Instructions for Form 990-T (2020)

Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e))

Section references are to the Internal Revenue Code unless otherwise noted.

2020


Instructions for Form 990-T - Introductory Material

Future Developments

For the latest information about developments related to Form 990-T and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form990T.

What's New

Mandatory electronic filing.

Mandatory electronic filing of the 2020 Form 990-T started in February 2021. Limited exceptions apply. See When, Where, and How To File, later, for more information.

Updated format.

Form 990-T has been redesigned for tax year 2020. Each unrelated trade or business of an organization has a separate Schedule A attached to the return, with a list of how many Schedules A are attached. Each separate trade or business may be classified by a 2-digit North American Industry Classification System (NAICS) code. See Regulation section 1.512(a)-6(b)(1)), regarding use of 2-digit NAICS codes. Different rules apply for investment income.

In the instructions, the Definitions section has been moved to Appendix A.

New payroll credit for required paid sick leave or family leave.

Under the Families First Coronavirus Response Act (FFCRA), as amended, an eligible employer can take a credit against payroll taxes owed for amounts paid for qualified sick leave or family leave if incurred during the allowed period. However, there is no double benefit allowed. The portion (if any) of the tax credits that is allocable to an unrelated trade or business must be included in gross income from that unrelated trade or business for purposes of the tax imposed by section 511 and the allocable amounts claimed are reportable as income on line 12 (Other income) of the appropriate Schedules(s) A (Form 990-T). Go to IRS.gov and search "Special Issues for Employers: Taxation and Deductibility of Tax Credits" for more information.

New employee retention credit.

The Coronavirus Aid, Relief, and Economic Securities Act (CARES Act) allows a new employee retention credit for qualified wages. Any qualified wages for which an eligible employer claims against payroll taxes for the new employee retention credit may not be taken into account for purposes of determining other credits.

Temporary allowance of 100% for business meals.

An organization is allowed a 100% deduction for certain business meal expenses paid or incurred in 2021 and 2022. See Travel, meals, and entertainment, later.

Reminders

Separate UBTI calculation for each trade or business.

Organizations with more than one unrelated trade or business must compute unrelated business taxable income (UBTI), including for purposes of determining any net operating loss deduction, separately with respect to each trade or business. See Schedule A (Form 990-T). The UBTI with respect to any such trade or business shall not be less than zero when computing total UBTI.

Net operating loss (NOL) carryback.

The CARES Act amended section 172 provides for carryback of any net operating loss arising in a tax year beginning after 2017 and before 2021 to each of the 5 tax years preceding the tax year of the NOL. Taxpayers may elect to waive the carryback period for NOLs arising in those years. To elect to waive the carryback period for an NOL arising in a tax year beginning in 2018 or 2019, attach a statement electing the carryback waiver to your return for the first tax year ending after March 27, 2020. For more information see Rev. Proc. 2020-24. If you incurred an NOL in a tax year beginning in 2018 or 2019, you can file an amended return, Form 990-T, to carryback the NOL. See Pub. 536 for more information.

Carrybacks of net operating losses for unrelated trade or businesses was prohibited, but that provision was delayed by the CARES Act. The same is true of a percentage limitation on the use of losses.

Qualified opportunity investment.

If you deferred a capital gain into a qualified opportunity fund (QOF), attach Schedule D, Form 8949, and Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments, to your return. You will need to file Form 990-T with Form 8997 attached annually until you dispose of the investment. See the Instructions for Form 8997.

Qualified business income deduction.

If you are a trust filing Form 990-T and have unrelated business income, you may have Qualified Business Income (QBI) and may be allowed a QBI deduction under section 199A. See Part I, line 9, later, for more information.

Adjustments to tax attributable to partner's audit liability.

If your organization received Form 8986, Partner's Share of Adjustment(s) to Partnership-Related Item(s), from one or more partnerships that have elected to push out adjustments to partnership-related items to their partners, see the instructions for Part II, line 7 and Part III, line 1b.

Omit SSN information.

Don't include social security numbers on publicly disclosed forms. Because the IRS is required to publicly disclose a 501(c)(3) organization’s Form 990-T returns, social security numbers should not be included on this form. Documents subject to disclosure include schedules. See Public Inspection Requirements of Section 501(c)(3) Organizations, later.

General Instructions

Purpose of Form

Use Form 990-T and Schedule A (as applicable) to:

  • Report unrelated business income;

  • Figure and report unrelated business income tax liability;

  • Report proxy tax liability;

  • Claim a refund of income tax paid by a regulated investment company (RIC) or a real estate investment trust (REIT), on undistributed long-term capital gain;

  • Request a credit for certain federal excise taxes paid or for small employer health insurance premiums paid; and

  • Report unrelated business income tax on reinsurance entities.

Who Must File

Organizations with Current UBTI

  • Any disregarded entity, domestic, or foreign organization exempt under section 501(a), section 529(a), or section 529A(a), if it has gross income of $1,000 or more from a regularly conducted unrelated trade or business (see Regulations section 1.6012-2(e)). Gross income is gross receipts minus the cost of goods sold (see Regulations section 1.61-3). For a discussion of cost of goods sold see Schedule A (Form 990-T), Part III. Cost of Goods Sold, later.

.This is an Image: caution.gifThe gross receipts from a gaming business include all amounts wagered in games, not just the net proceeds after payment of prizes and other expenses. Cash prizes aren't included in cost of goods sold but are reported on Schedule A, Part II, Line 14 as other deductions..

.This is an Image: caution.gif A disregarded entity, as described in Regulations sections 301.7701-1 through 301.7701-3, is treated as a branch or division of its parent organization for federal tax purposes. Therefore, financial information applicable to a disregarded entity must be reported as the parent organization's financial information..

  • Colleges and universities of states and other governmental units, and subsidiary corporations wholly owned by such colleges and universities. However, a section 501(c)(1) corporation that is an instrumentality of the United States and both organized and exempt from tax by an Act of Congress doesn’t have to file.

  • Applicable reinsurance entities under the Affordable Care Act of 2010 (ACA), section 1341(c)(1).

  • Qualified tuition programs described under section 529 that have $1,000 or more of unrelated trade or business gross income.

  • Qualified ABLE programs described under section 529A that have $1,000 or more of unrelated trade or business gross income.

  • Trustees for the following trusts that have $1,000 or more of unrelated trade or business gross income:
    1. Individual retirement accounts (IRAs), including traditional IRAs described under section 408(a),
    2. Simplified employee pension IRAs (SEP IRAs) described under section 408(k),
    3. Savings incentive match plan for employees of small employers IRAs (SIMPLE IRAs) described under section 408(p),
    4. Roth IRAs described under section 408A,
    5. Coverdell education savings accounts (ESAs) described under section 530,
    6. Archer medical savings accounts (Archer MSAs) described under section 220, and
    7. Health savings accounts (HSAs) described under section 223.

.This is an Image: taxtip.gifEach account of a type listed above is treated as a separate trust for unrelated business income tax purposes (even if there is a single owner or beneficiary for multiple accounts). A custodian is treated as a trustee. See section 408(h). Individual retirement annuities, unlike individual retirement accounts, aren't subject to unrelated business income tax..

.This is an Image: taxtip.gifIRAs and other tax-exempt shareholders in a RIC or REIT filing Form 990-T only to obtain a refund of income tax paid on undistributed long-term capital gains should complete Form 990-T as explained in IRAs and other tax-exempt shareholders in a RIC or REIT, later..

Organizations With or Without Current UBTI

Proxy tax.

Organizations liable for the proxy tax on lobbying and political expenditures. See Part II, line 3. Proxy Tax, later, for a discussion of the proxy tax. If your organization is only required to file because of the proxy tax, see Proxy Tax Only under Which Parts To Complete, later.

Section 1291 and Recapture tax.

Organizations that are liable for other taxes (such as the section 1291 tax (Form 990-T, Part II, line 4) or recapture taxes (Form 990-T, Part III, line 3)). See a discussion of these items, later. If your organization is only required to file Form 990-T because of these taxes, see Other Taxes under Which Parts To Complete, later.

Qualified opportunity investment (annual report).

Organizations that deferred a capital gain into a qualified opportunity fund (QOF) must file Form 990-T with Schedule D, Form 8949, and Form 8997 attached. Each such organization must file Form 990-T with Form 8997 attached annually until the organization disposes of the investment. See the Instructions for Form 8997.

.This is an Image: taxtip.gifIf you are filing Form 990-T only because of the proxy tax, other taxes, or only to claim a refund, go directly to Proxy Tax Only, Other Taxes, or Claim for Refund, later. If you are filing Form 990-T only to claim the credit for small employer health insurance premiums, see the instructions for Part III, line 6f, later..

Which Parts to Complete

Organizations with unrelated business taxable income.

Organizations with unrelated business taxable income must complete Form 990-T, and also a separate Schedules A (Form 990-T) for each separate unrelated trade or business. See Regulations section 1.512(a)-6. Organization should complete all Schedules A (Form 990-T) first. See Instructions the Instructions for Schedule A, later.

Consolidated returns.

The consolidated return provisions of section 1501 don't apply to exempt organizations, except for organizations having title holding companies. If a title holding corporation described in section 501(c)(2) pays any amount of its net income for a tax year to an organization exempt from tax under section 501(a) (or would, except that the expenses of collecting its income exceeded that income), and the corporation and organization file a consolidated return as described below, then treat the title holding corporation as being organized and operated for the same purposes as the other exempt organization (in addition to the purposes described in section 501(c)(2)).

Two organizations exempt from tax under section 501(a), one a title holding company and the other earning income from the first, will be includible corporations for purposes of section 1504(a). If the organizations meet the definition of an affiliated group and the other relevant provisions of Chapter 6 of the Code, then these organizations may file a consolidated return. The parent organization must attach Form 851, Affiliations Schedule, to the consolidated return. For the first year a consolidated return is filed, the title holding company must attach Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return. See Regulations section 1.1502-100.

Organizations with no unrelated business taxable income.

An organization with no unrelated business taxable income that needs to file Form 990-T should complete and file Form 990-T only. Such an organization does not complete or attach Schedule A (Form 990-T) to its return.

Proxy tax only.

Organizations that are required to file Form 990-T only because they are liable for the proxy tax on lobbying and political expenditures must complete the following.

  • The heading (above Part I) except items J and K;

  • Part II, lines 3 and 7;

  • Part III;

  • Signature area; and

  • Attach a statement showing the proxy tax computation.

Other taxes.

Organizations that are required to file Form 990-T only because they are liable for recapture taxes, the section 1291 tax, the tax on a hospital organization’s non-compliant facility income, or other items listed in the instructions for Part III, line 3 must complete the following.

  • The heading above Part I except items J and K;

  • The applicable lines of Parts II and III;

  • Signature area; and

  • Attach all appropriate forms and/or schedules showing the computation of the applicable tax or taxes.

Claim for refund (including special instructions for IRA trustees).

If your only reason for filing a Form 990-T is to claim a refund, complete the following:

  • The heading above Part I except items J and K;

  • Enter -0- on Part I, lines 1 and 11, and Part III, line 4;

  • Enter the credit or payment on Part III, lines 6a through 6g, as appropriate;

  • Part III, lines 7, 10, and 11; and

  • Signature area.

For claims described below, follow the additional instructions for that claim.

IRAs and other tax-exempt shareholders in a RIC or REIT.

If you are an IRA or other tax-exempt shareholder that is invested in a RIC or a REIT and file Form 990-T only to obtain a refund of income tax paid on undistributed long-term capital gains, follow steps above under Claim for Refund (including special instructions for IRA trustees); check the applicable box in item H at the top of Form 990-T; and attach Copy B of Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains.

Composite Form 990-T.

If you are a trustee of more than one IRA invested in a RIC, you may be able to file a composite Form 990-T to claim a refund of tax under section 852(b) instead of filing a separate Form 990-T for each IRA. See Notice 90-18, 1990-1 C.B. 327, for information on who can file a composite return. Complete steps above under Claim For Refund (including special instructions for IRA trustees) and follow the additional requirements in the notice.

Backup withholding.

If your only reason for filing Form 990-T is to claim a refund of backup withholding, complete steps above under Claim for Refund (including special instructions for IRA trustees) and attach a copy of the Form 1099 showing the withholding.

When, Where, and How to File

When to file

15th day of 4th month or 15th day of 5th month.

An employees' trust defined in section 401(a), an IRA (including SEPs and SIMPLEs), a Roth IRA, a Coverdell ESA, or an Archer MSA must file Form 990-T by the 15th day of the 4th month after the end of its tax year. All other organizations must file Form 990-T by the 15th day of the 5th month after the end of their tax years. If the regular due date falls on a Saturday, Sunday, or legal holiday, file no later than the next business day. If the return is filed late, see Interest and Penalties, later.

Extensions.

Filers may request an automatic extension of time to file Form 990-T by using Form 8868, Application for Automatic Extension of Time To File an Exempt Organization Return.

Amended return.

To correct errors or change a previously filed return, check box F, “Amended Return” at the top of the return. Also, in Part V, “Supplemental Information,” include a statement that indicates the line numbers on the original return that were changed and give the reason for each change. Generally, the amended return must be filed within 3 years after the date the original return was due or 3 years after the date the organization filed it, whichever is later.

Where and how to file

Mandatory electronic filing.

Mandatory electronic filing of the 2020 Form 990-T started in February 2021. Limited exceptions apply.

Where to file returns.

In the case where filing a paper return is permitted, such as amended returns prior to the period electronic returns were required, follow the instructions below.

U.S. Mail.

Send Form 990-T and all other required information to:

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

Private Delivery Service.

Organizations can use certain private delivery services (PDSs) designated by the IRS to meet the "timely mailing as timely filing" rule for tax returns. Go to IRS.gov/PDS for the list of PDS.

.This is an Image: caution.gifPrivate delivery services can't deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address..

Estimated Tax Payments

Generally, an organization filing Form 990-T must make installment payments of estimated tax if its estimated tax (tax minus allowable credits) is expected to be $500 or more. Both corporate and trust organizations use Form 990-W, Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations, to figure their estimated tax liability. Don't include the proxy tax when computing your estimated tax liability for 2020.

To figure estimated tax, only trusts must take the alternative minimum tax (if applicable) into account. See Form 990-W for more information.

Depository Method of Tax Payment

The organization must pay any tax due in full by the due date of the return without extension.

Electronic Deposit Requirement

The organization must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically. Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). For more information about EFTPS or to enroll in EFTPS, visit the EFTPS website at EFPTS.gov, or call 1-800-555-4477 (TTY/TDD 1-800-733-4829). You can also get Pub. 966, Electronic Federal Tax Payment System: A Guide to Getting Started.

Depositing on time.

For EFTPS deposits to be made timely, the organization must submit the deposit by 8 p.m. Eastern time the day before the deposit is due.

Same-day wire payment option.

If you fail to submit a deposit transaction on EFTPS by 8 p.m. eastern time the day before the date a deposit is due, you can still make your deposit on time by using the Federal Tax Application (FTA), a same-day federal tax payment system that works in conjunction with EFTPS. Make arrangements with your financial institution ahead of time, noting the institution's availability, deadlines, and costs, if you believe you would ever need the same-day wire payment option. To learn more, visit IRS.gov/SameDayWire.

Timeliness of deposits.

The IRS will use business days to determine the timeliness of deposits. Business days are any day that isn’t a Saturday, Sunday, or legal holiday in the District of Columbia.

Interest and Penalties

Your organization may be subject to interest and penalty charges if it files a late return or fails to pay tax when due. Generally, the organization isn't required to include interest and penalty charges on Form 990-T because the IRS can figure the amount and bill the organization for it.

Interest.

Interest is charged on taxes not paid by the original due date for the return even if the organization uses Form 8868 to request an automatic extension of time to file. Interest is also charged on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, and substantial understatements of tax from the due date (including extension) to the date of payment. The interest charge is figured at the underpayment rate determined under section 6621.

Late filing of return.

An organization that fails to file its return when due (including extension of time for filing) is subject to a penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $435. The penalty won't be imposed if the organization can show that the failure to file on time was due to reasonable cause. If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. Don’t include an explanation when you file your return.

Late payment of tax.

The penalty for late payment of taxes is usually 1/2 of 1% of the unpaid tax for each month or part of a month the tax is unpaid. The penalty can’t exceed 25% of the unpaid tax. If you receive a notice about a penalty after you file this return, reply to the notice with an explanation and we will determine if you meet reasonable-cause criteria. Don’t include an explanation when you file your return.

Estimated tax penalty.

An organization that doesn’t make estimated tax payments when due may be subject to an underpayment penalty for the period of underpayment. Generally, an organization is subject to this penalty if its tax liability for the tax year is $500 or more and it didn’t make estimated tax payments of at least the smaller of its tax liability for the tax year or 100% of the prior year's tax. See section 6655 for details and exceptions.

Trust fund recovery penalty.

This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld aren't paid to the United States Treasury. These taxes are generally reported on:

  • Form 720, Quarterly Federal Excise Tax Return;

  • Form 941, Employer's Quarterly Federal Tax Return;

  • Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; or

  • Form 945, Annual Return of Withheld Federal Income Tax.

The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to have been responsible for collecting, accounting for, and paying over these taxes, and who acted willfully in not doing so. The penalty is equal to the unpaid trust fund tax. See the Instructions for Form 720; Pub. 15 (Circular E), Employer's Tax Guide; or Pub. 51 (Circular A), Agricultural Employer's Tax Guide, for details, including the definition of responsible persons.

Other penalties.

There are also penalties that can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663.

Other Forms That May Be Required

Forms W-2 and W-3.

File Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, to report wages, tips, other compensation, withheld income taxes, and withheld social security/Medicare taxes for employees.

Form 720.

File Form 720, Quarterly Federal Excise Tax Return, to report environmental excise taxes, communications and air transportation taxes, fuel taxes, manufacturer's taxes, ship passenger tax, and certain other excise taxes. See Trust fund recovery penalty, earlier.

Form 926.

File Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation, if the organization is required to report certain transfers to foreign corporations under section 6038B.

Form 940.

File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, if the organization is liable for FUTA tax.

Form 941 and Form 943.

