Sch N_Liquidation, Termination, Dissolution or Significant Disposition of Assets

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Instructions for Schedule N (Form 990 or 990-EZ) 16:07 - 22-AUG-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

2008

Department of the Treasury
Internal Revenue Service

Instructions for Schedule N
(Form 990 or 990-EZ)
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
Purpose of Schedule
Schedule N (Form 990 or 990-EZ) is used
by an organization that files Form 990 or
Form 990-EZ to provide information
related to going out of existence or
disposing of more than 25 percent of its
net assets through a contraction, sale,
exchange, or other disposition.
An organization that liquidated,
terminated, or dissolved and ceased
operations other than to wind up its affairs
must complete Part I of this schedule. An
organization must report a significant
disposition of net assets in Part II. An
organization that has terminated its
operations and has no plans for future
activities need only complete Part I of this
schedule.
Use Schedule N-1(Form 990 or
990-EZ) to report additional information
for Parts I or II of Schedule N (Form 990
or 990-EZ). Use as many Schedules N-1
(Form 990 or 990-EZ) as needed.

Who Must File
Any organization that answered “Yes” to
Form 990, Part IV, Checklist of Required
Schedules, lines 31 or 32; or Form
990-EZ, line 36, must complete and
attach Schedule N to Form 990 or Form
990-EZ, as applicable.
If an organization is not required to file
Form 990 or 990-EZ, it is not required to
file Schedule N.

Specific Instructions
Part I. Liquidation,
Termination, or
Dissolution
If the organization answered “Yes” to
Form 990, Part IV, line 31, it must
complete Part I. An organization
answered “Yes”, if it ceased operations
and has no plans to continue any
activities or operations in the future. This
includes an organization that has
dissolved, liquidated, terminated, or
merged into a successor organization.

An organization must provide
support of its liquidation,
CAUTION termination, dissolution, or merger
by attaching a certified copy of its articles
of dissolution or merger, resolutions, and
plans of liquidation or merger. An
organization also must attach any other
relevant documentation, such as a
determination letter from the IRS ruling
that the organization is no longer exempt
under section 501(a), or a private letter
ruling from the IRS approving the
organization’s proposed dissolution or
liquidation, as provided in instructions for
line 4, later.
Line 1. List assets transferred in the
liquidation, termination, dissolution, or
merger.
If there are more transactions to report
in Part I than space available, report the
additional transactions on Schedule N-1
(Form 990 or 990-EZ), Part I. Use as
many Schedules N-1 (Form 990 or
990-EZ) as needed.
Column (a). Assets may be
aggregated into categories and should be
sufficiently described. Separately list
related transaction expenses of at least
$10,000. A transaction expense consists
of a payment to a professional or other
third party for services rendered to assist
in the transaction or in the winding down
of the organization’s activities, such as
attorney or accountant fees. Brokerage
fees should not be included in this
category, but should be taken into
account in the fair market value figure in
column (c).
Column (b). Enter the date of
distribution of assets or the date when the
transaction expense was paid.
Column (c). Enter the fair market
value of the asset distributed or the
amount of transaction expense paid.
Column (d). Enter the method of
valuation for the asset being distributed.
Methods of valuation include appraisals,
comparables, book value, actual cost
(with or without depreciation), and
outstanding offers (among other
methods). For transaction expenses,
provide the method for determining the
amount of the expense, such as an hourly
rate or fixed fee.
Columns (e) and (f). Enter the EIN,
name, and address of each recipient of
assets distributed or transaction
expenses paid. For membership
organizations that transfer assets to
individual members, the names of
individual members need not be reported.

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Cat. No. 51521Y

Rather, the members may be aggregated
into specific classes of membership, or
they may be aggregated into one group, if
there is only one class of membership.
Column (g). Enter the section of the
Internal Revenue Code under which the
transferee organization is tax-exempt, if it
is so exempt. For recipients that are not
tax-exempt, enter the type of entity.
Examples of types of entity are
government agencies or units or a limited
liability corporation (LLC). Report
“Individual” if the recipient is not an entity.
Line 2. Report whether any officer,
director, trustee, or key employee listed
on Form 990, Part VII, Section A, is (or is
expected to become) involved in a
successor or transferee organization by
governing, controlling, or having a
financial interest in that organization.
“Having a financial interest” includes
receiving payments from a successor or
transferee organization as an employee,
independent contractor, or in any other
capacity.
Line 2a. Check “Yes” if any officer,
director, trustee, or key employee listed
on Form 990, Part VII, Section A, is (or is
expected to become) a director or trustee
of a successor or transferee organization.
Line 2b. Check “Yes” if any officer,
director, trustee, or key employee listed
on Form 990, Part VII, Section A, is (or is
expected to become) an employee of, or
independent contractor for, a successor
or transferee organization.
Line 2c. Check “Yes” if any officer,
director, trustee, or key employee listed
on Form 990, Part VII, Section A, is (or is
expected to become) an owner, whether
direct or indirect, in a successor or
transferee organization.
Line 2d. Check “Yes” if any officer,
director, trustee, or key employee listed
on Form 990, Part VII, Section A, has
received or is expected to receive
compensation or any similar payment as
a result of the liquidation, termination, or
dissolution of the organization, whether
paid by the organization or a successor or
transferee organization. For this purpose,
“compensation or any similar payment”
includes a severance payment, a change
in control payment, or any other payment
that would not have been made to the
individual if the dissolution, liquidation, or
termination of the organization had not
occurred.
Line 2e. If the organization checked
“Yes” to any of the other questions on line
2, provide the name of the person

