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Instructions for Form 990-T
9:17 - 9-NOV-2009
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Act section 13 of the Worker, Homeownership, and Business
Assistance Act of 2009 allows an organization to make, for one
tax year, an election to carry back an applicable NOL for a period
of 3, 4, or 5 years instead of 2 years. See Rev. Proc. 2009-52,
2009-49 I.R.B. 744, available at www.irs.gov/irb/2009-49/ar11.
html.
09
Department of the Treasury
Internal Revenue Service
Instructions for Form 990-T
of
Move up to
Reminders
Exempt Organization Business Income Tax Return
Section references are to the Internal
Revenue Code unless otherwise noted.
Contents
Page
General Instructions
Purpose of Form . . . . . . . . . . . . . . . . 2
Who Must File . . . . . . . . . . . . . . . . . . 2
Definitions . . . . . . . . . . . . . . . . . . . . . 2
When To File . . . . . . . . . . . . . . . . . . . 3
Where To File . . . . . . . . . . . . . . . . . . 3
Estimated Tax Payments . . . . . . . . . . 3
Depository Method of Tax
Payment . . . . . . . . . . . . . . . . . . . . 3
Interest and Penalties . . . . . . . . . . . . . 4
Which Parts To Complete . . . . . . . . . . 4
Consolidated Returns . . . . . . . . . . . . . 5
Other Forms That May Be
Required . . . . . . . . . . . . . . . . . . . . 5
Accounting Methods . . . . . . . . . . . . . . 6
Accounting Period . . . . . . . . . . . . . . . 6
Reporting Form 990-T
Information on Other Returns . . . . . . 6
Rounding Off to Whole Dollars . . . . . . 6
Attachments . . . . . . . . . . . . . . . . . . . 7
Public Inspection Requirements
of Section 501(c)(3)
Organizations . . . . . . . . . . . . . . . . . 7
Specific Instructions
Period Covered . . . . . . . . . . . . . . . . . 8
Name and Address . . . . . . . . . . . . . . 8
Blocks A through J . . . . . . . . . . . . . . . 9
Part l — Unrelated Trade or
Business Income . . . . . . . . . . . . . . 9
Part ll — Deductions Not Taken
Elsewhere . . . . . . . . . . . . . . . . . . 11
Part Ill — Tax Computation . . . . . . . . 15
Part IV — Tax and Payments . . . . . . . 16
Part V — Statements Regarding
Certain Activities and Other
Information . . . . . . . . . . . . . . . . . . 17
Signature . . . . . . . . . . . . . . . . . . . . 18
Schedule A — Cost of Goods
Sold . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule C — Rent Income . . . . . . . . 19
Schedule E — Unrelated DebtFinanced Income . . . . . . . . . . . . . 19
Schedule F — Interest, Annuities,
Royalties, and Rents From
Controlled Organizations . . . . . . . . 20
Schedule G — Investment
Income of a Section 501(c)(7),
(9), or (17) Organization . . . . . . . . 21
Schedule I — Exploited Exempt
Activity Income, Other Than
Advertising Income . . . . . . . . . . . . 21
Schedule J — Advertising Income . . . 21
Schedule K — Compensation of
What’s
sN
New
The enhanced charitable deductions for
contributions for food inventoryy by
y
qualified farmers and ranchers expired on
q
December 31, 2008.
Reminders
The enhanced charitable deductions for
contributions for food inventoryy byy
qualified farmers and ranchers expired on
q
December 31, 2008.
Photographs of Missing
Children
1. For information on tax relief granted
to certain taxpayers in the Midwestern
disaster areas that were affected by
floods between May and August 2008
and declared eligible for federal
assistance, see Pub. 4492-B, Information
for Affected Taxpayers in the Midwestern
Disaster Areas.
2. For tax years ending after May 22,
2008, and tax years beginning before
May 23, 2009, if an organization has both
a net capital gain and a qualified timber
gain, a maximum 15% capital gain tax
rate may apply to the qualified timber
gain. Use the new Part IV, Schedule D
(Form 1120) to figure the organization’s
special alternative tax. See the
instructions for Part IV, Schedule D.
The Internal Revenue Service is a
proud partner with the National Center for
Missing and Exploited Children.
Photographs of missing children selected
by the Center may appear in instructions
on pages that would otherwise be blank.
You can help bring these children home
by looking at the photographs and calling
1-800-THE-LOST (1-800-843-5678) if you
recognize a child.
Unresolved Tax Issues
If the organization has attempted to deal
with an IRS problem unsuccessfully, it
should contact the Taxpayer Advocate.
The Taxpayer Advocate independently
represents the organization’s interest and
concerns within the IRS by protecting the
rights and resolving problems that have
not been fixed through normal channels.
While Taxpayer Advocates cannot
change the tax law or make a technical
tax decision, they can clear up problems
that resulted from previous contacts and
ensure that the organization’s case is
• An impartial and independent look at
your problem.
• Timely acknowledgment.
• The name and telephone number of the
individual assigned to its case.
• Updates on progress.
• Time frames for action.
• Speedy resolution.
• Courteous service.
When contacting the Taxpayer
Advocate, the organization should be
prepared to provide the following
information:
• The organization’s name, address, and
employer identification number (EIN).
• The name and telephone number of an
authorized contact person and the hours
he or she can be reached.
• The type of tax return and years
involved.
• A detailed description of the problem.
• Previous attempts to solve the problem
and the office that was contacted.
• A description of the hardship the
organization is facing and supporting
documentation (if applicable).
The organization may contact a
Taxpayer Advocate by calling a toll-free
number, 1-877-777-4778. Persons who
have access to TTY/TTD equipment may
call 1-800-829-4059 and ask for Taxpayer
Advocate assistance. If the organization
prefers, it may call, write, or fax to the
Taxpayer Advocate office in its area. See
Pub. 1546, The Taxpayer Advocate
Service – How to Get Help with
Unresolved Tax Problems, for a list of
addresses and fax numbers.
Phone Help
Your need
Voice
If you have questions and/or
helpat
completing this form, please
call
IRS,
1-877-829-5500. This toll-free telephone
service is available Monday through
Friday.
the
How To Get Forms and
Publications
Internet
You can access the IRS website 24 hours
a day, 7 days a week, at www.irs.gov to:
• Order IRS products online.
• Download forms, instructions, and
publications.
• See answers to frequently asked tax
questions.
• Search publications online by topic or
Page 2 of 23
Instructions for Form 990-T
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DVD For Tax Products
You can order Pub. 1796, IRS Tax
Products DVD, and obtain:
• Current-year forms, instructions, and
publications.
• Prior-year forms, instructions, and
publications.
• Tax Map: An electronic research tool
and finding aid.
• Tax law and frequently asked
questions.
• Tax topics from the IRS telephone
response system.
• Internal Revenue Code — Title 26
• Fill-in, print and save features for most
tax forms.
• Internal Revenue Bulletins.
• Toll-free and email technical support.
The DVD is released twice during the
year: The first release will ship beginning
January 2010. The final release will ship
the beginning of March 2010.
Purchase the DVD from National
Technical Information Services (NTIS) at:
www.irs.gov/cdorders for $30 (no
handling fee) or call 1-877-233-6767 toll
free to purchase the DVD for $30 (plus a
$6 handling fee).
By Phone and In Person
You can order forms and publications by
calling 1-800-TAX-FORM (1-800-8293676). You can also get most forms and
publications at your local IRS office.
General Instructions
Purpose of Form
Use Form 990-T, Exempt Organization
Business Income Tax Return, 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.
Who Must File
• Any domestic or foreign organization
exempt under section 501(a) or section
529(a) must file Form 990-T if it has gross
income from a regularly carried on
unrelated trade or business, of $1,000 or
more. See Regulations section
1.6012-2(e). Gross income is gross
receipts minus the cost of goods sold.
(See Regulations section 1.61-3.)
A disregarded entity, as described
in Regulations sections
CAUTION 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
!
the proxy tax, see Proxy Tax Only under
Which Parts To Complete, beginning on
page 4.
• Colleges and universities of states and
other governmental units, as well as
subsidiary corporations wholly owned by
such colleges and universities, are also
subject to the Form 990-T filing
requirements. However, a section
501(c)(1) corporation that is an
instrumentality of the United States and
both organized and exempted from tax by
an Act of Congress does not have to file.
• Organizations that are liable for other
taxes (such as the section 1291 tax (line
35c or 36 of Form 990-T) or recapture
taxes (line 42 of Form 990-T)) must file
Form 990-T. See pages 15 and 16 of the
instructions for a discussion of these
items. If your organization is only required
to file Form 990-T because of these
taxes, see Other Taxes under Which
Parts To Complete, beginning on page 4.
• Fiduciaries for the following trusts that
have $1,000 or more of unrelated trade or
business gross income must file Form
990-T:
re
ac
1. Individual retirement
accounts
(IRAs) described under section 408(a),
em
pe
2. Simplified employee
pensions
(SEPs) described under section
408(k),
3. Simple incentive match plans
(SIMPLEs)
Es) described under section
408(p),
4. Roth IRAs described under section
408A(b),
5. Coverdell education savings
accounts (ESAs) described under
section 530(b),
(
6. Archer me
medical sa
savings ac
accounts
(Archer MSAs) described under
section 220(d), and
7. Qualified tuition programs described
under section 529.
IRAs and other tax-exempt
TIP 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 on page 5.
Definitions
Section 501(c)(3) organization. Section
501(c)(3) describes certain organizations
which are exempt from taxation under
section 501(a). A 501(c)(3) organization is
an organization organized and operated
exclusivelyy for charitable purposes. See
ns section 1.501(c)(3)-1(a).
Regulations
Annual return. An annual return is an
exact copy of the Form 990-T that was
filed with the IRS including all schedules
and attachments. It also includes any
amendments to the original return
(amended return).
By annual return, we mean any annual
return (defined above) that is not more
depreciation, and similar items must
qualifyy as deductions allowed by section
162, 167 or other relevant provisions of
the Code, and must be directly connected
with the carrying on of an unrelated trade
or business activity.
To be directly connected with the
carrying on of a trade or business activity,
expenses, depreciation, and similar items
must bear a proximate and primary
relationship to the conduct of the activity.
For example, where facilities and/or
personnel are used both to carry on
exempt activities and to conduct
unrelated trade or business activities,
expenses and similar items attributable to
such facilities and/or personnel must be
allocated between the two uses on a
reasonable basis. The portion of any such
item allocated to the unrelated trade or
business activity must bear a proximate
and primary relationship to that business
activity.
Not substantially related to. Not
substantially related to means the activity
that produces the income does not
contribute importantly to the exempt
purposes of the organization, other than
the need for funds, etc. Whether an
activity contributes importantly depends in
each case on the facts involved.
For details, see Pub. 598, Tax on
Unrelated Business Income of Exempt
Organizations.
