported on any prior Form 990, and that were made before the end of the tax year. Do not report changes to policies described or established outside of the organizing or enabling document and bylaws (or similar documents), such as adoption of, or change to, a policy adopted by resolution of the governing body that does not entail a change to the organizing document or bylaws.

  Examples of significant changes to the organizing or enabling document or bylaws include changes to:
  • The organization's exempt purposes or mission;

  • The organization’s name (see also the instructions for Specific Instructions, Heading, Item B);

  • The number, composition, qualifications, authority, or duties of the governing body's voting members;

  • The number, composition, qualifications, authority, or duties of the organization's officers or key employees;

  • The role of the stockholders or membership in governance;

  • The distribution of assets upon dissolution;

  • The provisions to amend the organizing or enabling document or bylaws;

  • The quorum, voting rights, or voting approval requirements of the governing body members or the organization's stockholders or membership;

  • The policies or procedures contained within the organizing documents or bylaws regarding compensation of officers, directors, trustees, or key employees, conflicts of interest, whistleblowers, or document retention and destruction; and

  • The composition or procedures contained within the organizing document or bylaws of an audit committee.

Example.

Organization X has a written conflicts of interest policy that is not contained within the organizing document or bylaws. The policy is changed by board resolution. The policy change does not need to be reported on line 4.

  Examples of insignificant changes made to organizing or enabling documents or bylaws that are not required to be reported here include changes to the organization's registered agent with the state and to the required or permitted number or frequency of governing body or member meetings.

  Describe significant changes on Schedule O (Form 990 or 990-EZ), but do not attach a copy of the amendments or amended document to Form 990 (or recite the entire amended document verbatim), unless such amended documents reflect a change in the organization's name. See Specific Instructions, Heading, Item B, regarding attachments required in the event of a change in the organization's name.

  
An organization must report significant changes to its organizational documents in Form 990, Part VI, rather than in a letter to EO Determinations. EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report significant changes to their organizational documents, though it will, on request, issue an affirmation letter confirming an organization's name change. If an exempt organization becomes a different legal entity, such as by changing its legal structure from a trust to a corporation or by dissolving in one state and incorporating in another, then a new exemption application is required to establish that the new legal entity qualifies for exemption.

Line 5.   Answer “Yes,” if the organization became aware during the organization's tax year of a significant diversion of its assets, whether or not the diversion occurred during the year. If “Yes,” explain the nature of the diversion, dollar amounts and/or other property involved, corrective actions taken to address the matter, and pertinent circumstances on Schedule O (Form 990 or 990-EZ), although the person or persons who diverted the assets should not be identified by name.

  A diversion of assets includes any unauthorized conversion or use of the organization's assets other than for the organization's authorized purposes, including but not limited to embezzlement or theft. Report diversions by the organization's officers, directors, trustees, employees, volunteers, independent contractors, grantees (diverting grant funds), or any other person, even if not associated with the organization other than by the diversion. A diversion of assets does not include an authorized transfer of assets for FMV consideration, such as to a joint venture or for-profit subsidiary in exchange for an interest in the joint venture or subsidiary. For this purpose, a diversion is considered significant if the gross value of all diversions (not taking into account restitution, insurance, or similar recoveries) discovered during the organization's tax year exceeds the lesser of (1) 5% of the organization's gross receipts for its tax year, (2) 5% of the organization's total assets as of the end of its tax year, or (3) $250,000.

Note.

A diversion of assets can in some cases be inurement of the organization's net earnings. In the case of section 501(c)(3), 501(c)(4), and 501(c)(29) organizations, it also can be an excess benefit transaction taxable under section 4958 and reportable on Schedule L (Form 990 or 990-EZ).

Line 6.   Answer “Yes,” if the organization is organized as a stock corporation, a joint-stock company, a partnership, a joint venture, or a limited liability company. Also answer “Yes,” if the organization is organized as a non-stock, nonprofit, or not-for-profit corporation or association with members. For purposes of Form 990, Part VI, member means (without regard to what a person, including a corporation or other legal entity, is called in the governing documents) any person who, pursuant to a provision of the organization's governing documents or applicable state law, has the right to participate in the organization's governance or to receive distributions of income or assets from the organization. Members do not include governing body members. For purposes of Part VI, a membership organization includes members with the following kinds of rights.
  1. The members elect the members of the governing body (but not if the persons on the governing body are the organization's only members) or their delegates.

  2. The members approve significant decisions of the governing body.

  3. The members can receive a share of the organization's profits or excess dues or a share of the organization's net assets upon the organization's dissolution.

 
Describe on Schedule O (Form 990 or 990-EZ) the classes of members or stockholders with the rights described above.

Line 7a.   Answer “Yes” on line 7a if at any time during the organization's tax year there were one or more persons (other than the organization's governing body itself, acting in such capacity) that had the right to elect or appoint one or more members of the organization's governing body, whether periodically, or as vacancies arise, or otherwise. If “Yes,” describe on Schedule O (Form 990 or 990-EZ) the class or classes of such persons and the nature of their rights.

Line 7b.   Answer “Yes” on line 7b if at any time during the organization's tax year any governance decisions of the organization were reserved to (or subject to approval by) members, stockholders, or persons other than the governing body, whether or not any such governance decisions were made during the tax year, such as approval of the governing body's election or removal of members of the governing body, or approval of the governing body's decision to dissolve the organization. If “Yes,” describe on Schedule O (Form 990 or 990-EZ) the class or classes of such persons, the decisions that require their approval, and the nature of their voting rights.

Line 8.   Answer “Yes” on lines 8a and 8b if the organization contemporaneously documented by any means permitted by state law every meeting held and written action taken during the organization's tax year by its governing body and committees with authority to act on behalf of the governing body (which ordinarily do not include advisory boards). Documentation permitted by state law can include approved minutes, email, or similar writings that explain the action taken, when it was taken, and who made the decision. For this purpose, contemporaneous means by the later of (1) the next meeting of the governing body or committee (such as approving the minutes of the prior meeting) or (2) 60 days after the date of the meeting or written action. If the answer to either line 8a or 8b is “No,” explain on Schedule O (Form 990 or 990-EZ) the organization's practices or policies, if any, regarding documentation of meetings and written actions of its governing body and committees with authority to act on its behalf. If the organization had no committees, answer “No” to line 8b.

Line 9.   The IRS needs a current mailing address to contact the organization's officers, directors, trustees, or key employees. The organization can use its official mailing address stated on the first page of Form 990 as the mailing address for such persons. Otherwise, enter on Schedule O (Form 990 or 990-EZ) the mailing addresses for such persons that are to be contacted at a different address. Such information will be available to the public.

Section B. Policies

Answer “Yes” to any question in this section that asks whether the organization had a particular policy or practice only if the organization's governing body (or a committee of the governing body, if the governing body delegated authority to that committee to adopt the policy) adopted the policy by the end of its tax year, and if the policy applied to the organization as a whole. If the policy applied only on a division-wide or department-wide level, answer “No.” The organization may explain the scope of such policy on Schedule O.

Line 10a.   Answer “Yes,” if the organization had during its tax year any local chapters, local branches, local lodges, or other similar local units or affiliates over which the organization had the legal authority to exercise direct or indirect supervision and control (whether or not in a group exemption) and local units that are not separate legal entities under state law over which the organization had such authority. An affiliate or unit is considered “local” for this purpose if it is responsible for a smaller geographical area than the filing organization is responsible for. Thus, a regional organization would be considered local for a national organization.

Example 1.

X is a national organization dedicated to the reform of K. X has affiliates in 15 states which conduct activities to carry out the purposes of X at the state level. X has the authority to approve the annual budget of each affiliate. X must answer “Yes” to line 10a.

Example 2.

Y is a section 170(b)(1)(A)(iii) hospital located in M City. Y appoints a majority of the board of directors of Z, a section 509(a)(3) supporting organization that invests funds and makes grants for the benefit of Y. Although Y controls Z, Z is not a local affiliate of Y that would require Y to answer “Yes” to line 10a.

Line 10b.   Written policies and procedures governing the activities of local chapters, branches, and affiliates to ensure their operations are consistent with the organization's tax-exempt purposes are documents used by the organization and its local units to address the policies, practices, and activities of the local unit. Such policies and procedures can include policies and procedures similar to those described in lines 11-16 of this section, whether separate or included as required provisions in the chapter's articles of organization or bylaws, a manual provided to chapters, a constitution, or similar documents. If “No,” explain on Schedule O (Form 990 or 990-EZ) how the organization ensures that the local unit's activities are consistent with the organization's tax-exempt purposes.

Note.

The central organization (parent organization) named in a group exemption letter is required to have general supervision or control over its subordinate organizations as a condition of the group exemption.

Line 11a.   Answer “Yes” only if a complete copy of the organization's final Form 990 (including all required schedules), as ultimately filed with the IRS, was provided to each person who was a voting member of the governing body at the time the Form 990 was provided, whether in paper or electronic form, before its filing with the IRS. The organization can answer “Yes” if it emailed all of its governing body members a link to a password-protected web site on which the entire Form 990 can be viewed, and noted in the email that the Form 990 is available for review on that site. However, answer “No” if the organization merely informed its governing body members that a copy of the Form 990 is available upon request. Answer “No” if the organization redacted or removed any information from the copy of its final Form 990 that it provided to its governing body members before filing the form. For example, answer “No” if the organization, at the request of a donor, redacted the name and address of that donor from the copy of its Form 990, Schedule B that it provided to its governing body members. Under those circumstances, the organization may explain on Schedule O why it answered “No” to line 11a.

Line 11b.   Describe on Schedule O (Form 990 or 990-EZ) the process, if any, by which any of the organization's officers, directors, trustees, board committee members, or management reviewed the prepared Form 990, whether before or after it was filed with the IRS, including specifics about who conducted the review, when they conducted it, and the extent of any such review. If no review was or will be conducted, enter “No review was or will be conducted.

Example.

The return preparer emails a copy of the final version of Form 990 to each Board member before it was filed. However, no Board member undertakes any review of the form either before or after filing. Because such a copy of the final version of the form was provided to each voting member of the organization's governing body before it was filed, the organization can answer “Yes” even though no review took place. The organization must describe its Form 990 review process (or lack thereof) on Schedule O (Form 990 or 990-EZ).

Line 12a.

Answer “Yes,” if as of the end of the organization's tax year, the organization had a written conflict of interest policy. A conflict of interest policy defines conflicts of interest, identifies the classes of individuals within the organization covered by the policy, facilitates disclosure of information that can help identify conflicts of interest, and specifies procedures to be followed in managing conflicts of interest. A conflict of interest arises when a person in a position of authority over an organization, such as an officer, director, manager, or key employee can benefit financially from a decision he or she could make in such capacity, including indirect benefits such as to family members or businesses with which the person is closely associated. For this purpose, a conflict of interest does not include questions involving a person's competing or respective duties to the organization and to another organization, such as by serving on the boards of both organizations, that do not involve a material financial interest of, or benefit to, such person.

Example.

B is a member of the governing body of X Charity and of Y Charity, both of which are section 501(c)(3) public charities with different charitable purposes. X Charity has taken a public stand in opposition to a specific legislative proposal. At an upcoming board meeting, Y Charity will consider whether to publicly endorse the same specific legislative proposal. While B may have a conflict of interest in this decision, the conflict does not involve a material financial interest of B's merely as a result of Y Charity's position on the legislation.

Line 12b.   Answer “Yes,” if the organization's officers, directors, trustees, and key employees are required to disclose or update annually (or more frequently) information regarding their interests and those of their family members that could give rise to conflicts of interest, such as a list of family members, substantial business or investment holdings, and other transactions or affiliations with businesses and other organizations and those of family members.

Line 12c.   If “Yes” to line 12c, describe on Schedule O (Form 990 or 990-EZ) the organization's practices for monitoring proposed or ongoing transactions for conflicts of interest and dealing with potential or actual conflicts, whether discovered before or after the transaction has occurred. The description should include an explanation of which persons are covered under the policy, the level at which determinations of whether a conflict exists are made, and the level at which actual conflicts are reviewed. Also explain any restrictions imposed on persons with a conflict, such as prohibiting them from participating in the governing body's deliberations and decisions in the transaction.

Lines 13 and 14.   A whistleblower policy encourages staff and volunteers to come forward with credible information on illegal practices or violations of adopted policies of the organization, specifies that the organization will protect the individual from retaliation, and identifies those staff or board members or outside parties to whom such information can be reported. A document retention and destruction policy identifies the record retention responsibilities of staff, volunteers, board members, and outsiders for maintaining and documenting the storage and destruction of the organization's documents and records.

Certain federal or state laws provide protection against whistleblower retaliation and prohibit destruction of certain documents. For instance, while the federal Sarbanes-Oxley legislation generally does not pertain to tax-exempt organizations, it does impose criminal liability on tax-exempt as well as other organizations for (1) retaliation against whistleblowers that report federal offenses, and (2) for destruction of records with the intent to obstruct a federal investigation. See 18 U.S.C. sections 1513(e) and 1519. Also note that an organization is required to keep books and records relevant to its tax exemption and its filings with the IRS. Some states provide additional protection for whistleblowers.

Line 15.   Answer “Yes” on line 15a if, during the tax year, the organization (not a related organization or other third party) used a process for determining compensation (reported in Part VII or Schedule J (Form 990)) of the CEO, executive director, or other person who is the top management official, that included all of the following elements.

  
  • Review and approval by a governing body or compensation committee, provided that persons with a conflict of interest regarding the compensation arrangement at issue were not involved. For purposes of this question, a member of the governing body or compensation committee has a conflict of interest regarding a compensation arrangement if any of the following circumstances apply.

    1. The member (or a family member of the member) is participating in or economically benefitting from the compensation arrangement.

    2. The member is in an employment relationship subject to the direction or control of any person participating in or economically benefitting from the compensation arrangement.

    3. The member receives compensation or other payments subject to approval by any person participating in or economically benefitting from the compensation arrangement.

    4. The member has a material financial interest affected by the compensation arrangement.

    5. The member approves a transaction providing economic benefits to any person participating in the compensation arrangement, who in turn has approved or will approve a transaction providing economic benefits to the member. See Regulations 53.4958-6(c)(1)(iii).

  • Use of data as to comparable compensation for similarly qualified persons in functionally comparable positions at similarly situated organizations.

  • Contemporaneous documentation and recordkeeping for deliberations and decisions regarding the compensation arrangement.

  Answer “Yes” on line 15b if the process for determining compensation of one or more officers or key employees other than the top management official included all of the elements listed above.

  If the answer was “Yes” on line 15a or 15b, describe the process on Schedule O (Form 990 or 990-EZ), identify the offices or positions for which the process was used to establish compensation of the persons who served in those offices or positions, and enter the year in which this process was last undertaken for each such person.

  If the organization did not compensate its CEO, executive director, or top management official during the tax year, answer “No” to line 15a. If the organization did not compensate any of its other officers or key employees during the tax year, even if such employees were compensated by a related organization, answer “No” to line 15b.

Line 16.   Answer “Yes” on line 16a if at any time during its tax year the organization invested in, contributed assets to, or otherwise participated in a joint venture or similar arrangement with one or more taxable persons. For purposes of line 16, a joint venture or similar arrangement (or a “venture or arrangement”) means any joint ownership or contractual arrangement through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to (1) whether the organization controls the venture or arrangement, (2) the legal structure of the venture or arrangement, or (3) whether the venture or arrangement is treated as a partnership for federal income tax purposes, or as an association, or corporation for federal income tax purposes. Disregard ventures or arrangements that meet both of the following conditions.
  1. 95% or more of the venture's or arrangement's income for its tax year ending with or within the organization's tax year is described in section 512(b)(1)–(5) (including unrelated debt-financed income).

  2. The primary purpose of the organization's contribution to, or investment or participation in, the venture or arrangement is the production of income or appreciation of property.

  Answer “Yes” on line 16b if, as of the end of the organization's tax year, the organization had both:
  1. Followed a written policy or procedure that required the organization to negotiate, in its transactions and arrangements with other members of the venture or arrangement, such terms and safeguards as are adequate to ensure that the organization's exempt status is protected, and

  2. Taken steps to safeguard the organization's exempt status for the venture or arrangement.

  Some examples of safeguards include the following:
  • Control over the venture or arrangement sufficient to ensure that the venture furthers the exempt purpose of the organization.

  • Requirements that the venture or arrangement give priority to exempt purposes over maximizing profits for the other participants.

  • The venture or arrangement not engage in activities that would jeopardize the organization's exemption (such as political intervention or substantial lobbying for a section 501(c)(3) organization).

  • All contracts entered into with the organization be on terms that are at arm's length or more favorable to the organization.

Section C. Disclosure

Line 17.   List the states with which a copy of this Form 990 is required to be filed, even if the organization has not yet filed Form 990 with that state. Use Schedule O (Form 990 or 990-EZ) if additional space is necessary.

Some states require or permit the filing of Form 990 to fulfill state exempt organization or charitable solicitation reporting requirements.

Line 18.   Check the box for “Own website” only if the organization posted an exact reproduction (other than for information permitted by law to be withheld from public disclosure, such as the names and addresses of contributors listed in Form 990, Schedule B) of its Form 990, Form 990-T (for section 501(c)(3) organizations), or application for recognition of exemption (Form 1023, 1023-EZ, or 1024) on its website during its tax year. Check the box for “Another's website” only if the organization provided to another individual or organization, and that other individual or organization posted on its website, an exact reproduction (other than for information permitted by law to be withheld from public disclosure, such as the names and addresses of contributors listed in Form 990, Schedule B) of any such forms during the tax year.

