Schedule J - Compensation Information; Schedule J-1 - Continuation Sheet for Sch J-1; Schedule J-2 - Continuation Sheet for Form 990

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Instructions for Schedule J (Form 990)

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11:20 - 28-JAN-2010

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2009

Department of the Treasury
Internal Revenue Service

Instructions for Schedule J
(Form 990)
Compensation Information
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
Note. Terms in bold are defined in the
Glossary of the Instructions for Form
990.

Purpose of Schedule
Schedule J (Form 990) is used by an
organization that files Form 990 to
report compensation information for
certain officers, directors, individual
trustees, key employees, and highest
compensated employees, and
information on certain compensation
practices of the organization.
Use Schedule J-1 (Form 990),
Continuation Sheet for Schedule J
(Form 990), to report additional
information for Part II of Schedule J.
Use as many Schedules J-1 as
needed.
Use Schedule J-2 (Form 990) as a
continuation sheet to list persons and
report compensation that did not fit in
the space provided on Form 990, Part
VII, Section A. Do not use Schedule J-2
as a continuation sheet for Schedule J.

Who Must File
An organization that answered “Yes” on
Form 990, Part IV, line 23, must
complete Schedule J. Do not file
Schedule J for institutional trustees.
If an organization is not required to
file Form 990 but chooses to do so, it
must file a complete return and provide
all of the information requested,
including the required schedules.

Specific Instructions
Part I asks questions regarding certain
compensation practices of the
organization. Part I generally pertains to
all officers, directors, trustees and
employees of the organization listed on
Form 990, Part VII, Section A,
regardless of whether the organization
answered “Yes” to line 23 of Part IV for
all such individuals. However, only the
organizations that are described in Who
Must File must complete Part I. Part I,

lines 1, 2, 7, and 8 require reporting on
the compensation practices of the filing
organization, but not of related
organizations. Lines 3 through 6
require information regarding both the
filing organization and its related
organizations. Part I, lines 5 through 8,
must be completed only by section
501(c)(3) and section 501(c)(4)
organizations.
Part II requires detailed
compensation information for
individuals for whom the organization
answered “Yes” on Form 990, Part IV,
line 23. Not all persons listed on Form
990, Part VII, Section A, will necessarily
be listed in Schedule J, Part II.
Part III is used to provide
explanations of answers as required in
Parts I or II.
Unless stated otherwise, all
questions in this schedule pertain to
activity during the calendar year ending
with or within the organization’s tax
year.

Part I. Questions
Regarding
Compensation
For purposes of Part I, a listed person
is a person listed on Form 990, Part VII,
Section A.
Line 1. Report information regarding
certain benefits (if any) provided to
persons listed on Form 990, Part VII,
Section A, line 1a.
Line 1a. Check the appropriate
box(es) if the organization provided any
of the listed benefits to any of the
persons listed on Form 990, Part VII,
Section A, regardless of whether such
benefits are reported as compensation
on Form W-2, box 5, or Form
1099-MISC, box 7. For each of the
listed benefits provided to or for a listed
person, provide in Part III relevant
information regarding these items,
which can include the following.
• The type of benefit.
• The listed person who received the
benefit, or a description of the types (for
example, all directors) and number of
listed persons that received the benefit.
Cat. No. 51525Q

• Whether the benefit, or any part of it,

was treated as taxable compensation to
the listed person.
First-class travel refers to any travel
on a passenger airplane, train, or boat
with first-class seats or
accommodations by a listed person or
his or her companion if any portion of
the cost above the lower-class fare is
paid by the organization. First-class
travel does not include intermediate
classes between first class and coach,
such as business class on commercial
airlines. Bump-ups to first class free of
charge or as a result of using frequent
flyer benefits, or similar arrangements
that are at no additional cost to the
organization, can be disregarded.
Charter travel refers to travel on an
airplane, train, or boat under a charter
or rental arrangement. Charter travel
also includes any travel on an airplane
or boat that is owned or leased by the
organization.
Travel for companions refers to any
travel of a listed person’s guest not
traveling primarily for bona fide
business purposes of the organization.
It also refers to any travel of a listed
person’s family members, whether or
not for bona fide business purposes.
Tax indemnification and gross-up
payments refer to the organization’s
payment or reimbursement of any tax
obligations of a listed person.
Discretionary spending account
refers to an account or sum of money
under the control of a listed person with
respect to which he or she is not
accountable to the organization under
an accountable plan, whether or not
actually used for any personal
expenses. Accountable plans are
discussed in the instructions for Part II.
Housing allowance or residence for
personal use refers to any payment for,
or provision of, housing by the
organization for personal use by a
listed person.
Payments for business use of
personal residence refers to any
payment by the organization for the use
of all or part of a listed person’s
residence for any purpose of the
organization.