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Instructions for Schedule N (Form 990 or 990-EZ)

16:07 - 22-AUG-2008

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

involved and explain in Part III the nature
of the listed person’s relationship with the
successor or transferee organization and
the type of benefit received or to be
received by the person.
Line 3. Check “Yes” if the organization’s
assets were distributed in accordance
with its governing instrument.
Line 4. Check “Yes” to line 4a if the
organization requested or received a
determination letter from EO
Determinations that the organization’s
exempt status was terminated or it is no
longer exempt under section 501(a).
Attach a copy of the organization’s
request and, if applicable, a copy of the
EO Determinations response. Enter the
date of such EO Determinations letter on
line 4b.
Line 5a. Check “Yes” if the organization
is required to notify a state attorney
general or other appropriate state official
of the organization’s intent to dissolve,
liquidate, or terminate.
Line 5b. Check “Yes” if the organization
provided the notice described on line 5a.
Line 6. Check “Yes” if the organization
discharged or paid all of its liabilities in
accordance with state law.
Line 7a. Check “Yes” and complete line
7b if the organization had any tax-exempt
bonds outstanding during the year.
Line 7b. Check “Yes” and complete line
7c if tax-exempt bond liabilities were
discharged or defeased during the year.
Line 7c. If the organization checked
“Yes” on line 7b, explain in Part III how
the bond liabilities were discharged,
defeased, or otherwise settled during the
year. Also provide an explanation if any
bond liabilities were discharged,
defeased, or otherwise settled other than
in accordance with the Code or applicable
state law. If the organization avoided the
need for a defeasance of bonds, such as
through the transfer of assets to another
section 501(c)(3) organization, provide
the name of the transferees of such
assets, the CUSIP number of the bond
issue, and a description of the terms of
such arrangements in Part III.
An organization that completes

complete Part II. An organization
answered “Yes”, if it has undergone a
significant disposition of net assets
during the year. A significant disposition
of the organization’s net assets includes a
sale, exchange, disposition, or other
transfer of more than 25 percent of the
fair market value of its net assets during
the year, regardless of whether the
organization received full and adequate
consideration. A significant disposition
of net assets involves:
1. One or more dispositions during the
organization’s tax year amounting to more
than 25 percent of the fair market value of
the organization’s net assets as of the
beginning of its tax year, or
2. One of a series of related
dispositions or events commenced in a
prior year that when combined comprise
more than 25 percent of the fair market
value of the organization’s net assets as
of the beginning of the tax year when the
first disposition in the series was made.
Whether a significant disposition occurred
through a series of related dispositions or
events depends on the facts and
circumstances in each case.
Examples of the types of transactions
required to be reported in Part II as
significant dispositions of net assets
include the following.
• Taxable or tax-free sales or exchanges
of exempt assets for cash or other
consideration (such as a social club
described in section 501(c)(7) selling land
or an exempt organization selling assets it
had used to further its exempt purposes).
• Sales, contributions, or other transfers
of assets to establish or maintain a
partnership, joint venture, or a corporation
(for-profit or nonprofit) regardless of
whether such sales or transfers are
governed by section 721 or section 351,
and whether or not the transferor receives
an ownership interest in exchange for the
transfer.
• Sales of assets by a partnership or joint
venture in which the organization has an
ownership interest.
• Transfers of assets pursuant to a
reorganization in which the organization is
a surviving entity.

TIP Part I does not complete Part II.

Part II. Sale, Exchange,
Disposition, or Other
Transfer of More Than 25
Percent of the
Organization’s Assets
If an organization answered “Yes” to
Form 990, Part IV, line 32, it must

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• A contraction of net assets resulting
from a grant or charitable contribution of
assets to another organization described
in section 501(c)(3).
The following types of situations are
not required to be reported in Part II.
• The change in composition of publicly
traded securities held in an exempt
organization’s passive investment
portfolio.
• Asset sales made in the ordinary
course of business, such as gross sales
of inventory.
• A decrease in the value of net assets
due to market fluctuation in the value of
assets held by the organization.
• Transfers to a disregarded entity of
which the organization is the sole
member.
For purposes of Schedule N (Form
990 or 990-EZ), “net assets” means total
assets less total liabilities. The
determination of a significant disposition
of net assets is made by reference to the
fair market value of the organization’s net
assets at the beginning of the tax year (in
the case of a series of related dispositions
that commenced in a prior year, at the
beginning of the tax year during which the
first disposition was made).
Line 1. Refer to the instructions for Part
I, line 1, columns (a) – (g), earlier.
If there are more transactions to report
in Part II than space available, report the
additional transactions in Part II of
Schedule N-1 (Form 990 or 990-EZ). Use
as many Schedules N-1 (Form 990 or
990-EZ) as needed.
Line 2. Refer to the instructions for Part
I, line 2, earlier.

Part III. Supplemental
Information
Use Part III to provide the narrative
information required in Part I, lines 2e and
7c; or Part II, line 2e. Also use Part III to
provide additional narrative explanations
and descriptions as necessary to support
or supplement any responses in Part I or
II. Identify the specific part and line(s) that
the response supports. Part III may be
duplicated if more space is needed.