  If “Other” is checked, explain in Schedule O (Form 990 or 990-EZ). Also explain in Schedule O (Form 990 or 990-EZ) if the organization did not make publicly available upon request any of Forms 1023, 1023-EZ, 1024, 990, or 990-T that are subject to public inspection requirements. Exempt organizations must make available for public inspection their Form 1023, 1023-EZ, or 1024 application for recognition of exemption. Applications filed before July 15, 1987, need not be made publicly available unless the organization had a copy on July 15, 1987. Organizations that file Form 990 must make it publicly available for a period of three years from the date it is required to be filed (including extensions) or, if later, is actually filed. Organizations are not required to make publicly available the names and addresses of contributors (as set forth on Schedule B (Form 990, 990-EZ, or 990-PF), and on Form 1023, 1023-EZ, or 1024). Section 501(c)(3) organizations that file Form 990-T also are required to make their Form 990-T publicly available for the corresponding three-year period, for forms filed after August 17, 2006 (unless the form was filed solely to request a refund of telephone excise taxes). See Appendix D for more information on public inspection requirements.

Line 19.   Explain on Schedule O (Form 990 or 990-EZ) whether the organization made its governing documents (for example, articles of incorporation, constitution, bylaws, trust instrument) conflict of interest policy, and financial statements (whether or not audited) available to the general public during the tax year, and if so, how it made them available to the public (for example, posting on the organization's website, posting on another website, providing copies on request, inspection at an office of the organization, etc.). If the organization did not make any of these documents available to the public, enter “No documents available to the public.

  Federal tax law does not require that such documents be made publicly available unless they were included on a form that is publicly available (such as Form 1023, 1023-EZ, or 1024).

Line 20.   Provide the name of the person who possesses the organization's books and records, and the business address and telephone number of such person (or of the organization if the books and records are kept by such person at a personal residence). If the books and records are kept at more than one location, provide the name, business address, and telephone number of the person responsible for coordinating the maintenance of the books and records. The organization is not required to provide the address or telephone number of a personal residence of an individual. If provided, however, such information will be available to the public.

Part VII. Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors

  Check the box in the heading of Part VII if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

   Overview. Form 990, Part VII, requires the listing of the organization's current or former officers, directors, trustees, key employees, and highest compensated employees, and current independent contractors, and reporting of certain compensation information relating to such persons.

  All organizations are required to complete Part VII, and when applicable, Schedule J (Form 990), for certain persons. Compensation must be reported for the calendar year ending with or within the organization's tax year. In some cases, persons are reported in Part VII or Schedule J (Form 990) only if their reportable compensation (as explained below) and “other compensation” (as explained below) from the organization and related organizations (as explained in the Glossary and in the Instructions for Schedule R (Form 990)) exceeds certain thresholds. In some cases, compensation from an unrelated organization must be reported on Form 990. See the instructions for Part VII, Section A, line 5, later. The amount of compensation reported on Form 990, Part VII, for a listed person may differ from the amount reported on Form 990, Part IX, line 5, for that person due to factors such as a different accounting period (calendar vs. fiscal year) or a different accounting method.

  Form 990, Part VII, relies on definitions of reportable compensation and other compensation. Reportable compensation generally refers to compensation reported on Form W-2, box 1 or 5 (whichever amount is greater); and Form 1099-MISC, box 7. Organizations also must report other compensation in Part VII, as discussed in the instructions to Part VII, Section A, column (F), later.

  Organizations must report compensation for both current and former officers, directors, trustees, key employees, and highest compensated employees. The distinction between current and former such persons is discussed below. The determination of “former” uses a 5-year look-back period.

  Organizations must report compensation from themselves and from related organizations, which generally consist of parents, subsidiaries, brother/sister organizations, supporting organizations, supported organizations, sponsoring organizations of voluntary employees' beneficiary associations (VEBAs), and contributing employers to VEBAs. See the Instructions for Schedule R (Form 990) for a fuller discussion of related organizations.

  Part VII, Section A, requires reporting of officers, directors, trustees, key employees, and up to five of the organization's highest compensated employees. Compensation from related organizations must also be taken into account in determining a person's compensation and reported in Part VII, Section A, columns (E) and (F).

  Up to 25 persons can be reported on the Form 990, Part VII, Section A table. If more space is needed to enter additional persons, use as many duplicates of the Section A table as are needed, and change the numbering to reflect additional persons (for example, if five additional persons are reported on a duplicate Section A table, change the numbers along the left hand margin of the table from 1-5 to 26-30).

  Section B requires reporting of the five highest compensated independent contractors. Section B does not require reporting of compensation from related organizations.

Section A. Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees

Overview.   Organizations are required to enter in Part VII, Section A, the following officers, directors, trustees, and employees of the organization whose reportable compensation from the organization and related organizations (as explained in the Glossary and the Instructions for Schedule R (Form 990)) exceeded the following thresholds for the tax year.
  • Current officers, directors, and trustees (no minimum compensation threshold).

  • Current key employees (over $150,000 of reportable compensation).

  • Current five highest compensated employees other than officers, directors, trustees, or listed key employees (over $100,000 of reportable compensation).

  • Former officers, key employees, and highest compensated employees (over $100,000 of reportable compensation, with special rules for former highest compensated employees).

  • Former directors and trustees (over $10,000 of reportable compensation in the capacity as a former director or trustee).

  Special rules apply to disregarded entities of which the organization is the sole member. See instructions for Disregarded Entities, later.

  To determine which persons are current or former officers, directors, trustees, key employees, or highest compensated employees, see the instructions to Part VII, Section A, column (C), beginning later.

Fiscal year filers.   To determine which persons are listed in Part VII, Section A, the organization must use the calendar year ending with or within the organization's fiscal year for some (those whose compensation must exceed minimum thresholds in order to be reported) and the fiscal year for others. Report officers, directors, and trustees that served at any time during the fiscal year as “current officers, directors, and trustees. Report the following persons based on reportable compensation and status for the calendar year ending within the fiscal year.
  • Current key employees (over $150,000 of reportable compensation from the organization and related organizations).

  • Current five highest compensated employees (over $100,000 of reportable compensation from the organization and related organizations), other than current officers, directors, trustees, and key employees.

  • Former officers, key employees, and five highest compensated employees (over $100,000 of reportable compensation from the organization and related organizations, with special rules for former highest compensated employees).

  • Former directors and trustees (over $10,000 of reportable compensation for services in the capacity as director or trustee of the organization, from the organization and related organizations).

  Report compensation on Form 990, Part VII, for the calendar year ending within the organization's fiscal year, including that of current officers, directors, and trustees, even if the fiscal year is used to determine which such persons must be listed in Part VII.

Director or trustee.   A “director or trustee is a member of the organization's governing body, but only if the member has voting rights. A director or trustee that served at any time during the organization's tax year is deemed a current director or trustee. Members of advisory boards that do not exercise any governance authority over the organization are not considered directors or trustees.

  An “institutional trustee is a trustee that is not an individual or natural person but an organization. For instance, a bank or trust company serving as the trustee of a trust is an institutional trustee.

Officer.   An officer is a person elected or appointed to manage the organization's daily operations. An officer that served at any time during the organization's tax year is deemed a current officer. The officers of an organization are determined by reference to its organizing document, bylaws, or resolutions of its governing body, or as otherwise designated consistent with state law, but, at a minimum, include those officers required by applicable state law. Officers can include a president, vice-president, secretary, treasurer and, in some cases, a Board Chair. In addition, for purposes of Form 990, including Part VII, Section A, and Schedule J (Form 990), treat as an officer the following persons, regardless of their titles.
  1. Top management official. The person who has ultimate responsibility for implementing the decisions of the governing body or for supervising the management, administration, or operation of the organization; for example, the organization's president, CEO, or executive director.

  2. Top financial official. The person who has ultimate responsibility for managing the organization's finances; for example, the organization's treasurer or chief financial officer.

If ultimate responsibility resides with two or more individuals (for example, co-presidents or co-treasurers), who can exercise such responsibility in concert or individually, then treat all such individuals as officers.

Key employee.   For purposes of Form 990, a current key employee is an employee of the organization (other than an officer, director, or trustee) who meets all three of the following tests, applied in the following order:
  1. $150,000 Test: Receives reportable compensation from the organization and all related organizations in excess of $150,000 for the calendar year ending with or within the organization's tax year.

  2. Responsibility Test: At any time during the calendar year ending with or within the organization's tax year:

    1. Has responsibilities, powers, or influence over the organization as a whole that is similar to those of officers, directors, or trustees;

    2. Manages a discrete segment or activity of the organization that represents 10% or more of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole; or

    3. Has or shares authority to control or determine 10% or more of the organization's capital expenditures, operating budget, or compensation for employees.

  3. Top 20 Test: Is one of the 20 employees other than officers, directors, and trustees who satisfy the $150,000 Test and Responsibility Test with the highest reportable compensation from the organization and related organizations for the calendar year ending with or within the organization's tax year.

 
If the organization has more than 20 individuals who meet the $150,000 Test and Responsibility Test, report as key employees only the 20 individuals that have the highest reportable compensation from the organization and related organizations. Note that any others, up to five, might be reportable as current highest compensated employees, with over $100,000 in reportable compensation. Use the calendar year ending with or within the organization's tax year for determining the organization's current key employees.

  An individual that is not an employee of the organization (or of a disregarded entity of the organization) is nonetheless treated as a key employee if he or she serves as an officer or director of a disregarded entity of the organization and otherwise meets the standards of a key employee set forth above. See Disregarded Entities, later, for treatment of certain employees of a disregarded entity as a key employee of the organization.

   If an employee is a key employee of the organization for only a portion of the year, that person's entire compensation for the calendar year ending with or within the organization's tax year, from both the filing organization and related organizations, should be reported in Part VII, Section A.

   Management companies and similar entities that are independent contractors should not be reported as key employees. The organization's top management official and top financial official are deemed officers rather than key employees.

  In the examples set forth below, assume the individual involved is an employee that satisfies the $150,000 Test and Top 20 Test and is not an officer, director, or trustee.

Example 1.

T is a large section 501(c)(3) university. L is the dean of the law school of T, which generates more than 10% of the revenue of T, including contributions from alumni and foundations. Although L does not have ultimate responsibility for managing the university as a whole, L meets the Responsibility Test and is reportable as a key employee of T.

Example 2.

S chairs a small academic department in the College of Arts and Sciences of the same university, T, described above. As department chair, S supervises faculty in the department, approves the course curriculum, and oversees the operating budget for the department. The department represents less than 10% of the university's activities, assets, income, expenses, capital expenditures, operating budget, and employee compensation. Under these facts and circumstances, S does not meet the Responsibility Test and is not a key employee of T.

Example 3.

U is a large acute-care section 501(c)(3) hospital. U employs X as a radiologist. X gives instructions to staff for the radiology work X conducts, but X does not supervise other U employees, manage the radiology department, or have or share authority to control or determine 10% or more of U's capital expenditures, operating budget, or employee compensation. Under these facts and circumstances, X does not meet the Responsibility Test and is not a key employee of U.

Example 4.

W is a cardiologist and head of the cardiology department of the same hospital U described above. The cardiology department is a major source of patients admitted to U and consequently represents more than 10% of U's income, as compared to U as a whole. As department head, W manages the cardiology department. Under these facts and circumstances, W meets the Responsibility Test and is a key employee of U.

Five highest compensated employees.   The organization is required to enter its current five highest compensated employees whose reportable compensation combined from the organization and related organizations is greater than $100,000 for the calendar year ending with or within the organization's tax year and who are not also current officers, directors, trustees, or key employees of the organization. Such individuals are the “current” five highest compensated employees. These can include persons who meet some but not all of the tests for key employee status. The organization is not required to enter more than the top five such persons, ranked by amount of reportable compensation. Use the calendar year ending with or within the organization's tax year for determining the organization's current five highest compensated employees.

Example.

X is an employee of Y University and is not an officer, director, or trustee. X's reportable compensation for the calendar year exceeds $150,000, and X meets the Responsibility Test. X would qualify as a key employee of Y, except that 20 employees had higher reportable compensation and otherwise qualify as key employees; therefore, those 20 are listed as the organization's key employees. X has the highest reportable compensation from the organization and related organizations of all employees other than the 20 key employees. X must be listed as one of the organization's five highest compensated employees.

$10,000 exceptions for reporting compensation.   Report compensation paid or accrued by the filing organization and related organizations. Special rules apply for reporting reportable compensation and other compensation.

  All reportable compensation paid by the filing organization must be reported. Reportable compensation paid by a related organization is not required to be reported unless (1) it is $10,000 or more for the calendar year ending with or within the organization's tax year (the “$10,000-per-related-organization exception”), or (2) it is paid for past services to the filing organization in the person's capacity as a former director or trustee.

  A particular item of other compensation (such as listed in the compensation table, later) paid or accrued by the filing organization is not required to be reported unless (1) it is $10,000 or more for the calendar year ending with or within the organization's tax year (the “$10,000-per-item exception”) or (2) it is one of the five types of compensation (generally constituting deferred compensation (including retirement plan benefits) and health benefits) that must be reported regardless of amount (see the instructions for column (F)). The same principles apply to items of other compensation paid or accrued by a related organization (applied separately to each related organization).

  
The $10,000 exceptions do not apply to reporting compensation on Schedule J (Form 990), Part II.

Reportable compensation.   Reportable compensation consists of:
  • For officers and other employees, amounts required to be reported on Form W-2, box 1 or 5 (whichever amount is greater) (plus Form 1099-MISC, box 7 if the officer or employee is also compensated as an independent contractor of the filing organization or a related organization);

  • For directors and individual trustees, amounts required to be reported on Form 1099-MISC, box 7 for director and other independent contractor services to the organization or a related organization, plus amounts required to be reported on Form W-2, box 1 or 5 (whichever amount is greater) if also compensated as an officer or employee of the filing organization or a related organization; and

  • For institutional trustees, fees for services paid pursuant to a contractual agreement or statutory entitlement. While the compensation of institutional trustees must be reported on Form 990, Part VII, it need not be reported on Schedule J (Form 990).

  If the organization did not file a Form 1099-MISC because the amounts paid were below the threshold reporting requirement, then include and report the amount actually paid. For a full definition of reportable compensation, see Glossary.

  
Corporate officers are considered employees for purposes of Form W-2 reporting, unless they perform no services as officers, or perform only minor services and neither receive nor are entitled to receive, directly or indirectly, any compensation. Corporate directors are considered independent contractors, not employees, and director compensation, if any, generally is required to be reported on Form 1099-MISC. See Regulations section 31.3401(c)-1(f).

  For certain kinds of employees and for retirees, the amount in box 5 of Form W-2 can be zero or less than the amount in Form W-2, box 1. For instance, recipients of disability pay, certain members of the clergy, and religious workers who are not subject to social security and Medicare taxes as employees can receive compensation that is not reported in box 5. In that case, the amount required to be reported on Form W-2, box 1, must be reported as reportable compensation.

  If an officer, director, trustee, key employee, or highest compensated employee of the organization is a foreign person who received U.S. source income during the calendar year ending with or within the organization's tax year from the filing organization or a related organization, and if such income was reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, box 2, then treat this income as reportable compensation and report it in Part VII, Section A, column (D) or (E). For foreign persons for whom compensation reporting on Form W-2, Form 1099-MISC, or Form 1042-S, is not required, treat as reportable compensation in column (D) or (E) the total value of the compensation paid in the form of cash or property during the calendar year ending with or within the organization's tax year. Report other compensation from foreign organizations as “other compensation” in column (F).

  To determine whether an individual received more than $100,000 (or $150,000) in reportable compensation in the aggregate from the filing organization (and, as discussed later, certain third parties such as common paymasters, payroll/reporting agents, and certain unrelated organizations, compensation from which is considered compensation from the filing organization) and related organizations, add the following amounts.
  • The amount reported on Form W-2, box 1 or 5 (whichever amount is greater), and/or Form 1099-MISC, Miscellaneous Income, box 7, issued to the individual by the organization.

  • Amounts reported on Form W-2, box 1 or 5 (whichever amount is greater), or Form 1099-MISC, box 7, issued to the individual by each related organization that reported $10,000 or more.

  To determine whether an individual received solely in his or her capacity as a former trustee or director of the organization more than $10,000 in reportable compensation for the calendar year ending with or within the organization's tax year, in the aggregate, from the organization and all related organizations (and thus must be reported on Form 990, Part VII and Schedule J (Form 990), Part II), add the amounts reported on all Forms 1099-MISC, box 7, and, if relevant, all Forms W-2, box 1 or 5, (whichever amount is greater) issued to the individual by the organization and all related organizations for the calendar year ending with or within the organization's tax year. Report such amounts only to the extent that such amounts relate to the individual's past services as a trustee or director of the organization, and do not disregard any payments from a related organization if below $10,000, for such purpose.

Other compensation.   Other compensation includes compensation other than reportable compensation, including deferred compensation not currently reportable on Form W-2, box 1 or 5 or Form 1099-MISC, box 7, and certain nontaxable benefits, as discussed in detail in the instructions for Schedule J, (Form 990), Part II. See the instructions for other compensation reported in column (F), later, which includes a table to show where and how to report certain types of compensation in Part VII, Section A, and Schedule J (Form 990).

  

Note.

Do not report the same item of compensation in more than one column of Part VII, Section A, for the tax year.

Disregarded entities.    Disregarded entities (such as a limited liability company that is wholly owned by the organization and not treated as a separate entity for federal tax purposes) are generally treated as part of the organization rather than as related organizations for purposes of Form 990, including Part VII and Schedule J (Form 990). A person is not considered an officer or director of the organization by virtue of being an officer or director of a disregarded entity, but he or she can qualify as a key employee or highest compensated employee of the organization. An officer, director, or employee of a disregarded entity is a key employee of the organization if he or she meets the $150,000 Test and Top 20 Test for the filing organization as a whole, and if, for the Responsibility Test, the person has responsibilities, powers or influence over a discrete segment or activity of the disregarded entity that represents at least 10 percent of the activities, assets, income, or expenses of the filing organization as a whole, or has or shares authority to control or determine the disregarded entity's capital expenditures, operating budget, or compensation for employees that is at least 10 percent of the filing organization's respective items as a whole. If an officer or director of a disregarded entity also serves as an officer, director, trustee, or key employee of the organization, report this individual as an officer, director, trustee, or key employee, as applicable, of the organization, and add the compensation, if any, paid by the disregarded entity to this individual to the compensation, if any, paid directly by the organization to this individual. Report the total aggregate amount in column (D).