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Instructions for Schedule J (Form 990)

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Health or social club dues or
initiation fees refers to any payment of
dues by the organization for the
membership of a listed person in a
health or fitness club or a social or
recreational club, whether or not such
clubs are tax-exempt. It does not
include membership fees for an
organization described in section
501(c)(3) or section 501(c)(6) unless
such organization provides health,
fitness, or recreational facilities
available for the regular use of a listed
person. Health club dues do not include
provision by the organization of an
on-premises athletic facility described in
section 132(j)(4), or provision by a
school of an athletic facility available for
general use by its students, faculty, and
employees. Dues include the entrance
fee, periodic fees, and amounts paid for
use of such facilities.
Personal services refers to any
services for the personal benefit of a
listed person or the family or friends of
a listed person, whether provided
regularly (on a full-time or part-time
basis) or as needed, whether provided
by an employee of the organization or
independent contractor (and whether
the independent contractor is an
individual or an organization). They
include, but are not limited to, services
of a babysitter, bodyguard, butler,
chauffeur, chef, concierge or other
person who regularly runs nonincidental
personal errands, escort, financial
planner, handyman, landscaper,
lawyer, maid, masseur/masseuse,
nanny, personal trainer, personal
advisor or counselor, pet sitter,
physician or other medical specialist,
tax preparer, and tutor for nonbusiness
purposes. Personal services do not
include services provided to all
employees on a nondiscriminatory
basis under a qualified employee
benefit plan.
Line 1b. If the organization
provided any of the benefits listed in
line 1a, to one or more listed persons,
answer “Yes” if the organization
followed a written policy regarding the
payment, provision, or reimbursement
of all such benefits to listed persons. If
the organization did not follow a written
policy for payment, provision, or
reimbursement of any listed benefits,
explain in Part III who determined the
organization would provide such
benefits and the decision-making
process.
Line 2. Answer “Yes” if the
organization required substantiation of
all expenses or benefits listed on line 1,
in accordance with the rules for
accountable plans discussed in
Accountable plan amounts, later, under
Part II, column (D), prior to reimbursing
or allowing all such expenses incurred

by any officers, directors, and
trustees, including the CEO, executive
director, or other top management
official (all referred to as top
management official). An organization
can answer “Yes” if it checked the
“Discretionary spending account” box
on line 1 and required substantiation of
expenses under the rules for
accountable plans for all listed benefits
on line 1 other than for discretionary
spending accounts.
Line 3. Check the appropriate box(es)
to indicate which methods, if any, the
organization used to establish the
compensation of the organization’s
top management official. Do not
check any box(es) for methods used by
a related organization to establish the
filing organization’s compensation of its
top management official. Explain in Part
III that the organization relied on a
related organization that used one or
more of the methods described below
to establish the top management
official’s compensation.
Compensation committee refers to a
committee of the organization’s
governing body responsible for
determining the top management
official’s compensation package,
whether or not the committee has been
delegated the authority to make an
employment agreement with the top
management official on behalf of the
organization. The compensation
committee can also have other duties.
Independent compensation
consultant refers to a person outside
the organization who advises the
organization regarding the top
management official’s compensation
package, holds himself or herself out to
the public as a compensation
consultant, performs valuations of
nonprofit executive compensation on a
regular basis, and is qualified to make
valuations of the type of services
provided. The consultant is
independent if he or she does not have
a family relationship or business
relationship with the top management
official, and if a majority of his or her
appraisals made during his or her tax
year are performed for persons other
than the organization, even if the
consultant’s firm also provides tax,
audit, and other professional services to
the organization.
Form 990 of other organizations
refers to compensation information
reported on Form 990, 990-EZ, or
990-PF of similarly situated
organizations.
Written employment contract refers
to one or more recent or current written
employment agreements to which the
top management official and another
organization are or were parties, written
employment agreements involving

