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Instructions for Form 990-T
Department of the Treasury
Internal Revenue Service
Exempt Organization Business Income Tax Return (and Proxy Tax Under Section
6033(e))
Future Developments
Section references are to the Internal Revenue
Code unless otherwise noted.
Contents
Purpose of Form . . . . . . . . . . . .
Who Must File . . . . . . . . . . . . .
Definitions . . . . . . . . . . . . . . . .
When To File . . . . . . . . . . . . . .
Where To File . . . . . . . . . . . . . .
Estimated Tax Payments . . . . . .
Depository Method of Tax
Payment . . . . . . . . . . . . . .
Interest and Penalties . . . . . . . . .
Which Parts To Complete . . . . . .
Consolidated Returns . . . . . . . .
Other Forms That May Be
Required . . . . . . . . . . . . . .
Accounting Methods . . . . . . . . .
Accounting Period . . . . . . . . . . .
Reporting Form 990-T Information
on Other Returns . . . . . . . .
Rounding Off to Whole Dollars . . .
Attachments . . . . . . . . . . . . . . .
Public Inspection Requirements of
Section 501(c)(3)
Organizations . . . . . . . . . . .
Period Covered . . . . . . . . . . . .
Name and Address . . . . . . . . . .
Blocks A Through J . . . . . . . . . .
Part I. Unrelated Trade or
Business Income . . . . . . . .
Part II. Deductions Not Taken
Elsewhere . . . . . . . . . . . . .
Part III. Tax Computation . . . . . .
Part IV. Tax and Payments . . . . .
Part V. Statements Regarding
Certain Activities and Other
Information . . . . . . . . . . . .
Signature . . . . . . . . . . . . . . . .
Schedule A. Cost of Goods Sold . .
Schedule C. Rent Income . . . . . .
Schedule E. Unrelated
Debt-Financed Income . . . . .
Schedule F. Interest, Annuities,
Royalties, and Rents From
Controlled Organizations . . .
Schedule G. Investment Income of
a Section 501(c)(7), (9), or
(17) Organization . . . . . . . .
Schedule I. Exploited Exempt
Activity Income, Other Than
Advertising Income . . . . . . .
Schedule J. Advertising Income . .
Schedule K. Compensation of
Officers, Directors, and
Trustees . . . . . . . . . . . . . .
Business Activity Codes . . . . . . .
Mar 27, 2018
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The IRS has created a page on IRS.gov
for information about Form 990-T and its
instructions, at IRS.gov/Form990T.
Information about any future
developments affecting Form 990-T (such
as legislation enacted after we release it)
will be posted on that page.
What's New
Tax rates for corporate organizations
that are fiscal year filers. P.L. 115-97
replaced the graduated corporate tax
structure with a flat 21% corporate tax rate
and repealed the corporate alternative
minimum tax (AMT), effective for tax years
beginning after December 31, 2017.
However, under section 15, corporations
with fiscal tax years beginning before
January 1, 2018, and ending after
December 31, 2017, figure and apportion
their tax (including the alternative
minimum tax) by blending the rates in
effect before January 1, 2018, with the
rate in effect after December 31, 2017.
See Blended tax rate for fiscal year filers
and Alternative minimum tax for fiscal year
filers in Part III. Tax Computation, later.
Form 8975. Certain United States
persons that are the ultimate parent entity
of a United States multinational enterprise
group with annual revenue for the
preceding reporting period of $850 million
or more are required to file Form 8975.
Form 8975 and its Schedules A (Form
8975) must be filed with the income tax
return of the ultimate parent entity of a
U.S. multinational enterprise group for the
tax year in or within which the reporting
period covered by Form 8975 ends. The
first required reporting period for an
ultimate parent entity is the 12-month
reporting period that begins on or after the
first day of a tax year of the ultimate parent
entity that begins on or after June 30,
2016. For more information, see Form
8975, Schedule A (Form 8975), and the
Instructions for Form 8975 and
Schedule A (Form 8975).
Increase in penalty for failure to file.
For tax years beginning in 2017, the
minimum penalty for failure to file a return
that is over 60 days late has increased to
the smaller of the tax due or $210. See
Late filing of return, later.
Cat. No. 11292U
Alternative tax for corporate
organizations with qualified timber
gains. The alternative tax for corporations
with qualified timber gains has been
extended. Therefore, for tax years
beginning in 2017, if a corporation has
both a net capital gain and a qualified
timber gain, a maximum 23.8% alternative
tax may apply.
Principal Business Activity Codes. The
Principal Business Activity Codes, located
at the end of these instructions, have been
updated and revised to reflect updates to
the North American Industry Classification
System (NAICS).
Section 179D deductions. The
deduction under section 179D for the cost
of energy efficient commercial building
property has been extended through
December 31, 2017.
America Samoa economic
development credit. The American
Samoa economic development credit has
been extended through December 31,
2017.
Disaster relief. Disaster tax relief enacted
for those impacted by Hurricane Harvey,
Irma, or Maria includes a provision
modifying the limit on a corporation's
deduction for charitable contributions
made after August 22, 2017 and before
January 1, 2018 (after October 7, 2017
and before January 1, 2019 for relief
efforts in the California wildfire disaster
area.) See Temporary suspension of 10%
limitation for certain disaster-related
contributions, later. For more information
on this and other disaster relief provisions,
see Pub. 976.
Reminder
Don't include social security numbers
on publicly disclosed forms. Because
the IRS is required to publicly disclose a
501(c)(3) organization’s Form 990-T
returns, social security numbers should
not be included on this form. Documents
subject to disclosure include schedules
and attachments filed with the form. See
Public Inspection Requirements of Section
501(c)(3) Organizations, later.
General Instructions
Purpose of Form
Use Form 990-T to:
Report unrelated business income;
Figure and report unrelated business
income tax liability;
Report proxy tax liability;
Claim a refund of income tax paid by a
regulated investment company (RIC) or a
real estate investment trust (REIT), on
undistributed long-term capital gain;
Request a credit for certain federal
excise taxes paid or for small employer
health insurance premiums paid; and
Report unrelated business income tax
on reinsurance entities.
Who Must File
The following entities must file Form
990-T.
Any domestic or foreign organization
exempt under section 501(a) or section
529(a) if it has gross income of $1,000 or
more from a regularly conducted unrelated
trade or business (see Regulations
section 1.6012-2(e)). Gross income is
gross receipts minus the cost of goods
sold (see Regulations section 1.61-3). For
a discussion of cost of goods sold see
Schedule A. Cost of Goods Sold, later.
The gross receipts from a gaming
business include all amounts
CAUTION wagered in games, not just the net
proceeds after payment of prizes and
other expenses. Cash prizes aren't
included in cost of goods sold but are
reported on line 28 as other deductions.
!
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
financial information.
!
Organizations liable for the proxy tax on
lobbying and political expenditures. See
Line 37. Proxy Tax, later, for a discussion
of the proxy tax. If your organization is only
required to file because of the proxy tax,
see Proxy Tax Only under Which Parts To
Complete, later.
Colleges and universities of states and
other governmental units, and subsidiary
corporations wholly owned by such
colleges and universities. However, a
section 501(c)(1) corporation that is an
instrumentality of the United States and
both organized and exempt from tax by an
Act of Congress doesn’t have to file.
Applicable reinsurance entities under
the Affordable Care Act of 2010 (ACA),
section 1341(c)(1), must write “Applicable
Reinsurance Entity” across the top of
Form 990-T.
Organizations that are liable for other
taxes (such as the section 1291 tax (Form
990-T, line 35c or 36) or recapture taxes
(Form 990-T, line 43)). See a discussion
of these items, later. If your organization is
only required to file Form 990-T because
of these taxes, see Other Taxes under
Which Parts To Complete, later.
Qualified tuition programs described
under section 529 that have $1,000 or
more of unrelated trade or business gross
income.
Trustees for the following trusts that
have $1,000 or more of unrelated trade or
business gross income:
1. Individual retirement accounts (IRAs),
including traditional IRAs described under
section 408(a),
2. Simplified employee pension IRAs (SEP
IRAs) described under section 408(k),
3. Savings incentive match plan for
employees of small employers IRAs
(SIMPLE IRAs) described under section
408(p),
4. Roth IRAs described under section
408A,
5. Coverdell education savings accounts
(ESAs) described under section 530(b),
6. Archer medical savings accounts
(Archer MSAs) described under section
220(d), and
7. Health savings accounts (HSAs)
described under section 223(d).