  
A disregarded entity generally must use the EIN of its sole member. An exception applies to employment taxes: for wages paid to employees of a disregarded entity, the disregarded entity must file separate employment tax returns and use its own EIN on such returns. See Regulations sections 301.6109-1(h) and 301.7701-2(c)(2)(iv).

Management companies.    Management companies, as independent contractors, are reported on Form 990, Part VII (if at all) only in Section B. Independent Contractors, and are not reported on Schedule J (Form 990), Part II. If a current or former officer, director, trustee, or key employee has a relationship with a management company that provides services to the organization, then the relationship may be reportable on Schedule L (Form 990 or 990-EZ), Part IV. A key employee of a management company must be reported as a current officer of the filing organization if he or she is the filing organization's top management official or top financial official or is designated as an officer of the filing organization. However, that person does not qualify as a key employee of the filing organization solely on the basis of being a key employee of the management company. If a current or former officer, director, trustee, key employee, or highest compensated employee received compensation from a management company that provided services to the organization and was a related organization during the tax year, then the individual's compensation from the management company must be reported on Form 990, Part VII, Section A, columns (E) and (F). If the management company was not a related organization during the tax year, the individual’s compensation from the management company is not reportable in Part VII, Section A. Questions pertaining to management companies also appear on Form 990, Part VI, line 3 and Schedule H (Form 990), Part IV.

Leased employees.    In some cases, instead of hiring a management company, an exempt organization “leases” one or more “employees” from another company, which may be in the business of leasing employees. The compensation paid to the leasing company should be treated like compensation to a management company for purposes of Form 990 compensation reporting.

  The organization should treat employees of an employee leasing company or a management company as the organization's own employees if such persons are common law employees of the filing organization under state law.

 
 
Compensation from common paymasters, payroll/reporting agents, and unrelated organizations or individuals (except for compensation from management companies or leasing companies, and compensation described in Taxable organization employee exception, later) must be treated as reportable compensation in determining whether the dollar thresholds are met for reporting (1) current or former employees as current or former key employees or highest compensated employees, or (2) former officers, directors, or trustees, on Form 990, Part VII, Section A. If the Form 990, Part VII thresholds for reporting are met, then the compensation from the common paymaster, payroll/reporting agent, or unrelated organization or individual must be reported as compensation from the filing organization in Part VII. The compensation may also need to be reported in Form 990, Schedule J, Part II (see the instructions for Form 990, Part VII, Section A, line 5).

The use of a leasing company, common paymaster, payroll/reporting agent, or other payroll service provider does not relieve an employer of its obligation for employment tax liabilities. The IRS strongly suggests that the organization does not change its address to that of its payroll service provider or other third party payer. Doing so could limit the organization’s ability to stay informed of tax matters, because the IRS sends correspondence regarding problems with an employer's account to the employer's address of record. Alternatively, an employer may grant permission for a third party payer to receive copies of IRS correspondence by using Form 8822-B, Form 2848, or Form 8655, as appropriate.

Compensation from unrelated organizations or individuals.    If a current or former officer, director, trustee, key employee, or highest compensated employee received or accrued compensation or payments from an unrelated organization (other than from management companies or leasing companies, as discussed above) or an individual for services rendered to the filing organization in that person's capacity as an officer, director, trustee, or employee of the filing organization, then the filing organization must report (subject to the taxable organization employee exception, next) such amounts as compensation from the filing organization if it has knowledge of the arrangement, whether or not the unrelated organization or the individual treats the amounts as compensation, grants, contributions, or otherwise. Report such compensation from unrelated organizations in Section A, columns (D) and (F), as appropriate. If the organization cannot distinguish between reportable compensation and other compensation from the unrelated organization, report all such compensation in column (D).

Taxable organization employee exception.

Do not report as compensation any payments from an unrelated taxable organization that employs the individual and continues to pay the individual's regular compensation while the individual provides services without charge to the filing organization, but only if the unrelated organization does not treat the payments as a charitable contribution to the filing organization.

Column (A).   For each person required to be listed, enter the name in the top of each row and the person's title or position with the organization in the bottom of the row. If more than one title or position, list all. List persons in the following order: individual trustees or directors, institutional trustees, officers, key employees, highest compensated employees, and former such persons. List each person on only one line.

Column (B).   For each person listed in column (A), estimate the average hours per week devoted to the organization during the year. Entry of a specific number is required for a complete answer. Enter “-0-” if applicable. Do not include statements such as “as needed,” “as required,” or “40+”. If the average is less than one hour per week, then the organization can enter a decimal rounded to the nearest tenth (for example, 0.2 hours per week).

   For each person listed in column (A), list below the dotted line an estimate of the average hours per week (if any) devoted to related organizations.

Column (C).   For each person listed in column (A), check the box that reflects the person's position with the organization during the tax year. Do not check more than one box, unless the person was both an officer and a director/trustee of the organization during the tax year. For a former officer, director, trustee, key employee, or highest compensated employee, check only the “Former” box and indicate the former status in the person's title.

Current” officers, directors, trustees, key employees, and highest compensated employees.

A “currentofficer, director, or trustee is a person that was an officer, director, or trustee at any time during the organization's tax year. A “currentkey employee or highest compensated employee is a person who was an employee at any time during the calendar year ending with or within the organization's tax year, and was a key employee or highest compensated employee for such calendar year.

If the organization files Form 990 based on a fiscal year, use the fiscal year to determine the organization's “current” officers, directors, and trustees. Whether or not the organization files Form 990 based on a fiscal year, use the calendar year ending with or within the organization's tax year to determine the organization's “current key employees and five highest compensated employees.

Do not check the “Former” box if the person was a current officer, director, or trustee at any time during the organization's tax year, or a current key employee or among the five highest compensated employees for the calendar year ending with or within the organization's tax year. A current employee (other than a current officer, director, trustee, key employee, or highest compensated employee) can be reported on Form 990, Part VII and Schedule J (Form 990), Part II: (1) as a former director or trustee because he or she served as a director or trustee within the last five years; and received more than $10,000 in reportable compensation, for the calendar year ending with or within the organization’s tax year, in his or her capacity as a former director or trustee, or (2) a former officer or key employee (but not as a former highest compensated employee) because he or she served as an officer or key employee within the last five years and received more than $100,000 of reportable compensation for the calendar year ending with or within the organization’s tax year. In such a case, indicate the individual's former position in his or her titles (for example, “former president”).

Former” officers, directors, trustees, key employees, and highest compensated employees.

Check the “Former” box for former officers, directors, trustees, and key employees only if both conditions below apply.

  • The organization reported (or should have reported, applying the instructions in effect for such years) an individual on any of the organization's Forms 990, 990-EZ or 990-PF, for any one or more of the five prior years in one or more of the following capacities: officer, director, trustee, or key employee.

  • The individual received reportable compensation, from the organization and/or related organizations, in the calendar year ending with or within the organization's current tax year in excess of the threshold amount ($100,000 for former officers and key employees, $10,000 paid to former directors and trustees for services rendered in their former capacity as directors or trustees.)

 
 
If a person was reported (or should have been reported) as an officer, director, trustee, or key employee on any of the organization's prior five Forms 990, 990-EZ, or 990-PF, if the person was still employed at any time during the organization's tax year either: (1) by the organization in a lesser capacity other than as an officer, director, trustee, key employee, or highest compensated employee, or (2) by a related organization in any capacity, but not by the filing organization, and if the person received reportable compensation that exceeded the threshold amount described above, then check only the “Former” box. For example, do not check both the “Former” and “Officer” boxes for a former president of the organization who was not an officer of the organization during the tax year.

Whether or not the organization files Form 990 based on a fiscal year, use the calendar year ending within the organization's tax year to determine all “former” officers, directors, trustees, key employees, and five highest compensated employees (because their status depends on their reportable compensation, which is reported for the calendar year).

Check the “Former” box for the former five highest compensated employees only if all four conditions below apply.

  1. The individual was not an employee of the organization at any time during the calendar year ending with or within the organization's tax year.

  2. The individual was reported (or should have been reported, under the instructions in effect for such years) on any of the organization's Forms 990, 990-EZ, or 990-PF for one or more of the five prior years as one of the five highest compensated employees.

  3. The individual's reportable compensation exceeded $100,000 for the calendar year ending with or within the organization's tax year.

  4. The amount of the individual's reportable compensation for such year would place him or her among the organization's current five highest compensated employees if the individual were an employee during the calendar year ending with or within the organization's tax year.

  

Example 1.

X was reported as one of Y Charity's five highest compensated employees on one of Y's Forms 990, 990-EZ, or 990-PF from one of its five prior tax years. During Y’s tax year, X was not a current officer, director, trustee, key employee, or highest compensated employee of Y. X was not an employee of Y during the calendar year ending with or within Y's tax year. During this calendar year, X received reportable compensation in excess of $100,000 from Y for past services and would be among Y's five highest compensated employees if X were a current employee. Y must report X as a former highest compensated employee on Y's Form 990, Part VII, Section A, for Y's tax year.

Example 2.

T was reported as one of Y Charity's five highest compensated employees on one of Y's Forms 990, 990-EZ, or 990-PF from one of its five prior tax years. During Y’s tax year, T was not a current officer, director, trustee, key employee, or highest compensated employee of Y, although T was still an employee of Y during the calendar year ending with or within Y's tax year. T received reportable compensation in excess of $100,000 from Y and related organizations for such calendar year. T is not reportable as a former highest compensated employee on Y's Form 990, Part VII, Section A, for Y’s tax year because T was an employee of Y during the calendar year ending with or within Y's tax year.

Example 3.

Z was reported as one of Y Charity's key employees on Y's Form 990 filed for one of its five prior tax years. During Y’s tax year Z was not a current officer, director, trustee, key employee, or highest compensated employee of Y. For the calendar year ending with or within Y’s tax year, Z received reportable compensation of $90,000 from Y as an employee (and no reportable compensation from related organizations). Because Z received less than $100,000 reportable compensation for the calendar year ending with or within Y’s tax year from Y and its related organizations, Y is not required to report Z as a former key employee on Y's Form 990, Part VII, Section A, for Y’s tax year.

Columns (D) and (E).   Enter the amounts required to be reported (whether or not actually reported) on Form W-2, box 1 or 5 (whichever is greater) and/or Form 1099-MISC, box 7, issued to the person for the calendar year ending with or within the organization's tax year. Enter an amount for each person in each of columns (D) and (E). Enter “-0-” if the person received no reportable compensation. For institutional trustees that do not receive a Form 1099-MISC, enter the amount that the organization would have reported in box 7 if a Form 1099-MISC had been required.

  Reportable compensation paid to the person by a related organization at any time during the entire calendar year ending with or within the filing organization's tax year should be reported in column (E). If the related organization was related to the filing organization for only a portion of the tax year, then the filing organization may choose to report only compensation paid or accrued by the related organization during the time it was actually related. If the filing organization reports compensation on this basis, it must explain in Schedule O (Form 990 or 990-EZ) and state the period during which the related organization was related.

$10,000-per-related-organization exception.

For purposes of column (E), the organization need not include payments from a single related organization if less than $10,000 for the calendar year ending with or within the organization's tax year, except to the extent paid to a former director or former trustee of the filing organization for services as a director or trustee of the organization. For example, if an officer of the organization received compensation of $6,000, $15,000, and $50,000 from three separate related organizations for services provided to those organizations, the organization needs to report only $65,000 in column (E) for the officer.

Volunteer exception.

The organization need not report in column (E) or (F) compensation from a related organization paid to a volunteer officer, director, or trustee of the filing organization if the related organization is a for-profit organization, is not owned or controlled directly or indirectly by the organization or one or more related tax-exempt organizations, and does not provide management services for a fee to the organization.

Bank or financial institution trustee.

If the organization is a trust with a bank or financial institution trustee that is also a trustee of another trust, it need not report in column (E) or (F) compensation from the other trust for services provided as the trustee to the other trust, because the other trust is not a related organization (see Glossary definition of Related organization).

Reasonable effort.

The organization is not required to report compensation from a related organization to a person listed on Form 990, Part VII, Section A, if the organization is unable to secure the information on compensation paid by the related organization after making a reasonable effort to obtain it, and if it is unable to make a reasonable estimate of such compensation. If the organization makes reasonable efforts but is unable to obtain the information or provide a reasonable estimate of compensation from a related organization in column (E) or (F), then it must report the efforts undertaken on Schedule O (Form 990 or 990-EZ). An example of a reasonable effort is for the organization to distribute a questionnaire annually to each of its current and former officers, directors, trustees, key employees, and highest compensated employees that includes the name and title of each person reporting information, blank lines for those persons' signatures and signature dates, and the pertinent instructions and definitions for Form 990, Part VII, Section A, columns (E) and (F).

Short year and final returns.

For a short year return in which there is no calendar year that ends with or within the short year, leave columns (D) and (E) blank, and do not report any key employees, highest compensated employees, or highest compensated independent contractors (because such persons are determined according to compensation received in the calendar year ending with or within the tax year for which the return is filed), unless the return is a final return. If the return is a final return, report the compensation that is reportable compensation on Forms W-2 and 1099 for the short year, from both the filing organization and related organizations, whether or not Forms W-2 or 1099 have been filed yet to report such compensation.

Column (F).    Other compensation generally includes compensation not currently reportable on Form W-2, box 1 or 5 or Form 1099-MISC, box 7, including nontaxable benefits other than disregarded benefits, as discussed in Disregarded benefits and in the instructions for Schedule J (Form 990), Part II. Treat amounts paid or accrued under a deferred compensation plan, or held by a deferred compensation trust, that is established, sponsored, or maintained by the organization (or a related organization) as paid, accrued, or held directly by the organization (or the related organization). Deferred compensation to be reported in column (F) includes compensation that is earned or accrued in one year and deferred to a future year, whether or not funded, vested, qualified or nonqualified, or subject to a substantial risk of forfeiture. But do not report in column (F) a deferral of compensation that causes an amount to be deferred from the calendar year ending with or within the tax year to a date that is not more than 2 ½ months after the end of the calendar year ending with or within the tax year if such compensation is currently reported as reportable compensation.

  Enter an amount in column (F) for each person listed in Part VII, Section A. (Enter “-0-” if applicable.) Report a reasonable estimate if actual numbers are not readily available.

  Other compensation paid to the person by a related organization at any time during the calendar year ending with or within the filing organization's tax year should be reported in column (F). If the related organization was related to the filing organization for only a portion of the tax year, then the filing organization may choose to report only other compensation paid or accrued by the related organization during the time it was actually related. If the filing organization reports compensation on this basis, it must explain in Schedule O (Form 990 or 990-EZ) and state the period during which the related organization was related.

  The following items of compensation provided by the filing organization and related organizations must be reported as “other compensation” in column (F) in all cases regardless of the amount, to the extent they are not included in column (D).
  1. Tax-deferred contributions by the employer to a qualified defined contribution retirement plan.

  2. The annual increase or decrease in actuarial value of a qualified defined benefit plan, whether or not funded or vested.

  3. The value of health benefits provided by the employer, or paid by the employee with pre-tax dollars, that are not included in reportable compensation. For this purpose, health benefits include: (1) payments of health benefit plan premiums; (2) medical reimbursement and flexible spending programs, and (3) the value of health coverage (rather than actual benefits paid) provided by an employer's self-insured or self-funded arrangement. Health benefits include dental, optical, drug, and medical equipment benefits. They do not include disability or long-term care insurance premiums or allocated benefits for this purpose.

  4. Tax-deferred contributions by the employer and employee to a funded nonqualified defined contribution plan, and deferrals under an unfunded nonqualified defined contribution plan, whether or not such plans are vested or subject to a substantial risk of forfeiture. See examples in Schedule J (Form 990), Part II instructions.

  5. The annual increase or decrease in actuarial value of a nonqualified defined benefit plan, whether or not funded, vested, or subject to a substantial risk of forfeiture.

$10,000-per-item exception.   Except for the five items listed above, neither the organization nor a related organization is required to report on Form 990, Part VII, Section A any item of “other compensation” (as set forth in the compensation table beginning later) if its total value is less than $10,000 for the calendar year ending with or within the organization's tax year.

  Amounts excluded under the two separate $10,000 exceptions (the $10,000-per-related-organization and $10,000-per-item exceptions) are to be excluded from compensation in determining whether an individual's total reportable compensation and other compensation exceeds the thresholds set forth on Form 990, Part VII, Section A, line 4. If the individual's total compensation exceeds the relevant threshold, then the amounts excluded under the $10,000 exceptions are included in the individual's compensation reported on Schedule J (Form 990). Thus, the total amount of compensation reported on Schedule J (Form 990) can be higher than the amount reported on Form 990, Part VII, Section A.

  The $10,000-per-item exception applies separately for each item of other compensation from the organization and from each related organization.

Example 1.