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similarly situated top management
officials with similarly situated
organizations, or written employment
offers to the top management official
from other organizations dealing at
arm’s length.
Compensation survey or study refers
to a study of top management official
compensation or functionally
comparable positions in similarly
situated organizations.
Approval by board or compensation
committee refers to the ultimate
decision by the governing body or
compensation committee on behalf of
the organization regarding whether to
enter into an employment agreement
with the top management official, and
the terms of such agreement.
Line 4. List in Part III the names of
listed persons paid amounts during the
year by the filing organization or a
related organization under any
arrangement described in lines 4a
through 4c, and report the amounts
paid during the year to each such listed
person. Also describe in Part III the
terms and conditions of any
arrangement described in lines 4a
through 4c in which one or more listed
persons participated during the year,
regardless of whether any payments to
the listed person were made during the
year.
Line 4a. Answer “Yes” if a listed
person received a severance or
change-of-control payment from the
organization or a related organization.
A severance payment is a payment
made if the right to the payment is
contingent solely upon the person’s
severance from service in specified
circumstances, such as upon an
involuntary separation from service.
Payments under a change-of-control
arrangement are made in connection
with a termination or change in the
terms of employment resulting from a
change in control of the organization.
Treat as a severance payment any
payment to a listed person in
satisfaction or settlement of a claim for
wrongful termination or demotion.
Line 4b. Answer “Yes” if a listed
person participated in or received
payment from any supplemental
nonqualified retirement plan
established, sponsored, or maintained
by or for the organization or a related
organization. A supplemental
nonqualified retirement plan is a
nonqualified retirement plan that is not
generally available to all employees but
is available only to a certain class or
classes of management or highly
compensated employees. For this
purpose, include as a supplemental
nonqualified retirement plan a plan
described in section 457(f), but do not

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include a plan described in section
457(b).
Line 4c. Answer “Yes” if a listed
person participated in or received
payment from the organization or a
related organization of any
equity-based compensation (such as
stock, stock options, stock appreciation
rights, restricted stock, or phantom or
shadow stock), or participated in or
received payment from any equity
compensation plan or arrangement
sponsored by the organization or a
related organization, whether the
compensation is determined by
reference to equity in a partnership,
limited liability company, or corporation.
Equity-based compensation does not
include compensation contingent on the
revenues or net earnings of the
organization, which are addressed by
lines 5 and 6 later.
Example. A, a listed person, is an
employee of organization B. B owns an
interest in C, a for-profit subsidiary, that
is a stock corporation. As part of A’s
compensation package, B provides
restricted stock in C to A. This is an
equity-based compensation
arrangement for purposes of line 4c.
The same would be true if C were a
partnership or limited liability company
and B provided A a profits interest or
capital interest in C.
Line 5. Answer “Yes” if the
organization paid or accrued with
respect to a listed person any
compensation contingent upon and
determined in whole or in part by the
revenues (gross or net) of one or more
activities of the organization or a
related organization, or by the
revenues (gross or net) of the
organization or a related organization
as a whole. For this purpose, net
revenues means gross revenues less
certain expenses, but does not mean
net income or net earnings. Describe
such arrangements in Part III.
Example. A, a listed person, is a
physician employed by organization B.
As part of A’s compensation package,
A is to be paid a bonus equal to x% of
B’s net revenues from a particular
department operated by B for a
specified period of time. This
arrangement is a payment contingent
on revenues of the organization, and
must be reported on line 5, regardless
of whether the payment is contingent
on achieving a certain revenue target.
However, if instead the bonus payment
is a specific dollar amount (for instance,
$5,000) to be paid only if a gross
revenue or net revenue target of the
department is achieved, the payment is
not contingent on revenues of the
organization for this purpose.
Line 6. Answer “Yes” if the
organization paid or accrued with