File Form 941, Employer's QUARTERLY Federal Tax Return, or Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, to report income tax withheld, and employer and employee social security and Medicare taxes. Also, see Trust fund recovery penalty, earlier.

Form 945.

File Form 945, Annual Return of Withheld Federal Income Tax, to report income tax withheld from nonpayroll distributions or payments, including pensions, annuities, IRAs, gambling winnings, and backup withholding.

Form 965, Form 965-A, and Form 965-B.

See Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System; Form 965-A, Individual Report of Net 965 Tax Liability; and Form 965-B, Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts; and their respective instructions, for more information.

Form 1098.

File Form 1098, Mortgage Interest Statement, to report the receipt from any individual of $600 or more of mortgage interest (including points) in the course of the organization's trade or business and reimbursements of overpaid interest.

Forms 1099-A, B, DIV, INT, LTC, MISC, NEC, OID, R, S, and SA.

Organizations engaged in an unrelated trade or business may be required to:

  • File an information return on Forms 1099-A, B, DIV, INT, LTC, MISC, NEC, OID, R, S, and SA;

  • Report acquisitions or abandonments of secured property through foreclosure;

  • Report proceeds from broker and barter exchange transactions;

  • Report certain dividends and distributions;

  • Report interest income;

  • Report certain payments made on a per diem basis under a long-term care insurance contract, and certain accelerated death benefits;

  • Report miscellaneous income (such as payments to providers of health and medical services, and miscellaneous income payments);

  • Report nonemployee compensation;

  • Report original issue discount;

  • Report distributions from retirement or profit-sharing plans, IRAs, SEPs, SIMPLEs, insurance contracts;

  • Report proceeds from real estate transactions; and

  • Report distributions from an HSA, Archer MSA, or Medicare Advantage MSA.

.This is an Image: caution.gifWhen filing the above listed Form 1099 series information returns, the organization must also file Form 1096, Annual Summary and Transmittal of U.S. Information Returns..

Form 4466.

File Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, to apply for a quick refund if the organization overpaid its estimated tax for the year by at least 10% of its expected income tax liability and at least $500.

Form 5498.

File Form 5498, IRA Contribution Information, to report contributions (including rollover contributions) to any IRA, including a SEP, SIMPLE, Roth IRA, and to report Roth IRA conversions, IRA recharacterizations, and the fair market value (FMV) of the account.

Form 5498-ESA.

File Form 5498-ESA, Coverdell ESA Contribution Information, to report contributions (including rollover contributions) to a Coverdell education savings account (ESA).

Form 5498-SA.

File Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, to report contributions to an HSA or Archer MSA and the fair market value of an HSA, Archer MSA, or Medicare Advantage MSA. See the Instructions for Forms 1099-SA and 5498-SA.

Form 5713.

File Form 5713, International Boycott Report, if the organization had operations in, or related to, certain "boycotting" countries.

Form 5884-C.

File Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, to claim the work opportunity credit for qualified first-year wages paid to qualified veterans who begin working for the organization on or after November 22, 2011, and before January 1, 2026.

Form 6198.

File Form 6198, At-Risk Limitations, if the organization has a loss from an at-risk activity conducted as a trade or business or for the production of income.

Form 8275 and 8275-R.

Taxpayers and income tax return preparers file Form 8275, Disclosure Statement, and Form 8275-R, Regulation Disclosure Statement, to disclose items or positions taken on a tax return or that are contrary to Treasury regulations (to avoid parts of the accuracy-related penalty or certain preparer penalties).

Form 8300.

File Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if the organization received more than $10,000 in cash or foreign currency in one transaction or in a series of related transactions. See Form 8300 and Regulations section 1.6050I-1(c).

Form 8582.

File Form 8582, Passive Activity Loss Limitations, for trusts that have losses (including prior year unallowed losses) from passive activities.

Form 8697.

File Form 8697, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts, to figure the interest due or to be refunded under the look-back method of section 460(b)(2). The look-back method applies to certain long-term contracts that are accounted for under either the percentage method or the completion-capitalized cost method.

Form 8810.

File Form 8810, Corporate Passive Activity Loss and Credit Limitations, for closely held corporations that have losses or credits (including prior year unallowed losses and credits) from passive activities.

Form 8865.

File Form 8865, Return of U.S. Persons With Respect To Certain Foreign Partnerships, if the organization:

  1. Controlled a foreign partnership (that is, owned more than a 50% direct or indirect interest in the partnership).

  2. Owned at least a 10% direct or indirect interest in a foreign partnership while U.S. persons controlled that partnership.

  3. Had an acquisition, disposition, or change in proportional interest in a foreign partnership that:

    1. Increased its direct interest to at least 10% or reduced its direct interest of at least 10% to less than 10%.

    2. Changed its direct interest by at least a 10% interest.

  4. Contributed property to a foreign partnership in exchange for a partnership interest if:

    1. Immediately after the contribution, the organization directly or indirectly owned at least a 10% interest in the foreign partnership; or

    2. The FMV of the property the organization contributed to the foreign partnership in exchange for a partnership interest, when added to other contributions of property made to the foreign partnership by the organization or a related person during the preceding 12-month period, exceeds $100,000.

Also, the organization may have to file Form 8865 to report certain dispositions by a foreign partnership of property it previously contributed to that foreign partnership if it was a partner at the time of the disposition. See Form 8865 and its separate instructions.

Form 8886.

File Form 8886, Reportable Transaction Disclosure Statement, to disclose information for each reportable transaction in which the organization participated. Form 8886 must be filed for each tax year that the federal income tax liability of the organization is affected by its participation in the transaction. The organization may have to pay a penalty if it is required to file Form 8886 but doesn’t do so. The following are reportable transactions.

  • Any listed transaction that is the same as, or substantially similar to tax avoidance transactions identified by the IRS.

  • Any transaction offered under conditions of confidentiality for which the organization paid an advisor a fee of at least $250,000.

  • Certain transactions for which the organization has contractual protection against disallowance of the tax benefits.

  • Any transaction resulting in a loss of at least $10 million in any single year or $20 million in any combination of years.

  • Certain transactions identified by the IRS in published guidance as a "transaction of interest" (a transaction that the IRS believes has a potential for tax avoidance or evasion, but hasn’t yet been identified as a listed transaction).

Form 8886-T.

File Form 8886-T, Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction, to disclose information with respect to each prohibited tax shelter transaction to which the organization is a party.

Penalties.

The organization may have to pay a penalty if it is required to disclose a reportable transaction under section 6011 and fails to properly complete and file Form 8886. The penalty is $50,000 ($200,000 if the reportable transaction is a listed transaction) for each failure to file Form 8886 with its return or for failure to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA). Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. See the Instructions for Form 8886 for details.

Form 8899.

File Form 8899, Notice of Income From Donated Intellectual Property, to report income from qualified intellectual property.

Form 8925.

File Form 8925, Report of Employer-Owned Life Insurance Contracts, which must be filed by every applicable policyholder owning one or more employer-owned life insurance contracts issued after August 17, 2006.

Form 8975.

Certain United States persons that are the ultimate parent entity of a United States multinational enterprise group with annual revenue for the preceding reporting period of $850 million or more are required to file Form 8975. Form 8975 and its Schedules A (Form 8975) must be filed with the income tax return of the ultimate parent entity of a U.S. multinational enterprise group for the tax year in or within which the reporting period covered by Form 8975 ends. For more information, see Form 8975, Schedule A (Form 8975), and the Instructions for Form 8975 and Schedule A (Form 8975).

Form 8978.

File Form 8978, Partner's Additional Reporting Year Tax, to report adjustments shown on Form 8986, Partner's Share of Adjustment(s) to Partnership-Related Items, received from a partnership that has elected to push out adjustments to partnership-related items to their partners.

Form 8990.

File Form 8990, Limitation on Business Interest Expense Under Section IRC 163(j), to claim a deduction for business interest unless the taxpayer meets certain specified exceptions. Also, Form 8990 must be filed by any taxpayer that owns an interest in a partnership with current year or prior year carryover excess business interest expense allocated from the partnership.

Form 8991.

File Form 8991, Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts, for any corporation, other than a regulated investment company, a real estate investment trust, or an S corporation, that has average annual gross receipts for the 3-tax-year period ending with the preceding tax year of at least $500 million.

Form 8993.

File Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI), for the allowance of a deduction for the eligible percentage of FDII. The deduction is allowed only to domestic corporations (not including real estate investment trusts (REITs), regulated investment companies (RICs), and S corporations).

Form 8994.

File Form 8994, Employer Credit for Paid Family and Medical Leave, to figure the employer credit for paid leave.

Form 8995.

Refer to Form 8995, Qualified Business Income Deduction Simplified Computation, if you are a trust filing Form 990-T and have unrelated business income, to determine if you have Qualified Business Income (QBI) and may be allowed a QBI deduction under section 199A. See instructions for line Part I, line 9.

Form 8995-A.

Refer to Form 8995, Qualified Business Income Deduction Simplified Computation, if you are a trust filing Form 990-T and have unrelated business income, to determine if you have Qualified Business Income (QBI) and may be allowed a QBI deduction under section 199A. See instructions for Part I, line 9.

Form 8997.

File Form 8997, Initial and Annual Statement of Opportunity Fund Investments, annually to report investments held in a qualified opportunity fund at any time during the year. See the Instructions for Form 8997.

Accounting Methods

An accounting method, for federal income tax purposes, is a practice a taxpayer follows to determine the year in which to report revenue and expenses for federal income tax purposes. An accounting method includes not only the overall plan of accounting for gross income or deductions (for example, an accrual method or the cash receipts and disbursement method), but also the treatment of an item used in such overall plan. However, a practice that does not affect the timing for reporting an item of income or deduction for purposes of determining taxable income is not an accounting method. A taxpayer, including a tax-exempt entity, adopts any permissible accounting method in the first year in which it uses the method in determining its taxable income. See Rev. Proc. 2015-13, 2015-5 I.R.B. 419.

.This is an Image: caution.gifAn exempt organization may adopt an accounting method not only for purposes of calculating taxable income, but also for purposes of determining whether taxable income will be subject to federal income tax. For example, a tax-exempt entity may adopt an accounting method for an item of income from an unrelated trade or business activity even if the gross income from the activity is less than $1,000 and is therefore not taxed for federal income tax purposes pursuant to Regulations section 1.6012-2(e)..

.This is an Image: caution.gifAn accounting method for an item of income or deduction generally may be adopted separately for each of the taxpayer’s trades or businesses. However, in order to be permissible, an accounting method must clearly reflect the taxpayer’s income. Unless instructed otherwise, the organization generally should use the same accounting method on the Form 990-T and all schedules to report revenue and expenses that it regularly uses to keep its books and records..

Accounting method change.

Once a taxpayer, including a tax-exempt entity, adopts an accounting method for federal income tax purposes, the taxpayer generally must request the IRS’s consent before it can change its accounting method (even if the year in which the taxpayer seeks to make the change is a year in which it generates only tax-exempt income or is otherwise not taxed on its taxable income). In most cases a taxpayer requests consent to change an accounting method by filing Form 3115, Application for Change in Accounting Method. See Rev. Proc. 2015-13, or any successor, for general procedures for obtaining consent to change an accounting method.

Depending on the specific accounting method change being requested, the taxpayer may be able to request automatic consent. This means that as long as the taxpayer follows the applicable procedures, the taxpayer does not have to wait for formal approval by the IRS before applying the new accounting method. See Rev. Proc. 2019-43, 2019-48 I.R.B. 1107, or its successor, for a list of accounting method changes that may qualify for automatic consent.

For example, a tax-exempt entity that has adopted an accounting method for an item of income from an unrelated trade or business generally must request consent before it can change its method of accounting for that item in any subsequent year. This is true regardless of whether gross income from the unrelated trade or business is $1,000 or more in such subsequent year.

Alternatively, if a taxpayer, including a tax-exempt entity, has not yet adopted an accounting method for an item of income or deduction, a change in how the entity reports the item is not a change in accounting method. In this case, the procedures applicable to requests for accounting method changes (the requirement to file Form 3115) are not applicable. See Rev. Proc. 2015-13 for the definition of what constitutes an accounting method change.

Thus, a tax-exempt entity that has never taken into account an item of income or deduction in determining taxable income does not have to request consent to change its method of reporting that item on its Form 990-T. Additionally, a tax-exempt entity that has never been subject to federal income tax on an item of income or deduction, but that is required to file a Form 990-T solely due to owing a section 6033(e)(2) proxy tax, does not have to request consent to change its method for reporting the item.

Adjustments required when changing an accounting method.

A taxpayer, including a tax-exempt entity, that changes its accounting method generally must calculate and report an adjustment to ensure that no portion of the item being changed is permanently omitted or duplicated (see section 481(a)). However, depending on the specific method change, the IRS may provide that an adjustment is not required or permitted.

.This is an Image: caution.gifGenerally, a taxpayer, including a tax-exempt entity, will recognize a positive section 481(a) adjustment (that is, an increase to income) ratably over four tax years and will recognize a negative section 481(a) adjustment in full in the year of change. See Rev. Proc. 2015-13, or its successor..

An organization may elect a 1-year adjustment period for positive section 481(a) adjustment that is less than $50,000. See the Instructions for Form 3115 for more information and requirements to make this election.

Include any positive section 481(a) adjustment on Schedule A (Form 990-T), Part I, line 12 (Other income). If the section 481(a) adjustment is negative, report it as a deduction on Schedule A (Form 990-T), Part II, line 14 (Other deductions). The section 481(a) adjustment should not be reported on Form 990-T as a negative number.

However, as discussed above, if a tax-exempt entity has not yet adopted an accounting method for an item, a change in how the entity reports the item for purposes of filing the Form 990-T is not a change in accounting method. In this case, an adjustment under section 481(a) is not required or permitted.

Accounting Period

The return must be filed using the organization's established annual accounting period. If the organization has no established accounting period, file the return on the calendar-year basis.

To change an accounting period, some organizations may make a notation on a timely filed Form 990, 990-EZ, 990-PF, or 990-T. Others may be required to file Form 1128, Application To Adopt, Change, or Retain a Tax Year. For details on which procedure applies to your organization, see Rev. Proc. 85-58, 1985-2 C.B. 740, and the Instructions for Form 1128.

For the short period return, figure the tax by placing the organization's taxable income on an annual basis. If the organization changes its accounting period, file Form 990-T for the short period that begins with the first day after the end of the old tax year and ends on the day before the first day of the new tax year. For details, see section 443.

Reporting 990-T Information on Other Returns

Your organization may be required to file an annual information return on:

  • Form 990, Return of Organization Exempt From Income Tax;

  • Form 990-EZ, Short Form Return of Organization Exempt From Income Tax;

  • Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation; or

  • Form 5500, Annual Return/Report of Employee Benefit Plan.

If so, include on that information return the unrelated business gross income and expenses (but not including the specific deduction claimed on Part I, line 8, or any expense carryovers from prior years) reported on Form 990-T for the same tax year.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on the organization’s return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example $1.39 become $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total. If you are entering amounts that include cents, make sure to include the decimal point. There is no cents column on the form.

Public Inspection Requirements of Section 501(c)(3) Organizations

Under section 6104(d), a section 501(c)(3) organization that files Form 990-T must make its entire annual exempt organization business income tax return (including amended returns) available for public inspection. See Appendix C. Public Inspection of Form 990-T Returns Filed by Section 501(c)(3) Organization, later.

Specific Instructions

Period Covered

File the 2020 form for calendar year 2020 or a fiscal year beginning in 2020 and ending in 2021. For a fiscal year, fill in the tax year information at the top of the form.

The 2020 Form 990-T may also be used if:

  • The organization has a tax year of less than 12 months that begins and ends in 2021, and

  • The 2021 Form 990-T isn't available at the time the organization is required to file its return. The organization must show its 2021 tax year on the 2020 Form 990-T and take into account any tax law changes that are effective for tax years beginning after 2020.

Name and Address

The name and address on Form 990-T should be the same as the name and address shown on other Forms 990.

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

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.

.This is an Image: caution.gif Change of name. If the organization has changed its name, it must check the box next to "Name of organization" and also provide the following when filing this return, if it is: .

  • A corporation, is incorporated with the state or limited liability company treated as a corporation for tax purposes (that is, not a disregarded entity)—an amendment to the articles of incorporation or articles of organization along with proof of filing with the state.

  • A trust—an amendment to the trust agreement with the trustee(s) signature.

  • An association, or an unincorporated association—an amendment to the articles of association, constitution, by-laws, or other organizing document with signatures of at least two officers/members.

.

Items A through L

Item A.

If the organization has changed its address since it last filed a return, check Item A.

.This is an Image: taxtip.gifIf 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 B.

Check the box under which the organization receives its tax exemption.

Qualified pension, profit-sharing, and stock bonus plans should check the 501 box and enter "a" between the first set of parentheses. Do not make an entry in the space between the second parentheses.

For other organizations exempt under section 501, check the box for 501 and enter the section that describes their tax exempt status, for example, 501(c)(3).

For tax exempt organizations that don't receive their exemption under section 501, use the following guide.

IF you are a THEN check this box
IRA, SEP, or SIMPLE 408(e)
Roth IRA 408A
Archer MSA 220(e)
Coverdell ESA 530(a)
Qualified State Tuition Program 529(a)
Qualified ABLE Program 529A

For an "applicable reinsurance entity" described in section 1341(c)(1) of the Affordable Care Act of 2010 (ACA), don't check any of the boxes. Instead, check the box for "Applicable reinsurance entity" in Item G.

Item C.

Enter the total of the end-of-year assets from the organization's books of account.

Item D.

An employees' trust described in section 401(a) and exempt under section 501(a) should enter its own trust identification number in this block.

An IRA trust enters its own EIN in this block. An IRA trust never enters a social security number or the trustee's EIN.

An EIN may be applied for:

  • Online—Click on the Employer ID Numbers (EINs) link at IRS.gov/EIN. The EIN is issued immediately once the application information is validated.

  • By mailing or faxing Form SS-4, Application for Employer Identification Number.

Note.

Only organizations located in the United States or U.S. possessions can use the online application. Foreign organizations must use one of the other methods to apply for an EIN.

Item E.

If the organization is covered by a group exemption, enter the group exemption number.

Item F.

Check this box if the organization previously filed a Form 990-T 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. Also, see Amended return, earlier, for information you must include in an amended return.