Organization X provides the following compensation to its current officer:

$110,000 Reportable compensation (including pre-tax employee contributions of $5,000 to a qualified defined contribution retirement plan and $2,500 to a qualified health benefit plan)
5,000 Tax-deferred employer contribution to qualified defined contribution retirement plan
5,000 Nontaxable employer contributions to health benefit plan
4,000 Nontaxable dependent care assistance
500 Nontaxable group life insurance premium
8,000 Moving expense (nontaxable as qualified under section 132)

Organization Y, a related organization, also provides compensation to the officer as follows:

$21,000 Reportable compensation (including $1,000 pre-tax employee contribution to qualified defined contribution retirement plan)
1,000 Tax-deferred employer contribution to qualified defined contribution retirement plan
5,000 Nontaxable tuition assistance

The officer receives no compensation in the capacity as a former director or trustee of X, and no unrelated organization pays the officer for services provided to X. The organization can disregard as other compensation the (a) $4,500 in dependent care and group life insurance payments from the organization (under the $10,000-per-item exception); (b) the $8,000 moving expense from the organization (excluded under section 132) on both Form 990, Part VII and Schedule J (Form 990), Part II; and (c) the $5,000 in tuition assistance from the related organization (under the $10,000-per-item exception) in determining whether the officer's total reportable and other compensation from the organization and related organizations exceeds $150,000. In this case, total reportable compensation is $131,000, and total other compensation (excluding the excludible items below $10,000) is $11,000. Under these circumstances, the officer's dependent care, group life, moving expenses, and tuition assistance items need not be reported as other compensation on Form 990, Part VII, Section A, column (F), and the officer's total reportable and other compensation ($142,000) is not reportable on Schedule J (Form 990). If instead, the officer's reportable compensation from Y were $30,000 rather than $21,000, then the officer's total reportable and other compensation ($151,000) would be reportable on Schedule J (Form 990), including the dependent care, group life, and tuition assistance items, even though these items would not have to be reported as other compensation in Form 990, Part VII.

Example 2.

Organization S provides health benefits to B (its CEO) under a self-insured medical reimbursement plan. The value of the plan benefits for the tax year is $10,000, which represents the estimated cost of providing coverage for the year if the employer paid a third-party insurer for similar benefits, as determined on an actuarial basis. The actual benefits paid for B and B's family for the year are $30,000. If the benefits are not reportable compensation to B, then Organization S must report the $10,000 value of plan benefits as other compensation to B in Form 990, Part VII, Section A, column (F).

Disregarded benefits.   Disregarded benefits under Regulations section 53.4958-4(a)(4) need not be reported in column (F). Disregarded benefits generally include fringe benefits excluded from gross income under section 132. These benefits include the following:
  • No-additional cost service;

  • Qualified employee discount;

  • Working condition fringe;

  • De minimis fringe;

  • Qualified transportation fringe;

  • Qualified moving expense reimbursement;

  • Qualified retirement planning services; and

  • Qualified military base realignment and closure fringe.

   For descriptions of each of these disregarded benefits, see instructions for Schedule J (Form 990 and 990-EZ), Compensation Information.

Short year and final returns.   For a short year return in which there is no calendar year that ends with or within the short year, leave column (F) blank, unless the return is a final return. If the return is a final return, report the other compensation for the short year, from both the filing organization and related organizations.

Compensation table for reporting in Part VII, Section A, or Schedule J (Form 990), Part II.   The following table may be useful in determining how and where to report items of compensation on Form 990, Part VII, Section A and on Schedule J (Form 990), Part II. The list is not comprehensive but covers most items for most organizations. Many items of compensation may or may not be taxable or currently taxable, depending on the plan or arrangement adopted by the organization and other circumstances. The list attempts to take into account these varying facts and circumstances. The list is merely a guideline to report amounts for those persons required to be listed. In all cases, items included on Form W-2, box 1 or 5 (whichever is greater) and/or Form 1099-MISC, box 7 are required to be reported on Part VII, Section A and, for applicable persons, Schedule J (Form 990), Part II, column (B). Items listed as “taxable” or “taxable in current year” are currently includible in reportable compensation, but are not necessarily subject to federal income tax in the current year.

  Any item listed in the following compensation table that is not followed by a star (x) or asterisk (*) in any column should not be reported in Part VII, Section A or in Schedule J, Part II (Form 990).

  
Type of Compensation Where to Report
Form 990, Part VII, Section A, column (D) or (E) Form 990, Part VII, Section A, column (F)
Schedule J (Form 990), Part II, column B(i) Schedule J (Form 990), Part II, column B(ii) Schedule J (Form 990), Part II, column B(iii) Schedule J (Form 990), Part II, column C Schedule J (Form 990), Part II, column D
Base salary/wages/fees paid x        
Base salary/wages/fees deferred (taxable) x        
Base salary/wages/fees deferred (nontaxable)       x  
Bonus paid (including signing bonus)   x      
Bonus deferred (taxable in current year)   x      
Bonus deferred (not taxable in current year)       x  
Incentive compensation paid   x      
Incentive compensation deferred (taxable in current year)   x      
Incentive compensation deferred (not taxable in current year)       x  
Severance or change of control payments made     x    
Sick pay paid by employer x        
Third-party sick pay     x    
Other compensation amounts deferred (taxable in current year)   x      
Other compensation amounts deferred (not taxable in current year)       x  
Tax gross-ups paid     x    
Vacation/sick leave cashed out     x    
Stock options at time of grant       x  
Stock options at time of exercise     x    
Stock awards paid by taxable organizations substantially vested     x    
Stock awards paid by taxable organizations not substantially vested       x  
Stock equivalents paid by taxable organizations substantially vested     x    
Stock equivalents paid by taxable organizations not substantially vested       x  
Loans—forgone interest or debt forgiveness     x    
Contributions (employer) to qualified retirement plan       x  
Contributions (employee deferrals) to section 401(k) plan x        
Contributions (employee deferrals) to section 403(b) plan x        
Qualified or nonqualified retirement plan defined benefit accruals (reasonable estimate of increase or decrease in actuarial value)       x  
Qualified retirement (defined contribution) plan investment earnings or losses (not reportable or other compensation)          
Taxable distributions from qualified retirement plan, including section 457(b) eligible governmental plan (reported on Form 1099-R but not reportable or other compensation on Form 990)          
Type of Compensation Where to Report
Form 990, Part VII, Section A, column (D) or (E) Form 990, Part VII, Section A, column (F)
Schedule J (Form 990), Part II, column B(i) Schedule J (Form 990), Part II, column B(ii) Schedule J (Form 990), Part II, column B(iii) Schedule J (Form 990), Part II, column C Schedule J (Form 990), Part II, column D
Distributions from nongovernmental section 457(b) plan     x    
Amounts includible in income under section 457(f)     x    
Amounts deferred by employer or employee (plus earnings) under section 457(b) plan (substantially vested)     x    
Amounts deferred by employer or employee under section 457(b) or 457(f) plan (not substantially vested)       x  
Amounts deferred under nonqualified defined contribution plans (substantially vested)     x    
Amounts deferred under nonqualified defined contribution plans (not substantially vested)       x  
Earnings or losses of nonqualified defined contribution plan (substantially vested)     x    
Earnings or losses of nonqualified defined contribution plan (not substantially vested)          
Scholarships and fellowship grants (taxable)     x    
Health benefit plan premiums paid by employer (taxable) x        
Health benefit plan premiums paid by the employee (taxable) x        
Health benefit plan premiums (nontaxable)         x
Medical reimbursement and flexible spending programs (taxable)     x    
Medical reimbursement and flexible spending programs (nontaxable)         x
Other health benefits (taxable)     x    
Other health benefits (nontaxable)         x
Life, disability, or long-term-care insurance (taxable)     x    
Life, disability, or long-term-care insurance (nontaxable)         *
Split-dollar life insurance (see Notice 2002-8, 2002-1 C.B. 398)     x    
Housing provided by employer or ministerial housing allowance (taxable)     x    
Housing provided by employer or ministerial housing allowance (nontaxable) (but see Schedule J instructions regarding working condition fringes)         *
Personal legal services (taxable)     x    
Personal legal services (nontaxable)         *
Personal financial services (taxable)     x    
Personal financial services (nontaxable)         *
Dependent care assistance (taxable)     x    
Dependent care assistance (nontaxable)         *
Adoption assistance (taxable)     x    
Adoption assistance (nontaxable)         *
Tuition assistance for family (taxable)     x    
Tuition assistance for family (nontaxable)         *
Cafeteria plans (nontaxable health benefit)         x
Cafeteria plans (nontaxable benefit other than health)         *
Liability insurance (taxable)     x    
Employer-provided automobile (taxable)     x    
Employer-subsidized parking (taxable)     x    
Travel (taxable)     x    
Moving (taxable)     x    
Meals and entertainment (taxable)     x    
Social club dues (taxable)     x    
Spending account (taxable)     x    
Gift cards     x    
Disregarded benefits under Regulations section 53.4958-4(a)(4) (see Schedule J, Part II instructions)          

Note.

Items marked with asterisk (*) instead of a star (x) are excludible from Form 990, Part VII, Section A, column (F), if below $10,000.

Line 1b.   Report the sub-totals of compensation from the Section A, line 1a table in line 1b, columns (D), (E), and (F).

Line 1c.   Report the sub-totals of compensation from continuation sheets (duplicate Section A tables for filers that report more than 25 persons in Section A, line 1a table) in line 1c, columns (D), (E), and (F).

Line 1d.   Add the totals of lines 1b and 1c in line 1d for columns (D), (E), and (F).

Line 2.   Report the total number of individuals, both those listed in the Part VII, Section A table and those not listed, to whom the filing organization (not related organizations) paid over $100,000 in reportable compensation during the tax year.

Line 3.   Complete Schedule J (Form 990) for each of the following persons.
  • Each individual listed in Part VII, Section A, as a former officer, former key employee, or a former highest compensated employee. To determine whether an individual received more than $100,000 in reportable compensation in the aggregate from the organization and related organizations, add the amounts reported on all Forms W-2, box 1 or 5 (whichever is greater) and/or Forms 1099-MISC, box 7, issued to the individual by the organization and all related organizations (disregarding amounts from a related organization if below $10,000) for the calendar year ending with or within the organization's tax year.

  • Each individual that received, solely in the capacity as a former director or former trustee of the organization, more than $10,000 of reportable compensation (Part VII, Section A, columns (D) and (E)) during the year from the organization or related organizations. To determine whether an individual received or accrued more than $10,000 in reportable compensation solely in the capacity as a former trustee or director of the organization, add the amounts reported on all Forms 1099-MISC, box 7, and, if applicable, Forms W-2, box 1 or 5 (whichever is greater) and/or issued to the individual by the organization and all related organizations, to the extent that such amounts relate to the individual's past services as a trustee or director of the organization and not of a related organization. The $10,000-per-related-organization exception does not apply for this purpose.

Line 4.   Complete Schedule J (Form 990) for each individual listed in Section A who received or accrued more than $150,000 of reportable and other compensation from the organization and related organizations. To determine whether any listed individual received or accrued more than $150,000 of reportable and other compensation, add all compensation included in Part VII, Section A, columns (D), (E), and (F), but disregard any decreases in the actuarial value of defined benefit plans.

  The following chart explains which officers, directors, trustees, key employees, and highest compensated employees must be reported on Form 990, Part VII, Section A, and on Schedule J (Form 990). See also line 5 for additional individuals who must be reported on Schedule J (Form 990), Part II.

Matrix for Part VII, Section A, Lines 3 and 4

Position Current or former Enter on Form 990, Part VII, 
Section A . . .
Enter on Schedule J (Form 990), Part II . . .
Directors and Trustees Current All If reportable and other compensation is greater than $150,000 in the aggregate from organization and related organizations (do not report institutional trustees)
Former If reportable compensation in capacity as former director or trustee is greater than $10,000 in the aggregate from organization and related organizations If listed on Form 990, Part VII, Section A (do not report institutional trustees)
Officers Current All If reportable and other compensation is greater than $150,000 in the aggregate from organization and related organizations
Former If reportable compensation is greater than $100,000 in the aggregate from organization and related organizations If listed on Form 990, Part VII, Section A
Key employees Current All All
Former If reportable compensation is greater than $100,000 in the aggregate from organization and related organizations If listed on Form 990, Part VII, Section A
Other Five Highest Compensated Employees Current If reportable compensation is greater than $100,000 in the aggregate from organization and related organizations If reportable and other compensation is greater than $150,000 in the aggregate from organization and related organizations
Former If reportable compensation is greater than $100,000 in the aggregate from organization and related organizations If listed on Form 990, Part VII, Section A

Line 5.   Complete Schedule J (Form 990) for any individual listed on Form 990, Part VII, Section A if the person receives or accrues compensation from an unrelated organization (other than from management companies and leasing companies, as discussed earlier) for services rendered to the filing organization in the person's capacity as an officer, director, trustee, or employee of the filing organization. Also, specify on Schedule J (Form 990), Part III, the name of the unrelated organization, the type and amount of compensation it paid or accrued, and the person receiving or accruing such compensation. See Compensation from unrelated organizations, earlier.

  For purposes of line 5, disregard:
  1. Payments from a deferred compensation trust or plan established, sponsored, or maintained by the organization (or a related organization), and deferred compensation held by such trust or plan;

  2. Payments from a common paymaster for services provided to the organization (or to a related organization) (see instructions for Common paymaster or payroll/reporting agent, earlier); or

  3. Payments from an unrelated taxable organization that employs the individual and continues to pay the individual's regular compensation while the individual provides services without charge to the filing organization, but only if the unrelated organization does not treat the payments as a charitable contribution to the filing organization.

Example 1.

A is the CEO (and the top management official) of the organization. In addition to compensation paid by the organization to A, A receives payments from B, an unrelated corporation (using the definition of relatedness on Schedule R (Form 990)), for services provided by A to the organization. B also makes rent payments for A's personal residence. The organization is aware of the compensation arrangement between A and B, and does not treat the payments as paid by the organization for Form W-2 reporting purposes. A, as the top management official of the organization, must be listed as an officer of the organization in Part VII, Section A. However, the amounts paid by B to A require that the organization answer “Yes” on line 5 and complete Schedule J (Form 990) about A.

Example 2.

C is an attorney employed by a law firm that is not a related organization to the organization. The organization and the law firm enter into an arrangement where C serves the organization, a section 501(c)(3) legal aid society pro bono, on a full-time basis as its vice-president and as a board member while continuing to receive her regular compensation from the law firm. The organization does not provide any compensation to C for the services provided by C to the organization, and does not report C's compensation on Form W-2 or Form 1099-MISC. The law firm does not treat any part of C's compensation as a charitable contribution to the legal aid society. Under these circumstances, the amounts paid by the law firm to C do not require that the organization answer “Yes” on line 5, about C. Also, nothing in these facts would prevent C from qualifying as an independent member of the organization's governing body for purposes of Form 990, Part VI, line 1b.

Example 3.

D, a volunteer director of the organization, is also the sole owner and CEO of M management company (an unrelated organization), which provides management services to the organization. The organization pays M an annual fee of $150,000 for management services. Under the circumstances, the amounts paid by M to D (in the capacity as owner and CEO of M) do not require that the organization answer “Yes” on line 5, regarding D. However, the organization must report the transaction with M, including the relationship between D and M, on Schedule L (Form 990 or 990-EZ), Part IV. Also, D does not qualify as an independent member of the organization's governing body because D receives indirect financial benefits from the organization through M that are reportable on Schedule L (Form 990 or 990-EZ), Part IV.

Section B. Five Highest Compensated Independent Contractors

Complete this table for the five highest compensated independent contractors that received more than $100,000 in compensation for services, whether professional or other services, from the organization. Independent contractors include organizations as well as individuals and can include professional fundraisers, law firms, accounting firms, publishing companies, management companies, and investment management companies. Do not report public utilities or insurance providers as independent contractors. See Pub. 1779, Independent Contractor or Employee, and Pub. 15-A, Employer's Supplemental Tax Guide, for distinguishing employees from independent contractors.

Column (C).   Enter the amount the organization paid, whether reported on Form 1099-MISC, box 7, or paid under the parties' agreement or applicable state law, for the calendar year ending with or within the organization's tax year.

  For a short year return in which there is no calendar year that ends with or within the short year, do not report any information in columns (A) through (C), unless the return is a final return. If the return is a final return, report the compensation paid to the independent contractor(s) under the parties' agreement during the short year or the compensation that is reportable compensation on Form 1099 for the short year, whether or not Form 1099 has been filed yet to report such compensation.

   Compensation includes fees and similar payments to independent contractors but not reimbursement of expenses unless incidental to providing the service. However, for this purpose, the organization must report gross payments to the independent contractor that include expenses and fees if the expenses are not separately reported to the organization.

  
Form 1099-MISC may be required to be issued for payments to an independent contractor, with compensation reported in box 7.

Part VIII. Statement of Revenue

Check the box in the heading of Part VIII if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

Column (A).    
All organizations must complete column (A), reporting their gross receipts for all sources of revenue. All organizations (except section 527 political organizations) must complete columns (B) through (D), which must add up to the amount in column (A) for each line in Part VIII. Refer to specific instructions in this part for completing each column.

  
If the organization enters an amount in column (A) for lines 2a through 2e or lines 11a through 11c, it must also enter a corresponding business activity code from Appendix K. Business Activity Codes. If none of the listed codes, or other 6-digit codes listed on the NAICS website at http://www.census.gov/eos/www/naics/reference_files_tools/2007/naics07_6.txt, accurately describe the activity, enter “900099.” Use of these codes does not imply that the business activity is unrelated to the organization's exempt purpose.

Column (B).    
In column (B), report all revenue from activities substantially related to the organization's exempt purposes. Use of revenue for the organization's exempt purposes does not make the activity that produced the income (for example, fundraising activity) substantially related to the organization's exempt purposes. Also report here any revenue that is excludable from gross income other than by section 512, 513, or 514, such as interest on state and local bonds that is excluded from tax by section 103.

Column (C).    
In column (C), report any unrelated business revenue received by the organization during the tax year from an unrelated trade or business, unless that revenue is reportable in Part VIII, column (D). See Pub. 598 and Instructions for Form 990-T for more information.

  
A section 501(c)(3) organization that is an S corporation shareholder must treat all allocations of income from the S corporation as unrelated business income. Gain on the disposition of stock is also treated as unrelated business income. See section 512(e).