respect to a listed person any
compensation contingent upon and
determined in whole or in part by the
net earnings of one or more activities of
the organization or a related
organization, or by the net earnings of
the organization or a related
organization as a whole. Describe such
arrangements in Part III.
Example. A, a listed person, is an
employee of organization B. As part of
A’s compensation package, A is to be
paid a bonus equal to x% of B’s net
earnings for a specified period of time.
This arrangement is a payment
contingent on net earnings of the
organization for line 6 purposes,
regardless of whether the payment is
contingent on achieving a certain net
earnings target. However, if instead the
bonus payment is a specific dollar
amount to be paid only if a net earnings
target is achieved, the payment is not
contingent on the net earnings of the
organization for this purpose.
Line 7. Answer “Yes” if the
organization provided any non-fixed
payments, not described on lines 5 and
6, with respect to a listed person.
Describe such arrangements in Part III.
A fixed payment is an amount of cash
or other property specified in the
contract, or determined by a fixed
formula specified in the contract, which
is to be paid or transferred in exchange
for the provision of specified services or
property. A fixed formula can
incorporate an amount that depends
upon future specified events or
contingencies, provided that no person
exercises discretion when calculating
the amount of a payment or deciding
whether to make a payment, such as a
bonus. Amounts paid or accrued with
respect to any listed person that are not
fixed amounts as defined above are
non-fixed payments. For example, any
amount paid to a person under a
reimbursement arrangement where
discretion is exercised by any person
with respect to the amount of expenses
incurred or reimbursed is a non-fixed
payment. See Regulations section
53.4958-4(a)(3).
Exception. Amounts payable
pursuant to a qualified pension,
profit-sharing, or stock bonus plan
under section 401(a), or pursuant to an
employee benefit program that is
subject to and satisfies coverage and
nondiscrimination rules under the
Internal Revenue Code (for example,
sections 127 and 137), other than
nondiscrimination rules under section
9802, are treated as fixed payments for
purposes of line 7, regardless of the
organization’s discretion with respect to
the plan or program. The fact that a
person contracting with the organization
is expressly granted the choice to

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accept or reject any economic benefit is
disregarded in determining whether the
benefit constitutes a fixed payment for
purposes of line 7.
Line 8. Answer “Yes” if any amounts
from the organization reported on Form
990, Part VII, were paid pursuant to a
contract subject to the initial contract
exception described in Regulations
section 53.4958-4(a)(3). Describe such
arrangements in Part III. Fixed
payments made pursuant to an initial
contract are not subject to section
4958. An initial contract is a binding
written contract between the
organization and a person who was not
a disqualified person (within the
meaning of section 4958(f)(1)) with
respect to the organization immediately
prior to entering into the contract. See
the instructions for line 7 for the
definition of fixed payments.
Line 9. Answer “Yes” if the payments
described in line 8 above were made
pursuant to an initial contract that was
reviewed and approved by the
organization following the rebuttable
presumption procedure described in
Regulations section 53.4958-6(c). For
more information on the initial contract
exception and rebuttable presumption
procedure, see Appendix G, Section
4958 Excess Benefit Transactions, in
the Instructions for Form 990.

Part II. Officers,
Directors, Trustees, Key
Employees, and Highest
Compensated
Employees
Enter information for certain
individuals listed on Form 990, Part VII,
Section A, as described below. Report
compensation for the calendar year
ending with or within the organization’s
tax year paid to or earned by the
following individuals.
• Each of the organization’s former
officers, former directors, former
trustees, former key employees, and
former five highest compensated
employees listed on Form 990, Part
VII, Section A.
• Each of the organization’s current
officers, directors, trustees, key
employees, and five highest
compensated employees for whom the
sum of Form 990, Part VII, Section A,
Columns (D), (E), and (F) is greater
than $150,000.
• Each of the organization’s current
and former officers, directors, trustees,
key employees, and five highest
compensated employees who received
or accrued compensation for services
rendered to the organization from an
unrelated organization, and who are

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Instructions for Schedule J (Form 990)

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required to be reported on line 5 of
Form 990, Part VII, Section A.
All current key employees

TIP listed on Form 990, Part VII,
Section A must also be reported
on Schedule J, Part II, because their
reportable compensation, by
definition, exceeds $150,000.
Do not list any individuals in
Schedule J, Part II that are not listed on
Form 990, Part VII, Section A. Do not
list in Part II management companies
or other organizations providing
services to the organization. Do not list
highest compensated independent
contractors reported on Form 990,
Part VII, Section B.
For each individual listed, enter
compensation from the organization on
row (i), and compensation from all
related organizations on row (ii).
Related organizations are explained in
the Glossary in the Instructions for
Form 990 and the Instructions for
Schedule R (Form 990), Related
Organizations and Unrelated
Partnerships. Any type and amount of
reportable compensation from related
organizations that was excluded from
Form 990, Part VII, Section A, column
(E), pursuant to the
$10,000-per-related-organization
exception must be included on
Schedule J, Part II, columns B(i), B(ii),
and B(iii). If there is no compensation to
report in a particular column, enter “-0-.”
If the organization answered “Yes” to
Form 990, Part VII, Section A, line 5,
report such compensation from the
unrelated organization as if it were
received from the organization, and
enter the name of the unrelated
organization in Part III.
For a table showing how and where
to report certain types of compensation
on Schedule J, see the instructions to
line 1 of Form 990, Part VII, Section A.
Any type and amount of other
compensation that was excluded from
Form 990, Part VII, Section A, pursuant
to the $10,000-per-item exception for
certain other compensation items must
be included in Schedule J, Part II,
columns (C) or (D).
For purposes of these instructions, a
listed person is a person required to be
listed in Part II.
If there are more individuals to report
in Part II than space available, report
the additional individuals in Part I of
Schedule J-1. Use as many Schedules
J-1 as needed.
Column (A). Enter the name of each
person who must be listed in Part II.
Column (B). Amounts reported on
Form 990, Part VII, Section A, columns
(D) and (E), must be broken out