Each account of a type listed
TIP above is treated as a separate
trust for unrelated business
income tax purposes (even if there is a
single owner or beneficiary for multiple
accounts). A custodian is treated as a
trustee. See section 408(h). Individual
retirement annuities, unlike individual
retirement accounts, aren't subject to
unrelated business income tax.
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, later.
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 exclusively for charitable
purposes. See Regulations section
1.501(c)(3)-1(a).
Annual return. An annual return (for
purposes of the public inspection rules
discussed below) is an exact copy of the
Form 990-T that was filed with the IRS,
-2-
including all schedules and attachments. It
also includes any amendments to the
original return (amended return).
By annual return (for purposes of the
public inspection rules discussed below),
we mean any annual return (defined
above) that isn't more than 3 years old
from the later of:
The date the return is required to be
filed (including extensions), or
The date that the return is actually filed.
Applicable reinsurance entity. An
applicable reinsurance entity is a
not-for-profit organization:
The purpose of which is to help stabilize
premiums for coverage in the individual
and small group markets in a state during
the first 3 years of operation of the state's
American Health Benefit Exchange for
such markets within the state when the
risk of adverse selection related to new
rating rules and market changes is
greatest, and
The duties of which are to conduct the
reinsurance program under ACA section
1341 by coordinating the funding and
operation of the risk-spreading
mechanisms designed to implement the
reinsurance program of the Act.
Directly connected expenses. To be
deductible in computing unrelated
business taxable income, expenses,
depreciation, and similar items must
qualify as deductions allowed by section
162, 167, or other sections, and must be
directly connected with the conduct of an
unrelated trade or business activity.
To be directly connected with the
conduct of an unrelated 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 conduct
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 doesn’t
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 conducted for the
Instructions for Form 990-T
production of income from selling goods or
performing services. An activity must be
conducted with intent to profit to constitute
a trade or business. An activity doesn’t
lose its identity as a trade or business
merely because it is conducted 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 conducted for profit is an
unrelated trade or business, no part of it
can be excluded from this classification
merely because it doesn’t result in profit.
Unrelated trade or business income.
Unrelated trade or business income is the
gross income derived from any trade or
business (defined above) regularly carried
on and not substantially related to (defined
above) 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)).
For a section 511(a)(2)(B) state college
or university, or a corporation wholly
owned by such a 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 doesn’t
include a trade or business:
1. In which substantially all the work is
performed for the organization without
compensation; or
2. That is conducted by a section
501(c)(3) or 511(a)(2)(B) organization
mainly for the convenience of its
members, students, patients, officers, or
employees; 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
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
conducted 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
Instructions for Form 990-T
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, 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 $10.70 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 isn't 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 doesn’t compete with
bingo games conducted by for-profit
businesses in the same jurisdiction, and
c. The game doesn’t 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 doesn’t
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
sponsorship payment means any payment
to a tax-exempt organization by a person
engaged in a trade or business in which
there is no arrangement or expectation of
any substantial return benefit by that
person other than the use or
acknowledgment of that person's name,
logo, or product lines in connection with
the activities of the tax-exempt
organization. See section 513(i).
When To File
An employees' trust defined in section
401(a), an IRA (including SEPs and
SIMPLEs), a Roth IRA, a Coverdell ESA,
-3-
or an Archer MSA must file Form 990-T by
the 15th day of the 4th month after the end
of its tax year. All other organizations must
file Form 990-T by the 15th day of the 5th
month after the end of their tax years. If
the regular due date falls on a Saturday,
Sunday, or legal holiday, file no later than
the next business day. If the return is filed
late, see Interest and Penalties, later.
Extension. Corporations may request an
automatic extension of time to file Form
990-T by using Form 8868, Application for
Automatic Extension of Time To File an
Exempt Organization Return.
Amended return. To correct errors or
change a previously filed return, 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
U.S. Mail. Send Form 990-T and all other
required information to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
Private Delivery Service. Organizations
can use certain private delivery services
(PDSs) designated by the IRS to meet the
"timely mailing as timely filing" rule for tax
returns. Go to IRS.gov/PDS for the list of
PDS.
The PDS can tell you how to get written
proof of the mailing date. For the IRS
mailing address to use if you're using
PDSs, go to IRS.gov/PDSstreetAddresses
and select the last Submission Processing
Center address for filing Form 990-T using
a PDS.
Private delivery services can’t
deliver items to P.O. boxes. You
CAUTION must use the U.S. Postal Service
to mail any item to an IRS P.O. box
address.
!
Estimated Tax Payments
Generally, an organization filing Form
990-T must make installment payments of
estimated tax if its estimated tax (tax
minus allowable credits) is expected to be
$500 or more. Both corporate and trust
organizations use Form 990-W, Estimated
Tax on Unrelated Business Taxable
Income for Tax-Exempt Organizations, to
figure their estimated tax liability. Don't
include the proxy tax when computing
your estimated tax liability for 2017.
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
extension.
Electronic Deposit Requirement
The organization must deposit all
depository taxes (such as employment
tax, excise tax, and corporate income tax)
electronically. Generally, electronic fund
transfers are made using the Electronic
Federal Tax Payment System (EFTPS).
For more information about EFTPS or to
enroll in EFTPS, visit the EFTPS website
at IRS.gov/EFTPS, or call 1-800-555-4477
(TTY/TDD 1-800-733-4829). You can also
get Pub. 966, Electronic Federal Tax
Payment System: A Guide to Getting
Started.
Depositing on time. For EFTPS
deposits to be made timely, the
organization must submit the deposit by 8
p.m. Eastern time the day before the
deposit is due.
Same-day wire payment option. If
you fail to submit a deposit transaction on
EFTPS by 8 p.m. Eastern time the day
before the date a deposit is due, you can
still make your deposit on time by using
the Federal Tax Application (FTA), a
same-day federal tax payment system that
works in conjunction with EFTPS. Make
arrangements with your financial institution
ahead of time, noting the institution's
availability, deadlines, and costs, if you
believe you would ever need the
same-day wire payment option. To learn
more, visit
ElectronicFederalTaxPaymentSystem.
Timeliness of deposits. The IRS will
use business days to determine the
timeliness of deposits. Business days are
any day that isn’t a Saturday, Sunday, or
legal holiday in the District of Columbia.
See Pub. 583, Starting a Business and
Keeping Records.
If the organization owes tax when
it files Form 990-T, don't include
CAUTION the payment with the tax return.
Instead, use EFTPS.
!
Interest and Penalties
Your organization may be subject to
interest and penalty charges if it files a late
return or fails to pay tax when due.
Generally, the organization isn't required
to include interest and penalty charges on
Form 990-T because the IRS can figure
the amount and bill the organization for it.
Interest. Interest is charged on taxes not
paid by the original due date for the return
even if the organization uses Form 8868 to
request an automatic extension of time to
file. Interest is also charged on penalties
imposed for failure to file, negligence,
fraud, substantial valuation
misstatements, and substantial
understatements of tax from the due date
(including extension) to the date of
payment. The interest charge is figured at
the underpayment rate determined under
section 6621.
Late filing of return. An organization
that fails to file its return when due
(including extension of time for filing) is
subject to a penalty of 5% of the unpaid
tax for each month or part of a month the
return is late, up to a maximum of 25% of
the unpaid tax. The minimum penalty for a
return that is more than 60 days late is the
smaller of the tax due or $210. If you
receive a notice about a penalty after you
file this return, reply to the notice with an
explanation and we will determine if you
meet reasonable-cause criteria. Don’t
include an explanation when you file your
return.
Late payment of tax. The penalty for late
payment of taxes is usually 1 2 of 1% of the
unpaid tax for each month or part of a
month the tax is unpaid. The penalty can’t
exceed 25% of the unpaid tax. If you
receive a notice about a penalty after you
file this return, reply to the notice with an
explanation and we will determine if you
meet reasonable-cause criteria. Don’t
include an explanation when you file your
return.
Estimated tax penalty. An organization
that doesn’t make estimated tax payments
when due may be subject to an
underpayment penalty for the period of
underpayment. Generally, an organization
is subject to this penalty if its tax liability for
the tax year is $500 or more and it didn’t
make estimated tax payments of at least
the smaller of its tax liability for the tax
year or 100% of the prior year's tax. See
section 6655 for details and exceptions.
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 its amount. Generally, the
organization isn't required to file this form
because the IRS can figure the amount of
any penalty and notify the organization.