Column (D).    
In column (D), report any revenue excludable from unrelated business income by section 512, 513, or 514. Examples of such revenue include receipts from the sale of donated merchandise, interest (unless debt-financed), and receipts from bingo games.

  Neither Form 5500 nor DOL Forms LM-2 or LM-3 should be substituted for the Form 990, Parts VIII or IX.

Line 1. In General

On lines 1a through 1f, report cash and noncash amounts received as voluntary contributions, gifts, grants or other similar amounts from the general public, governmental units, foundations, and other exempt organizations. The general public includes individuals, corporations, trusts, estates, and other entities. Voluntary contributions are payments, or the part of any payment, for which the payer (donor) does not receive full retail value (fair market value) from the recipient (donee) organization. Contributions are reported on line 1 regardless of whether they are deductible by the contributor. The noncash portion of contributions reported on lines 1a through 1f is also reported on line 1g.

Report gross amounts of contributions collected in the organization's name by fundraisers.

Report all expenses of raising contributions in Part IX, column (D), Fundraising expenses. The organization must enter on Part IX, line 11e, fees for professional fundraising services relating to the gross amounts of contributions collected in the organization's name by professional fundraisers.

Report on line 1 assets contributed to the organization by another entity in the course of the entity's liquidation, dissolution, or termination.

Report the value of noncash contributions at the time of the donation. For example, report the FMV of a donated car at the time the car was received as a donation.

Do not net losses from uncollectible pledges from prior years, refunds of contributions and service revenue from prior years, or reversal of grant expenses from prior years on line 1. Rather, report any such items as “Other changes in net assets or fund balances” on Part XI, line 9, and explain in Schedule O.

The organization must report any contributions of conservation easements and other qualified conservation contributions consistently with how it reports revenue from such contributions in its books, records, and financial statements.

Reporting on line 1 according to SFAS 116 (ASC 958) generally is acceptable (though not required) for Form 990 purposes, but the value of donated services or use of materials, equipment, or facilities may not be reported. An organization that receives a grant to be paid in future years should, according to SFAS 116 (ASC 958), report the grant's present value on line 1. Accruals of present value increments to the unpaid grant should be reported on line 1 in future years.

Contributions do not include:

  • Grants, fees or other support from governmental units, foundations or other exempt organizations that represent a payment for a service, facility, or product that primarily gives some economic or physical benefit to the payer.

  • The portion of any fundraising solicitation representing payment for goods, services, or anything else at retail value.

  • Unreimbursed expenses of officers, employees, or volunteers. (See the explanations of charitable contributions and employee business expenses in Pub. 526 and Pub. 463, respectively.)

  • Payments received from employers for welfare benefits under plans described in sections 501(c)(9), (17), and (18). Report these amounts on line 2, Program Service Revenue.

  • Donations of services such as the value of donated advertising space, broadcast air time (including donated public service announcements), or discounts on services or donations of use of materials, equipment, or facilities, even though reporting donated services and facilities as items of revenue and expense is called for in certain circumstances by generally accepted accounting principles. The optional reporting of donated services and facilities is discussed in the instructions for Form 990, Part III.

    Example 1.

    A hotel in a city's entertainment district donates 100 “right to use” certificates covering 15 hotel rooms a night to disaster relief organization B. B then uses these certificates as emergency housing in furtherance of its exempt purposes. B should not report the value of this contribution on line 1 (or on any other line in Part VIII), because this is a donation of services and use of facilities to B. Similarly, if B were to auction off the certificates as part of a fundraising event, B should not report the value of the contributed certificates on line 1 (or on any other line in Part VIII). Rather, it should report gross income from the auction on Part VIII, line 8a.

    Example 2.

    Organization C purchases 100 “right to use” certificates (as described in Example 1) from the hotel, then contributes them to disaster relief organization B and designates that they be used for disaster relief purposes. B should report the FMV of these certificates on line 1. If B were to auction off the certificates as part of a fundraising event, then use the proceeds for disaster relief purposes, B should report the gross income from the auction on Part VIII, line 8a, report the FMV of the contributed certificates in line 8b, and report the difference between lines 8a and 8b on line 8c.

Line 1a.   Enter on line 1a the total amount of contributions received indirectly from the public through solicitation campaigns conducted by federated fundraising agencies and similar fundraising organizations (such as from a United Way organization). Federated fundraising agencies normally conduct fundraising campaigns within a single metropolitan area or some part of a particular state, and allocate part of the net proceeds to each participating organization on the basis of the donors' individual designations and other factors.

Federated fundraising agencies must, like all other filers, identify the sources of contributions made to them on lines 1a through 1g.

Line 1b.   Report on line 1b membership dues and assessments that represent contributions from the public rather than payments for benefits received or payments from affiliated organizations.

Example.

M is an organization whose primary purpose is to support the local symphony orchestra. Members have the privilege of purchasing subscriptions to the symphony's annual concert series before they go on sale to the general public, but must pay the same price as any other member of the public. They also are entitled to attend a number of rehearsals each season without charge. Under these circumstances, M's receipts from members are contributions reported on line 1b.

Membership dues that are not contributions because they compare reasonably with available benefits are reported on line 2, Program Service Revenue.

  Membership dues can consist of both contributions and payment for goods and services. In that case, the portion of the membership dues that is a payment for goods or services should be reported on line 2, Program Service Revenue. The portion that exceeds the FMV of the goods or services provided should be reported on line 1b.

  The portion of membership dues attributable to certain membership benefits that are considered to be insubstantial (for example, low-cost articles, free or discounted admission to the organization's activities, discounts on purchases from the organization's gift shop, free or discounted parking) may be reported as contributions on line 1, rather than as payments for goods or services on line 2. See Pub. 1771, for more information on insubstantial membership benefits that need not be valued or reported.

Line 1c.   Enter the total amount of contributions received from fundraising events, which includes, but is not limited to, dinners, auctions, and other events conducted for the sole or primary purpose of raising funds for the organization's exempt activities. Report contributions received from gaming activities on line 1f, not on line 1c.

Example.

An organization holds a dinner, charging $400 per person for the meal. The dinner has a retail value of $160. A person who purchases a ticket is really purchasing the dinner for $160 and making a contribution of $240. The contribution of $240, which is the difference between the buyer's payment and the retail value of the dinner, would be reported on line 1c and again on line 8a (within the parentheses). The revenue received ($160 retail value of the dinner) would be reported in the right-hand column on line 8a.

If a contributor gives more than $160, that person would be making a contribution of the difference between the dinner's retail value of $160 and the amount actually given. Rev. Rul. 67-246, 1967-2 C.B. 104, as distinguished by Rev. Rul. 74-348, 1974-2 C.B. 80, explains this principle in detail. See also the instructions for lines 8a through 8c and Pub. 526, Charitable Contributions.

 
 
Organizations that report more than $15,000 total on lines 1c and 8a must also answer “Yes” to Part IV, line 18, and complete Part II of Schedule G (Form 990 or 990-EZ).

Line 1d.   Enter on line 1d amounts contributed to the organization by related organizations. Do not report amounts reportable on line 1a.

Line 1e.   Enter the total amount of contributions in the form of grants or similar payments from local, state, or federal government sources, as well as foreign governments. Include grant amounts from U.S. possessions.

  Whether a payment from a governmental unit is labeled a “grant” or a “contract” does not determine where the payment should be reported in Part VIII. Rather, a grant or other payment from a governmental unit is reported here if its primary purpose is to enable the organization to provide a service to, or maintain a facility for, the direct benefit of the public rather than to serve the direct and immediate needs of the governmental unit. In other words, the payment is recorded on line 1e if the general public receives the primary and direct benefit from the payment and any benefit to the governmental unit is indirect and insubstantial as compared to the public benefit.

  The following are examples of governmental grants and other payments that are treated as contributions and reported on line 1e.
  • Payments by a governmental unit for the construction or maintenance of library or museum facilities open to the public.

  • Payments by a governmental unit to nursing homes to provide care to their residents (but not Medicare/Medicaid or similar payments made on behalf of the residents).

  • Payments by a governmental unit to child placement or child guidance organizations under government programs to better serve children in the community.

Line 1f.   Enter all other contributions, gifts, and similar amounts the organization received from sources not reported separately on lines 1a through 1e. This amount includes contributions from donor advised funds (unless the sponsoring organization is a related organization) and from gaming activities.

Line 1g.   Enter on line 1g the value of noncash contributions included on lines 1a through 1f. If this amount exceeds $25,000, the organization must answer “Yes” to Part IV, line 29, and complete and attach Schedule M (Form 990).

  Noncash contributions are anything other than cash, checks, money orders, credit card charges, wire transfers, and other transfers and deposits to a cash account of the organization. Value noncash donated items, like cars and securities, as of the time of their receipt, even if they were sold immediately after they were received.

Example.

A charity receives a gift of stock from an unrelated donor. The stock is delivered to the charity's broker, who sells it on the same day and remits the sales proceeds, net of commissions, to the charity. The value of the stock at the time of the contribution must be reported on line 1f and also on line 1g. The sale of the stock, and the related sales expenses (including the amount reported on lines 1f and 1g), must be reported on lines 7a through 7d.

  
Museums and other organizations that elect not to capitalize their collections (according to SFAS 116 (ASC 958-360-25) should not report an amount on line 1g for works of art and other collection items donated to them.)

  For more information on noncash contributions, see the Instructions for Schedule M (Form 990).

Line 1h.   Enter on line 1h the total of lines 1a through 1f (but not line 1g).

  
The organization may also need to attach Schedule B (Form 990, 990-EZ, or 990-PF) to report certain contributors and their contributions. See the Instructions for Schedule B (Form 990, 990-EZ, or 990-PF) for more information.

Line 2.   On lines 2a through 2e, enter the organization's five largest sources of program service revenue. Program services are primarily those that form the basis of an organization's exemption from tax. For a more detailed description of program service revenue, refer to the instructions for Part IX, column (B).

  On line 2f, enter the total received from all other sources of program service revenue not listed individually on lines 2a through 2e. On line 2g, enter the total of column (A), lines 2a through 2f.

Program service revenue.   Program service revenue includes income earned by the organization for providing a government agency with a service, facility, or product that benefited that government agency directly rather than benefiting the public as a whole. Program service revenue also includes tuition received by a school, revenue from admissions to a concert or other performing arts event or to a museum; royalties received as author of an educational publication distributed by a commercial publisher; interest income on loans a credit union makes to its members; payments received by a section 501(c)(9) organization from participants or employers of participants for health and welfare benefits coverage; insurance premiums received by a fraternal beneficiary society; and registration fees received in connection with a meeting or convention.

Program-related investments.   Program service revenue also includes income from program-related investments. These investments are made primarily to accomplish an exempt purpose of the investing organization rather than to produce income. Examples are scholarship loans and low interest loans to charitable organizations, indigents, or victims of a disaster.

  Rental income from an exempt function is another example of program-related investment income. For purposes of this return, report all rental income from an affiliated organization on line 2.

Unrelated trade or business activities.   Unrelated trade or business activities (not including any fundraising events or fundraising activities) that generate fees for services can also be program service activities. A social club, for example, should report as program service revenue the fees it charges both members and nonmembers for the use of its tennis courts and golf course.

Sales of inventory items by hospitals, colleges, and universities.   Books and records maintained according to generally accepted accounting principles for hospitals, colleges, and universities are more specialized than books and records maintained according to those accounting principles for other types or organizations that file Form 990. Accordingly, hospitals, colleges, and universities can report, as program service revenue on line 2, sales of inventory items otherwise reportable on line 10a. In that event, enter the applicable cost of goods sold as program service expense in column (B) of Part IX. No other organizations should report sales of inventory items on line 2.

Common Types of Program Service Revenue:   
  • Medicare and Medicaid payments, and other government payments made to pay or reimburse the organization for medical services provided to individuals who qualify under a government program for the services provided, and who select the service provider. See Rev. Rul. 83-153, 1983-2 C.B. 48.

  • Payments for medical services by patients and their guarantors, and

  • Fees and contracts from government agencies for a service, facility, or product that primarily benefited the government agencies.

Example 1.

A payment by a governmental agency to a medical clinic to provide vaccinations to the general public is a contribution reported on line 1e. A payment by a governmental agency to a medical clinic to provide vaccinations to employees of the agency is program service revenue reported on line 2.

Example 2.

A payment by a governmental agency to an organization to provide job training and placement for disabled individuals is a contribution reported on line 1e. A payment by a governmental agency to the same organization to operate the agency's internal mail delivery system is program service revenue reported on line 2.

  • Income from program-related investments. Report interest, dividends, and other revenues from those investments made primarily to accomplish the organization's exempt purposes rather than to produce income. Examples of program-related investments include student loans and notes receivable from other exempt organizations that borrowed the funds to pursue the filing organization's exempt function.

  • Membership dues and assessments received that compare reasonably with the membership benefits provided by the organization. Organizations described in section 501(c)(5), (6), or (7) generally provide benefits that have a reasonable relationship with dues.

  Examples of membership benefits include:
  • Subscriptions to publications,

  • Newsletters (other than one only about the organization's activities),

  • Free or reduced-rate admissions to events sponsored by the organization,

  • Use of the organization's facilities, and

  • Discounts on articles or services that members and nonmembers can buy.

  
For each amount entered on lines 2a through 2e, the organization must also enter a corresponding business activity code from Appendix K. Business Activity Codes. If you do not see a code for the activity you are trying to categorize, select the appropriate code from the NAICS website at http://www.census.gov/eos/www/naics/reference_files_tools/2007/naics07_6.txt. Select the most specific 6-digit code available that describes the activity producing the income. Note that most codes describe more than one type of activity. Avoid using codes that describe the organization rather than the income-producing activity. For example, a credit union reporting income from consumer lending activities should use code 522291. Sales revenue from a museum gift shop should be reported with code 453220. An organization providing credit counseling services should use code 541990. If none of the listed codes accurately describe the activity, enter “900099.” Use of these codes does not imply that the activity is unrelated to the organization's exempt purpose.

Line 3.   Enter the gross amount of interest income from savings and temporary cash investments, dividend and interest income from equity and debt securities (stocks and bonds), amounts received from payments on securities loans, as defined in section 512(a)(5), as well as interest from notes and loans receivable. Do not include unrealized gains and losses on investments carried at fair market value. Do not deduct investment management fees from this amount, but report these fees on Part IX, line 11f.

Line 4.   Enter all investment income actually or constructively received from investing the proceeds of a tax-exempt bond issue , which are under the control of the organization. For this purpose, do not include any investment income received from investing proceeds which are technically under the control of the governmental issuer. For example, proceeds deposited into a defeasance escrow which is irrevocably pledged to pay the principal and interest (debt service) on a bond issue is not under the control of the organization.

Line 5.   Enter on line 5 royalties received by the organization from licensing the ongoing use of its property to others. Typically, royalties are received for the use of intellectual property, such as patents and trademarks. Royalties also include payments to the owner of property for the right to exploit natural resources on the property, such as oil, natural gas, or minerals.

Line 6a.    Enter on line 6a the rental income received for the year from investment property and any other real property rented by the organization. Allocate revenue to real property and personal property in the spaces provided. Do not include on line 6a rental income related to the filing organization's exempt function (program service). Report such income on line 2. For example, an exempt organization whose exempt purpose is to provide low-rental housing to persons with low income would report that rental income as program service revenue on line 2.

  Only for purposes of completing this return, the filing organization must report any rental income received from an affiliated exempt organization as program service revenue on line 2.

  Rental revenue can be from an activity that is related or unrelated to the organization's exempt purpose. In general, rents from real property are excluded in computing unrelated business income, while rental income from personal property is included. There are special rules when rents are received from personal property leased with real property (a mixed lease). In general, rental revenue from real property is excluded from unrelated business revenue when:
  • The determination of the amount of such rents is not based on income or net profits derived by any person from the property leased other than an amount based on a fixed percentage of the gross receipts or sales,

  • The lease does not include personal services other than customary ones such as trash removal and cleaning of public areas,

  • Any portion attributable to personal property is 10% or less of the total rent, and

  • The real property is not debt-financed within the meaning of section 512, 513, or 514. (Rent from debt-financed real property is generally includible in unrelated business income, but there can be exceptions based on use of the property. See Pub. 598.)

  Rent received from leased personal property is generally taxable except when leased with real property, and the rent attributable to the personal property does not exceed 10% of the total rents from all leased property.

Line 6b.    Enter on line 6b the expenses paid or incurred for the income reported on line 6a. Include interest related to rental property and depreciation if it is recorded in the organization's books and records. If the organization reported on line 2 any rental income reportable as program service revenue, report any rental expense allocable to such activity on the applicable lines of Part IX, column (B).

Line 6c.   Subtract line 6b from line 6a for both columns (i) and (ii) and enter on line 6c. Show any loss in parentheses.

Line 6d.   Add line 6c, columns (i) and (ii) and enter on line 6d. Show any loss in parentheses.

Lines 7a through 7d.   Enter on lines 7a through 7c all sales of securities in column (i). Use column (ii) to report sales of all other types of investments (such as real estate, royalty interests, or partnership interests) and all other non-inventory assets (such as program-related investments and fixed assets used by the organization in its related and unrelated activities).

  On line 7a, for each column, enter the total gross sales price of all such assets. Total the cost or other basis (less depreciation) and selling expenses and enter the result on line 7b. On line 7c, enter the net gain or loss. Show any loss in parentheses.

  On lines 7a and 7c, also report capital gains dividends, the organization's share of capital gains and losses from a joint venture, and capital gains distributions from trusts.

  Combine the gain or loss figures reported on line 7c, columns (i) and (ii) and report that total on line 7d. Show any loss in parentheses. Do not include any unrealized gains or losses on securities carried at fair market value in the books of account.