Item G.

Check the box that describes your organization.

"Other trust" includes IRAs, SEPs, SIMPLEs, Roth IRAs, Coverdell IRAs, and Archer MSAs.

Section 529 organizations check the 501(c) corporation or 501(c) trust box depending on whether the organization is a corporation or a trust. Also, the box for 529(a) in Item B must be checked.

.This is an Image: caution.gifCompute your tax in Part II on the appropriate line. If you check (501(c)) corporation), you must compute your tax on Part II, line 1, and leave line 2 blank. If you check (501(c) trust), (401(a) trust), or (Other trust), you must compute your tax on Part II, line 2, and leave line 1 blank..

Item H.

Check if filing Form 990-T only to claim a credit from Form 8941 or to claim a refund shown on Form 2439.

Item I.

Check if you are a 501(c)(3) organization filing a consolidated return with a 501(c)(2) title holding corporation. See Consolidated returns, earlier, for additional information.

Item J.

Enter the total number of Schedules A attached to Form 990-T. An organization with one or more unrelated trades or businesses will complete a separate Schedule A for each unrelated trade or business.

.This is an Image: taxtip.gifComplete all needed Schedules A before completing Parts I through V of Form 990-T..

Item K.

Check the " Yes," box if your organization is a corporation and either 1 or 2 below applies:

  1. The corporation is a subsidiary in an affiliated group (defined in section 1504) but isn't filing a consolidated return for the tax year with that group.

  2. The corporation is a subsidiary in a parent-subsidiary controlled group (defined in section 1563).

Excluded member. If the corporation is an "excluded member" of a controlled group (see section 1563(b)(2)), it is still considered a member of a controlled group for purposes of Item K.

Item L.

Enter the name and address of the person who has the organization's books and records and the telephone number at which he or she can be reached.

Part I. Total Unrelated Business Taxable Income

Line 1. Total of Unrelated Business Taxable Income Computed From all Unrelated Trades or Businesses

An organization with only one unrelated trade or business should enter the amount from Schedule A (Form 990-T), Part II, line 18. An organization with more than one unrelated trade or business should enter the sum of the positive amounts from all Schedules A (Form 990-T), Part II, line 18. For an organization with more than one unrelated trade or business, do not include any amount from Schedule A (Form 990-T), Part II, line 18 that is less than zero in the computation of total unrelated trade or business income reported on Part I, line 1.

Line 2. Reserved

Do not enter any amount on this line.

Line 4. Charitable Contributions

Enter contributions or gifts actually paid within the tax year to or for the use of charitable and governmental organizations described in section 170(c). Also, enter any unused contributions carried over from earlier years. The deduction for contributions will be allowed whether or not directly connected with the conduct of a trade or business. See Appendix B, Charitable Contribution Deduction.

Line 6. Deduction for Net Operating Loss Arising in Tax Years Beginning Before 2018

Enter the smaller of (a) the amount of net operating losses arising in tax years beginning before January 1, 2018, or (b) the amount shown on Part I, line 1.

Line 8. Specific Deduction

A specific deduction of $1,000 is allowed except for computing the net operating loss and the net operating loss deduction under section 172.

Only one specific deduction may be taken, regardless of the number of unrelated businesses conducted. However, a diocese, province of a religious order, or convention or association of churches is allowed one specific deduction for each parish, individual church, district, or other local unit that regularly conducts an unrelated trade or business. This applies only to those parishes, districts, or other local units that aren't separate legal entities, but are components of a larger entity (diocese, province, convention, or association). Each specific deduction will be the smaller of $1,000 or the gross income from any unrelated trade or business the local unit conducts. If you claim a total specific deduction larger than $1,000, attach a statement showing how you figured the amount. The attached statement should include the name of each local unit, its gross unrelated business income, and its allowable specific deduction (which cannot exceed the smaller of $1,000 or the local unit’s gross unrelated business income).

The diocese, province of a religious order, or convention or association of churches must file a return reporting the gross income and deductions of all its units that aren't separate legal entities. These local units can’t file separate returns because they aren't separately incorporated. Local units that are separately incorporated must file their own returns and can’t be included with any other entity except for a title holding company. See Consolidated Returns, earlier.

For details on the specific deduction, see section 512(b)(12) and the related regulations.

Line 9. Section 199A Deduction

For Trust filers only.

If you are a trust filing Form 990-T and have unrelated business income, you may have Qualified Business Income (QBI) and may be allowed a QBI deduction under section 199A.

Refer to the Instructions for Form 8995, Qualified Business Income Deduction Simplified Computation, or Form 8995-A, Qualified Business Income Deduction, (as applicable) to determine whether you meet the requirements for the QBI deduction and how to complete the applicable form.

For purposes of calculating the QBI deduction, the taxable income before the QBI deduction is the amount reported on Part I, line 7 minus the amount reported on Part I, line 8.

Note.

For tax years beginning after 2017, the organization determines the unrelated business income separately for each unrelated trade or business, and the income for an unrelated trade or business cannot be less than zero. Since a loss from an unrelated trade or business is not included in the unrelated business taxable income for the tax year due to application of section 512(a)(6), when calculating QBI, omit items of income, gain, deduction, and loss from any unrelated trade or business that operated at a loss. A loss from an unrelated trade or business will be carried forward to future years when the trust has income (or gain that is subject to unrelated business income tax) from the same unrelated trade or business and will be used in those years in calculating the QBI. Additionally, W-2 wages and unadjusted basis immediately after the acquisition (UBIA) of qualified property from an unrelated trade or business that operated at a loss for the current tax year are not used in calculating the limitation on QBI for taxpayers over the threshold.

Part II. Tax Computation

Line 1. Organizations Taxable as Corporations

Multiply Part I, line 11 by 21% (0.21).

Line 2. Trusts

Trusts exempt under section 501(a), which otherwise would be subject to subchapter J (estates, trusts, etc.), are taxed at trust rates. This rule also applies to employees' trusts that qualify under section 401(a). Most trusts figure the tax on the unrelated business taxable income amount on Part I, Line 11 using the Tax Rate Schedule for Trusts, below. If the tax rate schedule is used, enter the tax on Part II, line 2 and check the “Tax rate schedule” box. If the trust is eligible for the rates on net capital gains and qualified dividends, complete Schedule D (Form 1041) and enter on Part II, line 2 the tax from Schedule D (Form 1041). Check the “Schedule D” box on line 2 and attach Schedule D (Form 1041) to Form 990-T.

.This is an Image: caution.gifA trust with more than one unrelated trade or business that computes its tax on Schedule D (Form 1041) may need to adjust the amount entered on Schedule D (Form 1041), Part V, line 22, to include only the net gain from Schedule D (Form 1041), line 18a (column 2) or line 19 (column 2) that is included in income on Part I of Form 990-T..

 

Tax Rate Schedule for Trusts

If the amount on Part II, line 2, is:  
Over— But not over— Tax is: Of the amount over—
$0 $2,600 10% $0
2,600 9,450 $260 + 24% 2,600
9.450 12,950 1,904 + 35% 9,450
12,950 - - - - - 3,129 + 37% 12,950
 

Line 3. Proxy Tax

To pay the section 6033(e)(2) proxy tax on nondeductible lobbying and political expenditures, enter the proxy tax on Part II, line 3 and attach a statement showing the computation.

Exempt organizations, except section 501(c)(3) and certain other organizations, must include certain information regarding lobbying expenditures on Form 990. In addition, organizations may have to provide notices to members regarding their share of dues to which the expenditures are allocable. See the Instructions for Form 990 and Rev. Proc. 98-19, 1998-1 C.B. 547, for exceptions.

If the organization elects not to provide the notices described earlier, it must pay the proxy tax described in section 6033(e)(2). If the organization doesn’t include the entire amount of allocable dues in the notices, it may have to pay the proxy tax. This tax isn't applicable to section 501(c)(3) organizations. Figure the proxy tax by multiplying the aggregate amount not included in the notices described earlier by 21%. No deductions are allowed.

Line 4. Other Tax Amounts

Enter other tax amounts not reported in Part III, line 3 and attach a statement describing the tax amount.

For example, if your organization has an excess distribution from a passive foreign investment company (PFIC) that is taxable as unrelated business taxable income, the organization may owe the deferred tax amount defined in section 1291(c)(1). Include the portion of the deferred tax amount that is the aggregate increases in taxes (described in section 1291(c)(2)).

Don't include the portion of the deferred tax amount that is the aggregate amount of interest determined under section 1291(c)(3). Instead, see Part V of Form 8621.

Line 5. Alternative Minimum Tax (Trusts Only)

Only trusts liable for tax on unrelated business taxable income may be liable for alternative minimum tax on certain adjustments and tax preference items.

Trusts attach Schedule I (Form 1041), Alternative Minimum Tax—Estates and Trusts, and enter any tax from Schedule I on this line.

Line 6. Tax on Noncompliant Facility Income

There is a tax on a hospital organization’s non-compliant facility income. See Regulations section 1.501(r)-2 for more information. This tax is an income tax and is separate from the excise tax on a failure to meet the community health needs assessment requirements of section 501(r)(3) that is reported on Form 4720.

Line 7. Total

Add Part II, lines 3, 4, 5, and 6 to Part II, line 1 or 2, whichever applies.

Increase in tax attributable to partner's audit liability.

If your organization received Form 8986 from one or more partnerships that have elected to push out adjustments to partnership-related items to their partners, complete and attach Form 8978. See the Instructions for Form 8978. Include any increase in taxes due from Form 8978, line 14, in the total for Part II, line 7. On the dotted line next to Part II, line 7, enter "From Form 8978” and the amount.

Part III. Tax and Payments

Line 1a. Foreign Tax Credit

  • Corporations. See Form 1118, Foreign Tax Credit—Corporations, for an explanation of when a corporation can claim this credit for payment of income tax to a foreign country or U.S. possession.

  • Trusts. See Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), for rules on how the trust computes the foreign tax credit.

    Complete the form that applies to the organization and attach the form to its Form 990-T. Enter the credit on this line.

Line 1b. Other Credits

Use line 1b to enter nonrefundable credits not identified elsewhere in Part III, line 1. Attach a statement that lists the applicable form and the amount of the credit. Such credits may include:

  • Any qualified electric vehicle passive activity credits from prior years allowed for the current tax year from Form 8834, Qualified Electric Vehicle Credit, line 7. Attach Form 8834.

  • The allowable credits from Form 8912, Credit to Holders of Tax Credit Bonds, line 12.

  • If your organization received Form 8986 from one or more partnerships that have elected to push out adjustments to partnership-related items to their partners, complete and attach Form 8978. See the Instructions For Form 8978. Enter the amount of any decrease in taxes due from Form 8978, line 14.

Line 1c. General Business Credit

Enter the organization's total general business credit (excluding the work opportunity credit, employee retention credit, the empowerment zone employment credit, the Indian employment credit, and the credit for employer differential wage payments). Additionally, in some cases, certain general business credits should not be claimed if the seller of the property discloses to the organization that the seller intends to claim the credit and discloses the tentative amount of the credit. These include the qualified electric vehicle credit, the alternative motor vehicle credit, the alternative fuel vehicle refueling property credit, and the qualified plug-in electric drive motor vehicle credit.

The organization is required to file Form 3800, General Business Credit, to claim any business credit. For a list of credits, see Form 3800. Include the allowable credit from Form 3800, Part II, line 38, on Form 990-T, Part III, line 1c.

.This is an Image: caution.gif An organization described in section 501(c) which is exempt from tax under section 501(a) should not use Form 3800 to claim the refundable small employer tax credit for certain health insurance premiums paid on behalf of its employees. See the instructions for Part III, line 6f..

Line 1d. Credit for Prior Year Minimum Tax

Use Form 8801 to figure the minimum tax credit and any carryforwards of that credit for trusts. For corporations, use Form 8827.

Line 1e. Total Credits

Add lines 1a through 1d.

Line 3. Other Taxes

Recapture of investment credit.

If property is disposed of or ceases to be qualified property before the end of the recapture period or the useful life applicable to the property, there may be a recapture of the credit. See Form 4255, Recapture of Investment Credit.

Recapture of low-income housing credit.

If the organization disposed of property (or there was a reduction in the qualified basis of the property) for which it took the low-income housing credit, it may owe a tax. See Form 8611, Recapture of Low-Income Housing Credit, and section 42(j) for details.

Interest due under the look-back method.

If the organization used the look-back method for certain long-term contracts, see Form 8697 for information on figuring the interest the organization may have to include. The organization may also have to include interest due under the look-back method for property depreciated under the income forecast method. See Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method.

Other.

Additional taxes and interest amounts may be included in the total entered on Part III, line 3. Check the box for “Other” if the organization includes any of the taxes and interest discussed. See How to report, below, for details on reporting these amounts on an attached statement.

  • Use this line to report the base erosion minimum tax under section 59A. Section 59A applies to base erosion payments paid or accrued in tax years beginning after 2017. See the Instructions for Form 8991 to determine if the organization qualifies as an applicable taxpayer under section 59A(e), in which case the base erosion minimum tax will need to be computed and entered on Part III, line 3.

  • Tax and interest on a nonqualified withdrawal from a capital construction fund (section 7518).

  • Interest on deferred tax attributable to installment sales of certain time-shares and residential lots (section 453(l)(3)) and certain nondealer installment obligations (section 453A(c)).

  • Interest due on deferred gain (section 1260(b)).

  • If the organization makes the election to be taxed on its income from qualifying shipping activities, complete and attach Form 8902 to Form 990-T. See Income from qualifying shipping activities, later.

How to report.

If the organization checked the “Other” box, attach a statement showing the computation of each item included in the total for Part III, line 3. In addition, identify (a) the applicable Code section, (b) the type of tax or interest, and (c) the amount of tax or interest. For example, if the organization is reporting $100 of tax due from the recapture of the QEV credit, enter “Section 30-QEV recapture tax–$100” on the attached statement.

Line 4. Total Tax

Include any deferred tax on the termination of a section 1294 election applicable to shareholders in a qualified electing fund in the amount entered on Part III, line 4. See Form 8621, Part VI, and How to report, later.

Subtract from the total entered on Part III, line 4 any deferred tax on the corporation's share of undistributed earnings of a qualified electing fund (see Form 8621, Part III).

How to report

Attach a statement showing the computation of each item included in, or subtracted from, the total on Part III, line 4. Specify (a) the applicable Code section, (b) the type of tax, and (c) the amount of tax.

Line 5. Section 965 Payments

Corporations.

If an election to pay the section 965 net tax liability in installments has been made under section 965(h), complete and attach Form 965-B. Enter the current year section 965 installment payment (from Form 965-B, Part II, column (k), line 4).

Trust.

If an election to pay the section 965 net tax liability in installments has been made under section 965(h), complete and attach Form 965-A. Enter the current year section 965 installment payment (from Form 965-A, Part II, column (k), line 4).

Line 6b. Estimated Tax Payments

Enter the total estimated tax payments made for the tax year.

If an organization is the beneficiary of a trust, and the trust makes a section 643(g) election to credit its estimated tax payments to its beneficiaries, include the organization's share of the estimated tax payment in the total amount entered here. Attach a statement showing the amount of the section 643(g) credit amount.

Line 6d. Foreign Organizations

Enter the tax withheld on unrelated business taxable income from U.S. sources that isn't effectively connected with the conduct of a trade or business within the United States. Attach Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, or another form which verifies the withheld tax reported on Part III, line 6d.

Line 6e. Backup Withholding

Recipients of dividend or interest payments must generally certify their correct tax identification number to the bank or other payer on Form W-9. If the payer doesn’t get this information, it must withhold part of the payments as “backup withholding.” If your organization was subject to erroneous backup withholding because the payer didn’t realize you were an exempt organization and not subject to this withholding, you can claim credit for the amount withheld by including it on Part III, line 6e. See Backup withholding under Which Parts To Complete, earlier.

Line 6f. Credit for Small Employer Health Insurance Premiums

An organization described in section 501(c) which is exempt from tax under section 501(a) may be eligible to claim the refundable small employer tax credit for a percentage of certain health insurance premiums paid on behalf of its employees.

A tax-exempt eligible small employer can request the refundable credit by attaching Form 8941, Credit for Small Employer Health Insurance Premiums, showing the calculation for the amount of the refundable credit claimed. A tax-exempt organization is eligible for the refundable credit if it is an organization that is described in section 501(c) which is exempt from tax under section 501(a). The organization must keep records to substantiate the amount of the credit claimed.

.This is an Image: taxtip.gifIf a tax-exempt eligible small employer is filing Form 990-T only to request a credit for small employer health insurance premiums paid, complete the following steps..

  1. Fill in the heading (the area above Part I) except items J and K. Check the box for “Claim credit from Form 8941” in Item H .

  2. Enter -0- on Part I, line 11, and Part III, line 4.

  3. Enter the credit from Form 8941, line 20, on Part III, line 6f.

  4. Complete Part III, lines 7, 10, 11, and the signature area.

.

Line 6g. Other Credits and Payments

Check the appropriate box(es) and enter:

  • From Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, the credit from a regulated investment company (RIC) or a real estate investment trust (REIT). Also, attach Form 2439. If you are filing a composite Form 990-T, see Composite Form 990-T under Which Parts To Complete, earlier.

  • From Form 4136, the credit for federal tax paid on fuels. Also, attach Form 4136, Credit for Federal Tax Paid on Fuels, if the organization qualifies to claim this credit.

  • The credit for ozone-depleting chemicals. Include any credit the organization is claiming under section 4682(g) for taxes paid on chemicals used as propellants in metered-dose inhalers.

  • The amount of current year net section 965 tax liability. For a corporation, this amount will be from Form 965-B, Part I, column (d), line 4. For a trust, this amount will be from Form 965-A, Part I, column (d), line 4.

After entering these amounts in the appropriate spaces, add them all together and enter the total on Part III, line 6g.

.This is an Image: taxtip.gif Form 8849, Claim for Refund of Excise Taxes, may be used to claim a periodic refund of excise taxes instead of waiting to claim a credit on Form 4136. See the Instructions for Form 8849 and Pub. 510, Excise Taxes (Including Fuel Tax Credits and Refunds)..