between columns (B)(i), (B)(ii), and
(B)(iii).
For certain kinds of employees,

TIP such as certain members of the
clergy and religious workers
who are not subject to social security
and Medicare taxes as employees, box
5 of Form W-2 may be blank. In this
case, the amount required to be
reported in box 1 of Form W-2 for the
listed persons must be reported, as
appropriate, in columns (B)(i), (B)(ii),
and (B)(iii).
Column (B)(i). Enter the listed
person’s base compensation that was
included in box 5 of Form W-2 (or in
box 1, if no compensation is reported
for that person in box 5), or box 7 of
Form 1099-MISC, issued to the person.
Base compensation means
nondiscretionary payments to a person
agreed upon in advance, contingent
only on the payee’s performance of
agreed-upon services (such as salary
or fees).
Column (B)(ii). Enter the listed
person’s bonus and incentive
compensation that is included in box 5
of Form W-2, (or in box 1, if no
compensation is reported for that
person in box 5), or box 7 of Form
1099-MISC, issued to the person.
Examples include payments based on
satisfaction of a performance target
(other than mere longevity of service),
and payments at the beginning of a
contract before services are rendered
(for example, signing bonus).
Column (B)(iii). Enter all other
payments to the listed person included
in box 5 of Form W-2, (or in box 1, if no
compensation is reported for that
person in box 5), or box 7 of Form
1099-MISC issued to the person but
not reflected in columns (B)(i) or (B)(ii).
Examples include, but are not limited
to, current-year payments of amounts
earned in a prior year, payments under
a severance plan, payments under an
arrangement providing for payments
upon the change in ownership or
control of the organization or similar
transaction, and awards based on
longevity of service.
Column (C). Enter all current-year
deferrals of compensation for the listed
person under any retirement or other
deferred compensation plan, whether
qualified or nonqualified, that is
established, sponsored, or maintained
by or for the organization or a related
organization. Report as deferred
compensation the annual increase in
actuarial value, if any, of a defined
benefit plan, but do not report earnings
accrued on deferred amounts in a
defined contribution plan. Do not enter
in column (C) any payments to a listed
person of compensation that are
included in box 5 of Form W-2 (or in

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box 1, if no compensation is reported
for that person in box 5), or box 7 of
Form 1099-MISC, issued to the person
for the calendar year ending with or
within the organization’s tax year. Enter
a reasonable estimate if actual
numbers are not readily available.
For this purpose, deferred
compensation is compensation that is
earned or accrued in, or is attributable
to, one year and deferred to a future
year for any reason, whether or not
funded, vested, or subject to a
substantial risk of forfeiture. This
includes earned but unpaid incentive
compensation deferred pursuant to a
deferred compensation plan. Note that
different rules can apply for determining
whether an arrangement provides for
deferred compensation for purposes of
Internal Revenue Code provisions such
as sections 83, 409A, 457(f), or
3121(v).
Do not report deferred compensation
in column (C) before it is earned or
accrued under the principles described.
For this purpose, deferred
compensation is generally treated as
earned or accrued in the year that
services are rendered, except when
entitlement to payment is contingent on
satisfaction of specified performance
criteria (other than mere longevity of
service) under the deferred
compensation plan. If the payment of
an amount of deferred compensation
requires the employee to perform
services for a period of time, the
amount is treated as accrued or earned
ratably over the course of the service
period, even though the amount is not
funded and may be subject to a
substantial risk of forfeiture until the
service period is completed.
Report deferred compensation for
each listed person regardless of
whether such compensation is deferred
as part of a deferred compensation
plan that is administered by a separate
trust, as long as the plan is established,
sponsored, or maintained by or for the
organization or a related organization
for the benefit of the listed person.
The following examples illustrate
when deferred compensation is
considered earned or accrued, as well
as when and how it is to be reported. In
these examples, assume that the
amounts deferred are not reported on
Form W-2, box 5 prior to the year
during which the amounts are paid.
Example 1. An executive
participates in Organization A’s
nonqualified deferred compensation
plan. Under the terms of the plan
beginning January 1 of calendar year 1,
she earns for each year of service an
amount equal to 2% of her base salary
of $100,000 for that year. These
additional amounts are deferred and