However, even if the organization doesn’t
owe the penalty, you must complete and
attach Form 2220 if either of the following
applies.
The annualized income or adjusted
seasonal installment method is used.
The organization is a “large
organization” computing its first required
installment based on the prior year's tax.
-4-
If you attach Form 2220, check the box
on Form 990-T, line 47, 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
aren't paid to the United States Treasury.
These taxes are generally reported on:
Form 720, Quarterly Federal Excise
Tax Return;
Form 941, Employer's Quarterly
Federal Tax Return;
Form 943, Employer's Annual Federal
Tax Return for Agricultural Employees; or
Form 945, Annual Return of Withheld
Federal Income Tax.
The trust fund recovery penalty may be
imposed on all persons who are
determined by the IRS to have been
responsible for collecting, accounting for,
and paying over these taxes, and who
acted willfully in not doing so. The penalty
is equal to the unpaid trust fund tax. See
the Instructions for Form 720; Pub. 15
(Circular E), Employer's Tax Guide; or
Pub. 51 (Circular A), Agricultural
Employer's Tax Guide, for details,
including the definition of responsible
persons.
Other penalties. There are also
penalties that can be imposed for
negligence, substantial understatement of
tax, reportable transaction
understatements, and fraud. See sections
6662, 6662A, and 6663.
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
directly to Proxy Tax Only, Other Taxes, or
Claim for Refund, later. If you are filing
Form 990-T only to claim the credit for
small employer health insurance
premiums, see the instructions for line 45f,
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.
Is Gross Income $10,000 or Less?
If Part I, line 13, column (A) is $10,000 or
less, complete the following.
The heading (above Part I);
Part I, lines 1–13, column (A);
Part I, line 13, for columns (B) and (C);
Part II, lines 29–34;
Parts III–V; and
Signature area.
Filers with $10,000 or less on line 13,
column (A) don't have to complete
Instructions for Form 990-T
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.
The heading (above Part I) except
items E, H, and I;
Lines 37 and 40;
Part IV;
Signature area; and
Attach a statement showing the proxy
tax computation.
Other Taxes
Organizations that are required to file
Form 990-T only because they are liable
for recapture taxes, the section 1291 tax,
the tax on a hospital organization’s
non-compliant facility income, or other
items listed in the instructions for line 43
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; and
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
following:
The heading above
Part I except items E, H, and I;
Enter -0- on line 13, column (A), line 34,
and line 44;
Enter the credit or payment on the
appropriate line (45a–45g);
Lines 46, 49, and 50; and
Signature area.
For claims described below, follow the
additional instructions for that claim.
IRAs and other tax-exempt
shareholders in a RIC or REIT. If you
are an IRA or other tax-exempt
shareholder that is invested in a RIC or a
REIT and file Form 990-T only to obtain a
refund of income tax paid on undistributed
long-term capital gains, follow steps above
under Claim for Refund; write “Claim for
Refund Shown on Form 2439” at the top of
Form 990-T; and attach Copy B of Form
2439, Notice to Shareholder of
Undistributed Long-Term Capital Gains.
Composite Form 990-T. If you are a
trustee of more than one IRA invested in a
RIC, you may be able to file a composite
Form 990-T to claim a refund of tax under
Instructions for Form 990-T
section 852(b) instead of filing a separate
Form 990-T for each IRA. See Notice
90-18, 1990-1 C.B. 327, for information on
who can file a composite return. Complete
steps above under Claim For Refund and
follow the additional requirements in the
notice.
Backup withholding. If your only
reason for filing Form 990-T is to claim a
refund of backup withholding, complete
steps above under Claim for Refund and
attach a copy of the Form 1099 showing
the withholding.
Consolidated Returns
The consolidated return provisions of
section 1501 don't apply to exempt
organizations, except for organizations
having title holding companies. If a title
holding corporation described in section
501(c)(2) pays any amount of its net
income for a tax year to an organization
exempt from tax under section 501(a) (or
would, except that the expenses of
collecting its income exceeded that
income), and the corporation and
organization file a consolidated return as
described below, then treat the title
holding corporation as being organized
and operated for the same purposes as
the other exempt organization (in addition
to the purposes described in section
501(c)(2)).
Two organizations exempt from tax
under section 501(a), one a title holding
company and the other earning income
from the first, will be includible
corporations for purposes of section
1504(a). If the organizations meet the
definition of an affiliated group and the
other relevant provisions of Chapter 6 of
the IRC, 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.
Other Forms That May Be
Required
Forms W-2 and W-3. File Form W-2,
Wage and Tax Statement, and Form W-3,
Transmittal of Wage and Tax Statements,
to report wages, tips, other compensation,
withheld income taxes, and withheld
social security/Medicare taxes for
employees.
Form 720. File Form 720, Quarterly
Federal Excise Tax Return, to report
environmental excise taxes,
communications and air transportation
taxes, fuel taxes, manufacturer's taxes,
-5-
ship passenger tax, and certain other
excise taxes.
!
See Trust fund recovery penalty,
earlier.
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
Annual Federal Unemployment (FUTA)
Tax Return, if the organization is liable for
FUTA tax.
Form 941 and Form 943. File Form 941,
Employer's QUARTERLY Federal Tax
Return, or Form 943, Employer's Annual
Federal Tax Return for Agricultural
Employees, to report income tax withheld,
and employer and employee social
security and Medicare taxes. Also, see
Trust fund recovery penalty, earlier.
Form 945. File Form 945, Annual Return
of Withheld Federal Income Tax, to report
income tax withheld from nonpayroll
distributions or payments, including
pensions, annuities, IRAs, gambling
winnings, and backup withholding.
Form 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,
OID, R, S, and SA. Organizations
engaged in an unrelated trade or business
may be required to:
File an information return on Forms
1099-A, B, DIV, INT, LTC, MISC, OID, R,
S, and SA;
Report acquisitions or abandonments
of secured property through foreclosure;
Report proceeds from broker and barter
exchange transactions;
Report certain dividends and
distributions;
Report interest income;
Report certain payments made on a per
diem basis under a long-term care
insurance contract, and certain
accelerated death benefits;
Report miscellaneous income (such as
payments to providers of health and
medical services, miscellaneous income
payments, and nonemployee
compensation);
Report original issue discount;
Report distributions from retirement or
profit-sharing plans, IRAs, SEPs,
SIMPLEs, insurance contracts;
Report proceeds from real estate
transactions; and
Report distributions from an HSA,
Archer MSA, or Medicare Advantage
MSA.
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 (FMV) of the account.
Form 5498-ESA. File Form 5498-ESA,
Coverdell ESA Contribution Information, to
report contributions (including rollover
contributions) to a Coverdell education
savings account (ESA).
Form 5498-SA. File Form 5498-SA,
HSA, Archer MSA, or Medicare
Advantage MSA Information, to report
contributions to an HSA or Archer MSA
and the fair market value of an HSA,
Archer MSA, or Medicare Advantage
MSA. See the Instructions for Forms
1099-SA and 5498-SA.
Form 5713. File Form 5713, International
Boycott Report, if the organization had
operations in, or related to, certain
“boycotting” countries.
Form 5884-C. File Form 5884-C, Work
Opportunity Credit for Qualified
Tax-Exempt Organizations Hiring
Qualified Veterans, to claim the work
opportunity credit for qualified first-year
wages paid to qualified veterans who will
be working for the organization on or after
November 22, 2011, and before January
1, 2020.
Form 6198. File Form 6198, At-Risk
Limitations, if the organization has a loss
from an at-risk activity conducted as a
trade or business or for the production of
income.
Form 8275 and 8275-R. Taxpayers and
income tax return preparers file Form
8275, Disclosure Statement, and Form
8275-R, Regulation Disclosure Statement,
to disclose items or positions taken on a
tax return or that are contrary to Treasury
regulations (to avoid parts of the
accuracy-related penalty or certain
preparer penalties).
Form 8300. File Form 8300, Report of
Cash Payments Over $10,000 Received in
a Trade or Business, if the organization
received more than $10,000 in cash or
foreign currency in one transaction or in a
series of related transactions. See Form
8300 and Regulations section
1.6050I-1(c).
Form 8582. File Form 8582, Passive
Activity Loss Limitations, for trusts that
have losses (including prior year
unallowed losses) from passive activities.