Line 8. Estimated Tax Penalty

Use Form 2220, Underpayment of Estimated Tax by Corporations, to see if the organization owes a penalty and its amount. Generally, the organization isn't required to file this form because the IRS can figure the amount of any penalty and notify the organization. However, even if the organization doesn’t owe the penalty, you must complete and attach Form 2220 if either of the following applies.

  • The annualized income or adjusted seasonal installment method is used.

  • The organization is a “large organization” computing its first required installment based on the prior year's tax.

If you attach Form 2220, check the box on Form 990-T, Part III, line 8, and enter the amount of any penalty on this line.

Line 9. Tax Due

You must pay the tax in full when the return is filed. You may pay by EFTPS. For more information about EFTPS, see Electronic Deposit Requirement, earlier. Also, you may pay by credit or debit card.

To pay by credit or debit card.

For information on paying your taxes electronically, including by credit or debit card, go to IRS.gov/E-pay.

Part IV. Statements Regarding Certain Activities and Other Information

Complete all lines in Part IV

Line 1

Check “Yes,” if either item 1 or 2 below applies.

  1. At any time during the 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 the accounts was more than $10,000 at any time during the 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, earlier.

    If the “Yes” box is checked, write the name of the foreign country or countries. If the list of foreign country names will not fit in the available space, continue the list in Part V, Supplemental Information.

    Get FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to see if the organization is considered to have 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). If the organization is required to file this form, file FinCEN Form 114 electronically with the Department of the Treasury using FinCEN's BSA E-Filing System. Because FinCEN Form 114 isn't a tax form, don't file it with Form 990-T.

    See www.fincen.gov for more information.

Line 2

The organization may be required to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, if:

  • It directly or indirectly transferred money or property to a foreign trust. For this purpose, any U.S. person who created a foreign trust is considered a transferor; or

  • It is treated as the owner of any part of the assets of a foreign trust under the grantor trust rules.

See the Instructions for Form 3520.

.This is an Image: caution.gifAn owner of a foreign trust must ensure that the trust files an annual information return on Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner. For details, see the Instructions for Form 3520-A..

Line 3

Report any tax-exempt interest received or accrued in the space provided. Include any exempt-interest dividends received as a shareholder in a mutual fund or other regulated investment company.

Line 4

Generally, the organization must file Form 3115, Application for Change in Accounting Method, to change its accounting method. An exception applies where a section 501(c) organization changes its accounting method to comply with the Financial Accounting Standards Board (FASB) Accounting Standards Codification 958, Not-for-Profit Entities (ASC 958). See Notice 96-30, 1996-1 C.B. 378.

Part V. Supplemental Information

Use Part V to provide the IRS with narrative information required for responses to specific questions on Form 990-T, and to explain the organization’s operations or responses to various questions.

Signature

Corporations.

The return must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or by any other corporate officer (such as a tax officer) authorized to sign. Receivers, trustees, or assignees must also sign and date any return filed on behalf of the organization.

Trusts.

The return must be signed and dated by the individual fiduciary, or by the authorized officer of the trust receiving or having custody or control and management of the income of the trust. If two or more individuals act jointly as fiduciaries, any one of them may sign.

Special rule for IRA trusts.

A trustee of IRA trusts may use a facsimile signature if all of the following conditions are met.

  • Each group of returns sent to the IRS must be accompanied by a letter signed by the person authorized to sign the returns declaring, under penalties of perjury, that the facsimile signature appearing on the returns is the signature adopted by that person to sign the returns filed and that the signature was affixed to the returns by that person or at that person's direction.

  • The letter must also list each return by the name and EIN of the IRA trust.

  • After the facsimile signature is affixed, no entries on the return may be altered other than to correct discernible arithmetic errors.

  • A manually signed copy (of the letter submitted to the IRS with the returns and a record of any arithmetic errors corrected) must be retained on behalf of the IRA trusts listed in the letter and it must be available for inspection by the IRS.

Paid preparer.

If an officer of the organization filled in its return, the paid preparer's space should remain blank. Anyone who prepares the return but doesn’t charge the organization should not sign the return. Certain others who prepare the return should not sign. For example, a regular, full-time employee of the organization, such as a clerk, secretary, etc. should not sign.

Generally, anyone who is paid to prepare the organization's tax return must sign it and fill in the Paid Preparer Use Only area.

The paid preparer must complete the required preparer information.

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

  • Give a copy of the return to the organization.

Note.

A paid preparer may sign original returns, amended returns, or requests for filing extension by rubber stamp, mechanical device, or computer software program. Also, facsimile signatures are authorized.

Paid preparer authorization.

If the organization wants to allow the IRS to discuss this tax return with the paid preparer who signed it, check the "Yes" box in the signature area of the return. This authorization applies only to the individual whose signature appears in the Paid Preparer Use Only section of its return. It doesn’t apply to the firm, if any, shown in that section.

If the "Yes," box is checked, the organization is authorizing the IRS to call the paid preparer to:

  • Give the IRS any information that is missing from its return,

  • Call the IRS for information about the processing of its return or the status of its refund or payment(s), and

  • Respond to certain IRS notices that the organization has shared with the preparer about a math error, offsets, and return preparation. The notices won't be sent to the preparer.

The organization isn't authorizing the paid preparer to receive any refund check, bind the organization to anything (including any additional tax liability), or otherwise represent the organization before the IRS. If the organization wants to expand the paid preparer's authorization, see Pub. 947, Practice Before the IRS and Power of Attorney.

The authorization can’t be revoked. However, the authorization will automatically end no later than the due date (excluding extension) for filing next year's Form 990-T.

.This is an Image: caution.gifEnter the paid preparer’s PTIN, not his or her social security number (SSN), in the “PTIN” box in the paid preparer’s block. Because Form 990-T is publicly disclosable when filed by a 501(c)(3) organization, any information entered in this block will be publicly disclosed. For more information about PTIN's, visit the IRS website at IRS.gov/Taxpros. .

General Instructions – Schedule A (Form 990-T)

Purpose of the Schedule

Complete a separate Schedule A to report income and allowable deduction for each separate unrelated trade or business.

Separate Trades or Businesses

An exempt organization may engage in more than one unrelated trade or business. Prior to the enactment of section 512(a)(6), an exempt organization deriving gross income from the regular conduct of two or more unrelated trades or businesses calculated UBTI by determining its aggregate gross income from all such unrelated trades or businesses and reducing that amount by the aggregate deductions allowed with respect to all such unrelated trades or businesses. However, section 512(a)(6) changed this calculation for exempt organizations with more than one unrelated trade or business so that, in the case of any exempt organization with more than one unrelated trade or business:

  • UBTI, including for purposes of determining any NOL deduction, shall be computed separately with respect to each trade or business and without regard to section 512(b)(12) (allowing a specific deduction of $1,000),

  • The UBTI of such exempt organization shall be the sum of the UBTI so computed with respect to each trade or business, less a specific deduction under section 512(b)(12); and

  • For purposes of section 512(a)(6)(B), UBTI with respect to any such trade or business shall not be less than zero.

Thus, under section 512(a)(6), an exempt organization is no longer permitted to aggregate income and deductions from all unrelated trades or businesses when calculating UBTI.

The Code does not define separate trade or business from the perspective of section 512(a)(6). An identification method based on the first two digits of the NAICS codes is acceptable. See section 1.512(a)-6(b)(1). Because investment income and other types of income may not be reflected in NAICS codes, see Business Activity Codes, later for more information about business activity codes.

Dual-use property

Section 512(a)(1) permits an exempt organization with an unrelated trade or business to reduce the income from that trade or business by the deductions allowed by chapter 1 that are directly connected with the carrying on of such trade or business. To be “directly connected” with a trade or business, an item of deduction must have a proximate and primary relationship to the carrying on of the unrelated trade or business generating the gross income. See Regulations section 1.512(a)-1(a). Expenses, depreciation, and similar items attributable solely to the conduct of an unrelated trade or business are proximately and primarily related to that trade or business and qualify to reduce income from such trade or business under section 512(a)(1) to the extent such items meet the requirements of sections 162 (trade or business expenses), 167 (depreciation), and other relevant provisions. To the extent that an exempt organization may have items of deduction that are shared between an exempt activity and an unrelated trade or business, Regulations section 1.512(a)-1(c) provides special rules for allocating such expenses. For example, if facilities are used both to carry on exempt activities and to conduct unrelated trade or business activities, then expenses, depreciation, and similar items attributable to such facilities must be allocated between the two uses on a reasonable basis. See Regulations section 1.512(a)-1(c). The allocation issues under section 512(a)(1) are also relevant under section 512(a)(6) because an exempt organization with more than one unrelated trade or business must not only allocate indirect expenses among exempt and taxable activities as described in Regulations section 1.512(a)-1(c) but also among separate unrelated trades or businesses.

The allocation of expenses, depreciation, and similar items using an unadjusted gross-to-gross method is not reasonable if the cost of providing the good or service is substantially the same but the price charged differs between related and unrelated activities.

Which Parts to Complete

Complete a separate Schedule A, Parts I and II, for each unrelated trade or business. Complete only the lines relevant to the unrelated trade or business being reported on that Schedule A.

Is Gross Income More Than $10,000?

If the sum of the amounts in all Schedules A (Form 990-T), Part I, line 13, column (A), is more than $10,000, you must complete all Parts of each Schedule A that apply to the unrelated trade or business reported on that Schedule A.

Is Gross Income $10,000 or Less?

If the sum of the amounts in all Schedules A (Form 990-T) Part I, line 13, column (A), is $10,000 or less, complete the following.

  • The heading (above Part I) on Form 990-T;

  • The heading on each Schedule A;

  • Schedule A, Part I, lines 1–13;

  • Schedule A, Part II, lines 15–18;

  • Form 990-T; and

  • Signature area.

Filers with gross income of $10,000 or less as described above, don't have to complete Schedule A, Parts III though X (however, refer to applicable Parts of Schedule A when completing Schedule A, Part I, column (A) and in determining the deductible expenses to include on Schedule A, Part I, line 13, column (B)).

Exceptions and special rules

Member income of mutual or cooperative electric companies.

Income of a mutual or cooperative electric company described in section 501(c)(12) which is treated as member income under subparagraph (H) of that section is excluded from unrelated business taxable income.

Income from qualifying shipping activities.

The organization's gross income doesn’t include income from qualifying shipping activities (as defined in section 1356) if the organization makes an election under section 1354 on a timely filed return (including extensions) to be taxed on its notional shipping income (as defined in section 1353) at the highest corporate rate. If the election is made, the organization generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. An organization making this election also may elect to defer gain on the disposition of a qualifying vessel under section 1359. Use Form 8902, Alternative Tax on Qualifying Shipping Activities, to figure the tax. Include the alternative tax on Form 990-T, Part III, line 3.

Passive loss and at-risk limitations.How to report income received from a payment card and third party network transactions.

Under section 469, certain taxpayers, including certain tax-exempt organizations, may not deduct a passive activity loss (PAL). Such tax-exempt organizations (“affected tax-exempt organizations”) include a trust (such as a trust described in section 501(c), a trust described in section 401(a), or an IRA), and a corporation if at any time during the last half of its tax year more than 50% in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for not more than five organizations that are private foundations under section 509(a) or are described in sections 401(a) or 501(c)(17) (for example, a stock corporation described in section 501(c)(2) with a 401(a) parent or private foundation parent).

A PAL occurs when total losses (including prior year unallowed losses) from all the organization’s passive activities exceed the total income from all its passive activities. Generally, passive activities include: (1) trade or business activities in which the organization didn’t materially participate for the tax year; and (2) rental activities, regardless of your participation. If the organization has income or loss from a passive activity, several lines on Form 990-T and Schedule A (Form 990-T) may be affected by these rules.

PALs can’t be used to offset income from nonpassive activities. Passive activity income doesn’t include portfolio income. Portfolio income (see Temporary Regulations section 1.469-2T(c)(3)) is income from a nonpassive activity. Portfolio income includes all gross income, other than income derived in the ordinary course of a trade or business, that is attributable to interest, dividends, annuities, and royalties (by contrast, a bank's receipt of interest is in the ordinary course of a trade or business, as is a securities dealer's receipt of dividends). Portfolio income also includes gain or loss from the disposition of property that produces portfolio income or is held for investment (see section 163(d)(5)). The rule treating portfolio income as not from a passive activity doesn’t apply to the extent that income, of a type generally regarded as portfolio income, is derived in the ordinary course of a trade or business. For example, the business income of a bank typically is largely interest. Similarly, a securities broker/dealer may earn a substantial portion of the income from the business in the form of dividends and gains on sales of dividend-bearing instruments. Interest income may also arise in the ordinary course of a trade or business with respect to installment sales and interest charges on accounts receivable. This means that portfolio income may not be reduced by PALs or passive activity credits. For example, any portfolio income earned by a trust described in section 501(a) that is unrelated business taxable income (such as unrelated debt-financed income) may not be offset by PALs from an unrelated trade or business.

Section 469(k) provides that the passive activity limitations must be applied separately to items from each publicly traded partnership (PTP). A PTP is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market (or its substantial equivalent). PALs from a PTP generally may be used only to offset income or gain from passive activities of the same PTP. This means that a partner in a PTP may not use PALs and passive activity credits from a PTP to offset income from other sources, including passive activity income from another PTP. Such PALs and passive activity credits aren't allowed for the tax year.

Generally, PALs are subject to other limitations (for example, basis and at-risk limitations) before they are subject to the PAL limitations. For example, the at-risk rules under section 465 generally prohibit trusts and corporations that are affected tax-exempt organizations from claiming losses from activities in excess of the taxpayer’s amount at risk in the activity.

An affected tax-exempt organization may need to attach Form 6198, At-Risk Limitations, and either Form 8582, Passive Activity Loss Limitations, or Form 8810, Corporate Passive Activity Loss and Credit Limitations. For more information on these rules, see Pub. 925, Passive Activity and At-Risk Rules.

.This is an Image: taxtip.gifAn organization that receives a Form 1099-K reporting a "gross amount" received from payment card and third party network transactions in the tax year should report these amounts in the same manner as if the payments weren’t reported on a Form 1099-K. There isn't any one specific line on which to report an amount from Form 1099-K; the correct line should be determined based on the nature of the payments. Some payments received may constitute unrelated business income; see the instructions below to determine the appropriate line. For instance, if some of the payments are sales income from an unrelated business, then those payments would be reported on Part I, line 1a. Retain Forms 1099-K with your other records. .

Specific Instructions – Schedule A (Form 990-T)

Items A through E

Item A.

Enter the same name as entered in the heading area of Form 990-T.

Item B.

Enter the same EIN as entered in Item D of Form 990-T.

Item C.

On each Schedule A, enter the business activity code that best describes the organization's unrelated trade or business reported on that Schedule A. Modernized e-File requires a 6-digit numerical entry for Item C. If you use a business activity code between 2 and 5 digits, add trailing zeros to complete the 6-character field. For example, if the 2-digit business activity code 45 (for retail trade) best describes your unrelated trade or business, enter “450000” in Item C. See Business Activity Codes, later for more information about business activity codes.

Part I. Unrelated Trade or Business Income

Line 1a. Gross Receipts or Sales

Enter the gross receipts from an unrelated trade or business regularly conducted that involves the sale of goods or performance of services.

.This is an Image: taxtip.gif A section 501(c)(7) social club would report its restaurant and bar receipts from nonmembers on Schedule A, Part I, line 1, but would report its investment income on Schedule A, Part I, line 9 and in Schedule A, Part VII..

Advance payments.

In general, advance payments are reported in the year of receipt. To report income from long-term contracts, see section 460. For special rules for reporting certain advance payments for goods and long-term contracts, see Regulations section 1.451-5. For permissible methods for reporting advance payments for services and certain goods by an accrual method organization, see Rev. Proc. 2004-34, 2004-22 I.R.B. 991, available at IRS.gov/IRB2004-22.

Installment sales.

Generally, the installment method cannot be used for dealer dispositions of property. A “dealer disposition” is (a) any disposition of personal property by a person who regularly sells or otherwise disposes of personal property of the same type on the installment plan or (b) any disposition of real property held for sale to customers in the ordinary course of the taxpayer's trade or business.

These restrictions on using the installment method don't apply to dispositions of property used or produced in a farming business or sales of time-shares and residential lots for which the organization elects to pay interest under section 453(l)(3).

For sales of time-shares and residential lots reported under the installment method, the organization's income tax is increased by the interest payable under section 453(l)(3).

Enter on Schedule A, Part I, line 1a and line 3, the gross profit on collections from installment sales for any of the following.

  • Dealer dispositions of property before March 1, 1986.

  • Dispositions of property used or produced in the trade or business of farming.

  • Certain dispositions of time-shares and residential lots reported under the installment method.

Attach Form 6252 to show information about each installment sale.

Nonaccrual experience method.

Accrual method organizations aren't required to accrue certain amounts to be received from the performance of services that, on the basis of their experience, won't be collected, if:

  • The services are in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting; or

  • The organization's average annual gross receipts for the 3 prior tax years doesn’t exceed $5 million.

This provision doesn’t apply to any amount if interest is required to be paid on the amount or if there is any penalty for failure to timely pay the amount. See Regulations section 1.448-2. Organizations that qualify to use the nonaccrual experience method should attach a statement showing total gross receipts, amounts not accrued as a result of the application of section 448(d)(5), and the net amount accrued. Enter the net amount on Schedule A, Part I, line 1a.

Gain or loss on disposition of certain brownfield property.

Gain or loss from the qualifying sale, exchange, or other disposition of a qualifying brownfield property (as defined in section 512(b)(19)(C)), which was acquired by the organization after 2004, is excluded from unrelated business taxable income and is excepted from the debt-financed rules for such property. See section 512(b)(19) and 514(b)(1)(E).

Line 4a. Capital Gain Net Income

Generally, organizations required to file Form 990-T (except organizations described in sections 501(c)(7), (9), and (17)) aren't taxed on the net gains from the sale, exchange, or other disposition of property. However, net capital gains on debt-financed property, capital gains on cutting timber, and ordinary gains on sections 1245, 1250, 1252, 1254, and 1255 property are taxed. See Form 4797, Sales of Business Property, and its instructions for additional information.