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Instructions for Schedule J (Form 990)

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are not vested until the executive has
completed 3 years of service with
Organization A. In year 4 the deferred
amounts for years 1 through 3 are paid
to the executive. For each of the years
1 through 3, Organization A enters
$2,000 of deferred compensation for
the executive in column (C). For year 4,
Organization A enters $6,000 in column
(B)(iii) and $6,000 in column (F).
Example 2. Under the terms of his
employment contract with Organization
B beginning July 1 of calendar year 1,
an executive is entitled to receive
$50,000 of additional compensation
after he has completed five years of
service with the organization. The
compensation is contingent only on the
longevity of service. The $50,000 is
treated as accrued or earned ratably
over the course of the five years of
service, even though it is not funded or
vested until the executive has
completed the 5 years. Organization B
makes payment of $50,000 to the
executive in calendar year 6.
Organization B enters $5,000 of
deferred compensation in column (C)
for calendar year 1 and $10,000 for
each of calendar years 2 through 5. For
calendar year 6, Organization B enters
$50,000 in column (B)(iii) and $45,000
in column (F).
Example 3. An executive
participates in Organization C’s
incentive compensation plan. The plan
covers calendar years 1 through 5.
Under the terms of the plan, the
executive is entitled to earn 1% of
Organization C’s total productivity
savings for each year during which
Organization C’s total productivity
savings exceed $100,000. Earnings
under the incentive compensation plan
will be payable in year 6, to the extent
funds are available in a certain
“incentive compensation pool.” For
years 1 and 2, Organization C’s total
productivity savings are $95,000. For
each of years 3, 4, and 5, Organization
C’s total productivity savings are
$120,000. Accordingly, the executive
earns $1,200 of incentive compensation
in each of years 3, 4, and 5. She does
not earn anything under the incentive
compensation plan in years 1 and 2
because the relevant performance
criteria were not met in those years.
Although the amounts earned under the
plan for years 3, 4, and 5, are
dependent upon there being a sufficient
incentive compensation pool from
which to make the payment,
Organization C enters $1,200 of
deferred compensation in column (C) in
years 3, 4, and 5. In year 6,
Organization C pays $3,600 attributable
to years 3, 4, and 5, and enters $3,600
in column (B)(ii) and $3,600 in column
(F).

Column (D). “Nontaxable benefits” are
benefits specifically excluded from
taxation under the Internal Revenue
Code. Report the value of all
nontaxable benefits provided to or for
the benefit of the listed person, other
than benefits disregarded for purposes
of section 4958 under Regulations
section 53.4958-4(a)(4). Common
nontaxable and section 4958
disregarded benefits, referred to as
“fringe benefits,” below are discussed in
detail beginning on this page.
Depending on the type of benefit,
fringe benefits can be provided only to
employees or also to persons other
than employees, such as directors,
trustees, and independent
contractors. Fringe benefits can be
entirely personal in nature or can
combine personal and business
elements.
The taxability of a benefit can
depend upon the form in which it is
provided. For example, a cash housing
allowance is ordinarily reportable in
Form W-2, box 5. Under section 119,
housing provided for the convenience
of the employer can be excludable, and
the fair rental value of in-kind housing
provided to certain school employees
can be part taxable and part
excludable, depending on facts and
circumstances. Taxable benefits must
be reported on Form W-2.
The following benefits provided for a
listed person must be reported in
column (D) to the extent not reported
as taxable compensation in Form W-2,
box 5 (or in box 1, if no compensation
is reported for that person in box 5) or
Form 1099-MISC, box 7.
• Value of housing provided by the
employer.
• Educational assistance.
• Health insurance.
• Medical reimbursement programs.
• Life insurance.
• Disability benefits.
• Long-term care insurance.
• Dependent care assistance.
• Adoption assistance.
• Payment or reimbursement by the
organization of (or payment of liability
insurance premiums for) any penalty,
tax, or expense of correction owed
under chapter 42 of the Internal
Revenue Code, any expense not
reasonably incurred by the person in
connection with a civil judicial or civil
administrative proceeding arising out of
the person’s performance of services
on behalf of the organization, or any
expense resulting from an act or failure
to act with respect to which the person
has acted willfully and without
reasonable cause.
The list above is not all-inclusive.
Disregarded benefits. Disregarded
benefits under Regulations section