Form 8697. File Form 8697, Interest
Computation Under the Look-Back
Method for Completed Long-Term
Contracts, to figure the interest due or to
be refunded under the look-back method
of section 460(b)(2). The look-back
method applies to certain long-term
contracts that are accounted for under
either the percentage method or the
completion-capitalized cost method.
Form 8810. File Form 8810, Corporate
Passive Activity Loss and Credit
Limitations, for closely held corporations
that have losses or credits (including prior
year unallowed losses and credits) from
passive activities.
Form 8865. File Form 8865, Return of
U.S. Persons With Respect To Certain
Foreign Partnerships, if the organization:
1. Controlled a foreign partnership
(that is, owned more than a 50% direct or
indirect interest in the partnership).
2. Owned at least a 10% direct or
indirect interest in a foreign partnership
while U.S. persons controlled that
partnership.
3. Had an acquisition, disposition, or
change in proportional interest in a foreign
partnership that:
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
organization contributed to the foreign
partnership in exchange for a partnership
interest, when added to other
contributions of property made to the
foreign partnership by the organization or
a related person during the preceding
12-month period, exceeds $100,000.
Also, the organization may have to file
Form 8865 to report certain dispositions
by a foreign partnership of property it
previously contributed to that foreign
partnership if it was a partner at the time of
-6-
the disposition. See Form 8865 and its
separate instructions.
Form 8886. File Form 8886, Reportable
Transaction Disclosure Statement, to
disclose information for each reportable
transaction in which the organization
participated. Form 8886 must be filed for
each tax year that the federal income tax
liability of the organization is affected by
its participation in the transaction. The
organization may have to pay a penalty if it
is required to file Form 8886 but doesn’t
do so. The following are reportable
transactions.
Any listed transaction that is the same
as, or substantially similar to tax
avoidance transactions identified by the
IRS.
Any transaction offered under
conditions of confidentiality for which the
organization paid an advisor a fee of at
least $250,000.
Certain transactions for which the
organization has contractual protection
against disallowance of the tax benefits.
Any transaction resulting in a loss of at
least $10 million in any single year or $20
million in any combination of years.
Certain transactions identified by the
IRS in published guidance as a
“transaction of interest” (a transaction that
the IRS believes has a potential for tax
avoidance or evasion, but hasn’t yet been
identified as a listed transaction).
Form 8886-T. File Form 8886-T,
Disclosure by Tax-Exempt Entity
Regarding Prohibited Tax Shelter
Transaction, to disclose information with
respect to each prohibited tax shelter
transaction to which the organization is a
party.
Penalties. The organization may have
to pay a penalty if it is required to disclose
a reportable transaction under section
6011 and fails to properly complete and
file Form 8886. The penalty is $50,000
($200,000 if the reportable transaction is a
listed transaction) for each failure to file
Form 8886 with its return or for failure to
provide a copy of Form 8886 to the Office
of Tax Shelter Analysis (OTSA). Other
penalties, such as an accuracy-related
penalty under section 6662A, may also
apply. See the Instructions for Form 8886
for details.
Form 8899. File Form 8899, Notice of
Income From Donated Intellectual
Property, to report income from qualified
intellectual property.
Form 8903. File Form 8903, Domestic
Production Activities Deduction, to deduct
a portion of income from certain qualified
domestic production activities.
Form 8925. File Form 8925, Report of
Employer-Owned Life Insurance
Contracts, which must be filed by every
applicable policyholder owning one or
Instructions for Form 990-T
more employer-owned life insurance
contracts issued after August 17, 2006.
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
IRC.
In all cases, the method used must
clearly show taxable income.
See Pub. 538, Accounting Periods and
Methods.
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. See Pub. 538.
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, line 12. If the
net section 481(a) adjustment is negative,
report it on Form 990-T, 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.
Instructions for Form 990-T
If the organization changes its
accounting period, file Form 990-T for the
short period that begins with the first day
after the end of the old tax year and ends
on the day before the first day of the new
tax year. For the short period return, figure
the tax by placing the organization's
taxable income on an 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, 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 amounts.
To round, drop amounts under 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
(statements). On the attachment, write the
corresponding form or schedule number
or letter and follow the same format. Show
totals on the IRS-printed form. Also,
include the organization's name and EIN.
The separate sheets should be the same
size as the IRS-printed form and should
be attached after the IRS-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
-7-
(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 any extension.
What Schedules and Attachments
to Form 990-T Must Be Made
Available for Public Inspection?
Only schedules, attachments
(statements), and supporting documents
that relate to the imposition of tax on
unrelated business income must be made
available for public inspection when
attached to a section 501(c)(3)
organization's Form 990-T filed after
August 17, 2006.
The following documents, when
attached to a section 501(c)(3)
organization's Form 990-T filed after
August 17, 2006, aren't required to be
made available for public inspections.
Form 926, Return by a U.S. Transferor
of Property to a Foreign Corporation;
Form 5471, Information Return of U.S.
Persons With Respect to Certain Foreign
Corporations;
Form 8271, Investor Reporting of Tax
Shelter Registration Number;
Form 8594, Asset Acquisition
Statement Under Section 1060;
Form 8621, Information Return by a
Shareholder of a Passive Foreign
Investment Company or Qualified Electing
Fund;
Form 8832, Entity Classification
Election;
Form 8858, Information Return of U.S.
Persons With Respect to Foreign
Disregarded Entities;
Form 8865, Return of U.S. Person with
Respect to Certain Foreign Partnerships;
Form 8886, Reportable Transaction
Disclosure Statement;
Form 8913, Credit for Federal
Telephone Excise Tax Paid;
Form 8925, Report of Employer-Owned
Life Insurance Contracts; and
Form 8941, Credit for Small Employer
Health Insurance Premiums.
Form 8975 Country-by-Country Report.
Public Inspection
How Does a 501(c)(3)
Organization Make Its Annual
Returns Available for Public
Inspection?
A 501(c)(3) organization must make its
annual returns available in two ways.
By office visitation, and
By providing copies or making them
widely available.
Public Inspection by Office
Visitation
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 aren't considered a
regional or district office. A site isn't
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 doesn’t serve as an office
for management staff, other than
managers who are involved only in
managing the exempt function activities at
the site.
What if the 501(c)(3) organization
doesn’t maintain a permanent office?
If the 501(c)(3) organization doesn’t
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 doesn’t 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
has a permanent office but no office hours
or very limited hours during certain times
of the year, it must still meet the office
visitation requirement. To meet this
requirement during those periods when
office hours are limited or not available,
follow the rules above under What if the
501(c)(3) organization does not maintain a
permanent office?
Public Inspection—Providing
Copies
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
-8-
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)
organization's principal, regional, or
district office;
Is delivered to that address by mail,
electronic mail (email), facsimile (fax), or a
private delivery service approved by the
IRS (see Private delivery services (PDSs),
earlier, for a list), and
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
Instructions for Form 990-T
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
copies? A 501(c)(3) organization may
charge a reasonable fee for providing
copies. Also, it can require the fee to be
paid before providing a copy of the
requested document.
What is a reasonable fee? A fee is
reasonable only if it is no more than the
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 doesn’t
pay the fee within 30 days, the 501(c)(3)
organization may ignore the request.
If a requester's check doesn’t clear on
deposit, the 501(c)(3) organization may
ignore the request.
If a 501(c)(3) organization doesn’t
require prepayment and the requester
doesn’t 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
Instructions for Form 990-T
determines that a 501(c)(3) organization is
being harassed, it isn't 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 doesn’t 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 is
met if:
The document is posted on an Internet
page that the 501(c)(3) organization
establishes and maintains, or
The document is posted as part of a
database of like documents of other
tax-exempt organizations on an Internet
page established and maintained by
another entity.
2. An additional posting information
requirement is met if:
The Internet 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.
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3. The reliability and accuracy
requirements are met if the entity
maintaining the Internet page:
Has procedures for ensuring the
reliability and accuracy of the document
that it posts on the page;
Takes reasonable precautions to
prevent alteration, destruction, or
accidental loss of the document when
posted on its page; and
Corrects or replaces the document if a
posted document is altered, destroyed, or
lost.
4. The notice requirement is met if a
501(c)(3) organization notifies 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 doesn’t make the annual returns
(including all required attachments)
available for public inspection according to
the section 6104(d) rules discussed,
earlier. 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.
Specific Instructions
Period Covered
File the 2017 return for calendar year 2017
or a fiscal year beginning in 2017 and
ending in 2018. For a fiscal year, fill in the
tax year information at the top of the form.