Trade or business. A trade or business
is any activity carried on for the
production of income from selling goods
or performing services. An activity does
not lose its identity as a trade or business
merely because it is carried on within a
larger group of similar activities that may
or may not be related to the exempt
purpose of the organization. If, however,
an activity carried on for profit is an
unrelated trade or business, no part of it
can be excluded from this classification
merely because it does not result in profit.
Unrelated trade or business income.
Unrelated trade or business income is the
gross income derived from any
y trade or
business (defined
(
earlier) regularly
carried on and not substantially related to
(defined earlier) the organization’s
exempt purpose or function (aside from
the organization’s need for income or
funds or the use it makes of the profits).
Generally, for section 501(c)(7), (9), or
(17) organizations, unrelated trade or
business income is derived from
nonmembers with certain modifications
(see section 512(a)(3)(A)).
For a section 511(a)(2)(B) state
college or university, unrelated trade or
business income is derived from activities
not substantially related to exercising or
performing any purpose or function
described in section 501(c)(3).
An unrelated trade or business does
not include a trade or business:
1. In which substantially all the work is
Page 3 of 23
Instructions for Form 990-T
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or
3. That sells items of work-related
equipment and clothes, and items
normally sold through vending machines,
food dispensing facilities or by snack
bars, by a local association of employees
p y
described in section 501(c)(4), organized
before May 27, 1969, if the sales are for
the convenience of its members at their
usual place of employment; or
4. That sells merchandise
substantially all of which was received by
the organization as gifts or contributions;
or
5. That consists of qualified public
entertainment activities regularly carried
on by a section 501(c)(3), (4), or (5)
organization as one of its substantial
exempt purposes (see section 513(d)(2)
for the meaning of qualified public
entertainment activities); or
6. That consists of qualified
convention or trade show activities
regularly conducted by a section
501(c)(3), (4), (5), or (6) organization as
one of its substantial exempt purposes
(see section 513(d)(3) for the meaning of
qualified convention and trade show
activities); or
7. That furnishes one or more
services described in section 501(e)(1)(A)
by a hospital to one or more hospitals
subject to conditions in section 513(e); or
8. That consists of qualified pole
rentals,
s, as defined in section
501(c)(12)(D),
), by a mutual or cooperative
telephone or electric company; or
9. That includes activities relating to
the distribution of low-cost articles, each
costing $9.50 or less, by an organization
described in section 501 and
contributions to which are deductible
under section 170(c)(2) or (3) if the
distribution is incidental to the solicitation
of charitable contributions; or
10. That includes the exchange or
rental of donor or membership lists
between organizations described in
section 501 and contributions to which
are deductible under section 170(c)(2) or
(3); or
11. That consists of bingo games as
defined in section 513(f). Generally, a
bingo game is not included in any
unrelated trade or business if:
a. Wagers are placed,, winners are
determined, and prizes are distributed in
the presence of all persons wagering in
that game, and
b. The game does not compete with
bingo games conducted by for-profit
businesses in the same jurisdiction, and
c. The game does not violate state or
local law; or
12. That consists of conducting any
game of chance by a nonprofit
organization in the state of North Dakota
and the conducting of the game does not
violate any state or local law; or
13. That consists of soliciting and
receiving qualified sponsorship payments
that are solicited or received after
December 31, 1997. Generally, qualified
name, logo, or product lines in connection
with the activities of the tax-exempt
organization. See section 513(i) for more
information.
When To File
An employees’ trust defined in section
401(a), an IRA (including SEPs and
SIMPLEs), a Roth IRA, a Coverdell ESA,
and 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
year. If the regular due date falls on a
Saturday, Sunday, or legal holiday, file on
the next business day. If the return is filed
late, see Interest a
and Penalties on page
4.
Extension. Corporations may request
an automatic 6-month extension of time to
file Form 990-T by using Form 8868,
Application for Extension of Time To File
an Exempt Organization Return.
Trusts may request an automatic
3-month extension of time to file by using
Form 8868. Also, if more than the initial
automatic 3 months is needed, trusts may
file a second Form 8868 to request that
an additional, but not automatic, 3-month
extension be granted by the IRS.
Amended return. To correct errors or
change a previously filed return, write
“Amended Return” at the top of the return.
Also, include a statement that indicates
the line number(s) on the original return
that was 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 To File
To file Form 990-T, mail or deliver it to:
Department
p
of the Treasuryy
Internal Revenue Service Center
Ogden, UT 84201-0027
Private delivery services (PDSs). In
addition to the United States mail, exempt
organizations can use certain PDSs
designated by the IRS to meet the “timely
mailing as timely filing/paying” rule for tax
returns and payments. These private
delivery services include only the
following:
g
• DHL Express (DHL): DHL Same Day
Service.
e
• Federal
era
r Express (FedEx): FedEx
Priority O
Overnight, FedEx Standard
Overnight,
h FedEx 2Day, FedEx
International
Priority, and FedEx
o
International
on First.
• United Parcel
P
Service (UPS): UPS Next
Day Air, UPS
UP Next Day Air Saver, UPS
2nd Day Air,
Ai UPS 2nd Day Air A.M., UPS
Worldwide E
Express Plus, and UPS
Worldwide E
Express.
The private
a delivery service can tell
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. Do not include the proxy tax
when computing
p
g your estimated tax
liability for 2010.
To figure estimated tax, trusts and
corporations 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
extensions. Some organizations
(described below) are required to
electronically deposit all depository taxes,
including their unrelated business income
tax payments.
Electronic Deposit Requirement
The organization must make electronic
deposits of all depository taxes (such as
employment tax, excise tax, unrelated
business income tax) using the Electronic
Federal Tax Payment System (EFTPS) in
2010 if:
• The total deposits in 2008 were more
than $200,000 or
• The organization was required to use
EFTPS in 2009.
If an organization is required to use
EFTPS and fails to do so, it may be
subject to a 10% penalty. If an
organization is not required to use
EFTPS, it may participate voluntarily. To
enroll in or get more information about
EFTPS, call 1-800-555-4477. To enroll
online, visit www.eftps.gov.
Depositing on time. For EFTPS
deposits to be made timely, the
organization must initiate the transaction
at least 1 calendar day prior to the tax
due date (before 8:00 p.m. ET).
Deposits With Form 8109
If the organization does not use EFTPS,
deposit unrelated business income tax
payments (and estimated tax payments)
with Form 8109, Federal Tax Deposit
Coupon. If you do not have a preprinted
Form 8109, you may use Form 8109-B to
make deposits. You can get this form only
by calling 1-800-829-4933. Be sure to
have your EIN ready when you call.
Do not send deposits directly to an IRS
office; otherwise, the organization may
have to pay a penalty. Mail or deliver the
completed Form 8109 with the payment
to an authorized depositary (such as a
commercial bank or other financial
institution authorized to accept federal tax
deposits).
Page 4 of 23
Instructions for Form 990-T
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“Quarter” box under “Tax Period” on the
coupon. Records of these deposits will be
sent to the IRS. For more information, see
“Marking the Proper Tax Period” in the
instructions for Form 8109.
If the organization prefers, it may mail
the coupon and payment to:
Financial Agent
g
Federal Tax Deposit
p
Processing
P.O. Box 970030
St. Louis, MO 63197
Make the check or money order payable
to “Financial Agent.”
For more information on deposits, see
the instructions in the coupon booklet
(Form 8109) and Pub. 583, Starting a
Business and Keeping Records.
If the organization owes tax when
it files Form 990-T, do not include
CAUTION the payment with the tax return.
Instead, mail or deliver the payment with
Form 8109 to an authorized depositary, or
use EFTPS, if applicable.
!
Interest and Penalties
u.c.
Your organization may be subject to
interest and penalty charges if it files a
late return or fails to pay tax when due.
y, the organization
g
Generally,
is not 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 due date even if an extension
of time to file is granted. 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 extensions) 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 extensions 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 $135. The
penalty will not be imposed if the
organization can show that the failure to
file on time was due to reasonable cause.
Organizations that file late should attach a
statement explaining the reasonable
cause.
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
cannot exceed 25% of the unpaid tax.
The penalty will not be imposed if the
organization can show that the failure to
pay on time was due to reasonable
cause.
Estimated tax penalty. An organization
that does not make estimated tax
payments when due may be subject to an
See section 6655 for details and
exceptions.
ns.
Form 2220, Underpayment of
Estimated Tax by Corporations, is used
by corporations and trusts filing Form
990-T to see if the organization owes a
penalty and to figure the amount of the
penalty. Generally, the organization is not
required to file this form because the IRS
can figure the amount of any penalty and
bill the organization for it. However, even
if the organization does not 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,, be sure to
check the box on Form 990-T, page 2,
line 46, and enter the amount of any
penalty on this line.
Trust fund recovery penalty. This
penalty may apply if certain excise,
income, social security, and Medicare
taxes that must be collected or withheld
are not 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;
0; Pub. 15
(Circular E), Employer’s Tax Guide;
e; or
Pub. 51 (Circular A),
), Agricultural
g
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 transactions
understatements, and fraud. See sections
6662, 6662A, and 6663.
Which Parts To Complete
If you are filing Form 990-T only
TIP because of the proxy tax, other
taxes, or only to claim a refund, go
y Other Taxes,
directly to Proxy Tax Only,
or Claim for Refund later.
Is Gross Income More Than
$10,000?
If the amount in Part I, line 13, column
(A), is more than $10,000, complete all
lines and schedules that apply.
• Part II, lines 29 – 34.
• Parts III – V.
• Signature area.
Filers with $10,000 or less on line 13,
column (A) do not have to complete
Schedules A through K (however, refer to
applicable schedules when completing
column (A) and in determining the
deductible expenses to include on line 13
of column (B)).
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.
p
• The heading (above
Part I)) except items E, H, and I.
• Lines 37 and 39.
• Part IV.
• Signature area.
• Attach a schedule 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,
or other items listed in the instructions for
line 42 must complete the following.
• The heading (above
Part I)) except items E, H, and I.
• The appropriate lines of Parts III and
IV.
• Signature area.
• Attach all appropriate forms and/or
schedules showing the computation of the
applicable tax or taxes.
Claim For Refund
If your only reason for filing a Form 990-T
is to claim a refund, complete the
g steps.
p
following
• The heading (above
Part I) except items E, H, and I.
• Enter -0- on line 13, column (A), line
34, and line 43.
• Enter the credit or payment on the
appropriate
pp p
line (44a – 44g).
• Lines 45,, 48,, and 49.
• 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
g
above under Claim For Refund; write
“Claim for Refund Shown on Form 2439”
at the top of the Form 990-T; and attach
to the return 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
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OID, R, S, and SA.
delete
refund of backup withholding, complete
steps above under Claim For Refund and
attach a copy of the Form 1099 showing
the withholding.
Consolidated Returns
The consolidated return provisions of
section 1501 do not 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 for more information on
consolidated returns.