Also, any capital gain or loss passed through from an S corporation or any gain or loss on the disposition of S corporation stock by a qualified tax exempt organization (see S Corporations, later) is taxed as a capital gain or loss, and reported on Part I, line 4.

Capital gains and losses should be reported by a trust on Schedule D (Form 1041), Capital Gains and Losses, and by a corporation on Schedule D (Form 1120), Capital Gains and Losses (and Form 8949, Sale and Other Dispositions of Capital Assets). Schedule D of Form 1041 or Form 1120 (and Form 8949 if applicable) must be attached to Form 990-T.

If you deferred a capital gain into a QOF, you must attach Schedule D, Form 8949, and Form 8997 to your Form 990-T. You will need to annually file Form 8997 until you dispose of the investment. See the Instructions for Form 8997.

An organization that transfers securities it owns for the contractual obligation of the borrower to return identical securities recognizes no gain or loss. To qualify for this treatment, the organization must lend the securities under an agreement that requires:

  1. The return of identical securities;

  2. The payment of amounts equivalent to the interest, dividends, and other distributions that the owner of the securities would normally receive; and

  3. The risk of loss or opportunity for gain not be lessened.

See section 512(a)(5) for details.

Debt-financed property disposition.

The amount of gain or loss to be reported on the sale, exchange, or other disposition of debt-financed property is the same percentage as the highest acquisition indebtedness for the property for the 12-month period before the date of disposition is to the average adjusted basis of the property. The percentage may not be more than 100%. See the instructions for Schedule A, Part V, line 5 to determine adjusted basis and average adjusted basis.

If debt-financed property is depreciable or depletable property, the provisions of sections 1245, 1250, 1252, 1254, and 1255 must be considered first.

Example.

On January 1, 2019, an exempt educational corporation, using $288,000 of borrowed funds, purchased an office building for $608,000. The only adjustment to basis was $29,902 for depreciation (straight-line method under MACRS over the 39-year recovery period for nonresidential real property). The corporation (section 501(c)(3) organization) sold the building on December 31, 2020 for $640,000. At the date of sale, the adjusted basis of the building was $578,098 ($608,000 - $29,902) and the indebtedness remained at $288,000. The adjusted basis of the property on the first day of the year of disposition was $593,037. The average adjusted basis is $585,568 (($593,037 + $578,098) ÷ 2). The debt/basis percentage is 49% ($288,000 ÷ $585,568).

The taxable gain is $30,332 (49% × ($640,000 - $578,098)). This is a long-term capital gain. A corporation should enter the gain on Schedule D (Form 1120) Part II, line 8. A trust should enter the gain on Schedule D (Form 1041) Part II, line 8, if applicable. In either scenario (a corporation or a trust), the educational organization must attach a statement on Form 990-T, in addition to the Schedule D, showing how the gain was figured along the lines described in this example, if the details weren’t provided with the Schedule D.

Disposition of property received from taxable subsidiary and used in unrelated business.

A taxable 80%-owned subsidiary corporation of one or more tax-exempt entities is generally subject to tax on a distribution in liquidation of its assets to its exempt parent (or parents). See section 337. The assets are treated as if sold at FMV.

"Tax-exempt entities" for this purpose include organizations described in sections 501(a), 529, 529A, and 115; charitable remainder trusts; U.S. and foreign governments; Indian tribal governments; international organizations; and similar non-taxable organizations.

A taxable corporation that transfers substantially all of its assets to a tax-exempt entity in a transaction that otherwise qualifies for nonrecognition treatment must recognize gain on the transaction as if it sold the assets at FMV. However, such a transfer isn't taxable if it qualifies as a like-kind exchange under section 1031 or an involuntary conversion under section 1033. In such a case the built-in appreciation is preserved in the replacement property received in the transaction. A “taxable corporation” is any corporation that isn't a tax-exempt entity as defined above, including an S corporation.

A corporation that changes status from taxable to tax-exempt is treated generally as if it transferred all of its assets to a tax-exempt entity immediately before the change in status (thus subjecting it to the tax on a deemed sale for fair FMV). This rule doesn’t apply where the taxable corporation becomes exempt within 3 years of formation, or had previously been exempt and within several years (generally a period of 3 years) regains exemption, unless the principal purpose of the transactions is to avoid the tax on the change in status.

In the transactions described above, the taxable event is deferred for property that the tax-exempt entity immediately uses in an unrelated business. If the parent later disposes of the property, then any gain (not in excess of the amount not recognized) is included in the parent’s unrelated business taxable income. If there is partial use of the assets in unrelated business, then there is partial recognition of gain or loss with respect to the assets not so used. Property is treated as disposed if the tax-exempt entity no longer uses it in an unrelated business.

Losses on the transfer of assets to a tax-exempt entity are disallowed if part of a plan having a principal purpose of recognizing losses.

Line 4b. Net Gain or (Loss)

Show gains and losses on other than capital assets on Form 4797. Enter on this line the net gain or (loss) from Form 4797, Part II, line 17.

An exempt organization using Form 4797 to report ordinary gain on sections 1245, 1250, 1252, 1254, and 1255 property will include only depreciation, amortization, or depletion allowed or allowable in figuring unrelated business taxable income or taxable income of the organization (or a predecessor organization) for a period when it wasn’t exempt.

Line 4c. Capital Loss Deduction for Trusts

If a trust has a net capital loss, it is subject to the limitations of Schedule D (Form 1041). Enter on this line the loss figured on Schedule D (Form 1041).

Line 5. Income or (Loss) From a Partnership or an S Corporation

See Regulations section 1.512(a)-6 for rules permitting the aggregation of income (and directly connected deductions) of certain partnership interests.

Also, for trusts and certain corporations, there are limitations on income and losses (including from a partnership or an S corporation) under section 469 (the passive activity loss and credit limitation rules) and section 465 (at-risk limitations). For more information on these rules, see the discussion of the application of the passive loss and at-risk limitations to affected tax-exempt organizations in the introductory instructions to Part I. Unrelated Trade or Business Income, earlier.

Partnerships

If the organization is a partner in a partnership conducting an unrelated trade or business, enter the organization's share (whether or not distributed) of the partnership's income or loss from the unrelated trade or business. The organization is required to notify the partnership of its tax-exempt status.

Figure the gross income and deductions of the partnership in the same way you figure unrelated trade or business income the organization earns directly.

Attach a statement to this return showing the organization's share of the partnership's gross income from the unrelated trade or business, and its share of the partnership deductions directly connected with the unrelated gross income.

S Corporations

Qualified tax-exempt organizations can be shareholders in an S corporation without the S corporation losing its status as an S corporation. Qualified tax-exempt organizations that hold stock in an S corporation treat their stock interest as an interest in an unrelated trade or business. All items of income, loss, or deduction that the organization receives as a shareholder of the S corporation are taken into account in Schedule A, Part I, line 5 in figuring unrelated business taxable income and not reported on another line of Schedule A (Form 990-T) that otherwise would apply, except capital gains and losses, which are reported on Part I, line 4. Report on Part I, line 4 any gain or loss on the disposition of S corporation stock.

Qualified tax-exempts.

A qualified tax-exempt is an organization that is described in section 401(a) (qualified stock bonus, pension, and profit-sharing plans) or 501(c)(3) and exempt from tax under section 501(a).

Exception.

Employee stock ownership plans (ESOPs) don't follow these S corporation rules if the S corporation stock is an employer security as defined in section 409(l).

Attach a statement to this return showing the qualified tax-exempt's share of all items of income, loss, or deduction. Combine the income, loss, and deductions (except for the capital gains and losses) on the statement. If you hold stock in more than one S corporation, total the combined amounts. Show capital gains and losses separately and include them on Schedule A, Part I, line 4a.

Line 6. Rent Income

Enter the amount computed at Part IV, line 3 on Part I, line 6, column (A). Enter the amount computed at Part IV, line 5 on Part I, line 6, column (B).

Line 7. Unrelated Debt-Financed Income

Enter the amount computed at Part V, line 8 on Part I, line 7, column (A). Enter the amount computed at Part V, line 10 on Part I, line 7, column (B).

Line 8. Interest, Annuities, Royalties, and Rents From a Controlled Organization

Enter the sum of columns 5 and 10 from Part VI on Part I, line 8, column (A). Enter the sum of columns 6 and 11 from Part VI on Part I, line 8, column (B).

Line 9. Investment Income of a Section 501(c)(7), (9), or (17) Organization

Enter the sum of amounts in Part VII, column 2 on Part I, line 9, column (A). Enter the sum of amounts in Part VII, column 5 on Part I, line 9, column (B).

Line 10. Exploited Exempt Activity Income, Other Than Advertising Income

Enter the amount computed at Part VIII, line 2 on Part I, line 10, column (A). Enter the amount computed at Part VIII, line 3 on Part I, line 10, column (B).

Line 11. Advertising Income

Enter the amount computed at Part IX, line 2 on Part I, line 11, column (A). Enter the amount computed at Part IX, line 3 on Part I, line 11, column (B).

Line 12. Other Income

Enter on Part I, line 12 any item of unrelated business income from a particular trade or business that isn't reportable elsewhere on the return. Attach a statement describing the sources of the other income and their amounts. Such amounts may include:

  • Recoveries of bad debts deducted in earlier years under the specific charge-off method;

  • The amount from Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit (if applicable);

  • The amount from Form 8864, Biodiesel and Renewable Diesel Fuels Credit (if applicable);

  • Proceeds received from employer-owned life insurance contracts issued after August 17, 2006 (complete and attach Form 8925); and

  • The amount of payroll tax credit taken by an employer on its employment tax returns (Forms 941, 943, and 944) for qualified paid sick and qualified paid family leave under FFCRA (both the nonrefundable and refundable portions) that is allocable to the trade or business. These amounts must be included in gross income for the tax year that includes the last day of the calendar quarter in which the credit is allowed.
     

Organizations described in section 501(c)(19).

Enter the net income from an insurance business that was not properly set aside. These organizations may set aside income from payments received for life, sickness, accident, or health insurance for members of the organization or their dependents.

  1. To provide for the payment of insurance benefits.

  2. For a purpose specified in section 170(c)(4) (religious, charitable, scientific, literary, educational, etc.).

  3. For administrative costs directly connected with benefits described in 1 and 2 above.

Amounts set aside and used for purposes other than those in 1, 2, or 3 above must be included in unrelated business taxable income for the tax year if they were previously excluded from taxable income.

Any amount spent for a purpose described in section 170(c)(4) is first considered paid from funds earned by the organization from insurance activities if the income isn't used for the insurance activities.

Expenditures for lobbying aren't considered section 170(c)(4) expenses.

Income from property financed with qualified 501(c)(3) bonds.

If any part of the property is used in a trade or business of any person other than a section 501(c)(3) organization or a governmental unit, and such use isn't consistent with the requirement for qualified 501(c)(3) bonds under section 145, the section 501(c)(3) organization is considered to have received unrelated business income in the amount of the greater of the actual rental income or the fair rental value of the property for the period it is used. No deduction is allowed for interest on the private activity bond. Report the greater of the actual rent or the fair rental value on Schedule A, Part I, line 12. Report allowable deductions in Schedule A, Part II. See sections 150(b)(3) and (c).

Passive foreign investment company (PFIC) shareholders.

If the organization is a direct or indirect shareholder of a PFIC within the meaning of section 1297, it may have income tax consequences under section 1291 upon the disposition of the PFIC stock or on the receipt of an excess distribution from the PFIC, described in section 1291(a). The organization may have current income under section 1293 if the PFIC is a qualified electing fund (QEF) with respect to the organization. The organization may also have current income under section 1296 if it makes a section 1296 mark-to-market election with respect to the PFIC stock.

Include on Schedule A, Part I, line 12 the portion of an excess distribution (or gain treated as an excess distribution) section 1293 inclusion or section 1296 inclusion that is taxable as unrelated business taxable income. See Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.

See the instructions for Form 990-T, Part II, line 4, for reporting the deferred tax amount that may be owed by the organization with respect to an excess distribution (or gain treated as an excess distribution).

Treatment of deferred foreign income upon transition to participation exemption system of taxation.

If the organization has a section 965(a) inclusion for the tax year, enter the net amount (the section 965(a) inclusion less the corresponding section 965(c) deduction) on Schedule A, Part I, line 12. You must also complete and attach Form 965, Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System and applicable schedules and Form 965-A (trusts) or Form 965-B (corporations).

Line 13. Total Unrelated Trade or Business Income

Use the amount from Schedule A, Part I, line 13, column (C) in the computation of unrelated business taxable income in Part II.

Part II. Deductions Not Taken Elsewhere

If the aggregate sum of the amounts on all Schedules A (Form 990-T), Part I, line 13, column (A) is $10,000 or less, you don't have to complete Schedule A, Part II, lines 1 through 14. However, you must complete the remainder of Schedule A, Part II and include the larger of each total from Schedule A, Part II, line 18 or zero, in the computation of the amount reported on Part I, line 1 of Form 990-T.

Note.

Only expenses directly connected with the unrelated trade or business income reported on the Schedule A for that particular unrelated trade or business may be deducted on that Schedule A (see Directly connected expenses, in Appendix A). Don't separately include in Schedule A, Part II any expenses that are reported in Schedule A, Parts III through IX, other than excess exempt expenses entered on Schedule A, Part II, line 12 and excess readership costs entered on Schedule A, Part II, line 13. For example, officers' compensation allocable to advertising income is reported on Schedule A, Part IX only, and shouldn’t be included on Schedule A, Part X or Schedule A, Part II, line 1.

Limitations on Deductions

The following items discuss certain areas in which the deduction may be limited.

Activities Lacking a Profit Motive

In some instances it is necessary to report income whether or not it comes from a trade or business (including interest, annuities, royalties, and rents from controlled organizations, and income of a section 501(c)(7), (9), or (17) organization other than exempt function income). If income is attributable to an activity lacking a profit motive, then a net loss from the activity can’t be claimed on Form 990-T. Therefore, in Part I, column (B) and Part II, the total of deductions for expenses directly connected with income from an activity lacking a profit motive is limited to the amount of that income. Generally, an activity lacking a profit motive is one that isn't conducted for the purpose of producing a profit or one that has consistently produced losses when both direct and indirect expenses are taken into account.

Deductions Related to Property Leased to Tax-Exempt Entities

For property leased to a governmental or other tax-exempt entity, or in the case of property acquired after March 12, 2004, that is treated as tax-exempt use property other than by reason of a lease, the organization may not claim deductions related to the property when they exceed the organization's income from the lease payments. Amounts disallowed may be carried over to the next year and treated as a deduction concerning the property. See section 470.

Transactions Between Related Taxpayers

Generally, an accrual basis taxpayer may deduct business expenses and interest owed to a related party only in the year the payment is included in the income of the related party. See sections 163(e)(3) and 267 for limitations on deductions for unpaid interest and expenses.

Preference Items

Corporations may be required to adjust deductions for depletion of iron ore and coal, intangible drilling and exploration and development costs, and the amortizable basis of pollution control facilities. See section 291 to determine the amount of the adjustment.

Section 263A Uniform Capitalization Rules

These rules require organizations to capitalize or include as inventory cost certain costs incurred in connection with:

  • The production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business.

  • Real property or personal property held in inventory (tangible and intangible) acquired for resale.

  • The production of real property and tangible personal property produced by the organization for use in its trade or business or in an activity engaged in for profit.

Tangible personal property produced by an organization includes a film, sound recording, videotape, book, or similar property.

Indirect expenses.

Organizations subject to the section 263A uniform capitalization rules are required to capitalize direct costs and an allocable part of most indirect costs (including taxes) that benefit the assets produced or acquired for resale or are incurred by reason of the performance of production or resale activities.

For inventory, some of the indirect expenses that must be capitalized are:

  • Administration expenses;

  • Taxes;

  • Depreciation;

  • Insurance;

  • Compensation paid to officers attributable to services;

  • Rework labor; and

  • Contributions to pension, stock bonus, and certain profit-sharing, annuity, or deferred compensation plans.

Regulations section 1.263A-1(e)(3) specifies other indirect costs that relate to production or resale activities that must be capitalized and those that may be currently deductible.

Interest expense.

Interest expense paid or incurred during the production period of designated property must be capitalized and is governed by special rules. See Regulations section 1.263A-8 through 1.263A-15.

When are section 263A capitalized costs deductible?

The costs required to be capitalized under section 263A aren't deductible until the property (to which the costs relate) is sold, used, or otherwise disposed of by the organization.

Exceptions.

Section 263A doesn’t apply to:

  • Personal property acquired for resale if the organization's average annual gross receipts for the 3 prior tax years were $10 million or less;

  • Timber;

  • Most property produced under long-term contract;

  • Certain property produced in a farming business;

  • Research and experimental costs under section 174;

  • Geological and geophysical costs amortized under section 167(h);

  • Intangible drilling costs for oil, gas, and geothermal property;

  • Mining exploration and development costs; and

  • Inventory of an organization that accounts for inventories in the same manner as materials and supplies that aren't incidental. See Schedule A, Part III, Cost of Goods Sold, later.

See Regulations sections 1.263A-1 through 1.263A-3.

Travel, Meals, and Entertainment

Subject to limitations and restrictions discussed below, an organization can deduct ordinary and necessary travel, meals, and non-entertainment expenses paid or incurred in its trade or business. Generally, entertainment expenses, membership dues, and facilities used in connection with these activities cannot be deducted. In addition, no deduction is generally allowed for qualified transportation fringe benefits. Special rules apply to deductions for gifts, luxury water travel, and convention expenses. See section 274 and Pub. 463, Travel, Gift, and Car Expenses.

Qualified transportation fringes (QTFs).

Generally, no deduction is allowed under section 274(a)(4) for QTF's provided by employers to their employees. QTFs are defined in section 132(f)(1) and include:

  • Transportation in a commuter highway vehicle between the employee's residence and place of employment,

  • Any transit pass, and

  • Qualified parking.

See section 274, Pub 15-B, and Pub. 535 for details.

Travel.

The organization can’t deduct travel expenses of any individual accompanying an organization's officer or employee, including a spouse or dependent of the officer or employee, unless:

  • That individual is an employee of the organization, and

  • His or her travel is for a bona fide business purpose and would otherwise be deductible by that individual.