  For reporting sales of securities on Form 990, the organization can use the more convenient average cost basis method to figure the organization's gain or loss. When a security is sold, compare its sales price with the average cost basis of the particular security to determine gain or loss. However, for reporting sales of securities on Form 990-T, do not use the average cost basis to determine gain or loss.

  The organization should maintain books and records to substantiate information about any securities or other assets sold for which market quotations were not published or were not otherwise readily available. The recorded information should include:
  • A description of the asset,

  • Date acquired,

  • Whether acquired by donation or purchase,

  • Date sold and to whom sold,

  • Gross sales price,

  • Cost, other basis, or, if donated, value at time acquired,

  • Expense of sale and cost of improvements made after acquisition, and

  • Depreciation since acquisition, if depreciable property.

Line 8a.    Enter in the line 8a box the gross income from fundraising events, not including the amount of contributions from fundraising events reported on line 1c. Report the line 1c amount in the line 8a parenthetical. If the sum of the amounts reported on line 1c and the line 8a box exceeds $15,000, then the organization must answer “Yes” to Part IV, line 18, and complete Schedule G (Form 990 or 990-EZ), Part II. If gaming is conducted at a fundraising event, the income and expenses must be allocated between the gaming and the fundraising event in Form 990, Part VIII; report all income from gaming in line 9a.

  Compute the organization's gross income from fees, ticket sales or other revenue from fundraising events.
Fundraising events include: Fundraising events do not include:
• Dinners/dances, • Sales or gifts of goods or services of only nominal value, 
• Door-to-door sales of merchandise, • Raffles or lotteries in which prizes have only nominal value, and 
• Concerts, • Solicitation campaigns that generate only contributions.
• Carnivals, 
 
 
• Sports events, and Proceeds from these activities are considered contributions and should be reported on line 1f.
• Auctions.  
Fundraising events do not include events or activities that substantially further the organization's exempt purpose even if they also raise funds. Revenue from such program service activities is reported on line 2.

Example.

An organization formed to promote and preserve folk music and related cultural traditions holds an annual folk music festival featuring concerts, handcraft demonstrations, and similar activities. Because the festival directly furthers the organization's exempt purpose, income from ticket sales should be reported on line 2 as program service revenue.

  Fundraising events sometimes generate both contributions and income, such as when an individual pays more than the retail value for the goods or services furnished. Report in parentheses the total amount from fundraising events that represents contributions rather than payment for goods or services. Treat the following as contributions.
  • Amounts paid in excess of retail value of goods or services furnished. See Example, earlier, in line 1c.

  • Amounts received from fundraising events when the organization gives items of only nominal value to recipients. See Publication 1771.

Example.

In return for a contribution of any amount, donors receive a keychain with the organization's logo. All amounts received should be reported as contributions on line 1f and all associated expenses on the appropriate lines in Part IX, column (D). In such a case, no amounts would be reported on line 8.

Line 8b.   Enter on this line both the cost or other basis of any items sold at the events and the expenses that relate directly to the production of the revenue portion of the fundraising activity, whether incurred before, during, or after the event. In the line 1c dinner example referred to earlier, the cost of the food and beverages served and invitation to the dinner would be among the items; in the reported on line 8b. Indirect fundraising expenses, such as certain advertising expenses associated with raising these contributions, must be reported on the appropriate lines in Part IX, column (D) and not on line 8b.

Line 8c.   Enter on line 8c the difference between lines 8a and 8b. Show any loss in parentheses. The organization must report net income from fundraising events as unrelated business revenue (column (C)) or as revenue excluded from tax under section 512, 513, or 514 (column (D)).

Example 1.

If an organization receives a donation of a home theater system with a FMV of $5,000 at the time of donation; sells the system for $7,500 at an auction, after having displayed the system and its FMV (which remains $5,000) at and before auction so that its value was known to the bidders; and incurs $500 in costs related to selling the system at auction, it should report the following amounts in Part VIII:

Line 1c (contributions from fundraising events): $2,500
Line 1f (all other contributions): $5,000
Line 1g (noncash contributions): $5,000
Line 8a (gross income from fundraising events): $5,000
Line 8a parenthetical (contributions reported on line 1c): $2,500
Line 8b (direct expenses: $5,000 FMV on donation date + $500 in auction costs) $5,500
Line 8c (net income from fundraising event, line 8a minus line 8b): ($500)

Example 2.

If the home theater system in Example 1 sold at auction for $2,500 instead of $7,500, and all other facts in Example 1 remain the same, then the organization should report the following amounts in Part VIII:

Line 1c (contributions from fundraising events): $0
Line 1f (all other contributions): $5,000
Line 1g (noncash contributions): $5,000
Line 8a (gross income from fundraising events): $2,500
Line 8a parenthetical (contributions reported on line 1c): $0
Line 8b (direct expenses: $5,000 FMV on donation date + $500 in auction costs) $5,500
Line 8c (net income from fundraising event, line 8a minus line 8b): ($3,000)

 

  In both Example 1 and Example 2, the organization would need to report the $5,000 value of this contribution on Schedule M if it received over $25,000 in total noncash contributions during the tax year.

Line 9a.   Line 9a should include only gross income from gaming activity. It should not include contributions from gaming activity, which should be reported on line 1f. Organizations that report more than $15,000 on line 9a must also answer “Yes” to Part IV, line 19, and complete Part III of Schedule G (Form 990 or 990-EZ).
Types of gaming include, but are not limited to:
- Bingo - Nevada Club tickets
- Pull tabs - certain Casino nights
- Instant bingo - certain Las Vegas nights
- Raffles - Coin-operated 
gambling devices 
including:
- Scratch-offs • Slot machines
 
- Charitable gaming tickets
• Electronic video 
slot or line games
- Break-opens • Video poker
- Hard cards • Video blackjack
- Banded tickets • Video keno
- Jar tickets • Video bingo
- Pickle cards • Video pull tab 
games

  Many games of chance are taxable. Income from bingo games is not generally subject to the tax on unrelated business income if the games meet the legal definition of bingo. For a game to meet the legal definition of bingo, wagers must be placed, winners must be determined, and prizes or other property must be distributed in the presence of all persons placing wagers in that game.

  A wagering game that does not meet the legal definition of bingo does not qualify for the exclusion, regardless of its name. For example, instant bingo, in which a player buys a pre-packaged bingo card with pull-tabs that the player removes to determine if he or she is a winner, does not qualify. See Pub. 598.

Line 9b.   Enter on this line the expenses that relate directly to the production of the revenue portion of the gaming activity.

  Direct expenses of gaming include:
  • Cash prizes,

  • Noncash prizes,

  • Compensation to bingo callers and workers,

  • Rental of gaming equipment, and

  • Cost of gaming supplies such as pull tabs, bingo cards, etc.

Line 9c.   Enter the difference between line 9a and 9b. Show any loss in parentheses.

Line 10a.    Enter the organization's gross income from sales of inventory items, less returns and allowances. Sales of inventory items reportable on line 10a are sales of items that are donated to the organization, that the organization makes to sell to others, or that it buys for resale. Sales of inventory do not, however, include the sale of goods related to a fundraising event, which must be reported on line 8. Sales of investments on which the organization expected to profit by appreciation and sale are not reported here. Report sales of investments on line 7.

  The organization must report the sales revenue regardless of whether the sales activity is an exempt function of the organization or an unrelated trade or business.

Line 10b.   Enter the cost of goods sold related to the sales of inventory. The usual items included in cost of goods sold are direct and indirect labor, materials and supplies consumed, freight-in, and a portion of overhead expenses. Marketing and distribution costs are not included in the cost of goods sold but are reported as expenses in Part IX. For purposes of Part VIII, the organization may include as cost of donated goods their fair market value at the time of acquisition.

Line 10c.   Enter in the appropriate columns (A) through (D), the net income or (loss) from the sale of inventory items. Show any loss in parentheses.

Line 11.   Enter all other types of revenue not reportable on lines 1 through 10. Enter the three largest sources on lines 11a through 11c and all other revenue on line 11d.

  
For each amount entered on lines 11a, 11b, and 11c, the organization must also enter a corresponding business activity code from Appendix K. Business Activity Codes. If you do not see a code for the activity you are trying to categorize, select the appropriate code from the NAICS website at http://www.census.gov/eos/www/naics/reference_files_tools/2007/naics07_6.txt . Select the most specific 6-digit code available that describes the activity producing the income. Note that most codes describe more than one type of activity. Avoid using codes that describe the organization rather than the income-producing activity. If none of the listed codes accurately describe the activity, enter “900099.” Use of these codes does not imply that the activity is unrelated to the organization's exempt purpose.

Line 12.   For column (A), add lines 1h, 2g, 3 through 5, 6d, 7d, 8c, 9c, 10c, and 11e. For columns (B) through (D), add lines 2a through 2f, 3, 4, 5, 6d, 7d, 8c, 9c, 10c, and 11a through 11d. The amounts reported on line 12 in columns (B), (C), and (D), plus the amount reported on line 1h, should equal line 12, column (A).

Part IX. Statement of Functional Expenses

Check the box in the heading of Part IX if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

Use the organization's normal accounting method to complete this section. If the organization's accounting system does not allocate expenses, the organization can use any reasonable method of allocation. The organization must report amounts accurately and document the method of allocation in its records. Report any expense described in lines 1-23 in the appropriate line; do not report such expense in line 24. Do not report in Part IX expenses that must be reported on lines 6b, 7b, 8b, 9b, or 10b in Part VIII.

Column (A)—Total    
Section 501(c)(3) and 501(c)(4) organizations must complete columns (A) through (D).

  All other organizations must complete column (A) but can complete columns (B), (C), and (D).

  
State reporting requirements can be different from IRS reporting requirements applicable to Part IX.

Column (B)—Program Services     
Program services are mainly those activities that further the organization's exempt purposes. Fundraising expenses should not be reported as program-service expenses even though one of the organization's purposes is to solicit contributions.

  Include lobbying expenses in this column if the lobbying is directly related to the organization's exempt purposes.

Example.

Foundation M, an organization exempt under section 501(c)(3), has the exempt purpose of improving health care for senior citizens. Foundation M operates in State N. The legislature of State N is considering legislation to improve funding of health care for senior citizens. Foundation M lobbies state legislators in support of the legislation. Since this lobbying is directly related to Foundation M's exempt purpose, it would be considered an exempt function expense, and would be included under Column (B).

  Program services can also include the organization's unrelated trade or business activities. Publishing a magazine is a program service even though the magazine contains both editorials and articles that further the organization's exempt purpose as well as advertising, the income from which is taxable as unrelated business income.

  Also include costs to secure a “grant,” or contract, to conduct research, produce an item, or perform a program service, if the activities are conducted to meet the grantor’s or other contracting party’s specific needs. Do not report these costs as fundraising expenses in column (D). Costs to solicit restricted or unrestricted grants to provide services to the general public should be reported in column (D).

Column (C)—Management and General     
Use Column (C) to report expenses that relate to the organization's overall operations and management, rather than to fundraising activities or program services. Overall management usually includes the salaries and expenses of the organization's chief executive officer and his or her staff, unless a part of their time is spent directly supervising program services or fundraising activities. In that case, their salaries and expenses should be allocated among management, fundraising, and program services.

  Expenses incurred to manage investments must be reported in column (C). Lobbying expenses should be reported in this column if they do not directly relate to the organization's exempt purposes.

  Organizations must also report the following in column (C): costs of board of directors' meetings; committee meetings, and staff meetings (unless they involve specific program services or fundraising activities); general legal services; accounting (including patient accounting and billing); general liability insurance; office management; auditing, human resources, and other centralized services; preparation, publication, and distribution of an annual report; and management of investments.

  However, report expenses related to the production of program-related income in column (B) and expenses related to the production of rental income in Part VIII, on line 6b. Rental expenses incurred for the organization's office space or facilities are reported on line 16.

  Do not use this column to report costs of special meetings or other activities that relate to fundraising or specific program services.

Column (D)—Fundraising     
Fundraising expenses are the expenses incurred in soliciting cash and noncash contributions, gifts, and grants. Report as fundraising expenses all expenses, including allocable overhead costs, incurred in: (a) publicizing and conducting fundraising campaigns and (b) soliciting bequests and grants from individuals, foundations, other organizations, or governmental units that are reported on Part VIII, line 1. This includes expenses incurred in participating in federated fundraising campaigns; preparing and distributing fundraising manuals, instructions, and other materials; and preparing to solicit or receive contributions. Report direct expenses of fundraising events in Part VIII, line 8b, rather than in Part IX, column (D). However, report indirect expenses of fundraising events, such as certain advertising expenses, in Part IX, column (D) rather than in Part VIII, line 8b.

Example.

For an employee who works on fundraising 40 percent of the time and program management 60 percent of the time, an organization must allocate that employee's salary 40 percent to fundraising and 60 percent to program service expenses. It cannot report the 100 percent of salary as program expenses simply because the employee spent over 50 percent of his time on program management.

Allocating Indirect Expenses

Direct costs are expenses that can be identified specifically with an organization's activity or project, and can be assigned to an activity or project with a high degree of accuracy. Indirect costs are costs that cannot be identified specifically with an activity or project. For example, a computer bought by a university specifically for a research project is a direct cost. In contrast, the costs of software licensing for programs that run on all the university's computers are indirect costs.

Colleges, universities, hospitals, and other organizations that incur indirect expenses in various cost centers (such as organizational memberships, books and subscriptions, and regular telecommunications costs) can allocate and report such expenses in the following manner:

  1. Report the expenses of all indirect cost centers on column (C), lines 5 through 24.

  2. As a separate line item of line 24, enter “Allocation of [name of indirect cost center] expenses.

    1. If any of the cost center's expenses are allocated to expenses listed in Part VIII such as the expenses attributable to fundraising events and activities, enter such expenses as a negative figure in columns (A) and (C).

    2. Allocate expenses to column (B) or (D) as positive amounts.

    3. Add the amounts in columns (B) and (D) and enter the sum as a negative offsetting amount in column (C). Do not make any entries in column (A) for these offsetting entries.

Example.

An organization reports in column (C) $50,000 of its actual management and general expenses and $100,000 of expenses of an indirect cost center that are allocable in part to other functions. The total of lines 5 through 24 of column (C) would be $150,000 before the indirect cost center allocations were made. Assume that of the $100,000 total expenses of the cost center, $10,000 was allocable to fundraising; $70,000 to various program services; $15,000 to management and general functions; and $5,000 to special events and activities. To report this in Part IX under this optional method:

  1. Indicate the cost center, the expenses of which are being allocated, on line 24, as “Allocation of [specify the indirect cost center] expenses;

  2. Enter a decrease of $5,000 on the same line in the column (A), Total expenses, representing the fundraising event expenses that were already reported in Part VIII, on line 8b;

  3. Enter $70,000 on the same line in column (B), Program Service Expenses;

  4. Enter $10,000 on the same line in column (D), Fundraising expenses; and

  5. Enter a decrease of $85,000 on the same line in column (C), Management and General expenses, to represent the allocations to functional areas other than management and general.

Allocating Indirect Expenses—Example

Line (A) (B) (C) (D)
5–24a $150,000 - $150,000 -
24b Allocation of $100,000 indirect cost center expenses reported in (C) (5,000) 70,000 (85,000) 10,000
25 $145,000 $70,000 $65,000 $10,000

 
After making these allocations, the column (C), line 25 total functional expenses would be $65,000, consisting of the $50,000 actual management and general expense amount and the $15,000 allocation of the aggregate cost center expenses to management and general.

The above is an example of a one-step allocation that shows how to report the allocation in Part IX. This reporting method would actually be more useful to avoid multiple-step allocations involving two or more cost centers. Without this optional reporting method, the total expenses of the first cost center would be allocated to the other functions, and might include an allocation of part of these expenses to another cost center. The expenses of the second cost center would then be allocated to other functions and, perhaps, to other cost centers, and so on. The greater the number of these cost centers that are allocated out, the more difficult it is to preserve the object classification identity of the expenses of each cost center (for example, salaries, interest, supplies, etc.). Using the reporting method described above avoids this problem.

The intent of the above instructions is only to facilitate reporting indirect expenses by both object classification and function. These instructions do not authorize the allocation to other functions of expenses that should be reported as management and general expenses.

Grants and Other Assistance to Governments, Organizations, and Individuals

 
Organizations should report the amount of grants and other assistance on lines 1 through 3. Report expenses incurred in selecting recipients or monitoring compliance with the terms of a grant or award on lines 5 through 24. See the following instructions.

Note.

Organizations can report this information according to Statement of Financial Accounting Standards (SFAS 116) (ASC 958) but are not required to do so. For example, an organization that follows SFAS 116 (ASC 958) and makes a grant during the tax year to be paid in future years should report the grant's present value on this year's Form 990 and report accruals of additional value increments in future years.

Line 1.   Enter the amount that the organization, at its own discretion, paid in grants to domestic organizations and domestic governments, United Way and similar federated fundraising organizations should report grants to member or participating agencies on line 1. Organizations must report voluntary grants to state or local affiliates for specific (restricted) purposes or projects on line 1.

  If the organization reported on line 1 more than $5,000 of grants or other assistance to any domestic organization or to any domestic government, the organization must complete Parts I and II of Schedule I (Form 990), Grants and Other Assistance to Organizations, Governments, and Individuals in the United States.

Line 2.   Enter the amount paid by the organization to domestic individuals in the form of scholarships, fellowships, stipends, research grants, and similar payments and distributions.

  Also include grants and other assistance paid to third party providers for the benefit of specified domestic individuals. For example, a grant payment to a hospital to cover the medical expenses of a specific patient must be reported on line 2. By comparison, a grant to the same hospital to provide services to the general public or to unspecified charity patients must be reported on line 1.

  If line 2 exceeds $5,000, the organization must complete Parts I and III of Schedule I (Form 990).

Line 3.    The organization must enter the total amount of grants and other assistance made to foreign organizations, foreign governments, and foreign individuals, and to domestic organizations or domestic individuals for the purpose of providing grants or other assistance to designated foreign organizations or foreign individuals.