The 2017 Form 990-T may also be
used if:
The organization has a tax year of less
than 12 months that begins and ends in
2018, and
The 2018 Form 990-T isn't available at
the time the organization is required to file
its return. The organization must show its
2018 tax year on the 2017 Form 990-T
and take into account any tax law changes
that are effective for tax years beginning
after December 31, 2017.
Name and Address
The name and address on Form 990-T
should be the same as the name and
address shown on other Forms 990.
Include the suite, room, or other unit
number after the street address. If the
Post Office doesn’t deliver mail to the
street address and the organization has a
P.O. box, show the box number instead of
the street address.
If the organization receives its mail in
care of a third party (such as an
accountant or an attorney), enter on the
street address line “C/O” followed by the
third party's name and street address or
P.O. box.
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.
A trust—an amendment to the trust
agreement with the trustee(s) signature.
An association, or an unincorporated
association—an amendment to the
articles of association, constitution,
by-laws, or other organizing document
with signatures of at least two officers/
members.
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–
B, Change of Address or
Responsible Party - Business, 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
stock bonus plans should check the 501
box and enter “a” between the first set of
parentheses.
For other organizations exempt under
section 501, check the box for 501 and
enter the section that describes their tax
exempt status, for example, 501(c)(3).
For tax exempt organizations that don't
receive their exemption under section 501,
use the following guide.
IF you are a . . . . .
THEN check this
box
IRA, SEP, or SIMPLE
408(e)
Roth IRA
408A
Archer MSA
220(e)
Coverdell ESA
530(a)
Qualified State
Tuition Program
529(a)
For an “applicable reinsurance entity”
described in section 1341(c)(1) of the
Affordable Care Act of 2010 (ACA), don't
check any of the boxes. Instead, write
“Applicable Reinsurance Entity” across the
top of the Form 990-T.
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 Business &SelfEmployedCenter. The EIN is issued
immediately once the application
information is validated.
By mailing or faxing Form SS-4,
Application for Employer Identification
Number.
Note. Only organizations located in the
United States or U.S. possessions can
use the online application. Foreign
organizations must use one of the other
methods to apply for an EIN.
Block E. Enter the applicable unrelated
business activity code(s) that specifically
describes the organization's unrelated
business activity. If a specific activity code
doesn’t accurately describe the
organization's activities, then choose a
general code (listed later) that best
describes its activity.
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, unless you are an
applicable reinsurance entity under
section 1341(c)(1) of the ACA.
“Other trust” includes IRAs, SEPs,
SIMPLEs, Roth IRAs, Coverdell IRAs, and
Archer MSAs.
Section 529 organizations check the
501(c) corporation or 501(c) trust box
depending on whether the organization is
a corporation or a trust. Also, the box for
529(a) in Block B must be checked.
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If you check “501(c) corporation,” leave
line 36 blank. If you check “501(c) trust,”
“401(a) trust,” or “Other trust” leave lines
35a, b, and c blank.
An applicable reinsurance entity should
check none of the boxes.
Block H. Describe the primary unrelated
business activity of your organization
based on unrelated income. Attach a
statement 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 isn't filing a consolidated return
for the tax year with that group.
2. The corporation is a subsidiary in a
parent-subsidiary controlled group
(defined in section 1563).
Excluded member. If the corporation
is an “excluded member” of a controlled
group (see section 1563(b)(2)), it is still
considered a member of a controlled
group for purposes of 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 don't 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. Refer to the
corresponding schedules to determine the
amount to be reported on each line.
Member income of mutual or cooperative electric companies. Income of a
mutual or cooperative electric company
described in section 501(c)(12) which is
treated as member income under
subparagraph (H) of that section is
excluded from unrelated business taxable
income.
Income from qualifying shipping activities. The organization's gross income
doesn’t include income from qualifying
shipping activities (as defined in section
1356) if the organization makes an
election under section 1354 on a timely
filed return (including extensions) to be
taxed on its notional shipping income (as
defined in section 1353) at the highest
corporate rate. If the election is made, the
organization generally may not claim any
loss, deduction, or credit with respect to
qualifying shipping activities. An
Instructions for Form 990-T
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 43.
Passive loss and at-risk limitations.
Under section 469, certain taxpayers,
including certain tax-exempt
organizations, may not deduct a passive
activity loss (PAL). Such tax-exempt
organizations (“affected tax-exempt
organizations”) include a trust (such as a
trust described in section 501(c), a trust
described in section 401(a), or an IRA),
and a corporation if at any time during the
last half of its tax year more than 50% in
value of the outstanding stock of the
corporation is owned, directly or indirectly,
by or for not more than five organizations
that are private foundations under section
509(a) or are described in sections 401(a)
or 501(c)(17) (for example, a stock
corporation described in section 501(c)(2)
with a 401(a) parent or private foundation
parent).
A PAL occurs when total losses
(including prior year unallowed losses)
from all your passive activities exceed the
total income from all your passive
activities. Generally, passive activities
include: (1) trade or business activities in
which you didn’t materially participate for
the tax year; and (2) rental activities,
regardless of your participation. If you
have income or loss from a passive
activity, several lines on the Form 990-T
may be affected by these rules.
PALs can’t be used to offset income
from nonpassive activities. Passive activity
income doesn’t include portfolio income.
Portfolio income (see Temp. Reg. section
1.469-2T(c)(3)) is income from a
nonpassive activity. Portfolio income
includes all gross income, other than
income derived in the ordinary course of a
trade or business, that is attributable to
interest, dividends, annuities, and royalties
(by contrast, a bank's receipt of interest is
in the ordinary course of a trade or
business, as is a securities dealer's
receipt of dividends). Portfolio income also
includes gain or loss from the disposition
of property that produces portfolio income
or is held for investment (see section
163(d)(5)). The rule treating portfolio
income as not from a passive activity
doesn’t apply to the extent that income, of
a type generally regarded as portfolio
income, is derived in the ordinary course
of a trade or business. For example, the
business income of a bank typically is
largely interest. Similarly, a securities
broker/dealer may earn a substantial
portion of the income from the business in
the form of dividends and gains on sales
of dividend-bearing instruments. Interest
income may also arise in the ordinary
Instructions for Form 990-T
course of a trade or business with respect
to installment sales and interest charges
on accounts receivable. This means that
portfolio income may not be reduced by
PALs or passive activity credits. For
example, any portfolio income earned by a
trust described in section 501(a) that is
unrelated business taxable income (such
as unrelated debt-financed income) may
not be offset by PALs from an unrelated
trade or business.
Section 469(k) provides that the
passive activity limitations must be applied
separately to items from each publicly
traded partnership (PTP). A PTP is a
partnership whose interests are traded on
an established securities market or are
readily tradable on a secondary market (or
its substantial equivalent). PALs from a
PTP generally may be used only to offset
income or gain from passive activities of
the same PTP. This means that a partner
in a PTP may not use PALs and passive
activity credits from a PTP to offset income
from other sources, including passive
activity income from another PTP. Such
PALs and passive activity credits aren't
allowed for the taxable year.
Generally, PALs are subject to other
limitations (for example, basis and at-risk
limitations) before they are subject to the
PAL limitations. For example, the at-risk
rules under section 465 generally prohibit
trusts and corporations that are affected
tax-exempt organizations from claiming
losses from activities in excess of the
taxpayer’s amount at risk in the activity.
An affected tax-exempt organization
may need to attach Form 6198, At-Risk
Limitations, and either Form 8582,
Passive Activity Loss Limitations, or Form
8810, Corporate Passive Activity Loss and
Credit Limitations. For more information
on these rules, see Pub. 925, Passive
Activity and At-Risk Rules.
How to report income received
TIP from a payment card and third
party network transactions. An
organization that receives a Form 1099-K
reporting a "gross amount" received from
payment card and third party network
transactions in the tax year should report
these amounts in the same manner as if
the payments weren’t reported on a Form
1099-K. There isn't any one specific line
on which to report an amount from Form
1099-K; the correct line should be
determined based on the nature of the
payments. Some payments received may
constitute unrelated business income; see
the instructions below to determine the
appropriate line. For instance, if some of
the payments are sales income from an
unrelated business, then those payments
would be reported on line 1a. Retain
Forms 1099-K with your other records.
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Line 1a. Gross Receipts or
Sales
Enter the gross receipts from any
unrelated trade or business regularly
conducted that involves the sale of goods
or performance of services.