Meals.

Generally, the organization can deduct only 50% of the amount otherwise allowable for non-entertainment related meal expenses paid or incurred in an unrelated trade or business. The Taxpayer Certainty and Disaster Relief Act of 2020 amended section 274(n)(2) to provide an exception from the general rule. For business meal expenses paid or incurred after December 31, 2020 and before January 1, 2023, the organization is allowed a deduction of 100% of business meal expenses for food and beverages provided by a restaurant. Meals not separately stated from entertainment are generally not deductible. In addition (subject to exceptions under section 274(k)(2)):

  • Meals mustn’t be lavish or extravagant; and

  • An employee of the organization must be present at the meal.

Membership dues.

The organization can deduct amounts paid or incurred for membership dues in civic or public service organizations, professional organizations (such as bar and medical associations), business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards. However, no deduction is allowed if a principal purpose of the organization is to entertain or provide entertainment facilities for members or their guests. In addition, organizations cannot deduct membership dues in any club organized for business, pleasure, recreation, or other social purpose. This includes country clubs, golf and athletic clubs, airline and hotel clubs, and clubs operated to provide meals under conditions favorable to business discussion.

Entertainment facilities.

The organization can’t deduct an expense paid or incurred for use of a facility (such as a yacht or hunting lodge) for an activity usually considered entertainment, amusement, or recreation.

Amounts treated as compensation.

The organization generally may be able to deduct otherwise nondeductible travel, meals, and entertainment expenses if the amounts are treated as compensation and reported on Form W-2 for an employee or Form 1099-NEC for an independent contractor and if the total amount of such compensation isn't unreasonable.

Reducing Certain Expenses For Which Credits Are Allowable

If the organization claims certain credits, it may need to reduce the otherwise allowable deductions for expenses used to figure the credit. This applies to credits such as the following.

  • Disabled access credit.

  • Employer credit for social security and Medicare taxes paid on certain employee tips.

  • Credit for employer-provided childcare facilities and services.

  • Orphan drug credit.

  • Credit for small employer pension plan start-up costs.

  • Mine rescue team training credit.

  • Employer credit for paid family and medical leave.

If the organization has any of these credits, figure each current year credit before figuring the deduction for expenses on which the credit is based.

Business Start-up and Organizational Costs

For business start-up and organizational costs paid or incurred after September 8, 2008, an organization can deduct up to $5,000 of such costs in the year it begins business (unless the organization elects to capitalize the full amount of such costs). The $5,000 deduction is reduced (but not below zero) by the amount the total costs exceed $50,000. If the total costs are $55,000 or more, the deduction is reduced to zero. Any costs not deducted must be amortized as explained below.

Note.

For start-up and organizational costs paid or incurred after September 8, 2008, the organization isn't required to attach a statement or specifically identify the amount deducted for the election under sections 195(b) and 248(a) to be effective. It is a deemed election. Whether an organization deducts a portion of its start-up and organizational costs under Regulations sections 1.195-1 and 1.248-1 or elects to amortize the full amount of such costs, its election is irrevocable. For start-up and organizational costs paid or incurred after October 22, 2004, and before September 9, 2008, an organization generally must attach the statement required by Regulation sections 1.195-1(b) and 1.248-1(c) to make the election to deduct a portion of such costs (as explained above). This election is irrevocable. However, an organization can apply the provisions of these regulations to costs paid or incurred after October 22, 2004.

Amortization.

Any costs not deducted under the above rules must be amortized ratably over the 180-month period, beginning with the month the organization begins business. See the Instructions for Form 4562, Depreciation and Amortization, for details. If the association elected to amortize business start-up and organizational costs paid or incurred before October 23, 2004, over a period of 60 months or more, it must continue to amortize those costs over the elected amortization period. Report the deductible amount of these costs and any amortization on Schedule A, Part II, line 14. For amortization that began during the tax year, complete and attach Form 4562.

Line 3. Repairs and Maintenance

Enter the cost of incidental repairs and maintenance not claimed elsewhere on the return, such as labor and supplies, that don't add to the value or appreciably prolong the life of the property.

Line 4. Bad Debts

Enter the total receivables from an unrelated trade or business that were previously included in taxable income and that became worthless in whole or in part during the tax year.

Line 5. Interest

Attach a separate statement listing the interest being claimed on this line.

Interest allocation.

If the proceeds of a loan were used for more than one purpose (for example, to purchase a portfolio investment and to acquire an interest in a passive activity), an interest allocation must be made. See Temp. Reg. section 1.163-8T for the interest allocation rules.

Tax-exempt interest.

Don't include interest on indebtedness incurred or continued to purchase or carry obligations on which the interest income is totally exempt from income tax. For exceptions, see section 265(b).

Prepaid interest.

Generally, a cash basis taxpayer cannot deduct prepaid interest allocable to years following the current tax year. For example, during the tax year a cash basis taxpayer prepaid interest on a loan. The taxpayer can deduct only that part of the prepaid interest that was for the use of the loaned funds during the tax year, not for the use of the loaned funds during the subsequent years.

Straddle interest.

Generally, the interest and carrying charges on straddles cannot be deducted and must be capitalized. See section 263(g).

Original issue discount.

See section 163(e)(5) for special rules for the disqualified portion of original issue discount on a high yield discount obligation.

Interest on certain underpayments of tax.

Don't deduct interest paid or incurred on any portion of an underpayment of tax that is attributable to an understatement arising from an undisclosed listed transaction or an undisclosed reportable avoidance transaction (other than a listed transaction) entered into in tax years beginning after October 22, 2004.

Interest allocable to the production of designated property.

Don't deduct interest on debt allocable to the production of designated property. Interest that is allocable to such property produced by an organization for its own use or for sale must be capitalized. An organization must also capitalize any interest on debt allocable to an asset used to produce the earlier property. See section 263A(f) and Regulations sections 1.263A-8 through 1.263A-15.

Interest on below-market loans.

See section 7872 for special rules regarding the deductibility of foregone interest on certain below-market-rate loans.

Limitation on deduction of business interest.

Business interest expense is limited to the sum of business interest income, 30% of the adjusted taxable income and floor plan financing interest. Business interest expense includes any interest paid or accrued on indebtedness properly allocable to an unrelated trade or business. A taxpayer, other than a tax shelter, that meets the gross receipts test is not required to limit business interest expense under section 163(j). A taxpayer meets the gross receipts test if the taxpayer has average annual gross receipts that are taken into account in determining its unrelated business taxable income of $26 million or less for the three prior tax years. Gross receipts include the aggregate gross receipts from all persons treated as a single employer such as a controlled group of corporations, commonly controlled partnerships or proprietorships, and affiliated service groups. If the taxpayer fails to meet the gross receipts test, Form 8990 is generally required.

Line 6. Taxes and Licenses

Enter taxes and license fees paid or accrued during the year, but don't include the following taxes.

  • Federal income taxes.

  • Foreign or U.S. possession income taxes if a foreign tax credit is claimed.

  • Taxes not imposed on your organization.

  • Taxes, including state or local sales taxes, paid or incurred in connection with an acquisition or disposition of property. These taxes must be treated as part of the cost of the acquired property or, in the case of a disposition, as a reduction in the amount realized on the disposition.

  • Taxes assessed against local benefits that increase the value of the property assessed (such as for paving, etc.).

  • Taxes deducted elsewhere on the return, such as those reflected in cost of goods sold.

See section 164(d) for apportionment of taxes on real property between the buyer and seller.

Line 7. Depreciation

Besides depreciation, include on line 7 the part of the cost, under section 179, that the organization elected to expense for certain tangible property placed in service during the tax year or carried over from the prior tax year. See Form 4562 and its instructions.

Line 9. Depletion

See sections 613 and 613A for percentage depletion rates for natural deposits. Attach Form T, Forest Activities Schedules, if a deduction is taken for depletion of timber.

Line 10. Contributions to Deferred Compensation Plans

Employers who maintain pension, profit-sharing, or other funded deferred compensation plans are generally required to file Form 5500. This requirement applies whether or not the plan is qualified under the Code and whether or not a deduction is claimed for the current tax year. Section 6652(e) imposes a penalty for late filing of these forms. In addition, there is a penalty for overstating the pension plan deduction. See section 6662(f).

Line 11. Employee Benefit Programs

Enter the amount of contributions to employee benefit programs (such as insurance, health, and welfare programs) that aren't an incidental part of a deferred compensation plan included on Schedule A, Part II, line 10.

Line 12. Excess Exempt Expenses

Enter the amount computed at Part VIII, line 7 (if applicable) on Part II, line 12.

Line 13. Excess Readership Costs

Enter the amount computed at Part IX, line 8a (if applicable) on Part II, line 13.

Line 14. Other Deductions

Enter on this line the deduction taken for amortization (see Form 4562) as well as other authorized deductions for which no space is provided on the return. Attach a statement listing the deductions claimed on this line. On each Schedule A, deduct only items directly connected with the unrelated trade or business for which income is reported on that Schedule A.

Extraterritorial income exclusion.

Complete Form 8873 and include the deduction from line 53 in other deductions reported on Part II, line 14.

Don't deduct fines or penalties paid to a government for violating any law. The exclusion was repealed generally for transactions after 2004, with some exceptions. See Form 8873 and its instructions.

Line 17. Net Operating Loss (NOL) Deduction Arising in Tax Years Beginning On or After January 1, 2018

The NOL deduction is the net operating loss carryover and carrybacks that can be deducted in the tax year with regard to each separate trade or business. To be deductible, an NOL must have been incurred in an unrelated trade or business activity. See section 172(a).

Tax Cuts & Jobs Act amendments to section 172.

Section 13302 of the Tax Cuts & Jobs Act amended section 172 for tax years ending after 2017 to eliminate NOL carrybacks except for certain farming losses and NOLs of insurance companies other than life insurance companies. See section 172(b) as amended by the Tax Cuts & Jobs Act. Also see Publication 225, Farmer's Tax Guide, Publication 536, Net Operating Losses for Individuals, Estates, and Trusts, and Publication 542, Corporations, for additional information. The Tax Cuts & Jobs Act also amended section 172(a)(2) to limit the allowable NOL deduction to 80% of taxable income (calculated as described in section 172(a)(2)).

CARES Act modifications.

The CARES Act temporarily modified or suspended certain amendments to section 172 under the Tax Cuts & Jobs Act.

Suspension of 80% limitation.

The excess business loss limitation under section 172(a)(2) has been suspended for tax year 2020.

NOL carryback.

Elimination of most NOL carrybacks was changed to provide that losses arising in a tax year beginning after December 31, 2017, and before January 1, 2021 (CARES Act NOLs) must be carried back to the five tax years preceding the tax year of such loss, which includes tax years prior to the enactment of section 512(a)(6).

The organization may waive the CARES Act NOL carryback by attaching a statement to Form 990-T as described in Revenue Procedure 2020-24.

An organization eligible to carry an NOL back to a prior year must file an amended Form 990-T for that year. Form 1045 or 1139 can’t be used for this purpose; however, Form 1045 or 1139 may be attached to the amended Form 990-T to show the NOL computation. See Pub. 536.

Instructions for Line 17.

Enter on Schedule A, Part II, line 17, the NOL carryover from other tax years attributable to that trade or business, but don't enter more than the amount shown on Schedule A, Part II, line 16. An organization that claims the deduction with respect to any NOL carried through tax years for which the organization was not required to file Form 990-T must show the amount of the deduction and how it was computed, but the organization need not file a Form 990-T in order to preserve an NOL carryover. The amount of an NOL carryback or carryover is determined under section 172. See Regulations section 1.512(b)-1(e). Attach a statement showing the computation of the NOL deduction.

Line 18. Unrelated Business Taxable Income

Use the greater of the amount computed on line 18 or zero in the computation of unrelated business taxable income on Part I, line 1 of Form 990-T. A net loss calculated on any Schedule A, Part II, line 18 cannot be used to offset gain on any other Schedule A. Accordingly, a net loss on a Schedule A should be treated as a zero to calculate the amount reported on Part I, line 1 of Form 990-T.

Part III. Cost of Goods Sold

Generally, inventories are required at the beginning and end of each tax year if the production, purchase, or sale of merchandise is an income-producing factor. See Regulations section 1.471-1.

However, if the organization is a qualifying taxpayer or a qualifying small business taxpayer, it may adopt or change its accounting method to account for inventoriable items in the same manner as materials and supplies that aren't incidental (unless its business is a tax shelter (as defined in section 448(d)(3))).

A qualifying taxpayer is a taxpayer that, for each prior tax year ending after December 16, 1998, has average annual gross receipts of $1 million or less for the 3-tax-year period ending with that prior tax year.

A qualifying small business taxpayer is a taxpayer (a) that has average annual gross receipts of $26 million or less for the 3-tax-year period ending with that prior tax year, and (b) whose principal business activity isn't an ineligible activity

Under this accounting method, inventory cost for raw materials purchased for use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or merchandise are sold (but not before the year the organization paid for the raw materials or merchandise, if it is also using the cash method). For additional guidance on this method of accounting for inventoriable items, see Pub. 538 and the Instructions for Form 3115.

Enter amounts paid for all raw materials and merchandise during the tax year on line 2. The amount the organization can deduct for the tax year is figured on Schedule A, Part III, line 8.

All filers not using the cash method of accounting should see Section 263A Uniform Capitalization Rules, earlier in the instructions for Limitations on Deductions before completing Schedule A. The instructions for lines 1, 4, 5, and 7 later apply to Schedule A, Part III.

Inventory valuation methods.

Inventories can be valued at:

  1. Cost as described in Regulations section 1.471-3,

  2. Lower of cost or market as described in Regulations section 1.471-4, or

  3. Any other method approved by the IRS that conforms to the requirements of the applicable regulations cited below.

However, if the organization is using the cash method of accounting, it is required to use cost.

A small producer is one whose average annual gross receipts are $1 million or less. Small producers that account for inventories in the same manner as materials and supplies that aren't incidental may currently deduct expenditures for direct labor and all indirect costs that would otherwise be included in inventory costs.

The average cost (rolling average) method of valuing inventories generally doesn’t conform to the requirement of the regulations. See Rev. Rul. 71-234, 1971-1 C.B. 148.

Organizations that use erroneous valuation methods must change to a method permitted for federal income tax purposes. File Form 3115 to make this change.

Inventory may be valued below cost when the merchandise is unsalable at normal prices or unusable in the normal way because the goods are subnormal because of damage, imperfections, shop wear, etc., within the meaning of Regulations section 1.471-2(c). The goods may be valued at the bona fide selling price, minus direct cost of disposition (but not less than scrap value). Bona fide selling price means actual offering of goods during a period ending not later than 30 days after inventory date.

If this is the first year the Last-in First-out (LIFO) inventory method was either adopted or extended to inventory goods not previously valued under the LIFO method provided in section 472, attach Form 970, Application To Use LIFO Inventory Method, or a statement with the information required by Form 970.

If the organization changed or extended its inventory method to LIFO and had to write up the opening inventory to cost in the year of election, report the effect of this write-up as other income (Part I, line 12) proportionately over a 3-year period that begins in the tax year the LIFO election was made (section 472(d)).

Line 1

If the organization is changing its method of accounting to no longer account for inventories, it must refigure last year's closing inventory using the new method of accounting and enter the result on line 1. If there is a difference between last year's closing inventory and the refigured amount, attach an explanation and take it into account when figuring the organization's section 481(a) adjustment (explained earlier).

Line 4

An entry is required on this line only for organizations that have elected a simplified method of accounting.

For organizations that have elected the simplified production method, additional section 263A costs are generally those costs, other than interest, that are now required to be capitalized under section 263A but that weren’t capitalized under the organization's method of accounting immediately prior to the effective date of section 263A. For details, see Regulations section 1.263A-2(b).

For organizations that have elected the simplified resale method, additional section 263A costs are generally those costs incurred with respect to the following categories:

  • Off-site storage or warehousing;

  • Purchasing;

  • Handling, such as processing, assembling, repackaging, and transporting; and

  • General and administrative costs (mixed service costs).

For details, see Regulations section 1.263A-3(d).

Enter on Schedule A, Part III, line 4 the balance of section 263A costs paid or incurred during the tax year not included on Schedule A, Part III, lines 2 and 3.

Line 5

Enter on Schedule A, Part III, line 5 any costs paid or incurred during the tax year not entered on Schedule A, Part III, lines 2 through 4. Attach a statement describing the other costs.

Line 7

See Regulations sections 1.263A-1 through 1.263A-3 for details on figuring the amount of additional section 263A costs to be included in ending inventory.

If the organization accounts for inventories in the same manner as materials and supplies that aren't incidental, enter on Schedule A, Part III, line 7 the portion of its raw materials and merchandise purchased for resale that are included on Schedule A, Part III, line 6 and weren’t sold during the year.

Part IV. Rent Income

Section 501(c)(7), (9), and (17) organizations, enter gross rents in Schedule A, Part I, line 6, and applicable expenses in Schedule A, Part II, lines 1 through 14. All rents except those that are exempt function income must be included.

All organizations that have applicable rent income, other than section 501(c)(7), (9), and (17) organizations, should complete Schedule A, Part IV. For organizations other than section 501(c)(7), (9), and (17) organizations, only the following rents are taxable in Schedule A, Part I, line 6.

  1. Rents from personal property leased with real property, if the rents from the personal property are more than 10% of the total rents received or accrued under the lease, determined at the time the personal property is placed in service.

  2. Rents from real and personal property if:

    1. More than 50% of the total rents received or accrued under the lease are for personal property, or

    2. The amount of the rent depends on the income or profits derived by any person from the property leased (except an amount based on a fixed percentage of receipts or sales).

A redetermination of the percentage of rent for personal property is required when either:

  1. There is an increase of 100% or more by the placing of additional or substitute personal property in service, or

  2. There is a modification of the lease that changes the rent charged. Rents from both real and personal property not taxable in Schedule A, Part I, line 6, may be taxable on Schedule A, Part I, line 8 if the income is from a controlled organization or on Schedule A, Part I, line 7 if the property is debt-financed. Taxability of the rents must be considered in the following order.

    • Rents not taxed on Schedule A, Part I, line 6 may be taxed on Schedule A, Part I, line 8.