  If line 3 exceeds $5,000, the organization may have to complete Part II and/or Part III of Schedule F (Form 990). See Instructions for Schedule F for more information.

Line 4.   Enter the payments made by the organization to provide benefits to members (such as payments made by an organization exempt under section 501(c)(8), 501(c)(9), or 501(c)(17) to obtain insurance benefits for members, or patronage dividends paid by section 501(c)(12) organizations to their members). Do not report on this line the cost of employment-related benefits such as health insurance, life insurance, or disability insurance provided by the organization to its officers, directors, trustees, key employees, and other employees. Report such costs for officers, directors, trustees, and key employees on Part IX, line 5; report such costs for other disqualified persons on Part IX, line 6; and report such costs for other employees on Part IX, lines 8 and 9.

Line 5.   Enter the total compensation paid to current officers, directors, trustees, and key employees (as defined in Part VII) for the organization's tax year. Compensation includes all forms of income and other benefits earned or received from the filing organization, common paymasters, and payroll/reporting agents in return for services rendered to the filing organization, including compensation reported on Forms W-2 and 1099, pension plan contributions and accruals, and other employee benefits, but does not include non-compensatory expense reimbursements or allowances. Report all compensation amounts relating to such an individual, including those related to services performed in a capacity other than as an officer, director, trustee, or key employee.

  
Compensation for Part IX is reported based on the accounting method and tax year used by the organization, rather than the definitions and calendar year used to complete Part VII or Schedule J (Form 990) regarding compensation of certain officers, directors, trustees and other employees.

Note.   To the extent the following examples discuss allocation of expenses in columns (B), (C), and (D), they apply only to filers required to complete those columns.

Line 6.    Section 501(c)(3), 501(c)(4), and 501(c)(29) organizations must report the total compensation and other distributions provided to disqualified persons and persons described in section 4958(c)(3)(B) to the extent not included on line 5. See Appendix G. Section 4958 Excess Benefit Transactions.

  Compensation includes all forms of income and other benefits earned or received from the filing organization, common paymasters, and payroll/reporting agents in return for services rendered to the filing organization, including compensation reported on Forms W-2 and 1099, pension plan contributions and accruals, and other employee benefits, but does not include non-compensatory expense reimbursements or allowances.

Line 7.   Enter the total amount of employee salaries, wages, fees, bonuses, severance payments, and similar amounts from the filing organization, common paymasters, and payroll/reporting agents in return for services rendered to the filing organization that are not reported on lines 5 or 6.

Line 8.   Enter the employer's share of contributions to, or accruals under, qualified and nonqualified pension and deferred compensation plans for the year. The organization should include contributions made by the filing organization, common paymasters, and payroll/reporting agents to the filing organization's sections 401(k) and 403(b) pension plans on behalf of employees. However, it should not include contributions to qualified pension, profit-sharing, and stock bonus plans under section 401(a) solely for the benefit of current or former officers, directors, trustees, key employees, or disqualified persons, which are reportable on line 5 or 6.

Complete Form 5500, Annual Return/Report of Employee Benefit Plan, for the organization's plan and file it as a separate return. If the organization has more than one pension plan, complete a Form 5500 for each plan. File the form by the last day of the 7th month after the plan year ends.

Line 9. Other employee benefits.   Enter contributions by the filing organization, common paymasters, and payroll/reporting agents to the filing organization's employee benefit programs (such as insurance, health, and welfare programs that are not an incidental part of a pension plan included on line 8), and the cost of other employee benefits.

  For example, report expenses for employee events such as a picnic or holiday party on line 9. Do not include contributions on behalf of current or former officers, directors, trustees, key employees or other persons that were included on line 5 or 6.

Line 10. Payroll taxes.   Enter the amount of federal, state, and local payroll taxes for the year but only those taxes that are imposed on the organization as an employer. This includes the employer's share of social security and Medicare taxes, the federal unemployment tax (FUTA), state unemployment compensation taxes, and other state and local payroll taxes. Do not include on line 10 taxes withheld from employees' salaries and paid to various governmental units such as federal, state, and local income taxes and the employees' shares of social security and Medicare taxes. Such withheld amounts are reported as compensation.

Line 11. Fees for services paid to non-employees (independent contractors).   Enter on lines 11a through 11g amounts for services provided by independent contractors for management, legal, accounting, lobbying, professional fundraising services, investment management, and other services, respectively. Include amounts whether or not a Form 1099 was issued to the independent contractor. Do not include on line 11 amounts paid to or earned by employees, officers, directors, trustees, or disqualified persons for these types of services, which must be reported on lines 5 through 7.

  If the organization is able to distinguish between fees paid for independent contractor services and expense payments or reimbursements to the contractor(s), report the fees paid for services on line 11 and the expense payments or reimbursements on the applicable lines in Part IX (including line 24 if no other line is applicable). If the organization is unable to distinguish between service fees and expense payments or reimbursements, report all such amounts on line 11.

Line 11a. Management fees.   Enter the total fees charged for management services provided by outside firms and individuals.

Line 11b. Legal fees.   Enter the total legal fees charged by outside firms and individuals. Do not include any penalties, fines, settlements, or judgments imposed against the organization as a result of legal proceedings. Report those expenses on line 24. Report any amounts for lobbying services provided by attorneys on line 11d.

Line 11c. Accounting fees.   Enter the total accounting and auditing fees charged by outside firms and individuals.

Line 11d. Lobbying fees.   Enter amounts for activities intended to influence foreign, national, state, or local legislation, including direct lobbying and grassroots lobbying.

Line 11e. Professional fundraising fees.   Enter amounts paid for professional fundraising services, including solicitation campaigns and advice or other consulting services supporting in-house fundraising campaigns. If the organization is able to distinguish between fees paid for professional fundraising services and amounts paid for fundraising expenses such as printing, paper, envelopes, postage, mailing list rental, and equipment rental, then fees paid for professional fundraising services should be reported on line 11e and amounts paid for fundraising expenses should be reported on line 24 as other expenses. If the organization is unable to distinguish between these amounts, it should report all such fees and amounts on line 11e.

Line 11f. Investment management fees.   Enter amounts for investment counseling and portfolio management. Monthly account service fees are considered portfolio management expenses, and must be reported here. Do not include transaction costs such as brokerage fees and commissions, which are considered sales expenses and are included on Part VIII, line 7b.

Line 11g. Other fees for services.   Enter amounts for other independent contractor services not listed on lines 11a through 11f. For example, amounts paid to an independent contractor for advocacy services that do not constitute lobbying should be reported here. For health care organizations, payments to health care professionals who are independent contractors are reported on line 11g. Report on line 11g payments to payroll agents, common paymasters, and other third parties for services provided by those third parties to the filing organization. Report on lines 5-10, as appropriate, payments that reimburse third parties for compensation to the organization's officers, directors, trustees, key employees, or other employees. Report payments to contractors for information technology services on line 14, rather than on line 11g.

If the amount on line 11g exceeds 10% of the amount on line 25, column (A), the organization must list the type and amount of each line 11g expense on Schedule O (Form 990 or 990-EZ).

Line 12. Advertising and promotion expenses.   Enter amounts paid for advertising. Include amounts for print and electronic media advertising. Also include Internet site link costs, signage costs, and advertising costs for the organization's in-house fundraising campaigns. Include fees paid to independent contractors for advertising, except for fees paid to independent contractors for conducting professional fundraising services or campaigns, which are reported on line 11e.

Line 13. Office expenses.   Enter amounts for supplies (office, classroom, or other supplies); telephone (cell phones and landlines) and facsimile; postage (overnight delivery, parcel delivery, trucking, and other delivery expenses) and mailing expenses; shipping materials; equipment rental; bank fees and other similar costs. Also include printing costs of a general nature. Printing costs that relate to conferences or conventions must be reported on line 19.

Line 14. Information technology.   Enter amounts for information technology, including hardware, software, and support services, such as maintenance, help desk, and other technical support services. Also include expenses for infrastructure support, such as web site design and operations, virus protection and other information security programs and services to keep the organization's web site operational and secured against unauthorized and unwarranted intrusions, and other information technology contractor services. Report payments to information technology employees on lines 5 through 10. Report depreciation/amortization related to information technology on line 22.

Line 15. Royalties.   Enter amounts for royalties, license fees and similar amounts that allow the organization to use intellectual property such as patents and copyrights.

Line 16. Occupancy.    Enter amounts for the use of office space or other facilities, including rent; heat, light, power, and other utilities expenses; property insurance; real estate taxes; mortgage interest; and similar occupancy-related expenses. Do not include on line 16 expenses reported as office expenses (such as telephone expenses) on line 13.

  Do not net any rental income received from leasing or subletting rented space against the amount reported on line 16 for occupancy expenses. If the tenant's activities are related to the organization's exempt purpose, report rental income as program-service revenue on Part VIII, line 2, and allocable occupancy expenses on line 16. However, if the tenant's activities are not program-related, report the rental income on Part VIII, line 6a, and related rental expenses on Part VIII, line 6b.

  Do not include employee salaries or depreciation as occupancy expenses. These expenses are reported on lines 5 through 7 and 22, respectively.

Line 17. Travel.   Enter the total travel expenses, including transportation costs (fares, mileage allowances, and automobile expenses), meals and lodging, and per diem payments. Travel costs include the expenses of purchasing, leasing, operating, and repairing any vehicles owned by the organization and used for the organization's activities. However, if the organization leases vehicles on behalf of its executives or other employees as part of an executive or employee compensation program, the leasing costs are considered employee compensation, and are reported on lines 5 through 7.

Line 18. Payments of travel or entertainment expenses for any federal, state, or local public officials.   Enter total amounts for travel or entertainment expenses (including reimbursement for such costs) for any federal, state, or local public officials (as determined under section 4946(c)) and their family members (as determined under section 4946(d)). Report amounts for a particular public official only if aggregate expenditures for the year relating to such official (including family members of such official), exceed $1,000 for the year.

  For expenditures that are not specifically identifiable to a particular individual, the organization can use any reasonable allocation method to estimate the cost of the expenditure to an individual. Amounts not described above can be included in the reported total amount for line 18 or can be reported on line 24. The organization is responsible for keeping records of all travel and entertainment expenses related to a government official whether or not the expenses are reported on line 18 or line 24.

Line 19. Conferences, conventions, and meetings.   Enter the total expenses incurred by the organization in conducting meetings related to its activities. Include such expenses as facility rentals, speakers' fees and expenses, and printed materials. Include the registration fees (but not travel expenses) paid for sending any of the organization's staff to conferences, conventions, and meetings conducted by other organizations. Travel expenses incurred by officers, directors, and employees attending such conferences, conventions, and meetings must be reported on line 17.

Line 20. Interest.    Enter the total interest expense for the year. Do not include any interest attributable to rental property (reported on Part VIII, line 6b) or any mortgage interest (reported as an occupancy expense on line 16).

Line 21. Payments to affiliates.    Enter certain types of payments to organizations affiliated with (closely related to) the filing organization.

Payments to affiliated state or national organizations.

Dues paid by a local organization to its affiliated state or national (parent) organization are reported on line 21. Report on this line predetermined quota support and dues (excluding membership dues of the type described below) by local agencies to their state or national organizations for unspecified purposes; that is, general use of funds for the national organization's own program and support services.

Purchases from affiliates.

Purchases of goods or services from affiliates are not reported on line 21 but are reported as expenses in the usual manner.

Expenses for providing goods or services to affiliates.

In addition to payments made directly to affiliated organizations, expenses for providing goods or services to affiliates can be reported on line 21 if:

  • The goods or services provided are not related to the program services conducted by the organization furnishing them (for example, when a local organization incurs expenses in the production of a solicitation film for the state or national organization); and

  • The costs involved are not connected with the management and general or fundraising functions of the filing organization. For example, when a local organization gives a copy of its mailing list to the state or national organization, the expense of preparing the copy provided can be reported on line 21, but not the expenses of preparing and maintaining the local organization's master list.

Voluntary awards or grants to affiliates.

Do not report on line 21 voluntary awards or grants made by the organization to its state or national organizations for specified purposes.

Membership dues paid to other organizations.

Report membership dues paid to obtain general membership benefits from other organizations, such as regular services, publications, and other materials, on line 24. This is the case if a charitable organization pays dues to a trade association comprised of otherwise unrelated members.

Properly distinguishing between payments to affiliates and grants and allocations is especially important if the organization uses Form 990 for state reporting purposes. If the organization uses Form 990 only for reporting to the IRS, payments to affiliated or national organizations that do not represent membership dues reportable as miscellaneous expenses on line 24 can be reported either on line 21 or line 1.

Line 22. Depreciation, depletion, and amortization.   If the organization records depreciation, depletion, amortization, or similar expenses, enter the total on line 22. Include any depreciation or amortization of leasehold improvements and intangible assets. An organization is not required to use the Modified Accelerated Cost Recovery System (MACRS) to compute depreciation reported on Form 990. For an explanation of acceptable methods for computing depreciation see Pub. 946, How to Depreciate Property. If an amount is reported on this line, the organization is required to maintain books and records to substantiate any amount reported.

Line 23. Insurance.   Enter total insurance expenses other than insurance attributable to rental property (reported on Part VIII, line 6b). Do not report on this line payments made by organizations exempt under section 501(c)(8), (9), or (17) to obtain insurance benefits for members. Report those expenses on line 4. Do not report on this line the cost of employment-related benefits such as health insurance, life insurance, or disability insurance provided by the organization to or for its officers, directors, trustees, key employees and other employees. Report the costs for officers, directors, trustees, and key employees on Part IX, line 5; report the costs for other disqualified persons on Part IX, line 6; and report the costs for other employees on Part IX, line 9. Report the costs for members on Part IX, line 4, not in Part IX, line 23. Do not report on this line property or occupancy-related insurance. Report those expenses on line 16.

Line 24. Other expenses.   Enter the types and amounts of expenses which were not reported on lines 1 through 23. Include expenses for medical supplies incurred by health care/medical organizations. Include payments by the organization to professional fundraisers of fundraising expenses such as printing, paper, envelopes, postage, mailing list rental, and equipment rental, if the organization is able to distinguish these expense amounts from fees for professional fundraising services reportable on line 11e. Enter the four largest dollar amounts on lines 24a through 24d and the total of all remaining, miscellaneous expenses on line 24e. Do not include a separate entry for “miscellaneous expenses,” “program expenses,” “other expenses,” or a similar general category in lines 24a-d. If the amount on line 24e exceeds 10% of the amount on line 25, column (A), the organization must list the type and amount of each line 24e expense on Schedule O (Form 990 or 990-EZ).

  The organization must separately report the amount, if any, of unrelated business income taxes that it paid or accrued during the tax year on line 24.

Line 25. Total functional expenses. Section 501(c)(3) and 501(c)(4) organizations:   Add lines 1 through 24e and enter the totals on line 25 in columns (A), (B), (C), and (D).

All other organizations:   Add lines 1 through 24e and enter the total on line 25 in column (A).

Line 26. Joint costs.    Organizations that included in program service expenses (column (B) of Part IX) any joint costs from a combined educational campaign and fundraising solicitation must disclose how the total joint costs of all such combined activities were allocated in Part IX between education and fundraising. For instance, if the organization spent $100,000 on joint costs and allocated 10% to education, it would report $100,000 in line 26, column (A), $10,000 in column (B), and $90,000 in column (D). Any costs reported here are not to be deducted from the other lines in Part IX on which they are reported. Do not check the box unless the organization followed SOP 98-2 (ASC 958-720) in allocating such costs.

  An organization conducts a combined educational campaign and fundraising solicitation when it solicits contributions (by mail, telephone, broadcast media, or any other means) and includes, with the solicitation, educational material or other information that furthers a bona fide non-fundraising exempt purpose of the organization.

  Expenses attributable to providing information regarding the organization itself, its use of past contributions, or its planned use of contributions received, are fundraising expenses and must be reported in column (D). Do not report such expenses as program service expenses in column (B).

  Any method of allocating joint costs between columns (B) and (D) must be reasonable under the facts and circumstances of each case. Most states with reporting requirements for charitable organizations and other organizations that solicit contributions either require or allow reporting of joint costs under AICPA Statement of Position 98-2 (SOP 98-2), Accounting for Costs of Activities of Not-for-Profit Organizations and State and Local Governmental Entities that Include Fundraising, now codified in FASB Accounting Standards Codification 958-720, Not-for-Profit Entities-Other Expenses (ASC 958-720).

Part X. Balance Sheet

Check the box in the heading of Part X if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

All organizations must complete Part X. No substitute balance sheet will be accepted. All references to Schedule D are to Schedule D (Form 990), Supplemental Financial Statements.

Column (A)— Beginning of year    
In column (A), enter the amount from the preceding year's Form 990, column (B). If the organization was excepted from filing Form 990 for the preceding year, enter amounts the organization would have entered in column (B) for that year. If this is the organization's first year of existence, enter zeros on lines 16, 26, 33, and 34 in column (A).

Column (B)— End of year    
When Schedule D (Form 990) reporting is required for any item in Part X, it is only for the end-of-year balance sheet figure reported in column (B). If this is the organization's final return, enter zeros on lines 16, 26, 33, and 34 in column (B).

Line 1. Cash (non-interest-bearing).   Enter the total funds that the organization has in cash, including amounts held as “petty cash” at its offices or other facilities, and amounts held in banks in non-interest-bearing accounts. Do not include cash balances held in an investment account with a financial institution and reported on lines 11 through 13.

Line 2. Savings and temporary cash investments.    Enter the combined total of amounts held in interest-bearing checking and savings accounts, deposits in transit, temporary cash investments (such as money market funds, commercial paper, and certificates of deposit), and U.S. Treasury bills or other governmental obligations that mature in less than a year. Do not include cash balances held in an investment account with a financial institution and reported on lines 11 through 13. Do not include advances to employees or officers or refundable deposits paid to suppliers or other independent contractors. Report the income from these investments on Part VIII, line 3.