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, manufacturers taxes,
ship passenger tax, and certain other
excise taxes.
!
See Trust fund recovery penalty
on page 4.
CAUTION
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
Agricultural Employees, to report income
tax withheld, and employer and employee
social security and Medicare taxes. Also,
see Trust fund recovery penalty on page
4.
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 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,
MSA, OID, R, and S. 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, MSA,
OID, R, and S;
• 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, miscellaneous income
payments, and nonemployee
compensation);
• Report distributions from an Archer
MSA;
• Report original issue discount;
• Report distributions from retirement or
profit-sharing
p
plans, IRAs, SEPs,
SIMPLEs, and insurance contracts; and
• Proceeds from real estate transactions.
When filing the above noted
information returns the
CAUTION 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 of the account.
Form 5498-ESA. File Form 5498-ESA,
Coverdell ESA Contribution Information,
!
contributions to an HSA or Archer MSA
and the fair market value of an HSA,
Archer MSA, or Medicare Advantage
MSA. For more information see the
general and specific 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 6198. File Form 6198, At-Risk
Limitations, if the organization has a loss
from an at-risk activity carried on 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. For more
information, see Form 8300 and
Regulations section 1.6050I-1(c).
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 8865. File Form 8865, Return of
U.S. Person 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:
a. Increased its direct interest to at
least 10% or reduced its direct interest of
at least 10% to less than 10%.
b. Changed its direct interest by at
least a 10% interest.
4. Contributed property to a foreign
partnership in exchange for a partnership
interest if:
a. Immediately after the contribution,
the organization directly or indirectly
owned at least a 10% interest in the
foreign partnership; or
b. The FMV of the property the
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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. For more details,
including penalties that may apply, 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 does
not 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 has not 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 8903. File Form 8903, Domestic
Production Activities Deduction,, to deduct
a portion of income from certain qualified
Accounting Methods
An accounting method is a set of rules
used to determine when and how income
and expenses are reported. Figure
taxable income using the method of
accounting regularly used in keeping the
organization’s books and records.
Generally, permissible methods
include:
• Cash,
• Accrual, or
• Any other method authorized by the
Internal Revenue Code.
In all cases, the method used must
clearly show taxable income.
See Pub. 538, Accounting Periods and
Methods, for more information.
Change in accounting method. To
change the method of accounting used to
report taxable income (for income as a
whole or for the treatment of any material
item), the organization must file with the
IRS either an (a) advanced consent
request for a ruling or (b) automatic
change request for certain specific
changes in accounting method.
In either case, the organization must
file Form 3115, Application for Change in
Accounting Method. For more
information, see Pub. 538, Accounting
Periods and Methods.
Section 481(a) adjustment. The
organization may have to make an
adjustment under section 481(a) to
prevent amounts of income or expense
from being duplicated or omitted. The
section 481(a) adjustment period is
generally 1 year for a net negative
adjustment and 4 years for a net positive
adjustment. However, an organization
may elect to use a 1-year adjustment
period if the net section 481(a)
adjustment for the change is less than
$25,000. The organization must complete
the appropriate lines of Form 3115 to
make the election.
Include any net positive section 481(a)
adjustment on Form 990-T, page 1, line
12. If the net section 481(a) adjustment is
negative, report it on Form 990-T, page 1,
line 28.
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.
If the organization changes its
annual basis. For details, see section
443.
Reporting Form 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 line 33, page 1, or
any expense carryovers from prior years)
reported on Form 990-T for the same tax
year.
Rounding Off to Whole Dollars
The organization may round off cents to
whole dollars on Form 990-T and its
schedules. If the organization does round
to whole dollars, it must round all
p amounts under
amounts. To round, drop
50 cents and increase amounts from 50
to 99 cents to the next dollar. For
example, $1.39 becomes $1 and $2.50
becomes $3.
If two or more amounts must be added
to figure the amount to enter on a line,
include cents when adding the amounts
and round off only the total.
Attachments
If you need more space on the form or
schedules, attach separate sheets. On
the attachment, write the corresponding
form or schedule number or letter and
follow the same format. Show totals on
the printed form. Also, include the
organization’s name and EIN. The
separate sheets should be the same size
as the printed form and should be
attached after the printed 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.
The Form 990-T and related schedules
must be made available for public
inspection for a period of 3 years from the
date the Form 990-T is required to be
filed, including extensions.
How Does a 501(c)(3)
Organization Make Its Annual
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Public Inspection by Office
Visitation
501(c)(3) organization does not maintain
a permanent office?
A 501(c)(3) organization must make its
annual returns available for public
inspection without charge at its principal,
regional, and district offices during regular
business hours.
Conditions that may be set for public
inspection at the office. A 501(c)(3)
organization:
• May have an employee present,
• Must allow the individual conducting
the inspection to take notes freely during
the inspection, and
• Must allow an individual to make
photocopies of documents at no charge
but only if the individual brings
photocopying equipment to the place of
inspection.
Determining if a site is a regional or
district office. A regional or district
office is any office of a 501(c)(3)
organization, other than its principal
office, that has paid employees whose
total number of paid hours a week are
normally 120 hours or more. Include the
hours worked by part-time (as well as
full-time) employees in making that
determination.
What sites are not considered a
regional or district office. A site is not
considered a regional or district office if:
1. The only services provided at the
site further the organization’s exempt
purposes (for example, day care, health
care, or scientific or medical research),
and
2. The site does not serve as an office
for management staff, other than
managers who are involved only in
managing the exempt function activities at
the site.
Public Inspection —Providing
Copies
What if the 501(c)(3) organization
does not maintain a permanent office?
If the 501(c)(3) organization does not
maintain a permanent office, it will comply
with the public inspection by office
visitation requirement by making the
annual returns available at a reasonable
location of its choice. It must permit public
inspection:
• Within a reasonable amount of time
after receiving a request for inspection
(normally, not more than 2 weeks), and
• At a reasonable time of day.
Optional method of complying. If a
501(c)(3) organization that does not have
a permanent office wishes not to allow an
inspection by office visitation, it may mail
a copy of the requested documents
instead of allowing an inspection.
However, it must mail the documents
within 2 weeks of receiving the request
and may charge for copying and postage
only if the requester consents to the
charge.
501(c)(3) organizations with a
permanent office but limited or no
hours. Even if a 501(c)(3) organization
A 501(c)(3) organization must provide
copies of its annual returns to any
individual who makes a request for a copy
in person or in writing unless it makes
these documents widely available.
In-person requests for document
copies. A 501(c)(3) organization must
provide copies to any individual who
makes a request in person at the
501(c)(3) organization’s principal,
regional, or district offices during regular
business hours on the same day that the
individual makes the request.
Accepted delay in fulfilling an
in-person request. If unusual
circumstances exist and fulfilling a
request on the same day places an
unreasonable burden on the 501(c)(3)
organization, it must provide copies by
the earlier of:
• The next business day following the
day that the unusual circumstances end,
or
• The fifth business day after the date of
the request.
Examples of unusual circumstances
include:
• Receipt of a volume of requests (for
document copies) that exceeds the
501(c)(3) organization’s daily capacity to
make copies,
• Requests received shortly before the
end of regular business hours that require
an extensive amount of copying, or
• Requests received on a day when the
501(c)(3) organization’s managerial staff
capable of fulfilling the request is
conducting official duties (for example,
student registration or attending an
off-site meeting or convention) instead of
its regular administrative duties.
Use of local agents for providing
copies. A 501(c)(3) organization may
use a local agent to handle in-person
requests for document copies. If a
501(c)(3) organization uses a local agent,
it must immediately provide the local
agent’s name, address, and telephone
number to the requester.
The local agent must:
• Be located within reasonable proximity
to the principal, regional, or district office
where the individual makes the request,
and
• Provide document copies within the
same time frames as the 501(c)(3)
organization.
Written requests for document copies.
If a 501(c)(3) organization receives a
written request for a copy of its annual
returns (or parts of these documents), it
must give a copy to the requester.
However, this rule only applies if the
request:
• Is addressed to a 501(c)(3)
• Gives the address to which the
document copies should be sent.
How and when a written request is
fulfilled.
• Requested document copies must be
mailed within 30 days from the date the
501(c)(3) organization receives the
request.
• Unless other evidence exists, a request
or payment that is mailed is considered to
be received by the 501(c)(3) organization
7 days after the postmark date.
• If an advance payment is required,
copies must be provided within 30 days
from the date payment is received.
• If the 501(c)(3) organization requires
payment in advance and it receives a
request without payment or with
insufficient payment, it must notify the
requester of the prepayment policy and
the amount due within 7 days from the
date it receives the request.
• A request that is transmitted to the
501(c)(3) organization by email or fax is
considered received the day the request
is transmitted successfully.
• Requested documents can be emailed
instead of the traditional method of
mailing if the requester consents to this
method.
A document copy is considered as
provided on the:
• Postmark date,
• Private delivery date,
• Registration date for certified or
registered mail,
• Postmark date on the sender’s receipt
for certified or registered mail, or
• Day the email is successfully
transmitted (if the requester agreed to this
method).
Requests for parts of a document
copy. A person can request all or any
specific part or schedule of the annual
returns and the 501(c)(3) organization
must fulfill their request for a copy.
Can an agent be used to provide
copies? A 501(c)(3) organization can
use an agent to provide document copies
for the written requests it receives.
However, the agent must provide the
document copies under the same
conditions that are imposed on the
501(c)(3) organization itself. Also, if an
agent fails to provide the documents as
required, the 501(c)(3) organization will
continue to be subject to penalties.
Example. The ABC Organization
retained an agent to provide copies for all
written requests for documents. However,
ABC Organization received a request for
document copies before the agent did.
The deadline for providing a response
is referenced by the date that the ABC
Organization received the request and not
when the agent received it. If the agent
received the request first, then a
response would be referenced to the date
that the agent received it.
Can a fee be charged for providing
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delete per email
from Amy Henshey
per-page copying fee charged by the IRS
for providing copies, plus no more than
the actual postage costs incurred to
provide the copies.
What forms of payment must the
501(c)(3) organization accept? The
form of payment depends on whether the
request for copies is made in person or in
writing.
Cash and money order must be
accepted for in-person requests for
document copies. The 501(c)(3)
organization, if it wishes, may accept
additional forms of payment.
Certified check, money order, and
either personal check or credit card must
be accepted for written requests for
document copies. The 501(c)(3)
organization, if it wishes, may accept
additional forms of payment.
Other fee information. If a 501(c)(3)
organization provides a requester with
notice of a fee and the requester does not
pay the fee within 30 days, it may ignore
the request.
If a requester’s check does not clear
on deposit, it may ignore the request.
If a 501(c)(3) organization does not
require prepayment and the requester
does not prepay, the 501(c)(3)
organization must receive consent from
the requester if the copying and postage
charge exceeds $20.