A section 501(c)(7) social club
TIP would report its restaurant and bar
receipts from nonmembers on
line 1, but would report its investment
income on line 9 and in Schedule G.
Advance payments. In general, advance
payments are reported in the year of
receipt. To report income from long-term
contracts, see section 460. For special
rules for reporting certain advance
payments for goods and long-term
contracts, see Regulations section
1.451-5. For permissible methods for
reporting advance payments for services
and certain goods by an accrual method
organization, see Rev. Proc. 2004-34,
2004-22 I.R.B. 991, available at IRS.gov/
IRB2004-22.
Installment sales. Generally, the
installment method cannot be used for
dealer dispositions of property. A “dealer
disposition” is (a) any disposition of
personal property by a person who
regularly sells or otherwise disposes of
personal property of the same type on the
installment plan or (b) any disposition of
real property held for sale to customers in
the ordinary course of the taxpayer's trade
or business.
These restrictions on using the
installment method don't apply to
dispositions of property used or produced
in a farming business or sales of
time-shares and residential lots for which
the organization elects to pay interest
under section 453(l)(3).
For sales of time-shares and residential
lots reported under the installment
method, the organization's income tax is
increased by the interest payable under
section 453(l)(3). To report this addition to
the tax, see the instructions for line 43.
Enter on line 1a and line 3, the gross
profit on collections from installment sales
for any of the following.
Dealer dispositions of property before
March 1, 1986.
Dispositions of property used or
produced in the trade or business of
farming.
Certain dispositions of time-shares and
residential lots reported under the
installment method.
Attach a statement 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 aren't
required to accrue certain amounts to be
received from the performance of services
that, on the basis of their experience,
won't be collected, if:
The services are in the fields of health,
law, engineering, architecture, accounting,
actuarial science, performing arts, or
consulting; or
The organization's average annual
gross receipts for the 3 prior tax years
doesn’t exceed $5 million.
This provision doesn’t apply to any
amount if interest is required to be paid on
the amount or if there is any penalty for
failure to timely pay the amount. See
Regulations section 1.448-2.
Organizations that qualify to use the
nonaccrual experience method should
attach a statement showing total gross
receipts, amounts not accrued as a result
of the application of section 448(d)(5), and
the net amount accrued. Enter the net
amount on line 1a.
Gain or loss on disposition of certain
brownfield property. Gain or loss from
the qualifying sale, exchange, or other
disposition of a qualifying brownfield
property (as defined in section 512(b)(19)
(C)), which was acquired by the
organization after 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)) aren't taxed on the net gains from the
sale, exchange, or other disposition of
property. However, net capital gains on
debt-financed property, capital gains on
cutting timber, and ordinary gains on
sections 1245, 1250, 1252, 1254, and
1255 property are taxed. See Form 4797,
Sales of Business Property, and its
instructions for additional information.
Also, any capital gain or loss passed
through from an S corporation or any gain
or loss on the disposition of S corporation
stock by a qualified tax exempt
organization (see S Corporations, later) is
taxed as a capital gain or loss, and
reported on line 4.
Capital gains and losses should be
reported by a trust on Schedule D (Form
1041), Capital Gains and Losses, and by a
corporation on Schedule D (Form 1120),
Capital Gains and Losses (and Form
8949, Sale and Other Dispositions of
Capital Assets). Schedule D of Form 1041
or Form 1120 (and Form 8949 if
applicable) must be attached to Form
990-T.
An organization that transfers
securities it owns for the contractual
obligation of the borrower to return
identical securities recognizes no gain or
loss. To qualify for this treatment, the
organization must lend the securities
under an agreement that requires:
1. The return of identical securities;
2. The payment of amounts
equivalent to the interest, dividends, and
other distributions that the owner of the
securities would normally receive; and
3. The risk of loss or opportunity for
gain not be lessened.
See section 512(a)(5) for details.
Debt-financed property disposition.
The amount of gain or loss to be reported
on the sale, exchange, or other disposition
of debt-financed property is the same
percentage as the highest acquisition
indebtedness for the property for the
12-month period before the date of
disposition is to the average adjusted
basis of the property. The percentage may
not be more than 100%. See the
instructions for Schedule 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, 2016, 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, 2017, for $640,000. At the
date of sale, the adjusted basis of the
building was $578,098 ($608,000 −
$29,902) and the indebtedness remained
at $288,000. The adjusted basis of the
property on the first day of the year of
disposition was $593,037. The average
adjusted basis is $585,568 (($593,037 +
$578,098) ÷ 2). The debt/basis
percentage is 49% ($288,000 ÷
$585,568).
The taxable gain is $30,332 (49% ×
($640,000 − $578,098)). This is a
long-term capital gain. A corporation
should enter the gain on Schedule D
(Form 1120) Part II, line 6. A trust should
enter the gain on Schedule D (Form
1041), if applicable. In either scenario (a
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corporation or a trust), the educational
organization must attach a statement to
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 weren’t provided
with the Schedule D attachment(s).
Disposition of property received from
taxable subsidiary and used in unrelated business. A taxable 80%-owned
subsidiary corporation of one or more
tax-exempt entities is generally subject to
tax on a distribution in liquidation of its
assets to its exempt parent (or parents).
See section 337. The assets are treated
as if sold at FMV.
“Tax-exempt entities” for this purpose
include organizations described in
sections 501(a), 529, and 115, charitable
remainder trusts, U.S. and foreign
governments; Indian tribal governments;
international organizations; and similar
non-taxable organizations.
A taxable corporation that transfers
substantially all of its assets to a
tax-exempt entity in a transaction that
otherwise qualifies for nonrecognition
treatment must recognize gain on the
transaction as if it sold the assets at FMV.
However, such a transfer isn't taxable if it
qualifies as a like-kind exchange under
section 1031 or an involuntary conversion
under section 1033. In such a case the
built-in appreciation is preserved in the
replacement property received in the
transaction. A “taxable corporation” is any
corporation that isn't a tax-exempt entity
as defined above, including an S
corporation.
A corporation that changes status from
taxable to tax-exempt is treated generally
as if it transferred all of its assets to a
tax-exempt entity immediately before the
change in status (thus subjecting it to the
tax on a deemed sale for fair FMV). This
rule doesn’t apply where the taxable
corporation becomes exempt within 3
years of formation, or had previously been
exempt and within several years
(generally a period of 3 years) regains
exemption, unless the principal purpose of
the transactions is to avoid the tax on the
change in status.
In the transactions described above,
the taxable event is deferred for property
that the tax-exempt entity immediately
uses in an unrelated business. If the
parent later disposes of the property, then
any gain (not in excess of the amount not
recognized) is included in the parent’s
unrelated business taxable income. If
there is partial use of the assets in
unrelated business, then there is partial
recognition of gain or loss with respect to
the assets not so used. Property is treated
as disposed if the tax-exempt entity no
longer uses it in an unrelated business.
Instructions for Form 990-T
Losses on the transfer of assets to a
tax-exempt entity are disallowed if part of
a plan having a principal purpose of
recognizing losses.
Line 4b. Net Gain or (Loss)
Show gains and losses on other than
capital assets on Form 4797. Enter on this
line the net gain or (loss) from Form 4797,
Part II, line 17.
An exempt organization using Form
4797 to report ordinary gain on sections
1245, 1250, 1252, 1254, and 1255
property will include only depreciation,
amortization, or depletion allowed or
allowable in figuring unrelated business
taxable income or taxable income of the
organization (or a predecessor
organization) for a period when it wasn’t
exempt.
Line 4c. Capital Loss Deduction
for Trusts
If a trust has a net capital loss, it is subject
to the limitations of Schedule D (Form
1041). Enter on this line the loss figured
on Schedule D (Form 1041).
Line 5. Income or (Loss) From
Partnerships and S
Corporations
In general, combine all partnership income
or loss (determined later) with all S
corporation income or loss and enter it on
line 5. Also, for trusts and certain
corporations, there are limitations on
income and losses (including from
partnerships and S corporations) under
section 469 (the passive activity loss and
credit limitation rules) and section 465
(at-risk limitations). For more information
on these rules, see the discussion of the
application of the passive loss and at-risk
limitations to affected tax-exempt
organizations in the introductory
instructions to Part I. Unrelated Trade or
Business Income, earlier.
Partnerships
If the organization is a partner in a
partnership conducting an unrelated trade
or business, enter the organization's share
(whether or not distributed) of the
partnership's income or loss from the
unrelated trade or business. The
organization is required to notify the
partnership of its tax-exempt status.