    • Rents not taxed on Schedule A, Part I, line 6 or line 8 may be taxed on Schedule A, Part I, line 7.

Rents from personal property not leased with real property should be reported on Schedule A, Part I, line 12.

See Form 8582 (for trusts) or Form 8810 (for corporations) and section 469 for limitations on losses from rental activities.

Line 1. Description of Property

Check the box next to the property description if the property is used both to carry on exempt activities and to conduct unrelated trade or business activities.

Line 4

For each property, attach a statement describing the directly connected deductions and their amounts.

Part V. Unrelated Debt-Financed Income

Use Schedule A, Part V to compute unrelated debt-financed income described in sections 512(b)(4) and 514 from debt-financed property only to the extent that the income doesn’t constitute income from the conduct of an unrelated trade or business and isn't specifically taxable under other provisions of the Code, such as taxable rents from personal property leased with real property reportable on Schedule A, Part IV (and Schedule A, Part I, line 6), or taxable interest, annuities, royalties, and rents from a controlled entity reportable on Schedule A, Part VI (and Schedule A, Part I, line 8). See Regulations section 1.514(b)-1(b)(2). Refer to Regulations section 1.512(a)-6 when reporting income from one or more debt-financed properties and also for rules permitting the aggregation of unrelated debt-financed income with other UBTI in certain circumstances. Gain or loss from the sale or disposition of debt-financed property is reported on Schedule A, Part I, line 4.

Section 501(c)(7), (9), and (17) organizations should report income from debt-financed property on Schedule A, Part VII (and Schedule A, Part I, line 9).

When a debt-financed property is held for exempt purposes and other purposes, the organization must allocate the basis, debt, income, and deductions among the purposes for which the property is held. Don't include in Schedule A, Part V amounts allocated to exempt purposes.

.This is an Image: caution.gifFor section 514 purposes, don't treat an interest in a qualified state tuition program (QSTP) as debt. However, a QSTP's investment income is treated as debt-financed income if the QSTP incurs indebtedness when acquiring or improving income-producing property..

A property held to produce income is debt-financed property if at any time during the tax year there was acquisition indebtedness outstanding for the property. When a property held for the production of income by an organization is disposed of at a gain during the tax year, and there was acquisition indebtedness outstanding for that property at any time during the 12-month period before the date of disposition, the property is debt-financed property. Securities purchased on margin are considered debt-financed property if the liability incurred in purchasing them remains outstanding.

Acquisition indebtedness is the outstanding amount of principal debt incurred by the organization to acquire or improve the property. Acquisition indebtedness also includes indebtedness incurred:

  1. Before the property was acquired or improved, if the indebtedness would not have been incurred but for such acquisition or improvement of the property; or

  2. After the property was acquired or improved, if the indebtedness would not have been incurred but for such acquisition or improvement and the incurrence of such indebtedness was reasonably foreseeable at the time of such acquisition or improvement. See Regulations section 1.514(c)-1(a).

With certain exceptions, acquisition indebtedness doesn’t include debt incurred by:

  1. A qualified (section 401) trust in acquiring or improving real property. See section 514(c)(9).

  2. A tax-exempt school (section 170(b)(1)(A)(ii)) and its affiliated support organizations (section 509(a)(3)) for indebtedness incurred after July 18, 1984.

  3. An organization described in section 501(c)(25) in tax years beginning after December 31, 1986.

  4. An obligation, to the extent that it is insured by the Federal Housing Administration, to finance the purchase, rehabilitation, or construction of housing for low and moderate income persons, or indebtedness incurred by a small business investment company licensed after October 22, 2004, under the Small Business Investment Act of 1958 if such indebtedness is evidenced by a debenture issued by such company under section 303(a) of that Act, and held or guaranteed by the Small Business Administration (see section 514(c)(6)(B) for limitations).

  5. A retirement income account described in section 403(b)(9) in acquiring or improving real property in tax years beginning on or after August 17, 2006.

See Pub. 598 for additional exceptions to the rules for debt-financed property.

Example 1.

An exempt organization owns a four-story building. Two floors are used for an exempt purpose and two floors are rented (as an unrelated trade or business) for $10,000. Expenses are $1,000 for depreciation and $5,000 for other expenses that relate to the entire building. The average acquisition indebtedness is $6,000, and the average adjusted basis is $10,000. Both apply to the entire building.

To complete Schedule A, Part V for this example, describe the property in Schedule A, Part V, line 1. Enter $10,000 in Schedule A, Part V, line 2 (since the entire amount is for debt-financed property); $500 and $2,500 in Schedule A, Part V, line 3(a) and 3(b), respectively (since only one-half of the expenses are for the debt-financed property); $3,000 and $5,000 in Schedule A, Part V, lines 4 and 5, respectively (since only one-half of the acquisition indebtedness and the average adjusted basis are for debt-financed property); 60% in Schedule A, Part V, line 6; $6,000 in Schedule A, Part V, line 7; and $1,800 in Schedule A, Part V, line 9.

Example 2.

Assume the same facts as in Example 1, except the entire building is rented out as an unrelated trade or business for $20,000. To complete Schedule A, Part V for this example, enter $20,000 in Schedule A, Part V, line 2; $1,000 and $5,000 in Schedule A, Part V, lines 3(a) and 3(b), respectively (since the entire amount is for debt-financed property); $6,000 and $10,000 in Schedule A, Part V, lines 4 and 5 (since the entire amount is for debt-financed property); 60% in Schedule A, Part V, line 6; $12,000 in Schedule A, Part V, line 7; and $3,600 in Schedule A, Part V, line 9.

Line 1

Enter the address of the debt-financed property. If the debt-financed property is not real property, enter the address where the property is located and describe the property in Part XI, Supplemental Information.

Check the box next to the property description if the property is used both to carry on exempt activities and to conduct unrelated trade or business activities.

Line 2

Enter the gross income from debt financed property, excluding income otherwise included in unrelated business taxable income. For example, don't include rents from personal property shown in Schedule A, Part IV, or rents and interest from controlled organizations shown in Schedule A, Part VI.

Line 3

For amounts shown on line 3a, attach a statement showing, for each property,

  1. The cost or salvage value,

  2. The year acquired,

  3. The property’s useful life (rounded to a whole number if necessary),

  4. The years remaining (rounded to a whole number if necessary),

  5. The annual depreciation expense amount, and

  6. The allowable depreciation expense amount.

Line 4

Average acquisition indebtedness for any tax year is the average amount of the outstanding principal debt during the part of the tax year the property is held by the organization. To figure the average amount of acquisition debt, determine the amount of the outstanding principal debt on the first day of each calendar month during that part of the tax year that the organization holds the property. Add these amounts together, and divide the result by the total number of months during the tax year that the organization held the property. See section 514(a) and the related regulations for property acquired for an indeterminate price.

Attach a statement showing, for each property,

  1. The average amount of acquisition debt,

  2. The percent allocable to debt-financed income, and

  3. The product of (1) multiplied by (2).

Line 5

The average adjusted basis for debt-financed property is the average of the adjusted basis of the property on the first and last days during the tax year that the organization holds the property. Determine the adjusted basis of property under section 1011. Adjust the basis of the property by the depreciation for all earlier tax years, whether or not the organization was exempt from tax for any of these years. Similarly, for tax years during which the organization is subject to tax on unrelated business taxable income, adjust the basis of the property by the entire amount of allowable depreciation, even though only a part of the deduction for depreciation is taken into account in figuring unrelated business taxable income.

Attach a statement showing, for each property,

  1. A brief description of the property,

  2. The adjusted basis,

  3. The percent allocable to debt-financed income, and

  4. The product of (3) multiplied by (4).

If no adjustments to the basis of property under section 1011 apply, the basis of the property is cost.

See section 514(d) and the related regulations for the basis of debt-financed property acquired in a complete or partial liquidation of a corporation in exchange for its stock.

Line 6

Divide each property's average acquisition indebtedness for the tax year by that property's average adjusted basis during the period it is held in the tax year. This percentage cannot be more than 100%.

Line 7

The amount of income from debt-financed property included in unrelated trade or business income is figured by multiplying the property's gross income by the percentage computed on line 6.

Line 8

Enter on line 8 the sum of amounts computed for each property on line 7. Also enter this amount on Part I, line 7, column (A).

Line 9

For each debt-financed property, multiply the total deductions directly connected to the income (including the dividends-received deductions allowed by sections 243, 244, and 245) by the percentage computed on line 6. However, if the debt-financed property is depreciable property, figure the depreciation deduction by the straight- line method only and enter the amount in Schedule A, Part V, line 3(a).

For each debt-financed property, attach statements showing separately a computation of the depreciation deduction (if any) reported in Schedule A, Part V, line 3(a) (as described earlier) and a breakdown of the expenses included in Schedule A, Part V, line 3(b). Corporations owning stock that is unrelated debt-financed property should see Schedule C (Dividends and Special Deductions) of Form 1120, U.S. Corporation Income Tax Return, to determine the dividends-received deductions to include in Schedule A, Part V, line 3(b).

When a capital loss for the tax year may be carried back or carried over to another tax year, the amount to carry over or back is figured by using the percentage determined above. However, in the year to which the amounts are carried, don't apply the debt-basis percentage to determine the deduction for that year.

Line 10

On line 10 enter the sum of amounts computed for each property on line 9. Also enter this amount on Part I, line 7, column (B).

Line 11

Enter the total dividends-received deductions (after reduction, when applicable, by the debt-basis percentage(s)) included in Schedule A, Part V, line 9.

Part VI. Interest, Annuities, Royalties, and Rents From Controlled Organizations

Under section 512(b)(13), interest, annuities, royalties, and rents received or accrued (directly or indirectly) by a controlling organization from a controlled organization are subject to tax, whether or not the activity conducted by the controlling organization to earn these amounts is a trade or business or is regularly conducted. However, see Regulations section 1.512(b)-1(l)(5) regarding amounts taxable under other provisions of the Code.

Controlled organization.

An entity is a “controlled organization” if the controlling organization owns:

  • By vote or value more than 50% of a corporation's stock (for an organization that is a corporation);

  • More than 50% of a partnership's profits or capital interests (for an organization that is a partnership); or

  • More than 50% of the beneficial interests in an organization (for an organization other than a corporation or partnership).

To determine the ownership of stock in a corporation, apply the principles of section 318 (constructive ownership of stock). Apply similar principles to determine the ownership of interests in a partnership or any other organization.

Column 3.

Enter the net unrelated income (or net unrelated loss) of each controlled entity listed that is exempt from tax under section 501(a).

Column 7.

Enter the taxable income of each nonexempt controlled organization.

Column 8.

Enter the net unrelated income (or net unrelated loss) of each controlled entity listed that isn't exempt from tax under section 501(a). Net unrelated income is that portion of the controlled entity's taxable income that would be unrelated business taxable income if the entity were exempt under section 501(a) and had the same exempt purposes as the controlling organization. Net unrelated loss is the controlled organization's net operating loss adjusted under rules similar to those used to determine net unrelated income.

Column 4 or 9.

For each controlled organization, enter the total of specified payments received from each controlled organization. If the organization received both specified payments and qualifying specified payments from a controlled organization, enter specified payments on one line and qualifying specified payments on another so that there are dual entries for that controlled organization.

Column 5 or 10.

For specified payments, enter the portion of columns 4 or 9 to the extent that the payment reduced the net unrelated income (or increased the net unrelated loss) of the controlled entity.

Column 6 or 11.

Enter only those deductions directly connected with the income entered in columns 5 or 10.

With respect to qualifying specified payments, enter only that portion of expenses directly connected to the amounts included in columns 5 or 10, that is, the excess of the payment over the fair market value amount as determined in accordance with section 482. Don't enter any expenses relating to the portion of such payment that isn't includible in income under this special rule.

.This is an Image: caution.gifFor valuation misstatements regarding qualifying specified payments, there is a 20% addition to tax. See section 512(b)(13)(E)(ii)..

Excess qualifying specified payments.

Excess qualifying specified payments received or accrued from a controlled entity (that is, the amount of qualifying specified payments in excess of what would have been paid or accrued if the payments had been determined under section 482) are included in a controlling exempt organization's unrelated business taxable income.

Part VII. Investment Income of a Section 501(c)(7), (9), or (17) Organization

Generally, for section 501(c)(7), (9), or (17) organizations, unrelated trade or business income includes all gross income from nonmembers with certain modifications. See section 512(a)(3)(A). Report on Schedule A, Part VII all income from investments in securities and other similar investment income from nonmembers, including 100% of income and directly connected expenses from debt-financed property. Don't report nonmember income from debt-financed property on Schedule A, Part V.

All section 501(c)(7), (9), and (17) organizations figure their investment income using Schedule A, Part VII. Don't include interest on state and local governmental obligations described in section 103(a).

Investment income includes all income from debt-financed property.

If a section 501(c)(7), (9), or (17) organization (or a title holding corporation described earlier) sells property that was used for the exempt function of the section 501(c)(7), (9), or (17) organization and buys other property used for the organization's exempt function within a period beginning 1 year before the date of the sale, and ending 3 years after the date of the sale, the gain from the sale will be recognized only to the extent that the sales price of the old property is more than the cost of the other property. The other property need not be similar in type or use to the old property. The organization must notify the IRS of the sale by a statement attached to the return, or other written notice.

To compute the gain on the sale of depreciable property, see the instructions for Part V, line 5, to determine the adjusted basis of the property.

Column 3.

Deduct only those expenses that are directly connected to the net investment income. Allocate deductions between exempt activities and other activities where necessary. The organization may not take the dividends-received deductions in figuring net investment income because they aren't treated as directly connected with the production of gross income.

Column 4.

Section 501(c)(7), (9), and (17) organizations may set aside income that would otherwise be taxable under section 512(a)(3). However, income derived from an unrelated trade or business may not be set aside and thus can’t be exempt function income. In addition, any income set aside and later used for other purposes must be included in income.

Section 501(c)(7), (9), and (17) organizations won't be taxed on income set aside for:

  1. Religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals (and reasonable administration costs directly connected to such purposes); or

  2. The payment of life, sickness, accident, or other benefits (and reasonable administration costs directly connected to such benefits) by a section 501(c)(9) or (17) organization. The amount allowed as a set aside may not exceed a limit determined using section 512(a)(3)(E). See sections 512(a)(3)(E) and 419A for details.

Report income set aside in Schedule A, Part VII, column 4. Attach a statement listing,

  1. The amount set aside for charitable purposes,

  2. The amount set aside for reasonable administration costs directly connected with such amount,

  3. The amount set aside for payment of life, sickness, accident or other benefits, and

  4. The amount set aside for reasonable administration costs directly connected with the payment of such benefits.

Amounts set aside aren't deductible under section 170 or any other section of the Code.

The organization may elect to treat income set aside by the date for filing the return, including any extension of time, as income set aside in the tax year for which the return is filed. The income set aside must have been includible in gross income for that earlier tax year.

Although set aside income may be accumulated, any accumulation that is unreasonable will be evidence that the set aside wasn’t for the purposes previously mentioned.

Net investment income set aside must be specifically earmarked as such, or placed in a separate account or fund (except for a section 501(c)(9) or (17) organization which, by the terms of its governing instrument, must use its net investment income for the payment of life, sickness, accident, or other benefits, and reasonable administration costs).

These rules apply to a corporation described in section 501(c)(2) (title holding corporation) whose income is payable to an organization described in section 501(c)(7), (9), or (17) if it files a consolidated return with the section 501(c)(7), (9), or (17) organization.

Part VIII. Exploited Exempt Activity Income, Other Than Advertising Income

Exempt organizations that have gross income from an unrelated trade or business activity that exploits an exempt activity (other than periodical advertising income reportable in Schedule A, Part IX) should complete Schedule A, Part VIII. See Regulations section 1.513-1(d)(4)(iv) for a definition of exploited exempt activity. Report income from advertising other than in a periodical in Schedule A, Part VIII.

Line 1.

Briefly describe the exempt activity being exploited in an unrelated trade or business activity.

Line 3.

An exempt organization may take all deductions directly connected with the gross income from the unrelated trade or business activity.

Line 4.

Subtract directly connected deductions from the gross unrelated business income. If unrelated business income exceeds the directly connected deduction, the exempt organization may take into account all deductible items attributable to the exploited exempt activity, with the following limitations.

  1. Reduce the deductible items of the exempt activity by the income from the activity;

  2. Limit the net amount of deductible items arrived at in item 1, above, for the exempt activity to the net unrelated business income from the exploited exempt activity;

  3. Exclude income and expenses of the exempt activity in figuring a loss carryover or carryback from the unrelated trade or business activity exploiting the exempt activity; and

  4. Exclude deductible items of the exempt activity in figuring unrelated trade or business income from an activity that isn't exploiting the same exempt activity.

As a result, the net includible exploited exempt activity income is the unrelated business taxable income minus the excess of the exempt activity expenses over the exempt activity income. If the income from the exempt activity exceeds the exempt activity expenses, don't add that profit to the net income from the unrelated business activity. Attach a separate statement showing the computation.

Part IX. Advertising Income

An exempt organization that earned gross income from the sale of advertising in an exempt organization periodical must complete Schedule A, Part IX. The part of the advertising income taken into account is determined as follows.

  1. If direct advertising costs (expenses directly connected with advertising income) are more than advertising income (unrelated business income), deduct that excess in figuring unrelated business taxable income from any other unrelated trade or business activity conducted by the organization.

  2. If advertising income is more than direct advertising costs, and circulation income (exempt activity income) equals or exceeds readership costs (exempt activity expenses), then unrelated business taxable income is the excess of advertising income over direct advertising costs.

  3. If advertising income is more than direct advertising costs, and readership costs are more than circulation income, then unrelated business taxable income is the excess of total income (advertising income and circulation income) over total periodical costs (direct advertising costs and readership costs).

  4. If the readership costs are more than the circulation income, and the net readership costs are more than the excess of advertising income over direct advertising costs, no loss is allowable. See Regulations section 1.512(a)-1(f)(2)(ii)(b).

For allocating membership receipts to circulation income, see Rev. Rul. 81-101, 1981-C.B. 352.

Consolidated periodicals.