501(c)(3) organizations subject to a
harassment campaign. If the IRS
determines that a 501(c)(3) organization
is being harassed, it is not required to
comply with any request for copies that it
reasonably believes is part of the
harassment campaign.
A group of requests for a 501(c)(3)
organization’s annual return is indicative
of a harassment campaign if the requests
are part of a single coordinated effort to
disrupt the operations of the 501(c)(3)
organization rather than to collect
information about it.
Requests that may be disregarded
without IRS approval. A 501(c)(3)
organization may disregard any request
for copies of all or part of any document
beyond the first two received within any
30-day period or the first four received
within any 1-year period from the same
individual or the same address.
Making the Annual Returns Widely
Available
A 501(c)(3) organization does not have to
provide copies of its annual returns if it
makes these documents widely available.
However, it must still allow public
inspection by office visitation.
How does a 501(c)(3) organization
make its annual returns widely
available? A 501(c)(3) organization’s
annual returns are widely available if it
meets all four of the following
requirements:
1. The Internet posting requirement —
tax-exempt organizations on a World
Wide Web page established and
maintained by another entity.
2. Additional posting information
requirement — This is met if:
• The World Wide Web page through
which the document is available clearly
informs readers that the document is
available and provides instructions for
downloading the document;
• After it is downloaded and viewed,
the web document exactly reproduces the
image of the annual return as it was
originally filed with the IRS, except for any
information permitted by statute to be
withheld from public disclosure; and
• Any individual with access to the
Internet can access, download, view, and
print the document without special
computer hardware or software required
for that format (except software that is
readily available to members of the public
without payment of any fee) and without
payment of a fee to the 501(c)(3)
organization or to another entity
maintaining the web page.
3. Reliability and accuracy
requirements — To meet this, the entity
maintaining the World Wide Web page
must:
• Have procedures for ensuring the
reliability and accuracy of the document
that it posts on the page;
• Take reasonable precautions to
prevent alteration, destruction, or
accidental loss of the document when
posted on its page; and
• Correct or replace the document if a
posted document is altered, destroyed, or
lost.
4. Notice requirement — To meet this,
a 501(c)(3) organization must notify any
individual requesting a copy of its annual
return where the documents are available
(including the Internet address). If the
request is made in person, the 501(c)(3)
organization must notify the individual
immediately. If the request is in writing, it
must notify the individual within 7 days of
receiving the request.
Penalties
A penalty may be imposed on any person
who does not make the annual returns
(including all required attachments to
each return) available for public
inspection according to the section
6104(d) rules discussed above. If more
than one person fails to comply, each
person is jointly and severally liable for
the full amount of the penalty. The penalty
amount is $20 for each day during which
a failure occurs. The maximum penalty
that may be imposed on all persons for
any one annual return is $10,000.
Any person who willfully fails to comply
with the section 6104(d) public inspection
requirements is subject to an additional
penalty of $5,000 (section 6685).
and ending 2010. For a fiscal year, fill in
the tax year information at the top of the
form.
The 2009 Form 990-T may also be
used if:
• The organization has a tax year of less
than 12 months that begins and ends in
2010, and
• The 2010 Form 990-T is not available
at the time the organization is required to
file its return. The organization must show
its 2010 tax year on the 2009 Form 990-T
and take into account any tax law
changes that are effective for tax years
y
beginning after December 31, 2009.
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. If
you received a mailing label and any
information is incorrect or missing, cross
out any errors, print the correct
information, and add any missing
information.
Include the suite, room, or other unit
number after the street address. If the
post office does not deliver mail to the
street address and the organization has a
P.O. box, 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.
Change of name. If the
organization has changed its
CAUTION 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, or is incorporated with
the state, an amendment to the articles of
incorporation along with proof of filing with
the state is required.
• A trust, an amendment to the trust
agreement is required along 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 is required
along with signatures of at least two
officers/members.
!
Blocks A through J
Block A. If the organization has
changed its address since it last filed a
return, check Block A.
If a change in address occurs after
TIP the return is filed, use Form 8822,
Change of Address, to notify the
IRS of the new address.
Block B. Check the box under which the
organization receives its tax exemption.
Qualified pension, profit-sharing, and
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For tax exempts that do not receive
their exemption under section 501, use
the following guide.
IF you are a . . . . . .
THEN check
c
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)
Block C. Enter the total of the
end-of-year assets from the
organization’s books of account.
Block 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 uses 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 www.irs.gov/
businesses/small. The EIN is issued
immediately once the application
information is validated.
• By telephone at 1-800-829-4933 from 7
a.m. to 10 p.m. in the association’s local
time zone.
• By mailing or faxing Form SS-4,
Application for Employer Identification
Number.
If the organization has not received its
EIN by the time the return is due, write
“Applied for” in the space for the EIN. For
more details, see Pub. 583, Starting a
Business and Keeping Records.
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.
Block E. Enter the applicable unrelated
business activity code(s) that specifically
describes the organization’s unrelated
business activity. If a specific activity code
does not accurately describe the
organization’s activities, then choose a
general code that best describes its
activity. These codes are listed on
page 23.
Block F. If the organization is covered
by a group exemption, enter the group
exemption number.
Block 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, be sure the
box for 529(a) in Block B is checked.
based on unrelated income. Attach a
schedule if more space is needed.
Block I. 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 is not 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 Block I.
Block J. Enter the name 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—Unrelated Trade or
Business Income
Complete lines 1 through 13, column (A).
If the amount on line 13 is $10,000 or
less, you may complete only line 13 for
columns (B) and (C). These filers do not
have to complete Schedules A through K
(however, refer to applicable schedules
when completing column (A)). If the
amount on line 13, column (A), is more
than $10,000, complete all lines and
schedules that apply.
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 does not 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 (35%). 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 IV, line 42.
Line 1a—Gross Receipts or
Sales
Enter the gross receipts from any
unrelated trade or business regularly
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.
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 do not apply to
dispositions of property used or produced
in a farming business or sales of
timeshares and residential lots for which
the organization elects to pay interest
under section 453(l)(3).
For sales of timeshares and residential
lots reported under the installment
method, the organization’s income tax is
increased by the interest payable under
section 453(l)(3). To report this addition to
the tax, see the instructions for line 42.
Enter on line 1a (and carry to 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 timeshares and
residential lots reported under the
installment method.
Attach a schedule showing the
following information for the current and
the 3 preceding years:
1. Gross sales,
2. Cost of goods sold,
3. Gross profits,
4. Percentage of gross profits to gross
sales,
5. Amount collected, and
6. Gross profit on amount collected.
Nonaccrual experience method.
Accrual method organizations are not
required to accrue certain amounts to be
received from the performance of
services that, on the basis of their
experience, will not be collected, if:
• The services are in the fields of health,
law, engineering, architecture,
accounting, actuarial science, performing
arts, or consulting;
g; or
• The organization’s average annual
gross receipts for the 3 prior tax years
does not exceed $5 million.
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6
method should attach a schedule 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 line 1a.
Certain cooperatives that have gross
receipts of $10 million or more and have
patronage and nonpatronage source
income and deductions must complete
and attach Form 8817, Allocation of
Patronage and Nonpatronage Income
and Deductions, to their return.
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 December 31,
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)) are not 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 (see S
Corporations under the line 5 instructions)
is taxed as a capital gain or loss.
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.
Schedule D, Form 1041 or Form 1120, if
pp
applicable,
must be attached to the Form
990-T.
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
may not be more than 100%. See the
instructions for Schedule E, column 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, 2008, 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, 2009, 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 line 6, Part II,
Schedule D (Form 1120). A trust should
enter the gain on Schedule D (Form
1041), if applicable. In either scenario (a
corporation or a trust), the educational
organization
must attach a statement to
g
Form 990-T,, in addition to the Schedule D
attachment, showing how the gain was
figured along the lines described in this
example, if the details were not provided
with the Schedule D attachment(s).
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 Part II,
line 17, Form 4797.
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 was not
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
Partnerships and S
Corporations
Combine all partnership income or loss
and Credit Limitations, and sections 465
and 469.
Partnerships
If the organization is a partner in a
partnership carrying on 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.
Attachment. 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. Also, see Attachments on page 7
for other information you need to include.
S Corporations
Qualified tax exempts can be
shareholders in an S corporation without
the S corporation losing its status as an S
corporation. Qualified tax exempts that
hold stock in an S corporation treat their
stock interest as an unrelated trade or
business. All items of income, loss, or
deduction are taken into account in
figuring unrelated business taxable
income. Report on 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) do not follow these S
corporation rules if the S corporation
stock is an employer security as defined
in section 409(l).
Attachment. Attach a statement to this
return showing the qualified tax exempt’s
share of all items of income, loss, or
deduction. Show capital gains and losses
separately and include them on line 4a.
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. Also, see
Attachments on page 7 for other
information you need to include.
Line 12—Other Income
Enter on line 12 any item of unrelated
business income that is not reportable
elsewhere on the return. Include:
• Recoveries of bad debts deducted in
earlier years under the specific charge-off
method. Attach a separate schedule of
any items of other income to your return;
• The amount from Form 6478, Alcohol
and Cellulosic Biofuel Fuels Credit;
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Organizations described in section
501(c)(19). Enter the net income from
insurance business that was not properly
set aside. These organizations may set
aside income from payments received for
life, sick, accident, or health insurance for
members of the organization or their
dependents.
s.
1. To provide for the payment of
s.
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 is not used for the insurance
activities.
Expenditures for lobbying are not
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, your 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 line 12. Report
allowable deductions in Part II. See
section 150(b)(3) for more information.
Passive foreign investment company
(PFIC) shareholders. If your
organization is a direct or indirect
shareholder of a PFIC within the meaning
of section 1296, it may have income tax
consequences under section 1291 on the
disposition of the PFIC stock or on receipt
of an excess distribution from the PFIC,
described in section 1291(a). Your
organization may have current income
under section 1293 if the PFIC is a
qualified electing fund (QEF) with respect
to the organization.
Include on line 12 the portion of an
excess distribution or section 1293
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, for more
information on reporting excess
distributions and current income
Part II—Deductions Not
Taken Elsewhere
amortizable basis of pollution control
facilities. See section 291 to determine
the amount of the adjustment.
If the amount on Part I, line 13, column
(A), is $10,000 or less, you do not have to
complete lines 14 through 28 of Part II.
However, you must complete lines 29
through 34 of Part II.
Directly connected expenses. Only
expenses directly connected with
unrelated trade or business income
(except charitable contributions) may be
deducted on these lines (see Directly
connected expenses on page 2).
Charitable contributions may be
deducted, whether or not directly
connected. Do not separately include in
Part II any expenses that are reported in
Schedules A through J, other than excess
exempt expenses entered on line 26 and
excess readership costs entered on line
27. For example, officers’ compensation
allocable to advertising income is
reported on Schedule J only, and should
not be included on Schedule K or line 14
of Part II.