Line 3. Pledges and grants receivable, net.   Enter the total of (a) all pledges receivable, less any amounts estimated to be uncollectible, including pledges made by officers, directors, trustees, key employees, and highest compensated employees and (b) all grants receivable.

  Organizations that follow SFAS 116 (ASC 958) can report the present value of the grants receivable as of each balance sheet date.

Line 4. Accounts receivable, net.   Enter the organization's total accounts receivable (reduced by any allowance for doubtful accounts) from the sale of goods and the performance of services. Report claims against vendors or refundable deposits with suppliers or others here, if not significant in amount. Otherwise, report them on line 15, Other assets. Report the net amount of all receivables due from officers, directors, trustees, or key employees on line 5. Report receivables (including loans and advances) due from other disqualified persons on line 6. Receivables (including loans and advances) from employees who are not current or former officers, directors, trustees, key employees, or disqualified persons must be reported on line 7.

Lines 5 and 6. Loans and other receivables from current and former officers, directors, trustees, key employees, and highest compensated employees.   Report on line 5 loans and other receivables due from current or former officers, directors, trustees, key employees, and former and highest compensated employees. Section 501(c)(3), 501(c)(4), and 501(c)(29) organizations must also report on line 6 receivables due from other disqualified persons (for purposes of section 4958, see Appendix G), and from persons described in section 4958(c)(3)(B). Section 501(c)(9) voluntary employees' beneficiary associations (VEBAs) must also report on line 6 receivables due from their contributing employers and sponsoring organizations (see definitions of “contributing employers” and “sponsoring organizations” of a VEBA in the Glossary definition of related organization). Include all amounts owed on secured and unsecured loans made to such persons. Report interest from such receivables on Part VIII, line 11. Do not report on line 5 or 6 (1) pledges or grants receivable, which are to be reported on line 3 or (2) receivables that are excepted from reporting in Schedule L (Form 990 or 990-EZ), Part II (except for excess benefit transactions involving receivables). If the organization must report loans and other receivables on either line 5 or 6, it must answer “Yes” to Part IV, line 26, and complete Schedule L (Form 990 or 990-EZ), Part II.

Line 7. Notes and loans receivable, net.    Enter the net amount of all notes receivable and loans receivable not listed on lines 5 and 6, including receivables from unrelated third parties. The term “unrelated third parties” includes independent contractors providing goods or services and employees who are not current or former officers, directors, trustees, key employees, highest compensated employees or disqualified persons. Do not include the following:
  • Receivables reported on line 4.

  • Program-related investments reported on line 13.

  • Notes receivable acquired as investments reported on line 12.

Line 8. Inventories for sale or use.   Enter the amount of materials, goods, and supplies held for future sale or use, whether purchased, manufactured by the organization, or donated.

Line 9. Prepaid expenses and deferred charges.    Enter the amount of short-term and long-term prepayments of expenses attributable to one or more future accounting periods. Examples include prepayments of rent, insurance, or pension costs, and expenses incurred for a solicitation campaign to be conducted in a future accounting period.

Line 10a. Land, buildings, and equipment.   Enter the cost or other basis of all land, buildings, and equipment held at the end of the year. Include both property held for investment purposes and property used for the organization's exempt functions. If an amount is reported here, answer “Yes” to Part IV, line 11a, and complete Schedule D (Form 990), Part VI. The amount reported on line 10a must equal the total of Schedule D, Part VI, columns (a) and (b).

Line 10b. Accumulated depreciation.   Enter the total amount of accumulated depreciation for the assets reported on line 10a. The amount reported on line 10b must equal the total of Schedule D (Form 990), Part VI, column (c).

Line 10c. Column (A)—Beginning of year.   Enter the cost or other basis of land, buildings, and equipment, net of any accumulated depreciation, as of the beginning of the year.

Line 10c. Column (B)—End of year.   Enter line 10a minus line 10b. The amount reported must equal the total of Schedule D, (Form 990), Part VI, column (d).

Line 11. Investments—publicly traded securities.    Enter the total value of publicly traded securities held by the organization as investments. Publicly traded securities include common and preferred stocks, bonds (including governmental obligations such as bonds and Treasury bills), and mutual fund shares that are listed and regularly traded in an over-the-counter market or an established exchange and for which market quotations are published or are otherwise readily available. Report dividends and interest from these securities on Part VIII, line 3.

  Do not report on line 11 publicly traded stock for which the organization holds 5% or more of the outstanding shares of the same class or publicly traded stock in a corporation that comprises more than 5% of the organization's total assets. Report these investments on line 12.

Line 12. Investments—other securities.    Enter on this line the total value of all securities, partnerships, or funds that are not publicly traded. This includes stock in a closely held company whose stock is not available for sale to the general public or which is not widely traded. Other securities reportable on line 12 also include publicly traded stock for which the organization holds 5% or more of the outstanding shares of the same class, and publicly traded stock in a corporation that comprises more than 5% of the organization's total assets. Do not include program-related investments.

  If an amount is reported on this line that is 5% or more of the amount reported on Part X, line 16, answer “Yes” to Part IV, line 11b and complete Schedule D (Form 990), Part VII. The amount reported on column (B), line 12 must equal the total of Schedule D (Form 990), Part VII, column (b).

Line 13. Program-related investments.   Report here the total book value of all investments made primarily to accomplish the organization's exempt purposes rather than to produce income. Examples of program-related investments include student loans and notes receivable from other exempt organizations that obtained the funds to pursue the filing organization's exempt function.

  If the amount reported on this line is 5% or more of the amount reported on Part X, line 16, answer “Yes” to Part IV, line 11c and complete Part VIII of Schedule D (Form 990). The amount reported on Part X, column (B), line 13 must equal the total of Schedule D (Form 990), Part VIII, column (b).

Line 14. Intangible assets.   Report on this line the total value of all non-monetary, non-physical assets such as copyrights, patents, trademarks, mailing lists, or goodwill.

Line 15. Other assets.   Report on this line the total book value of all assets held and not reported on lines 1 through 14.

  If an amount is reported on this line that is 5% or more of the amount reported on Part X, line 16, answer “Yes” to Part IV, line 11d and complete Schedule D (Form 990), Part IX. The amount reported on Part X, column (B), line 15 must equal the total of Schedule D, Part IX, column (b).

Line 16. Total assets.   Add the totals in columns (A) and (B), lines 1 through 15. The amounts on line 16 must equal the amounts on line 34 for both the beginning and end of the year. The organization must enter a zero or a dollar amount on this line.

Line 17. Accounts payable and accrued expenses.    Enter the total of accounts payable to suppliers, service providers, property managers and other independent contractors, plus accrued expenses such as salaries payable, accrued payroll taxes, and interest payable.

Line 18. Grants payable.   Enter the unpaid portion of grants and awards that the organization has committed to pay other organizations or individuals, whether or not the commitments have been communicated to the grantees.

Line 19. Deferred revenue.   Report revenue that the organization has received but not yet earned as of the balance sheet date under its method of accounting.

Line 20. Tax-exempt bond liabilities.   Enter the amount of tax-exempt bonds (or other obligations) for which the organization has a direct or indirect liability which were either issued by the organization on behalf of a state or local governmental unit, or by a state or local governmental unit on behalf of the organization, and for which the organization has a direct or indirect liability. Tax-exempt bonds include state or local bonds and any obligations, including direct borrowing from a lender, or certificates of participation, the interest on which is excluded from the gross income of the recipient for federal income tax purposes under section 103.

  See also Part IV, line 24a, and Schedule K (Form 990).

Line 21. Escrow or custodial account liability.   Enter the amount of funds or other assets held in an escrow or custodial account for other individuals or organizations. Enter these amounts only if the related assets (such as cash) are reported on lines 1 through 15 of this part. If an amount is reported on this line, the organization must also answer “Yes” to Part IV, line 9, and complete Schedule D (Form 990), Part IV. If the organization has signature authority over, or another interest in an escrow or custodial account for which it does not report the assets or liabilities, it must also answer “Yes” to Part IV, line 9, and complete Schedule D, Part IV.

Example.

A credit counseling organization collects amounts from debtors to remit to creditors and reports the amounts temporarily in its possession as cash on line 1 of the balance sheet. It must then report the corresponding liability (the amounts to be paid to the creditors on the debtors' behalf) on line 21.

Lines 22–24.   Enter on line 22 the unpaid balance of loans and other payables (whether or not secured) to current and former officers, directors, trustees, key employees, highest compensated employees, disqualified persons (for purposes of section 4958), and persons described in section 4958(c)(3)(B). If the organization reports a loan payable on this line, it must answer “Yes” to Part IV, line 26, and complete Schedule L (Form 990 or 990-EZ), Part II. Do not report on line 22 accrued but unpaid compensation owed by the organization. Do not report on line 22 loans and payables excepted from reporting on Schedule L, Part II (except for excess benefit transactions involving receivables).

  On line 23, enter the total amount of secured mortgages and notes payable to unrelated third parties that are secured by the organization's assets as of the end of the tax year. Report on line 25 (and not line 23) any secured mortgages and notes payable to related organizations.

  On line 24, enter the total amount of notes and loans that are payable to unrelated third parties but are not secured by the organization's assets. Report on line 25 (and not line 24) any unsecured payables to related organizations.

Line 25. Other liabilities.   Enter the total amount of all liabilities not properly reportable on lines 17 through 24. Items properly reported on this line include federal income taxes payable and secured or unsecured payables to related organizations. The organization must also answer “Yes” to Part IV, line 11e, and complete Schedule D (Form 990), Part X.

Line 26. Total liabilities.   Add the totals in columns (A) and (B), lines 17 through 25. The organization must enter a zero or a dollar amount on this line.

Net Assets and Fund Balances

Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards 117, Financial Statements of Not-for-Profit Organizations (SFAS 117), now codified in FASB Accounting Standards Codification 958, Not-for-Profit Entities (ASC 958), provides standards for external financial statements certified by an independent accountant for certain types of nonprofit organizations. SFAS 117 (ASC 958-10-15-5) does not apply to credit unions, voluntary employees' beneficiary associations, supplemental unemployment benefit trusts, section 501(c)(12) cooperatives, and other member benefit or mutual benefit organizations.

While some states may require reporting according to SFAS 117 (ASC 958), the IRS does not. However, a Form 990 return prepared according to SFAS 117 (ASC 958) will be acceptable to the IRS.

Organizations that follow SFAS 117 (ASC 958).   If the organization follows SFAS 117 (ASC 958), check the box above line 27, and complete lines 27 through 29 and lines 33 and 34. Classify and report net assets in three groups (unrestricted, temporarily restricted, and permanently restricted) based on the existence or absence of donor-imposed restrictions and the nature of those restrictions. Enter the sum of the three classes of net assets on line 33. On line 34, add the amounts on lines 26 and 33 to show total liabilities and net assets. The amount on line 34 must equal the amount on line 16.

  
Effective for reporting years ending after December 15, 2008, FSP FAS 117-1 (now codified in ASC 958-205, Not-for-Profit Entities–Presentation of Financial Statements) addresses reporting of endowments as permanently restricted or temporarily restricted funds. Further, a number of states have enacted or are considering enacting the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”). If the organization is subject to UPMIFA or FSP 117-1 (now codified in ASC 958-205, Not-for-Profit Entities–Presentation of Financial Statements), it may affect the amounts reported on lines 27 through 29.

Line 27. Unrestricted net assets.   Enter the balance per books of unrestricted net assets. Unrestricted net assets are neither permanently restricted nor temporarily restricted by donor-imposed stipulations. All funds without donor-imposed restrictions must be classified as unrestricted, regardless of the existence of any board designations or appropriations.

Line 28. Temporarily restricted net assets.    Enter the balance per books of temporarily restricted net assets. Donors' temporary restrictions may require that resources be used after a specified date (time restrictions), or that resources be used for a specified purpose (purpose restrictions), or both.

Line 29. Permanently restricted net assets.   Enter the balance per books of permanently restricted net assets. Permanently restricted net assets are (a) assets, such as land or works of art, donated with stipulations that they be used for a specified purpose, be preserved, and not be sold or (b) assets donated with stipulations that they be invested to provide a permanent source of income. The latter results from gifts or bequests that create permanent endowment funds.

Organizations that do not follow SFAS 117 (ASC 958).   If the organization does not follow SFAS 117 (ASC 958), check the box above line 30 and complete lines 30 through 34. Report capital stock, trust principal, or current funds on line 30. Report paid-in capital surplus or land, building, or equipment funds on line 31. Report retained earnings, endowment, accumulated income or other funds on line 32.

Line 30. Capital stock or trust principal, or current funds.   For corporations, enter the balance per books of capital stock accounts. Show par or stated value (or for stock with no par or stated value, total amount received on issuance) of all classes of stock issued and not yet canceled. For trusts, enter the amount in the trust principal or corpus. For organizations using the fund method of accounting, enter the fund balances for the organization's current restricted and unrestricted funds.

Line 31. Paid-in or capital surplus, or land, building, and equipment fund.   Enter the balance of paid-in capital in excess of par or stated value for all stock issued and not yet canceled, as recorded on the corporation's books. If stockholders or others made donations that the organization records as paid-in capital, include them here. Enter the fund balance for the land, building, and equipment fund on this line.

Line 32. Retained earnings, endowment, accumulated income, or other funds.    For corporations, enter the balance of retained earnings as recorded on the corporation's books, or similar account, minus the cost of any corporate treasury stock. For trusts, enter the balance in the accumulated income or similar account. For those organizations using the fund method of accounting, enter the total of the fund balances for the permanent endowment funds, temporarily restricted endowment funds, and quasi-endowment funds as well as balances of any other funds not reported on lines 30 and 31.

Line 33. Total net assets or fund balances.   For organizations that follow SFAS 117 (ASC 958), enter the total of lines 27 through 29. For all other organizations, enter the total of lines 30 through 32. All filers must enter a zero or a dollar amount on this line.

Line 34. Total liabilities and net assets/fund balances.   Enter the total of line 26 and line 33. This amount must equal the amount on line 16. The organization must enter a zero or a dollar amount on this line.

Part XI. Reconciliation of Net Assets

Check the box in the heading of Part XI if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.  
 
Line 1. Enter the amount of total revenue reported on Part VIII, line 12, column (A). 
 
Line 2. Enter the amount of total expenses reported on Part IX, line 25, column (A).  
 
Line 3. Enter the difference between lines 1 and 2.  
 
Line 4. Enter the amount of net assets or fund balances at the beginning of year reported on Part X, line 33, column (A). This amount should be the same amount reported on Part X, line 33, column (B) for the prior year’s return.  
 
Line 5. Report the net unrealized gains or losses on investments reported in the organization's audited financial statements (or other financial statements). This amount represents the change in market value of investments that were not sold or exchanged during the tax year. 
 
Line 6. Report the value of services or use of facilities donated to the organization (net of services or use of facilities donated by the organization) reported as income or expense in the financial statements. 
 
Line 8. Report the net prior period adjustments during the tax year reported in the financial statements. Prior period adjustments are corrections of errors in financial statements of prior years, or changes in accounting principles applied to such years. The errors may include math errors, mistakes in applying accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. 
 
Line 9. Enter the total amount of other changes in net assets or fund balances during the year. Amounts to report here include losses on uncollectible pledges, refunds of contributions and program service revenue, reversal of grant expenses, any difference between FMV and book value of property given as an award or grant, and any other changes in net assets or fund balances not listed in lines 5-8. Itemize these changes in Schedule O (Form 990 or 990-EZ) and check the box in the heading of Part XI.  
 
Line 10. Combine the amounts on lines 3 through 9. The total must equal the amount reported on Part X, line 33, column (B).

Part XII. Financial Statements and Reporting

  

  Check the box in the heading of Part XII if Schedule O (Form 990 or 990-EZ) contains any information pertaining to this part.

   Line 1. Accounting method. Indicate the method of accounting used in preparing this return. See Part D, earlier. Provide an explanation in Schedule O (Form 990 or 990-EZ) (1) if the organization changed its method of accounting from a prior year, or (2) if the organization checked the “Other” accounting method box.

Line 2. Financial statements and independent accountant.   Answer “Yes” or “No” to indicate on line 2a or line 2b whether the organization's financial statements for the tax year were compiled, reviewed or audited by an independent accountant. An accountant is independent if he or she meets the standards of independence set forth by the American Institute of Certified Public Accountants (AICPA), the Public Company Accounting Oversight Board (PCAOB), or another similar body that oversees or sets standards for the accounting or auditing professions.

If “Yes” to either line 2a or 2b, answer “Yes” or “No” on line 2c to indicate whether the organization has a committee that is responsible under its governing documents or through delegation by its governing body for (i) overseeing the compilation, review, or audit of the financial statements, and (ii) the selection of an independent accountant that compiled, reviewed, or audited the statements. Answer “Yes” only if both (i) and (ii) apply. If this process has changed from the prior year, describe in Schedule O (Form 990 or 990-EZ).

Line 3a. Single Audit Act and OMB Circular A-133.   Answer “Yes,” if during the year the organization was required under the Single Audit Act of 1984, as amended in 1996, and OMB Circular A-133 to undergo an audit or audits because of its receipt of federal contract awards. The Single Audit Act requires states, local governments, and nonprofit organizations that expend $500,000 or more of federal awards in a year to obtain an annual audit according to the Act.

Line 3b. Required audits.   If “Yes” to line 3a, indicate whether the organization has undergone the required audit or audits. Answer “Yes,” if the audit was completed or in progress during the organization's tax year. If the answer to line 3b is “No,” explain in Schedule O (Form 990 or 990-EZ) why the organization has not undergone any required audits and describe any steps taken to undergo such audits.


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