Revised Form 990: A Line-by-Line Preparation Guide
A line-by-line preparation guide to the completely new and revised Form 990 for nonprofit organizations
The accurate and complete preparation of Form 990the information return that must be filed annually by most types of tax-exempt organizationsis a key factor in maintaining public image and fundraising capabilities. The newly redesigned Form 990 was released in December 2008 with significant revisions to the initial June 2007 draft. Preparation of the new return will require tax-exempt organizations to gather extensive new information about their activities for disclosure on the new form beginning with their 2008 tax year.
In Revised Form 990: A Line-by-Line Preparation Guide, authors Jody Blazekwho with other AICPA Task Force members was instrumental in effecting changes to the original IRS draft of the formand Amanda Adams, provide step-by-step and line-by- ine analysis and preparation guidelines for nonprofit professionals and nonprofessionals alike charged with preparing and submitting the form.
This hands-on workbook walks you through the process of producing an annual report to the IRS that demonstrates continued qualification for exempt status for a nonprofit organization, explaining the information requested page by page and part by part. It addresses the issues and challenges for each part, particularly the new schedules. As each part is explained, the authors suggest when certain answers have negative consequences. Guidance is provided for functional expense reporting and generally accepted accounting principles for reporting revenues. A good discussion of the differences between book and tax reporting and records needed to accurately display financials for tax purposes is included. The Form 990-PF and Form 990-T are also examined.
About the Authors.
Chapter One: Redesigned Form 990.
§ 1.1 History of Redesign Project.
§ 1.2 Highlights of Revised Form 990.
§ 1.3 Filing of New Form Delayed for Many.
§ 1.4 Find Out Why Organization Qualifies for Tax Exemption.
§ 1.5 Who Is Required to File What.
§ 1.6 Filing for New Organizations.
§ 1.7 Who Is Not Required to File.
§ 1.8 Filing Deadline and Fiscal Year.
§ 1.9 New Form 990-N (e-Postcard).
§ 1.10 Electronic Filing of Returns.
§ 1.11 Group Returns and Annual Affidavit.
§ 1.12 Public Inspection of Forms 990 and 1023/1024.
Appendix 1A: 6/14/07 Draft of Core Form.
Appendix 1B: BV Suggested Revisions.
Appendix 1C: Form 990-EZ.
Chapter Two: Good Accounting Makes a Good 990.
§ 2.1 Tax Accounting Methods.
§ 2.2 Professional Accounting Standards.
§ 2.3 Chart of Differences Between GAAP and IRS Rules.
Chapter Three: The Core.
§ 3.1 2008 Form 990 Core.
§ 3.2 Part I Summary.
§ 3.3 Part II Signature Block.
§ 3.4 Part III Statement of Program Service Accomplishments.
§ 3.5 Part IV Checklist of Required Schedules.
§ 3.6 Part V Statements Regarding Other IRS Filings and Tax Compliance.
§ 3.7 Part VI Governance, Management, and Disclosure.
§ 3.8 Part VII Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.
§ 3.9 Part VIII Statement of Revenue.
§ 3.10 Part IX Statement of Functional Expenses.
§ 3.11 Part X Balance Sheet.
§ 3.12 Part XI Financial Statements and Reporting.
Appendix 3A: Transactions with Interested Parties Questionaire.
Chapter Four: Form 990, Schedules A through R.
§ 4.1 Schedule A.
§ 4.2 Schedule B.
§ 4.3 Schedule C.
§ 4.4 Schedule D.
§ 4.5 Schedule E.
§ 4.6 Schedule F.
§ 4.7 Schedule G.
§ 4.8 Schedule H.
§ 4.9 Schedule I.
§ 4.10 Schedule J.
§ 4.11 Schedule K.
§ 4.12 Schedule L.
§ 4.13 Schedule M.
§ 4.14 Schedule N.
§ 4.15 Schedule O.
§ 4.16 Schedule R.
Appendix 4A: State Unified Registration Statement.
Appendix 4B: Interested Party by Part and Type.
Chapter Five: Form 990-T: Exempt Organization Business Income Tax Return.
§ 5.1 What Is Unrelated Business Income?
§ 5.2 Exceptions and Modifications from Tax.
§ 5.3 Unrelated Debt-Financed Income.
§ 5.4 Who Files Form 990-T?
§ 5.5 Due Dates, Tax Rates, and Other Filing Issues.
§ 5.6 Normal Income Tax Rules Apply.
§ 5.7 The Unique Design of the 990-T.
§ 5.8 Categories of Deductions.
§ 5.9 Cost Allocations.
§ 5.10 In-Kind Donations.
Appendix 5A: Analysis of Corporation versus Trust 990-T Issues.
Chapter Six: The Private Foundation Return.
§ 6.1 Successful Completion of Form 990-PF.
§ 6.2 The Part I Columns.
§ 6.3 Line-by-Line Instructions for Revenues.
§ 6.4 Line-by-Line Instructions for Expenditures.
§ 6.5 Part II: Balance Sheets.
§ 6.6 Part III: Analysis of Changes in Net Worth or Fund Balances.
§ 6.7 Part IV: Capital Gains and Losses for Tax on Investment Income.
§ 6.8 Reports Unique to Private Foundations.
§ 6.9 Part V: Reducing the Tax Rate.
§ 6.10 Part VI: Calculating the Excise Tax.
§ 6.11 Part VII-A: Proof of Ongoing Qualification for Exemption.
§ 6.12 Part VII-B: Questions Seeking Evidence That No Sanctions Apply.
§ 6.13 Part VIII: Information About Officers, Directors, Trustees, Foundation Managers, Highly Paid Employees, and Contractors.
§ 6.14 Part IX-A and B: Summary of Direct Charitable Activities and Program-Related Investments.
§ 6.15 Part X: Minimum Investment Return.
§ 6.16 Part XI: Distributable Amount.
§ 6.17 Part XII: Qualifying Distributions.
§ 6.18 Part XIII: Undistributed Income.
§ 6.19 Part XIV: Private Operating Foundations.
§ 6.20 Part XV: Supplementary Information (Lines 1–2).
§ 6.21 Part XV: Grants and Contributions Paid During the Year or Approved for Future Payment (Line 3).
§ 6.22 Part XVI-A: Analysis of Income-Producing Activity.
§ 6.23 Part XVII: Information Regarding Transfers to and Transactions and Relationships with Noncharitable Exempt Organizations.
JODY BLAZEK is a partner in Blazek & Vetterling, a CPA firm focusing on tax and financial planning for exempt organizations and the individuals who create, fund, and work with them. BV serves over 400 nonprofit organizations providing financial reports and tax compliance and planning services. She is the author of six books in the Wiley Nonprofit Series: Nonprofit Financial Planning Made Easy; IRS Form 1023 Preparation Guide; IRS Form 990 Tax Preparation Guide for Nonprofits; Tax Planning and Compliance for Tax-Exempt Organizations, Fourth Edition; Private Foundations: Tax Law and Compliance, Third Edition; and The Legal Answer Book for Private Foundations, the latter two volumes coauthored with Bruce R. Hopkins.
AMANDA ADAMS is a tax manager at Blazek & Vetterling with extensive experience in public charities and also private foundation tax matters through her work with Foundation Source. She is a member of the American Institute of Certified Public Accountants, the Texas Society of Certified Public Accountants, and the Houston Chapter of CPAs.