Section 263A Uniform
Capitalization Rules
Limitations on Deductions
The following
g items discuss certain areas
in which the deduction may to some
extent be limited.
Activities Lacking a Profit Motive
If income is attributable to an activity
lacking a profit motive, a loss from the
activity cannot 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
is not 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 Re
Related to Pr
Property
Leased to Ta
Le
Tax-exempt En
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
y 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 yyear and treated
as a deduction concerning the property.
See section 470 for more information.
Transactions Between Related
Taxpayers
Generally, an accrual basis taxpayer may
only deduct business expenses and
interest owed to a related party in the
year the payment is included in the
income of the related party. See sections
163(e)(3), 163(j), and 267 for limitations
on deductions for unpaid interest and
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. For
more details, 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 are not
deductible until the property (to which the
costs relate) is sold, used, or otherwise
disposed of by the organization.
Exceptions. Section 263A does not
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;
s;
• Timber;
r;
• Most property pproduced under
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insert space
• Intangible drilling costs for oil, gas, and
geothermal property;
y;
• Mining exploration and development
s;
costs;
• Inventory of an organization that
accounts for inventories in the same
manner as materials and supplies that are
not incidental. See Schedule A — Cost of
Goods Sold on page 18 for details.
Additional information. For more
details on the uniform capitalization rules,
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 entertainment expenses paid
or incurred in its trade or business. Also,
special rules apply to deductions for gifts,
skybox rentals, luxury water travel,
convention expenses, and entertainment
tickets. See section 274 and Pub. 463,
Travel, Entertainment, Gift, and Car
Expenses, for more details.
Travel. The organization cannot 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 and entertainment. Generally,
the organization can deduct only 50% of
the amount otherwise allowable for meals
and entertainment expenses paid or
incurred in its trade or business. In
addition (subject to exceptions under
section 274(k)(2)):
• Meals must not be lavish or
extravagant;
• A bona fide business discussion must
occur during, immediately before, or
immediately after the meal; and
• An employee of the organization must
be present at the meal.
Membership dues. The organization
may 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 may not 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
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-MISC for an
independent contractor.
However, if the recipient is an officer or
director, the deduction for otherwise
nondeductible meals, travel, and
entertainment expenses is limited to the
amount treated as compensation. See
section 274(e)(2) and Notice 2005-45,
2005-24 I.R.B. 1228.
Reducing Certain Expenses For
Which Credits Are Allowable
The organization may need to reduce the
otherwise allowable deductions for
expenses used to figure
g
the credit byy the
amount of the following current year
credits.
cr
• The disabled access credit.
• The employer credit for social security
and Medicare taxes paid on certain
em
employee tips.
• The credit for employer-provided child
care.
ca
e.
• The orphan drug credit.
• The credit for small employer pension
pl
plan start-up cost.
• Mine rescue team training credit.
• Agricultural chemicals
ch
security
se
credit.
cr t.
• Credit for employer differential wa
wage
payments.
s.
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 is not 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
Temporary Regulations sections 1.195-1T
and 1.248-1T 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
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 for details. If the association
elected to amortize business start-up and
organizational costs paid or incurred
before October 23, 2008, 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 line 28. For amortization
that began during the tax year, complete
and attach Form 4562.
Line 16—Repairs and
Maintenance
Enter the cost of incidental repairs and
maintenance not claimed elsewhere on
the return, such as labor and supplies,
that do not add to the value or
appreciably prolong the life of the
property.
Line 17—Bad Debts
Enter the total receivables from unrelated
business activities that were previously
included in taxable income and that
became worthless in whole or in part
during the tax year.
Line 18—Interest
Attach a separate schedule listing the
interest being claimed on this line.Enter
taxes and license fees paid or accrued
during the year, but do not include the
following taxes.
• 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 Temporary
Regulations section 1.163-8T for the
interest allocation rules.
• Tax-exempt interest. Do not 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 loan
during the tax year, not for the use of the
loan 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
Page 13 of 23
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such interest. See section 163(j) forr more
details.
• Interest on certain underpayments
e
of tax. Interest paid or incurred on a
any
portion of an underpayment of tax that
ha is
attributable to an understatement arising
s
from an undisclosed listed transaction
n 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
o
of designated property. Do not deduct
c
interest on debt allocable to the
production of designated property.
Interest that is allocable to such property
t
produced by an organization for its own
n
use or for sale must be capitalized. An
organization must also capitalize any
interest on debt allocable to an asset
used to produce the above property. See
e
section 263A(f) and Regulations sectionss
1.263A-8 through 1.263A-15 for
definitions and more information.
• Interest on below-market loans. See
section 7872 for special rules regarding
the deductibility of foregone interest on
certain below-market-rate loans.
• Interest on which no tax is imposed
(section 163(j)). For tax years beginning
after May 16, 2006, an organization that
owns an interest in a partnership, directly
or indirectly, must treat its distributive
share of the partnership liabilities, interest
income, and interest expense as
liabilities, income, and expenses of the
organization for purposes of applying the
earnings stripping rules. For more details,
see section 163(j)(8).
Line 19—Taxes and Licenses
Enter taxes and license fees paid or
accrued during the year,, but do not
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.
q
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 20—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).
unrelated business taxable income
figured without regard to the following.
• Any deduction for contributions.
• The domestic production activities
deduction under section 199.
• Any net operating loss (NOL) carryback
to the tax year under section 172.
• Any capital loss carryback to the tax
year under section 1212(a)(1).
Corporations on the accrual basis can
elect to deduct contributions paid by the
15th day of the 3rd month after the end of
the tax year if the contributions are
authorized by the board of directors
during the tax year. Attach a declaration
to the return stating that the resolution
authorizing the contributions was adopted
by the board of directors during the tax
year. The declaration must also include
the date the resolution was adopted. See
Regulations section 1.170A-11.
Suspension of 10% limitation for
farmers and ranchers. An organization
that is a qualified farmer or rancher (as
)( )( )) that does
defined in section 170(b)(1)(E))
not have publicly traded stock can deduct
contributions of qualified conservation
property without regard to the general
10% limit. The total amount of the
contribution claimed for the qualified
conservation property cannot exceed
100% of the excess of the organization’s
taxable income (as computed above
substituting “100%” for “10%” over all
other allowable charitable contributions).
Any excess qualified conservation
contributions can be carried over to the
next 15 years subject to the 100%
n
llimitation. See section 170(b)(2)(B). This
sspecial rule will expire for contributions
made in tax years beginning after
m
December 31, 2009.
D
Contributions of conservation property
m
made
after August 17, 2006 that is used
in agriculture or live stock production
u remain available for such
must
rod
o
productions.
Temporary suspension of 10%
limitation for qualified cash
contributions to relief efforts in
Midwestern disaster areas. An
organization can elect to deduct qualified
cash contributions (as defined in section
170(c)) without regard to the general 10%
limitation, if the contributions were paid
after May 1, 2008, and before January 1,
2009, to a qualified charitable
organization for relief efforts in 1 or more
Midwestern disaster areas. The
organization must attach a statement to
Form 990-T which includes
contemporaneous written
acknowledgment from the qualified
charitable organization that the
contribution was used (or will be used) for
relief efforts in Midwestern disaster areas.
See Pub. 4492-B, Information for Affected
Taxpayers in the Midwestern Disaster
Areas, for more information.
Carryover. Charitable contributions
taking into account any deduction for the
NOL.
To figure the amount of any remaining
NOL carryover to later years, taxable
income must be modified. See section
172(b). To the extent charitable
contributions are used to reduce taxable
income for this purpose and increase a
net operating loss carryover, a
contributions carryover is not allowed.
See section 170(d)(2)(B).
Trusts. In general:
1. For contributions to organizations
described in section 170(b)(1)(A), the
amount claimed may not be more than
50% of the unrelated business taxable
income figured without this deduction;
and
2. For contributions to other
organizations, the amount claimed may
not be more than the smaller of:
a. 30% of unrelated business taxable
income figured without this deduction; or
b. The amount by which 50% of the
unrelated business taxable income is
more than the contributions allowed in 1
above.
Contributions not allowable in
TIP whole or in part because of the
limitations mayy not be deducted
as a businesss expense but may be
carried over to the next 5 tax years.
Substantiation requirements.
Generally, no deduction is allowed for any
contribution of $250 or more, unless the
organization gets a written
acknowledgment from the donee
organization that shows the amount of
cash contributed, describes any property
contributed, and either gives a description
and a good faith estimate of the value of
any goods or services provided in return
for the contribution or states that no
goods or services were provided in return
for the contribution. The acknowledgment
must be obtained by the due date
(including extensions) of the
organization’s return, or, if earlier, the
date the return is filed. However, see
section 170(f)(8) and the related
regulations for exceptions to this rule. Do
not attach the acknowledgment to the
return but keep it with the organization’s
records.
Note. For contributions of cash, check,
or other monetary gifts (regardless of the
amount), the organization must maintain
a bank record, or a receipt, letter, or other
written communication from the donee
organization indicating the name of the
organization, the date of the contribution,
and the amount of the contribution.
Contributions of property other than
cash. If an organization contributes
property other than cash and claims over
a $500 deduction for the property, it must
attach a schedule to the return describing
the kind of property contributed and the
method used to determine its fair market
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Deleted: "and before January 1, 2009"
u.c.
contribution of certain property. See the
instructions for Form 8283.
Special rules for contributions of
certain easements in registered
historic districts. The following rules
apply to certain contributions of real
property interests located in a registered
historic district.
• A deduction is allowed for the qualified
real property interest, if the exterior of the
building (including the front, side, rear,
and space above the building) is
preserved and no portion of the exterior is
changed in a manner
that is inconsistent
m
with its historical character. For more
details, see section 170(h)(4)(B).
• A deduction is allowed on the building
only (no deduction is allowed for a
structure or land) if located in a registered
historic district. However, if listed in the
National Register, a deduction is also
allowed for structures or land areas. For
more information, see section
170(h)(4)(c).
• The organization must also include the
following information with the tax return.
1. A qualified appraisal (as defined in
section 170(f)(11)(E)) of the qualified
property interest,
2. Photographs of the entire exterior
of the building, and
3. A description of all restrictions on
the development of the building. See
section 170(h)(4)(B)(iii).
• The organization’s deduction may be
reduced if rehabilitation credits were
claimed on the building. See section
170(f)(14).
• A $500 filing fee may apply to certain
deductions over $10,000. See section
170(f)(13).
Reduced deductions for contributions
for certain property. The organization
must reduce its deduction for
contributions of certain capital gain
property and qualified appreciated stock.
See sections 170(e)(1) and 170(e)(5).
Special rules for corporation. A larger
deduction is allowed for certain
contributions of:
• Inventory and other property to certain
organizations for use in the care of the ill,
needy, or infants (see section 170(e)(3)
and Regulations section 1.170A-4A);
• Scientific equipment used for research
to institutions of higher learning or to
certain scientific research organization
(see section 170(e)(4)); and
• Computer technology and equipment
for education purposes (see section
170(e)(6)).