-5-

53.4958-4(a)(4) need not be reported in
column (D). “Disregarded benefits”
generally include fringe benefits
excluded from gross income under
section 132. These benefits include the
following.
• No-additional cost service.
• Qualified employee discount.
• De minimis fringe.
• Reimbursements pursuant to an
accountable plan.
• Working condition fringe.
• Qualified transportation fringe.
• Qualified moving expense
reimbursement.
• Qualified retirement planning
services.
• Qualified military base realignment
and closure fringe.
De minimis fringe. A “de minimis
fringe” is a property or service the value
of which, after taking into account the
frequency with which similar fringes are
provided by the employer to the
employees, is so small as to make
accounting for it unreasonable or
administratively impractical.
Working condition fringe. A
working condition fringe is any property
or service provided to an employee to
the extent that, if the employee paid for
the property or service, the payment
would be deductible by the employee
under section 162 (ordinary and
necessary business expense) or
section 167 (depreciation). In some
cases, property provided to employees
may be used partly for business and
partly for personal purposes, such as
automobiles. In that case the value of
the personal use of such property is
taxable compensation, and the value
of the use for business purposes
properly accounted for is a working
condition fringe benefit.
Accountable plan amounts. An
accountable plan is a reimbursement or
other expense allowance arrangement
that meets each of the following rules.
1. The expenses covered under the
plan must be reasonable employee
business expenses that are deductible
under section 162 or other provisions of
the Code.
2. The employee must adequately
account to the employer for the
expenses within a reasonable period of
time.
3. The employee must return any
excess allowance or reimbursement
within a reasonable period of time. See
Regulations section 1.62-2 and Pub.
535, Business Expenses, for
explanations of accountable plans.
The method by which benefits under
an accountable plan are provided
(whether reimbursement, cash
advances with follow-up accounting, or
charge by the employee on company

Page 6 of 6

Instructions for Schedule J (Form 990)

11:20 - 28-JAN-2010

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

credit card) is not material. Payments
that do not qualify under the
accountable plan rules, such as
payments for which the employee did
not adequately account to the
organization, or allowances that were
more than the payee spent on serving
the organization, constitute
compensation.
Directors and trustees are treated as
employees for purposes of the working
condition fringe provisions of section
132. Therefore, treat cash payments to
directors or trustees made under
circumstances substantially identical to
the accountable plan provisions as a
section 132 working condition fringe.
See Pub. 15-B, Employer’s Guide to
Fringe Benefits, Pub. 521, Moving
Expenses, and Unreimbursed
Employee Expenses in Pub. 529,

Miscellaneous Deductions, for further
explanation of section 132 fringe
benefits and for determining whether a
given section 132 fringe benefit is
available to nonemployees, such as
directors and trustees, or to persons
who no longer work for the
organization.
Column (F). Enter in column (F) any
payment reported in this year’s column
(B) to the extent such payment was
already reported as compensation to
the listed person in a prior Form 990,
990-EZ, or 990-PF. For this purpose,
the amount must have been reported
as compensation specifically for the
listed person on the prior form.
Inclusion of the amount in the
organization’s compensation expense
reported in its Statement of Functional

-6-

Expenses in Form 990, Part IX is not
sufficient. Do not include in column (F)
amounts that were reported in a prior
Form 990 but that were forfeited or
repaid by the listed person or otherwise
recovered by the organization during
this tax year, and which are not
reported in column (B) for this year.

Part III. Supplemental
Information
Use Part III to provide narrative
information, explanations, or
descriptions required for Part I, lines 1a,
1b, 3, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 7, and
8. Also use Part III to provide other
narrative explanations and descriptions,
as applicable. Identify the specific part
and line(s) that the response supports.