Figure the gross income and
deductions of the partnership in the same
way you figure unrelated trade or business
income the organization earns directly.
Attach a statement to this return
showing the organization's share of the
partnership's gross income from the
unrelated trade or business, and its share
of the partnership deductions directly
Instructions for Form 990-T
connected with the unrelated gross
income. Also, see Attachments, earlier for
other information you must include.
S Corporations
Qualified tax exempt organizations can be
shareholders in an S corporation without
the S corporation losing its status as an S
corporation. Qualified tax exempt
organizations that hold stock in an S
corporation treat their stock interest as an
interest in an unrelated trade or business.
All items of income, loss, or deduction that
the organization receives as a shareholder
of the S corporation are taken into account
in line 5 in figuring unrelated business
taxable income and not reported on
another line of Form 990-T that otherwise
would apply, except capital gains and
losses, which are reported on line 4.
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) don't follow these S
corporation rules if the S corporation stock
is an employer security as defined in
section 409(l).
Attach a statement to this return
showing the qualified tax exempt's share
of all items of income, loss, or deduction.
Combine the income, loss, and
deductions (except for the capital gains
and losses) on the statement. If you hold
stock in more than one S corporation, total
the combined amounts. Show capital
gains and losses separately and include
them on line 4a. Also, see Attachments,
earlier, for other information you must
include.
Line 6. Rent income
Report on line 6 all rent income described
in the instructions for Schedule C.
Line 7. Unrelated
Debt-Financed Income
Report on line 7 and Schedule E unrelated
debt-financed income of the organization
under sections 512(b)(4) and 514 only to
the extent that the income doesn’t
constitute income from the conduct of an
unrelated trade or business and isn't
specifically taxable under other provisions
of the Code, such as taxable rents from
personal property leased with real
property reportable on line 6 and
Schedule C, or taxable interest, annuities,
royalties, and rents from a controlled entity
reportable on line 8 and Schedule F. See
Regulations section 1.514(b)-1(b)(2). Gain
or loss from the sale or disposition of
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debt-financed property is reported on
line 4 and not line 7 or Schedule E.
Section 501(c)(7), (9), and (17)
organizations should report income from
debt-financed property on line 9 and
Schedule G, not line 7 and Schedule E.
Line 8. Interest, Annuities,
Royalties, and Rents from
Controlled Organizations
Report on line 8 and Schedule F interest,
annuities, royalties, and rents (other than
rents reportable on line 6 and Schedule C)
from controlled entities to the extent
taxable under section 512(b)(13). See
Regulations section 1.512(b)-1(l)(5).
Line 9. Investment Income of a
Section 501(c)(7), (9), or (17)
Organization
Report on line 9 and Schedule G all
income of a section 501(c)(7), (9), or (17)
organization from investments in
securities and other similar investment
income from nonmembers, other than rent
income (gross rents are reportable on
line 6 and Schedule C). For these
purposes, investment income includes all
income from debt-financed property.
Line 12. Other Income
Enter on line 12 any item of unrelated
business income that isn't reportable
elsewhere on the return. Include:
Recoveries of bad debts deducted in
earlier years under the specific charge-off
method. Attach a separate statement of
any items of other income to your return;
The amount from Form 6478, Alcohol
and Cellulosic Biofuel Fuels Credit;
The amount from Form 8864, Biodiesel
and Renewable Diesel Fuels Credit; and
Proceeds received from employerowned life insurance contracts issued
after August 17, 2006. Complete Form
8925 and attach a copy to Form 990-T.
Organizations described in section
501(c)(19). Enter the net income from an
insurance business that was not properly
set aside. These organizations may set
aside income from payments received for
life, sickness, accident, or health
insurance for members of the organization
or their dependents.
1. To provide for the payment of
insurance benefits.
2. For a purpose specified in section
170(c)(4) (religious, charitable, scientific,
literary, educational, etc.).
3. For administrative costs directly
connected with benefits described in 1
and 2 above.
Amounts set aside and used for
purposes other than those in 1, 2, or 3
above must be included in unrelated
business taxable income for the tax year if
they were previously excluded from
taxable income.
Any amount spent for a purpose
described in section 170(c)(4) is first
considered paid from funds earned by the
organization from insurance activities if the
income isn't used for the insurance
activities.
Expenditures for lobbying aren't
considered section 170(c)(4) expenses.
Income from property financed with
qualified 501(c)(3) bonds. If any part of
the property is used in a trade or business
of any person other than a section 501(c)
(3) organization or a governmental unit,
and such use isn't consistent with the
requirement for qualified 501(c)(3) bonds
under section 145, 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 sections 150(b)(3) and (c).
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.
See the instructions for Part III, lines
35c and 36, for reporting the deferred tax
amount that may be owed by your
organization with respect to an excess
distribution.
Part II. Deductions Not
Taken Elsewhere
If the amount on Part I, line 13, column (A),
is $10,000 or less, you don't have to
complete lines 14 through 28 of Part II.
However, you must complete Part II, lines
29 through 34.
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, earlier). Charitable
contributions may be deducted, whether
or not directly connected. Don't 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 shouldn’t be included on Schedule K
or Part II, line 14.
Limitations on Deductions
The following items discuss certain areas
in which the deduction may to some extent
be limited.
Activities Lacking a Profit Motive
In some instances it is necessary to report
income whether or not it comes from a
trade or business (including interest,
annuities, royalties, and rents from
controlled organizations, and income of a
section 501(c)(7), (9), or (17) organization
other than exempt function income). If
income is attributable to an activity lacking
a profit motive, then a net loss from the
activity can’t be claimed on Form 990-T.
Therefore, in Part I, column (B) and Part II,
the total of deductions for expenses
directly connected with income from an
activity lacking a profit motive is limited to
the amount of that income. Generally, an
activity lacking a profit motive is one that
isn't conducted for the purpose of
producing a profit or one that has
consistently produced losses when both
direct and indirect expenses are taken into
account.
Deductions Related to Property
Leased to Tax-Exempt Entities
For property leased to a governmental or
other tax-exempt entity, or in the case of
property acquired after March 12, 2004,
that is treated as tax-exempt use property
other than by reason of a lease, the
organization may not claim deductions
related to the property when they exceed
the organization's income from the lease
payments. Amounts disallowed may be
carried over to the next year and treated
as a deduction concerning the property.
See section 470.
Transactions Between Related
Taxpayers
Generally, an accrual basis taxpayer may
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
expenses.
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Preference Items
Corporations may be required to adjust
deductions for depletion of iron ore and
coal, intangible drilling and exploration
and development costs, and the
amortizable basis of pollution control
facilities. See section 291 to determine the
amount of the adjustment.
Section 263A Uniform
Capitalization Rules
These rules require organizations to
capitalize or include as inventory cost
certain costs incurred in connection with:
The production of real property and
tangible personal property held in
inventory or held for sale in the ordinary
course of business.
Real property or personal property held
in inventory (tangible and intangible)
acquired for resale.
The production of real property and
tangible personal property produced by
the organization for use in its trade or
business or in an activity engaged in for
profit.
Tangible personal property produced
by an organization includes a film, sound
recording, videotape, book, or similar
property.
Indirect expenses. Organizations
subject to the section 263A uniform
capitalization rules are required to
capitalize direct costs and an allocable
part of most indirect costs (including
taxes) that benefit the assets produced or
acquired for resale or are incurred by
reason of the performance of production
or resale activities.
For inventory, some of the indirect
expenses that must be capitalized are:
Administration expenses;
Taxes;
Depreciation;
Insurance;
Compensation paid to officers
attributable to services;
Rework labor; and
Contributions to pension, stock bonus,
and certain profit-sharing, annuity, or
deferred compensation plans.
Regulations section 1.263A-1(e)(3)
specifies other indirect costs that relate to
production or resale activities that must be
capitalized and those that may be
currently deductible.
Interest expense. Interest expense paid
or incurred during the production period of
designated property must be capitalized
and is governed by special rules. See
Regulations section 1.263A-8 through
1.263A-15.
When are section 263A capitalized
costs deductible? The costs required to
be capitalized under section 263A aren't
Instructions for Form 990-T
deductible until the property (to which the
costs relate) is sold, used, or otherwise
disposed of by the organization.