For more information on charitable
contributions, including substantiation and
recordkeeping requirements, see section
170, the related regulations, and Pub.
526, Charitable Contributions.
Line 21—Depreciation
Besides depreciation, include on line 21
Line 23—Depletion
See sections 613 and 613A for
a
percentage depletion rates for natural
deposits. Attach Form T, Forest Activities
A
Schedules, if a deduction is taken
e for
depletion of timber.
Line 24—Contributions tto
Deferred Compensation P
Plans
n
Employers who maintain pension,
e
profit-sharing, or other funded deferred
l
compensation plans are generally
required to file Form 5500. This
n the
requirement applies whether or not
plan is qualified under the Internal
a
Revenue Code and whether or not
n a
deduction is claimed for the current
e tax
year. Section 6652(e) imposes a penalty
for late filing of these forms. In addition,
d
there is a penalty for overstating the
c
pension plan deduction. See section
6662(f).
Line 25—Employee Benefit
e
Programs
Enter the amount of contributionss to
employee benefit programs (such
h as
insurance, health, and welfare programs)
r
that are not an incidental part of a
deferred compensation plan included
on
u
line 24.
Line 28—Other Deductions
o
Enter on this line the deduction taken
for
a
amortization (see Form 4562) as
s well as
other authorized deductions for which
no
w
space is provided on the return. Attach
a
A
separate schedule listing the deductions
d
claimed on this line. Deduct only items
directly connected with the unrelated
a
trade or business for which income
m is
reported in Part I.
Domestic production activities
s
deduction. Complete Form 8903
0 and
enter the deduction on this line.
Do not deduct fines or penalties
e paid
to a government for violating anyy law.
Energy efficient commercial buildings.
u
You may deduct expenses for energy
n
efficient commercial buildings
in
g placed
plac
a
service after December 31, 2005.
5 See
section 179D.
Extraterritorial income exclusion.
Complete Form 8873 and enter the
deduction from line 52, on this line.
Do not deduct fines or penalties paid
to a g
government for violating
g any
y law. The
exclusion was repealed
p
generally
g
y for
transactions after 2004,, with some
exceptions.
See Form 8873 and its
p
instructions.
Line 31—Net Operating Loss
(NOL) Deduction
The NOL deduction is the total of the net
operating loss carryovers and carrybacks
that can be deducted in the tax year. To
be deductible, an NOL must have been
incurred in an unrelated trade or business
activity. See section 172(a).
applies.
See Form 1139 and its
pp
instructions for more information.
Enter on line 31, the total NOL
carryover from other tax years, but do not
enter more than the amount shown on
line 30. Attach a schedule showing the
computation of the NOL deduction. The
amount of an NOL carryback or carryover
is determined under section 172. See
Regulations section 1.512(b)-1(e). For
more information about NOLs, see Pub.
536, Net Operating Losses for Individuals,
Estates and Trusts.
Line 33—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 are not 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 schedule showing how
you figured the amount.
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 are not separate legal entities.
These local units cannot file separate
returns because they are not separately
incorporated. Local units that are
separately incorporated must file their
own returns and cannot be included with
any other entity except for a title holding
company. See the instructions under
Consolidated Returns on page 5.
For details on the specific deduction,
see section 512(b)(12) and the related
regulations.
Part III—Tax Computation
Lines 35a and 35b
Corporate members of a controlled
group, as defined in section 1563, must
check the box on line 35 and complete
lines 35a and 35b. Lines 35a and 35b
must agree with amount(s) reported on
the Schedule O (Form 1120), Consent
Plan and Apportionment Schedule for a
Controlled Group, filed by the other
component members of the controlled
group. See Schedule O (Form 1120) and
its instructions for more information.
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line 34
stock ownership with a common parent
corporation if:
• Stock possessing at least 80% of the
total combined voting power of all classes
of stock entitled to vote or at least 80% of
the total value of shares of all classes of
stock of each of the corporations, except
the common parent corporation, is directly
or indirectly owned by one or more of the
other corporations; and
• The common parent corporation
directly or indirectly owns stock
possessing at least 80% of the total
combined voting power of all classes of
stock entitled to vote or at least 80% of
the total value of shares of all classes of
stock of at least one of the other
corporations, excluding, in computing
such voting power or value, stock owned
directly by such other corporation.
Brother-sister group. A
brother-sister group is two or more
corporations if the same five or fewer
persons who are individuals, estates, or
trusts directly or indirectly own stock
possessing:
1. At least 80% of the total combined
voting power of all classes of stock
entitled to vote or at least 80% of the total
value of shares of all classes of the stock
of each corporation, and
2. More than 50% of the total
combined voting power of all classes of
stock entitled to vote or more than 50% of
the total value of shares of all classes of
stock of each corporation, taking into
account the stock ownership of each such
person only to the extent such stock
ownership is identical with respect to
each such corporation.
The definition of a brother-sister group
does not include (1) above, for purposes
of determining and allocating the
following.
• Taxable income brackets,
• Accumulated earnings credit,
• Alternative minimum tax exemption
amount,
• Phaseout of the alternative minimum
tax exemption amount, or
• The additional tax.
For purposes of determining whether a
corporation is a member of a
brother-sister controlled group of
corporations, within the meaning of
section 1563(a)(2), stock owned by a
person who is an individual, estate, or
trust means:
• Stock owned directly by such person,
and
• Stock owned with the application of
section 1563(e).
Combined group. A combined
group is three or more corporations each
of which is a member of a
parent-subsidiary group or a
brother-sister group, and one of which is:
• A common parent corporation included
in a group of corporations in a
one $9,925,000 taxable income bracket
amount (in that order) on line 35a.
When a controlled group adopts or
later amends an apportionment plan,
each member must attach to its tax return
a copy of its consent to this plan. The
copy (or an attached statement) must
show the part of the amount in each
taxable income bracket apportioned to
that member. See Regulations section
1.1561-3(b) for other requirements and
for the time and manner of making the
consent.
Equal apportionment plan. If no
apportionment plan is adopted, members
of a controlled group must divide the
amount in each taxable income bracket
equally among themselves. For example,
Controlled Group AB consists of
Corporation A and Corporation B. They
do not elect an apportionment plan.
Therefore, Corporation A and Corporation
B are each entitled to $25,000 (one-half
of $50,000) in the $50,000 taxable
income bracket on line 35a(1), $12,500
(one-half of $25,000) in the $25,000
taxable income bracket on line 35a(2),
and $4,962,500 (one-half of $9,925,000)
in the $9,925,000 taxable income bracket
on line 35a(3).
Unequal apportionment plan.
Members of a controlled group may elect
an unequal apportionment plan and divide
the taxable income brackets as they want.
There is no need for consistency among
taxable income brackets. Any member of
the controlled group may be entitled to all,
some, or none of the taxable income
bracket. However, the total amount for all
members cannot be more than the total
amount in each taxable income bracket.
Additional 5% tax and additional 3%
tax. Members of a controlled group are
treated as one corporation to figure the
applicability of the additional 5% tax that
must be paid by corporations with taxable
income over $100,000 and the additional
3% tax that must be paid by corporations
with taxable income over $15 million. If
either additional tax applies, each
member of the controlled group will pay
that tax based on the part of the amount
that is used in each taxable income
bracket to reduce that member’s tax. See
section 1561(a). Each member must
enter its share of the additional 5% tax on
line 35b(1) and its share of the additional
3% tax on line 35b(2) and attach to its tax
return a schedule that shows the taxable
income of the entire group, as well as
how its share of the additional tax was
figured.
Lines 35c and 36
Deferred tax amount under section
1291. 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
Do not include on line 35c or 36 the
portion of the deferred tax amount that is
the aggregate amount of interest
determined under section 1291(c)(3).
Instead, write “Sec. 1291 interest” and the
amount in the bottom right margin of page
2, Form 990-T. See Part IV of Form 8621,
Return by a Shareholder of a Passive
Foreign Investment Company or Qualified
Electing Fund.
Line 35c —Corporations
Use the Tax Rate Schedule for
Corporations shown below to figure the
tax.
Members of a controlled group
g
use the Tax Computation
p
CAUTION Worksheet for Members of a
Controlled Group
p shown below to figure
g
the tax. Members of a controlled group
g p
should see the instructions above for lines
35a and 35b. Members of a controlled
group must attach a statement showing
the computation of the tax entered on line
35c.
!
Tax Rate Schedule for Corporations
(Internal Revenue Code – Section 11)
If the amount on line, page 1 is:
Over —
$0
50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333
But not over —
$50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333
-----
Tax is:
Of the
amount
over —
15%
$0
$ 7,500 + 25%
50,000
13,750 + 34%
75,000
22,250 + 39%
100,000
113,900 + 34%
335,000
3,400,000 + 35% 10,000,000
5,150,000 + 38% 15,000,000
35%
0
Tax Computation Worksheet for
Members of a Controlled Group
(Keep for your records)
Each member of a controlled group must compute the tax
using the computation below:
1. Enter unrelated business taxable
income (line 34, page 1, Form 990-T)
2. Enter line 1 or corporation’s share of
the $50,000 taxable income bracket,
whichever is less . . . . . . . . . . . . .
3. Subtract line 2 from line 1 . . . . . . . .
4. Enter line 3 or corporation’s share of
the $25,000 taxable income bracket,
whichever is less . . . . . . . . . . . . .
5. Subtract line 4 from line 3 . . . . . . . .
6. Enter line 5 or corporation’s share of
the $9,925,000 taxable income bracket,
whichever is less . . . . . . . . . . . . .
7. Subtract line 6 from line 5 . . . . . . . .
8. Enter 15% of line 2 . . . . . . . . . . . .
9. Enter 25% of line 4 . . . . . . . . . . . .
10. Enter 34% of line 6 . . . . . . . . . . . .
11. Enter 35% of line 7 . . . . . . . . . . . .
12. If the taxable income of the controlled
group exceeds $100,000, enter this
member’s share of the smaller of: (a)
5% of the excess over $100,000, or (b)
$11,750 (see instructions for additional
5% and additional 3% tax). . . . . . . .
Page 16 of 23
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italics
or Trust),
Line 36—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 amount on line 34 using the Tax
Rate Schedule for Trusts, later. If the tax
rate schedule is used, enter the tax on
line 36 and check the “tax rate schedule”
box on line 36. If the trust is eligible for
the rates on net capital gains and
qualified dividends, complete Schedule D
(Form 1041) and enter the tax from
Schedule D (Form 1041) on page 2, line
36. Check the “Schedule D” box on line
36 and attach Schedule D (Form 1041) to
Form 990-T.