If an organization publishes two or more periodicals, it may elect to treat the gross income for all (but not less than all) periodicals, and deductions directly connected with those periodicals (including excess readership costs) as if the periodicals were one to determine its unrelated business taxable income. This rule only applies to periodicals published for the production of income. A periodical is considered published for the production of income if gross advertising income of the periodical is at least 25% of the readership costs, and the periodical is an activity engaged in for profit.

If periodicals are consolidated, check the box next to the periodical name, and attach a statement showing the name of each periodical in the consolidated group. The attached statement should include the amounts that correspond to information for line 2 through 4. Attach a separate statement for the consolidated group of publications that includes the amounts corresponding to the information for lines 5 through 8.

Part X. Compensation of Officers, Directors, and Trustees

Complete columns 1 through 4 for those officers, directors, and trustees whose salaries or other compensation are allocable to unrelated business gross income. Don't include in column 4 compensation that is deducted on Schedule A, Part II, lines 2, 14, or any line of Schedule A, Parts III through IX.

Part XI. Supplemental Information

Use Part XI to explain the organization’s operations, provide information for lines that don’t have an embedded attachment to capture the information to supplement information provided on an embedded attachment, or to provide any other information in support of amounts reported on Schedule A. An organization that associated unrelated trade or business activity with a different NAICS or Business Activity Code in a prior year than the NAICS or Business Activity Code shown on the Schedule A for the current tax year can enter the explanation for the change here.

For each entry in Part XI, include the Schedule A, Part and line number, a brief description and the amount (if any). If necessary, you may also attach a PDF document to provide supplemental information.

Instructions for Form 990-T - Notices

Paperwork Reduction Act Notice

We ask for the information on these forms to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

Estimates of Taxpayer Burden. These include Forms in the 990 series and attachments and 1023, 1024, 1028, 5578, 5884-C, 8038, 8038-B, 8038-CP, 8038-G, 8038-GC, 8038-R, 8038-T, 8038-TC, 8328, 8718, 8282, 8453-EO, 8453-X, 8868, 8870, 8871, 8872, 8879-EO, 8886-T, 8899 and their schedules and all the forms tax-exempt organizations attach to their tax returns. Time spent and out-of-pocket costs are presented separately. Time burden includes the time spent preparing to file and to file, with recordkeeping representing the largest component. Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax preparation software costs. Note that these estimates do not include burden associated with post-filing activities. IRS operational data indicate that electronically prepared and filed returns have fewer arithmetic errors, implying lower post-filing burden.

Reported time and cost burdens are national averages and do not necessarily reflect a “typical” case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type. For instance, the estimated average time burden for all taxpayers filing Forms 990, 990-EZ, 990-PF, 990-T, and 990-N and related forms is 32.8 hours, with an average cost of $921 per return. This average includes all associated forms and schedules, across all preparation methods and taxpayer activities.

Fiscal Year 2021 Form 990 Series Tax Compliance Cost Estimates

Form 990 Form 990-EZ Form 990-PF Form 990-T Form 990-N
Projections of the Number of Returns to be Filed with IRS 321,100 253,200 120,200 162,500 742,000
Estimates Average Total Time (Hours) 85 45 47 40 2
Estimated Average Total Out-of-Pocket Costs $2,600 $500 $2,000 $1,500 $10
Estimated Average Total Monetized Burden $8,000 $1,200 $3,900 $4,400 $30
Estimates Total Time (Hours) 27,220,000 11,450,000 5,600,000 6,570,000 1,630,000
Estimated Total Out-of-Pocket Costs (Note: Totals may not add due to rounding.) $849,800,000 $139,000,000 $240,200,000 $237,300,000 $6,800,000
Note: Amounts above are for FY2021. Reported time and cost burdens are national averages and don’t necessarily reflect a “typical” case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type. Detail may not add due to rounding.
 

Comments and suggestions

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to the

Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Don't send your return to this address. Instead, see When, Where, and How to File, earlier.

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Ordering Forms and Publications

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Instructions for Form 990-T - Additional Material

Business Activity Codes

The codes listed below that begin with the digits 1 through 8 are a selection from the North American Industry Classification System (NAICS) commonly used by tax-exempt organizations. If you don’t see a code for the activity you need to categorize in the list below, refer to full list of NAICS codes on the NAICS website @ www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2017.

Agriculture, Forestry, Hunting and Fishing

Code

110000 - Agriculture, forestry, hunting and fishing
111000 - Crop production

Mining

Code

211110 - Oil and gas extraction
211120 - Crude petroleum extraction
211130 - Natural gas extraction
212000 - Mining (except oil and gas)

Utilities

Code

221000 - Utilities

Construction

Code

230000 - Construction
236000 - Construction of buildings

Manufacturing

Code

310000 - Manufacturing
323100 - Printing and related support activities
339110 - Medical equipment and supplies manufacturing

Wholesale Trade

Code

423000 - Merchant wholesalers, durable goods
424000 - Merchant wholesalers, nondurable goods

Retail Trade

Code

441100 - Automobile dealers
442000 - Furniture and home furnishings stores
444100 - Building materials and supplies dealers
445100 - Grocery stores
445200 - Specialty food stores
446110 - Pharmacies and drug stores
446199 - All other health and personal care stores
448000 - Clothing and clothing accessories stores
451110 - Sporting goods stores
451211 - Book stores
452000 - General merchandise stores
453000 - Miscellaneous store retailers
453220 - Gift, novelty, and souvenir stores
453310 - Used merchandise stores
454110 - Electronic shopping and mail-order houses

Transportation and Warehousing

Code

480000 - Transportation
485000 - Transit and ground passenger transportation
493000 - Warehousing and storage

Information

Code

511110 - Newspaper publishers (except Internet)
511120 - Periodical publishers (except Internet)
511130 - Book publishers (except Internet)
511140 - Directory and mailing list publishers (except Internet)
511190 - Other publishers (except Internet)
512000 - Motion picture and sound recording industries
515100 - Radio and television broadcasting (except Internet)
517000 - Telecommunications (including paging, cellular, satellite, cable, other telecommunications, and Internet service providers)
519100 - Other information services (including news syndicates and libraries)
519130 - Internet Publishing and Broadcast

Data Processing Services

Code

518210 - Data Processing, Hosting, and Related Services

Finance and Insurance

Code

522100 - Depository credit intermediation (including commercial banking, savings institutions, and credit unions)
522200 - Nondepository credit intermediation (including credit card issuing and sales financing)
522110 - Credit card issuing
522220 - Sales Financing
522291 - Consumer lending
522292 - Real estate credit
522298 - Other nondepository credit intermediation
523000 - Securities, commodity contracts, and other financial investments and related activities
523920 - Portfolio management
523930 - Investment advice
524113 - Direct life insurance carriers
524114 - Direct health and medical insurance carriers
524126 - Direct property and casualty insurance carriers
524130 - Reinsurance carriers
524292 - Third-party administration of insurance and pension funds
524298 - All other insurance-related activities
525100 - Insurance and employee benefit funds
525920 - Trusts, estates, and agency accounts
525990 - Other Financial vehicles (including mortgage REITs)

Real Estate and Rental Leasing

Code

531110 - Lessors of residential buildings and dwellings (including equity REITs)
531120 - Lessors of nonresidential buildings (except Miniwarehouses)(including equity REITs)
531190 - Lessors of other real estate property (including equity REITs)
531310 - Real estate property managers
531390 - Other activities related to real estate
532000 - Rental and leasing services
532289 - Rental of personal property
532420 - Office machinery and equipment rental and leasing
533110 - Lessors of nonfinancial intangible assets (except copyrighted works)

Professional, Scientific, and Technical Services

Code

541100 - Legal services
541990 - Consumer credit counseling services
541200 - Accounting, tax preparation, bookkeeping, and payroll services
541300 - Architectural, engineering, and related services
541380 - Testing laboratories
541511 - Custom computer programming services
541519 - Other computer-related services
541610 - Management consulting services
541700 - Scientific research and development services
541800 - Advertising and related services
541860 - Direct mail advertising
541900 - Other professional, scientific, and technical services

Management of Companies and Enterprises

Code

551111 - Offices of bank holding companies
551112 - Offices of other holding companies

Administrative and Support Services

Code

561000 - Administrative and support services
561300 - Employment services
561439 - Other business service centers
561499 - All other business support services
561500 - Travel arrangement and reservation services
561520 - Tour operators
561700 - Services to buildings and dwellings

Waste Management and Remediation Services

Code

562000 - Waste management and remediation services (sanitary services)

Educational Services

Code

611420 - Computer training
611430 - Professional and management development training
611600 - Other schools and instruction (other than elementary and secondary schools or colleges and universities, which should select a code to describe their unrelated activities)
611710 - Educational support services

Healthcare and Social Assistance

Code

621110 - Offices of physicians
621300 - Offices of other health practitioners
621400 - Outpatient care centers
621500 - Medical and diagnostic laboratories
621610 - Home health care services
621910 - Ambulance services
621990 - All other ambulatory health care services
623000 - Nursing and residential care facilities
623990 - Other residential care facilities
624100 - Individual and family services
624110 - Community centers (except rec. only), youth Adoption agencies
624200 - Community food and housing, and emergency and other relief services
624210 - Meal delivery programs, Soup kitchens, or Food banks
624310 - Vocational rehabilitation services
624410 - Child day care services

Arts, Entertainment, and Recreation

Code

711110 - Theater companies and dinner theaters
711120 - Dance companies
711130 - Musical groups and artists
711190 - Other performing art companies
711210 - Spectator sports (including sports clubs and racetracks)
711300 - Promoters of performing arts, sports and similar events
713110 - Amusement and theme parks
713200 - Gambling industries
713910 - Golf courses and country clubs
713940 - Fitness and recreational sports centers
713990 - All other amusement and recreation industries (including skiing facilities, marinas, and bowling centers)

Accommodation and Food Services

Code

721000 - Accommodation
721110 - Hotels (except casino hotels) and motels
721210 - RV (recreational vehicle) parks and recreational camps
721310 - Rooming and boarding houses, dormitories, and workers’ camps
722320 - Caterers
722440 - Drinking places (alcoholic beverages)
722511 - Full-service restaurants
722513 - Limited-service restaurants
722514 - Cafeterias and buffets
722515 - Snack and non-alcoholic beverage bars

Other Services

Code

811000 - Repair and maintenance
812300 - Dry cleaning and laundry services
812900 - Other personal services
812930 - Parking lots and garages

Additional codes listed below that begin with "9" are not part of the NAICS and are not listed on the NAICS website. The non-NAICS business activity codes are for use on Form 990-T to identify various types of investments, including certain partnership and S corporation interests, reported as separate trades or businesses under section 512(a)(6) without regard to the specific trade or business engaged in by the partnership or S corporation. See Regulations section 1.512(a)-6.

Index

A

Accounting method, Accounting Methods
Accounting Period, Accounting Period
Alcohol and Cellulosic Biofuel Fuels Credit, Line 12. Other Income
Alternative Minimum Tax (Trusts Only), Line 5. Alternative Minimum Tax (Trusts Only)
Amortization, Amortization.
Appendix A, Mandatory electronic filing.
Appendix C. Public Inspection of Form 990-T Returns Filed by Section 501(c)(3) Organizations, Public Inspection Requirements of Section 501(c)(3) Organizations

B

Backup Withholding, Line 6e. Backup Withholding
Biodiesel and Renewable Diesel Fuels Credit, Line 12. Other Income

C

Capital Gain Net Income, Line 4a. Capital Gain Net Income
Capital Loss Deduction for Trusts, Line 4c. Capital Loss Deduction for Trusts
Certain Activities and Other Information
Signature or other authority over a financial account in a foreign country
Report of Foreign Bank and Financial Accounts (FBAR), Part IV. Statements Regarding Certain Activities and Other Information
Change in address
Archer MSA, Items A through L
Coverdell ESA, Items A through L
IRA, SEP, or SIMPLE, Items A through L
Qualified ABLE Program, Items A through L
Qualified State Tuition Program, Items A through L
Roth IRA, Items A through L
Charitable Contributions, Line 4. Charitable Contributions
Compensation of Officers, Directors, and Trustees, Part X. Compensation of Officers, Directors, and Trustees
Consolidated periodicals, Consolidated periodicals.
Cost of Goods Sold, Part III. Cost of Goods Sold
Credit for Prior Year Minimum Tax, Line 1d. Credit for Prior Year Minimum Tax
Credit for Small Employer Health Insurance Premiums
Tax-exempt eligible small employer, Line 6f. Credit for Small Employer Health Insurance Premiums

D

Debt-financed property disposition, Debt-financed property disposition.
Deduction for Net Operating Loss, Line 6. Deduction for Net Operating Loss Arising in Tax Years Beginning Before 2018
Deductions Not Taken Elsewhere
Directly connected expenses, Part II. Deductions Not Taken Elsewhere
Depletion, Line 9. Depletion
Disposition of property received from taxable subsidiary, Disposition of property received from taxable subsidiary and used in unrelated business.
Disregarded entity, Organizations with Current UBTI

E

Employer-owned life insurance contracts, Line 12. Other Income
Estimated Tax Payments, Line 6b. Estimated Tax Payments
Estimated Tax Penalty, Line 8. Estimated Tax Penalty
Exceptions and special rules
Member income of mutual or cooperative electric companies.
Income from qualifying shipping activities. , Exceptions and special rules
Passive loss and at-risk limitations., Exceptions and special rules
Exploited Exempt Activity Income, Other Than Advertising Income, Part VIII. Exploited Exempt Activity Income, Other Than Advertising Income

F

Foreign Organizations, Line 6d. Foreign Organizations
Foreign Tax Credit, Line 1a. Foreign Tax Credit

G

Gain or loss on disposition of certain brownfield property, Gain or loss on disposition of certain brownfield property.
General Business Credit
Refundable small employer tax credit , Line 1c. General Business Credit
Gross Receipts or Sales
Advance payments
Installment sales, Line 1a. Gross Receipts or Sales

H

How to report., How to report.

I

Income from property financed with qualified 501(c)(3) bonds, Income from property financed with qualified 501(c)(3) bonds.
Income or (Loss) From a Partnership or an S Corporation, Line 5. Income or (Loss) From a Partnership or an S Corporation
Interest , Line 5. Interest
Interest, Annuities, Royalties, and Rents From Controlled Organizations
Controlled organization, Part VI. Interest, Annuities, Royalties, and Rents From Controlled Organizations
Qualifying specified payment, Part VI. Interest, Annuities, Royalties, and Rents From Controlled Organizations
Specified payment, Part VI. Interest, Annuities, Royalties, and Rents From Controlled Organizations

L

Limitations on Deductions
Activities Lacking a Profit Motive , Limitations on Deductions
Deductions Related to Property Leased to Tax-Exempt Entities, Limitations on Deductions
Preference Items, Limitations on Deductions
Section 263A Uniform Capitalization Rules, Limitations on Deductions
Transactions Between Related Taxpayers, Limitations on Deductions

O

Organizations described in section 501(c)(19), Organizations described in section 501(c)(19).
Organizations Taxable as Corporations., Line 1. Organizations Taxable as Corporations
Other Credits, Line 1b. Other Credits
Other Deductions
Extraterritorial income exclusion, Line 14. Other Deductions
Other tax amounts
Excess distribution from a passive foreign investment company (PFIC) , Line 4. Other Tax Amounts

P

Paperwork Reduction Act Notice, Paperwork Reduction Act Notice
partner's audit liability, Increase in tax attributable to partner's audit liability.
Partnerships, Partnerships
Passive foreign investment company (PFIC) shareholders, Passive foreign investment company (PFIC) shareholders.
Payment card and third party network transactions, Passive loss and at-risk limitations.
Proxy Tax, Line 3. Proxy Tax
Public Inspection Requirements of Section 501(c)(3) , Public Inspection Requirements of Section 501(c)(3) Organizations
Purpose of Form, Purpose of Form

R

Recapture of investment credit
Recapture of low-income housing credit
Interest due under the look-back method., Line 3. Other Taxes
Recoveries of bad debts deducted, Line 12. Other Income
Rent Income, Part IV. Rent Income
Reporting 990-T Information on Other Returns, Reporting 990-T Information on Other Returns
Reserved, Line 2. Reserved
Rounding Off to Whole Dollars, Rounding Off to Whole Dollars

S

S Corporations
Qualified tax-exempts
Exception, S Corporations
Section 199A Deduction, Line 9. Section 199A Deduction
Section 263A Uniform Capitalization Rules
Indirect expenses, Section 263A Uniform Capitalization Rules
Interest expense, Section 263A Uniform Capitalization Rules
Section 481(a) adjustment , Adjustments required when changing an accounting method.
Section 965 Payments
Net tax liability in installments, Line 5. Section 965 Payments
Separate trades or businesses
Dual-use property
Which Parts to Complete, Separate Trades or Businesses
Specific deduction, Line 8. Specific Deduction
Supplemental Information
Signature
Paid preparer, Part V. Supplemental Information
Special rule for IRA trusts, Part V. Supplemental Information

T

Tax and Payments, Part III. Tax and Payments
Tax Due
Pay by credit or debit card
IRS.gov/E-pay, Line 9. Tax Due
Tax on Noncompliant Facility Income, Line 6. Tax on Noncompliant Facility Income
Tax Rate Schedule for Trusts, Line 2. Trusts
Total of Unrelated Business Taxable Income Computed From all Unrelated Trades or Businesses, Line 1. Total of Unrelated Business Taxable Income Computed From all Unrelated Trades or Businesses
Total Tax
How to report. , Line 4. Total Tax
Total Unrelated Business Taxable Income, Part I. Total Unrelated Business Taxable Income
Travel, Meals, and Entertainment, Travel, Meals, and Entertainment
Treatment of deferred foreign income upon transition to participation exemption system of taxation, Treatment of deferred foreign income upon transition to participation exemption system of taxation.
Trust filers only
Qualified Business Income Deduction
Determines the unrelated business income separately for each unrelated trade or business, For Trust filers only.

U

Unrelated Debt-Financed Income, Part V. Unrelated Debt-Financed Income
Unrelated Trade or Business Income
Purpose of the Schedule , Purpose of the Schedule

W

When are section 263A capitalized costs deductible
Exceptions, When are section 263A capitalized costs deductible?
Who Must File, Who Must File