Tax Rate Schedule for Trusts
(Internal Revenue Code – Section 1(e))
If the amount on line 34, page 1 is:
Over —
$0.00
2,300
5,350
8,200
11,150
But not over —
$2,300
5,350
8,200
11,150
-----
Tax is:
15%
$ 345.00 + 25%
1,107.50 +28%
1,905.50 + 33%
2,879.00 + 35%
Of the
amount
over —
$0.00
2,300
5,350
8,200
11,150
Line 37—Proxy Tax
To pay the section 6033(e)(2) proxy tax
on nondeductible lobbying and political
expenditures, enter the proxy tax on line
37 and attach a schedule 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 Form 990
instructions and Rev. Proc. 98-19, 1998-1
C.B. 547 for exceptions and other details.
If the organization elects not to provide
the notices described above, it must pay
the proxy tax described in section
6033(e)(2). If the organization does not
include the entire amount of allocable
dues in the notices, it may have to pay
the proxy tax. This tax is not applicable to
section 501(c)(3) organizations. Figure
the proxy tax by multiplying the aggregate
amount not included in the notices
described above by 35%. No deductions
are allowed.
Line 38—Alternative Minimum
Tax
Organizations liable for tax on unrelated
business taxable income may be liable for
alternative minimum tax on certain
adjustments and tax p
preference items.
Trusts attach Schedule I (Form
(
1041),
),
Alternative Minimum Tax — Estates and
Trusts, and enter any tax from Schedule I
on this line. A corporation, unless it is
Part IV—Tax and
Payments
Line 40a—Foreign Tax Credit
• Corporations. See Form 1118,
Foreign Tax Credit — Corporations, for an
explanation of when a corporation can
take this credit for payment of income tax
to a foreign country or U.S. possession.
• Trusts. See Form 1116, Foreign Tax
Credit (Individual, Estate, Trust, or
Nonresident Alien Individual), 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 40b—Other Credits
• American Samoa economic
ec
de
development cr
credit. An organization that
is an existing credit claimant with respect
to American Samoa, may be able to claim
the American Samoa economic
development credit. See the instructions
for Form 5735.
• Qualified electric vehicle credit.
y credit from Form
Include on line 40b any
g Electric and
8834,, Qualified Plug-in
Electric Vehicle Credit. Complete and
attach Form 8834.
• Credit to holders of tax credit bonds.
Enter the amount of the credit to holders
of clean renewable energy bonds, new
clean renewable energy bond, gulf tax
credit bonds, Midwestern tax credit
bonds, qualified energy conservation
bonds, qualified forestry conservation
bonds, and qualified zone academy
bonds (for bonds issued after October 3,
2008), and attach Form 8912.
Line 40c—General Business
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 Part II, line 32 of Form 3800,
on line 40c of Form 990-T.
Line 40d—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 42—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
below
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 line 42. Check the box for
“Other” if the organization includes any of
the taxes and interest discussed later.
See How to report, later, for details on
reporting these amounts on an attached
schedule.
• Recapture of qualified electric vehicle
(QEV) credit. The organization must
recapture part of the QEV credit it claimed
in a prior year if within 3 years of the date
the vehicle was placed in service, it
ceases to qualify for the credit. See
Regulations section 1.30-1 for details on
how to figure the recapture.
• Tax and interest on a nonqualified
withdrawal from a capital construction
fund (section 7518).
• Interest on deferred tax attributable to
(a) installment sales of certain timeshares
and residential lots (section 453(l)(3)) and
(b) 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
on page 9.
How to report. If the organization
checked the “Other” box, attach a
schedule showing the computation of
each item included in the total for line 42.
In addition, identify (a) the applicable
Code section, (b) the type of tax or
interest, and (c) enter the amount of tax
or interest. For example, if the
organization is reporting $100 of tax due
from the recapture of the QEV credit,
write “Section 30-QEV recapture
tax — $100” on the attached schedule.
Line 43—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
line 43. See Form 8621, Part V, and How
to report, below.
Subtract from the total entered on line
43 any deferred tax on the corporation’s
share of undistributed earnings of a
qualified electing fund (see Form 8621,
Part II).
How to report. Attach a schedule
showing the computation of each item
included in, or subtracted from, the total
on line 43. On the dotted line next to line
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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.
In the entry space to the left of line 44b,
write “T” and the amount attributable to it.
payable to the “United States Treasury,”
with Form 990-T.
Domestic organizations owing $500 or
more and foreign organizations with an
office or place of business in the United
States should see Depository Method of
Tax Payment on page 3.
Line 44d—Foreign
Organizations
Part V—Statements
Regarding Certain
Activities and Other
Information
Enter the tax withheld on unrelated
business taxable income from U.S.
sources that is not 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 other
form which verifies the withheld tax
reported on line 44d.
Line 44e—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 does not 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 did not
realize you were an exempt organization
and not subject to this withholding, you
can claim credit for the amount withheld
by including it on line 44e. See Backup
withholding under Which Parts To
Complete beginning on page 4.
Line 44f—Other Credits and
Payments
Check the appropriate box(es) and enter:
• From Form 2439, the credit from
regulated investment company (RIC) or
real estate investment trust (REIT). Also,
attach Form 2439, Notice to Shareholder
of Undistributed Long-Term Capital
Gains. If you are filing a composite Form
990-T, see Composite Form 990-T under
Which Parts To Complete beginning on
page 4 of these instructions.
• 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 take 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.
After entering these amounts in the
appropriate spaces, add them all together
and enter the total on line 44f.
Form 8849, Claim for Refund of
TIP 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
d Pub. 510,, Excise Tax
(Including Fuel Tax Credits and Refunds),
for more information.
Complete all items in Part V.
Line 1. Check “Yes” if either 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
a. The combined value of the
accounts was more than $10,000 at any
time during the year; and
b. The accounts were not with a U.S.
military banking facility operated by a U.S.
financial institution.
2. The organization owns more than
50% of the stock in any corporation that
would answer “Yes” to item 1 above.
If the “Yes” box is checked, write the
name of the foreign country or countries.
Attach a separate sheet if more space is
needed.
Get Form TD F 90-22.1, Report of
Foreign Bank and Financial Accounts, 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). The organization can obtain
Form TD F 90-22.1 from the IRS Forms
Distribution Center or by calling
1-800-TAX-FORM (1-800-829-3676) or
by downloading it from the IRS website at
www.irs.gov. If the organization is
required to file this form, file it by June 30,
2009, with the Department of the
Treasury at the address shown on the
form. Do not file it with the IRS or attach it
to Form 990-T.
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;
r;
• It is treated as the owner of any part of
the assets of a foreign
g trust under the
grantor trust rules;
s; or
• It received a distribution from a foreign
trust.
details,, see the
e 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.
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 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.
t.
• 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 does
not 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’s Use
Only” area.
The paid preparer must complete the
required preparer information:
• Sign the return in the space provided
for the preparer’s signature.
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501(c)(3) organization is a publicly
disclosable document, any information
entered on this block in such case will be
publicly disclosed. Accordingly, the paid
preparer may
y wish to apply
pp y for and obtain
a PTIN using
for
g Form W-7P,, Application
pp
Preparer Tax Identification Number.
Note. A paid preparer may sign original
returns, amended returns, or requests for
filing extensions by rubber stamp,
mechanical device, or computer software
program.
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’s Use Only” section of its
return. It does not 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 will not be sent
to the preparer.
The organization is not 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 cannot be revoked.
However, the authorization will
automatically end no later than the due
date (excluding extensions) for filing next
year’s Form 990-T.
Schedule A—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 are
not 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
prior tax year, and (b) whose principal
business activity is not 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 line 7.
All filers not using the cash method of
accounting should see Section 263A
uniform capitalization rules in the
instructions for Limitations on Deductions
on page 11 before completing Schedule
A. The instructions for lines 4a, 4b, and 6
below apply to Schedule A.
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 are
not 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
does not 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
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
(line 12, page 1) proportionately over a
3-year period that begins in the tax year
the LIFO election was made (section
472(d)).
Schedule A, 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 on page 6).
Schedule A, line 4a. 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 were not 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 line 4a the balance of section
263A costs paid or incurred during the tax
year not included on lines 2 and 3.
Schedule A, line 4b. Enter on line 4b
any costs paid or incurred during the tax
year not entered on lines 2 through 4a.
Schedule A, line 6. 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 are not
incidental, enter on line 6 the portion of its
raw materials and merchandise
purchased for resale that are included on
line 5 and were not sold during the year.
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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 C on page 3 of the
return. For organizations other than
section 501(c)(7), (9), and (17)
organizations, only the following rents are
taxable in 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:
a. More than 50% of the total rents
received or accrued under the lease are
for personal property; or
b. 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 Part I, line 6, may
be taxable on line 8 if the income is from
a controlled organization or on line 7 if the
property is debt-financed. Taxability of the
rents must be considered in that order;
that is, rents not taxed on line 6 may be
taxed on line 8 and rents not taxed on line
6 or line 8 may be taxed on line 7.
Rents from personal property not
leased with real property should be
reported on line 12 of Part I.
See Form 8582 (for trusts) or Form
8810 (for corporations) and section 469
for limitations on losses from rental
activities.
Schedule E—Unrelated
Debt-Financed Income
Schedule E applies to all organizations
except sections 501(c)(7), (9), and (17)
organizations.
When 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.
Do not include in Schedule E amounts
allocated to exempt purposes.
!
CAUTION
For section 514 purposes, do not
treat an interest in a qualified state
tuition program (QSTP) as debt.
time during the tax year there was
acquisition indebtedness outstanding for
the property. When any 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:
1. Before the property was acquired
or improved, if the debt was incurred
because of the acquisition or
improvement of the property; or
2. After the property was acquired or
improved, if the debt was incurred
because of the acquisition or
improvement, and the organization could
reasonably foresee the need to incur the
debt at the time the property was
acquired or improved.
With certain exceptions, acquisition
indebtedness does not include debt
incurred by:
1. A qualified (section 401) trust in
acquiring or improving real property. See
section 514(c)(9) for more details.
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) of the
Internal Revenue Code 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.
Column 2. Income is not unrelated
debt-financed income if it is otherwise
included in unrelated business taxable
income. For example, do not include rents
from personal property shown in
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.
Column 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.
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.
Column 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 obtained from
dividing the property’s average acquisition
indebtedness for the tax year by the
property’s average adjusted basis during
the period it is held in the tax year. This
percentage cannot be more than 100%.
Column 8. For each debt-financed
property, deduct the same percentage (as
determined above) of the total deductions
that are directly connected to the income
(including the dividends-received
deductions allowed by sections 243, 244,
and 245). However, if the debt-financed
property is depreciable property, figure
the depreciation deduction by the straight
line method only and enter the amount in
column 3(a).
For each debt-financed property,
attach schedules showing separately a
computation of the depreciation deduction
(if any) reported in column 3(a) and a
breakdown of the expenses included in
column 3(b). Corporations owning stock
that is unrelated debt-financed property
should see Schedule C (Dividends and
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debt-basis percentage(s)) included in
column 8.
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, do not
apply the debt-basis percentage to
determine the deduction for that year.
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 E for this
example, describe the property in column
1. Enter $10,000 in column 2 (since the
entire amount is for debt-financed
property), $500 and $2,500 in columns
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 columns 4 and 5, respectively
(since only one-half of the acquisition
indebtedness and the average adjusted
basis are for debt-financed property),
60% in column 6, $6,000 in column 7, and
$1,800 in column 8.
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 E for this example,
enter $20,000 in column 2, $1,000 and
$5,000 in columns 3(a) and 3(b),
respectively (since the entire amount is
for debt-financed property), $6,000 and
$10,000 in columns 4 and 5 (since the
entire amount is for debt-financed
property), 60% in column 6, $12,000 in
column 7, and $3,600 in column 8.
Schedule F—Interest,
Annuities, Royalties, and
Rents From Controlled
Organizations
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 carried on.
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);
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
partnership or any other organization.
Specified payment. Specified payment
means any payment of interest, annuities,
royalties, or rents. Include the specified
payment in gross income to the extent
that the payment reduces the net
unrelated income (or increases the net
unrelated loss) of the controlled
organization. If any part of a specified
payment is included in gross income,
Schedule F must be completed.
Qualifying specified payment.
Qualifying specified payment means any
payment of interest, annuities, royalties,
or rents received or accrued from the
controlled organization after December
31, 2005, and before January 1, 2010,
pursuant to a binding written contract that
was in effect on August 17, 2006, or is a
renewable contract under substantially
similar terms of a contract in effect on
August 17, 2006. Qualifying specified
payments are subject to tax only on the
amount that exceeds what would have
been paid or accrued if such payment had
been determined under the principles of
section 482.
Columns 1 and 2. List every controlled
entity and its EIN from which your
organization received interest, annuities,
royalties, or rents. For each of the
columns, if a controlled organization
makes specified payments, some of
which are qualifying specified payments
and some of which are not, report the
qualifying specified payments on one line
and all other specified payments on
another line. Thus, the organization must
repeat the name of any controlled
organization from which the organization
receives both specified payments and
qualifying specified payments.
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 each controlled
organization’s taxable income.
Column 8. Enter the net unrelated
income (or net unrelated loss) of each
controlled entity listed that is not 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
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 column 5 or 10.
With respect to qualifying specified
payments,
p y
, 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. Do not
enter any expenses relating to the portion
of such payment that is not includible in
income under this special rule.
Schedule G—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 G 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. Do not report nonmember
income from debt-financed property on
Schedule E.
All section 501(c)(7), (9), and (17)
organizations figure their investment
income using Schedule G. Do not include
interest on state and local governmental
obligations described in section 103(a).
Investment income includes all income
from debt-financed property.
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 are not treated as
directly connected with the production of
gross income.
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 cannot be exempt
function income. In addition, any income
set aside and later expended for other
purposes must be included in income.
Section 501(c)(7), (9), and (17)
organizations will not be taxed on income
Page 21 of 23
Instructions for Form 990-T
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(17) organization. The amount allowed as
a set aside may not exceed a limit
determined using section 419A. See
sections 419A and 512(a)(3)(E) for
details; or
3. Reasonable administration costs
directly connected with 1 and 2 above.
organizations) that have gross income
from an unrelated trade or business
activity that exploits an exempt activity
(other than advertising income) should
complete Schedule I. See Regulations
section 1.513-1(d)(4)(iv) for a definition of
exploited exempt activity.
Report income set aside in column 4 of
Schedule G. Amounts set aside are not
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 extensions 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 was not for the purposes described
above.
Net investment income set aside must
be specifically earmarked as such, or
placed in a separate account or fund
(except for an employees’ association
which, by the terms of its governing
instrument, must use its net investment
income for the purposes stated in 2
above).
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.
If a section 501(c)(7), (9), or (17)
organization (or a title holding corporation
described above) 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 column 5 of Schedule E to determine
the adjusted basis of the property.
An organization may take all
deductions directly connected with the
gross income from the unrelated trade or
business activity. In addition, the
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 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 is
not exploiting the same exempt activity.
Schedule I—Exploited
Exempt Activity Income,
Other Than Advertising
Income
A section 501(c)(7), (9), or (17)
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, do not add
that profit to the net income from the
unrelated business activity. If two or more
unrelated trade or business activities
exploit the same exempt activity, treat
those activities as one on Schedule I.
Attach a separate schedule showing the
computation.
Schedule J—Advertising
Income
A section 501(c)(7), (9), or (17)
organization does not report advertising
income on Schedule J. Instead, report
that income in Part I, line 1a.
An exempt organization (other than a
section 501(c)(7), (9), or (17)
organization) that earned gross income
from the sale of advertising in an exempt
organization periodical must complete
Schedule J. The part of the advertising
income taken into account is determined
s.
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
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,
1981-1 C.B. 352.
Consolidated periodicals. If an
g
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.
Schedule
K—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. Do not include in column 4
compensation that is deducted on lines
15, 28, or Schedules A through J.
Include on Schedule K (or elsewhere
on the return) only compensation that is
directly attributable to the unrelated trade
or business activities of the organization.
If personnel is used both to carry on
exempt activities and to conduct
unrelated trade or business activities, the
salaries and wages of those individuals
will be allocated between the activities.
For example, assume an exempt
organization derives gross income from
the conduct of certain unrelated trade or
business activities. The organization pays
its president a salary of $65,000 a year.
Ten percent of the president’s time is
devoted to the unrelated business activity.
On Form 990-T, the organization enters
$6,500 (10% of $65,000) on Schedule K
Page 22 of 23
Instructions for Form 990-T
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Please update
these times.
If taxable fringe benefits are provided
to your employees, such as personal use
of a car, do not deduct as salaries and
wages the amounts you deducted for
depreciation and other deductions.
Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue
ev
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
l
allow us to figure and collect the right amount of tax. Section 6109 requires return preparers to provide their identifying numbers
on
u
the return.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the
n
form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long
g as their
m
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.
rag
a time is:
The time needed to complete and file this form will vary depending on individual circumstances. The estimated average
Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
67 hr., 26 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 hr., 10 min.
Preparing the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43 hr., 25 min.
Copying, assembling, and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 hr., 1 min.
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 write to the Internal Revenue Service, Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the Form 990-T to this address.
Instead, see Where To File on page 3.
Page 23 of 23
Instructions for Form 990-T
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Codes for Unrelated Business Activity
(If engaged in more than one unrelated business activity, select up to two codes for the principal activities. List first the largest in terms of gross
unrelated income, then the next largest. Be sure to classify your unrelated activities, rather than your related activities. For example, code income
from advertising in publications as 541800, Advertising and related services, rather than selecting a code describing a printing or publishing
activity. Also, if possible, select a code that more specifically describes your unrelated activity, rather than a code for a more general activity.)
AGRICULTURE, FORESTRY, HUNTING,
AND FISHING
Code
110000 Agriculture, forestry, hunting, and fishing
111000 Crop production
MINING
Code
211110 Oil and 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
442000
443120
444100
445100
445200
446110
446199
448000
451110
451211
452000
453000
453220
453310
454110
Automobile dealers
Furniture and home furnishings stores
Computer and software stores
Building materials and supplies dealers
Grocery stores
Specialty food stores
Pharmacies and drug stores
All other health and personal care stores
Clothing and clothing accessories stores
Sporting goods stores
Book stores
General merchandise stores
Miscellaneous store retailers
Gift, novelty, and souvenir stores
Used merchandise stores
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
511120
511130
511140
511190
512000
515100
517000
519130
Newspaper publishers (except Internet)
Periodical publishers (except Internet)
Book publishers (except Internet)
Directory and mailing list publishers (except
Internet)
Other publishers (except Internet)
Motion picture and sound recording industries
Radio and television broadcasting (except
Internet)
Telecommunications (including paging, cellular,
satellite, cable, other telecommunications,
and internet service providers)
Internet Publishing and Broadcasting
DATA PROCESSING SERVICES
Code
518210 Data Processing, Hosting, and Related Services
519100 Other information services (including news
syndicates and libraries, Internet publishing and
broadcasting)
EDUCATIONAL 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)
522210 Credit card issuing
522220 Sales financing
522291 Consumer lending
522292 Real estate credit
522299 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
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)
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
REAL ESTATE AND RENTAL AND LEASING
624210
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
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 AND
WASTE MANAGEMENT AND
REMEDIATION SERVICES
Administrative and Support Services
Code
561000
561300
561439
561499
561500
561520
561700
Administrative and support services
Employment services
Other business service centers (including copy shops)
All other business support services
Travel arrangement and reservation services
Tour operators
Services to buildings and dwellings
Waste Management and Remediation Services
Code
562000 Waste management and remediation services
(sanitary services)
HEALTHCARE AND SOCIAL ASSISTANCE
Code
621110
621300
621400
621500
621610
621910
621990
623000
623990
624100
624110
624200
624310
624410
Offices of physicians
Offices of other health practitioners
Outpatient care centers
Medical and diagnostic laboratories
Home health care services
Ambulance services
All other ambulatory health care services
Nursing and residential care facilities
Other residential care facilities
Individual and family services
Community centers (except rec. only), youth
Adoption agencies
Community food and housing, and emergency
and other relief services
Meal delivery programs
Soup kitchens
Food banks
Vocational rehabilitation services
Child day care services
ARTS, ENTERTAINMENT, AND
RECREATION
Code
711110
711120
711130
711190
711210
711300
713110
713200
713910
713940
713990
Theater companies and dinner theaters
Dance companies
Musical groups and artists
Other performing art companies
Spectator sports (including sports clubs
and racetracks)
Promoters of performing arts, sports, and
simiilar events
Amusement and theme parks
Gambling industries
Golf courses and country clubs
Fitness and recreational sports centers
All other amusement and recreation industries
(including skiing facilities, marinas, and bowling
centers)
ACCOMMODATION AND FOOD SERVICES
Code
721000 Accomodation
721110 Hotels (except casino hotels) and motels
721210 RV (recreational vehicle) parks and recreational
camps
721310 Rooming and boarding houses
722100 Full-service restaurants
722210 Limited-service eating places
722320 Caterers
722410 Drinking places (alcoholic beverages)
OTHER SERVICES
Code
811000
812300
812900
812930
Repair and maintenance
Drycleaning and laundry services
Other personal services
Parking lots and garages
OTHER
Code
900001 Investment activities of section 501(c)(7), (9), or
(17) organizations
900002 Rental of personal property
900003 Passive income activities with controlled
organizations
900004 Exploited exempt activities
900099 Other activity
| File Type | application/pdf |
| File Title | Project File Checksheet.doc |
| Author | RMDFB |
| File Modified | 2009-12-16 |
| File Created | 2009-12-16 |