Exceptions. Section 263A doesn’t apply
to:
Personal property acquired for resale if
the organization's average annual gross
receipts for the 3 prior tax years were $10
million or less;
Timber;
Most property produced under
long-term contract;
Certain property produced in a farming
business;
Research and experimental costs
under section 174;
Geological and geophysical costs
amortized under section 167(h);
Intangible drilling costs for oil, gas, and
geothermal property;
Mining exploration and development
costs; and
Inventory of an organization that
accounts for inventories in the same
manner as materials and supplies that
aren't incidental. See Schedule A. Cost of
Goods Sold, later.
See Regulations sections 1.263A-1
through 1.263A-3.
Travel, Meals, and Entertainment
Subject to limitations and restrictions
discussed below, an organization can
deduct ordinary and necessary travel,
meals, and 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.
Travel. The organization can’t deduct
travel expenses of any individual
accompanying an organization's officer or
employee, including a spouse or
dependent of the officer or employee,
unless:
That individual is an employee of the
organization, and
His or her travel is for a bona fide
business purpose and would otherwise be
deductible by that individual.
Meals 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 mustn’t 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.
Instructions for Form 990-T
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 discussion.
Entertainment facilities. The
organization can’t deduct an expense paid
or incurred for use of a facility (such as a
yacht or hunting lodge) for an activity
usually considered entertainment,
amusement, or recreation. For more
information see
Pub529MiscellaneousDeductions.
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 and if the total amount of such
compensation isn't unreasonable.
Reducing Certain Expenses For
Which Credits Are Allowable
The organization must reduce the
otherwise allowable deductions for
expenses used to figure the credit by the
amount of the following current year
credits.
Disabled access credit.
Employer credit for social security and
Medicare taxes paid on certain employee
tips.
Credit for employer-provided childcare
facilities and services.
Orphan drug credit.
Credit for small employer pension plan
start-up costs.
Mine rescue team training credit.
Credit for employer differential wage
payments.
If the organization has any of these
credits, figure each current year credit
before figuring the deduction for expenses
on which the credit is based.
Business start-up and
organizational costs
For business start-up and organizational
costs paid or incurred after September 8,
2008, an organization can deduct up to
$5,000 of such costs in the year it begins
business (unless the organization elects to
capitalize the full amount of such costs).
The $5,000 deduction is reduced (but not
below zero) by the amount the total costs
exceed $50,000. If the total costs are
$55,000 or more, the deduction is reduced
to zero. Any costs not deducted must be
amortized as explained below.
Note. For start-up and organizational
costs paid or incurred after September 8,
2008, the organization isn't required to
attach a statement or specifically identify
the amount deducted for the election
under sections 195(b) and 248(a) to be
effective. It is a deemed election. Whether
an organization deducts a portion of its
start-up and organizational costs under
Regulations sections 1.195-1 and 1.248-1
or elects to amortize the full amount of
such costs, its election is irrevocable. For
start-up and organizational costs paid or
incurred after October 22, 2004, and
before September 9, 2008, an
organization generally must attach the
statement required by Regulation sections
1.195-1(b) and 1.248-1(c) to make the
election to deduct a portion of such costs
(as explained above). This election is
irrevocable. However, an organization can
apply the provisions of these regulations
to costs paid or incurred after October 22,
2004.
Amortization. Any costs not deducted
under the above rules must be amortized
ratably over the 180-month period,
beginning with the month the organization
begins business. See the Instructions for
Form 4562, Depreciation and
Amortization, for details. If the association
elected to amortize business start-up and
organizational costs paid or incurred
before October 23, 2004, over a period of
60 months or more, it must continue to
amortize those costs over the elected
amortization period. Report the deductible
amount of these costs and any
amortization on 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
don't 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
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included in taxable income and that
became worthless in whole or in part
during the tax year.
Line 18. Interest
Attach a separate statement listing the
interest being claimed on this line.
Interest allocation. If the proceeds of
a loan were used for more than one
purpose (for example, to purchase a
portfolio investment and to acquire an
interest in a passive activity), an interest
allocation must be made. See Temp. Reg.
section 1.163-8T for the interest allocation
rules.
Tax-exempt interest. Don't include
interest on indebtedness incurred or
continued to purchase or carry obligations
on which the interest income is totally
exempt from income tax. For exceptions,
see section 265(b).
Prepaid interest. Generally, a cash
basis taxpayer cannot deduct prepaid
interest allocable to years following the
current tax year. For example, during the
tax year a cash basis taxpayer prepaid
interest on a loan. The taxpayer can
deduct only that part of the prepaid
interest that was for the use of the loaned
funds during the tax year, not for the use
of the loaned funds during the subsequent
years.
Straddle interest. Generally, the
interest and carrying charges on straddles
cannot be deducted and must be
capitalized. See section 263(g).
Original issue discount. See section
163(e)(5) for special rules for the
disqualified portion of original issue
discount on a high yield discount
obligation.
Related party interest. Certain
interest paid or accrued by the
organization (directly or indirectly) to a
related person may be limited if no tax is
imposed on such interest. See section
163(j).
Interest on certain underpayments
of tax. Interest paid or incurred on any
portion of an underpayment of tax that is
attributable to an understatement arising
from an undisclosed listed transaction or
an undisclosed reportable avoidance
transaction (other than a listed
transaction) entered into in tax years
beginning after October 22, 2004.
Interest allocable to the production
of designated property. Don't deduct
interest on debt allocable to the production
of designated property. Interest that is
allocable to such property produced by an
organization for its own use or for sale
must be capitalized. An organization must
also capitalize any interest on debt
allocable to an asset used to produce the
earlier property. See section 263A(f) and
Regulations sections 1.263A-8 through
1.263A-15.
Interest on below-market loans. See
section 7872 for special rules regarding
the deductibility of foregone interest on
certain below-market-rate loans.
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. See section 163(j)(8).
Line 19. Taxes and Licenses
Enter taxes and license fees paid or
accrued during the year, but don't include
the following taxes.
Federal income taxes.
Foreign or U.S. possession income
taxes if a foreign tax credit is claimed.
Taxes not imposed on your
organization.
Taxes, including state or local sales
taxes, paid or incurred in connection with
an acquisition or disposition of property.
These taxes must be treated as part of the
cost of the acquired property or, in the
case of a disposition, as a reduction in the
amount realized on the disposition.
Taxes assessed against local benefits
that increase the value of the property
assessed (such as for paving, etc.).
Taxes deducted elsewhere on the
return, such as those reflected in cost of
goods sold.
See section 164(d) for apportionment
of taxes on real property between the
buyer and seller.
Line 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).
Also, enter any unused contributions
carried over from earlier years. The
deduction for contributions will be allowed
whether or not directly connected with the
conduct of a trade or business.
Corporations. The total amount claimed
normally can’t be more than 10% of
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 4th month after the end of
the tax year if the contributions are
authorized by the board of directors during
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the tax year. Attach a declaration
statement to the return stating that the
resolution authorizing the contributions
was adopted by the board of directors
during the tax year. The declaration
statement must also include the date the
resolution was adopted. See Regulations
section 1.170A-11.
Temporary suspension of 10%
limitation for certain disaster-related
contributions. A corporation may elect
to deduct qualified cash contributions
without regard to the 10% taxable income
limit. Qualified contributions are
contributions that were made after August
22, 2017, and before January 1, 2018, to a
qualified charitable organization (other
than certain private foundations described
in section 509(a)(3) or donor advised
funds described in section 4966(d)(2)), for
Hurricane Harvey, Irma, or Maria relief
efforts, or contributions made after
October 7, 2017, and before January 1,
2019, for relief efforts in the California
wildfire disaster area. The corporation
must obtain contemporaneous written
acknowledgment (within the meaning of
section 170(f)(8)) from the qualified
charitable organization that the
contribution was used or is to be used for
hurricane relief efforts.
The total amount of the contribution
claimed for hurricane relief efforts cannot
exceed 100% of the corporation's
unrelated business taxable income (as
computed by substituting "100%" for
"10%") over all other allowable charitable
contributions. Any excess contributions
are carried over to the next 5 years. See
Pub. 976.
Suspension of 10% limitation for
farmers and ranchers. An organization
that is a qualified farmer or rancher (as
defined in section 170(b)(1)(E)) that
doesn’t 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 can’t 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 the next
15 years subject to the 100% limitation.
See section 170(b)(2)(B).
Contributions of conservation property
made after August 17, 2006, that is used
in agriculture or live stock production must
remain available for such productions.
Carryover. Charitable contributions
over the 10% limitation can’t be deducted
for the tax year, but may be carried over to
the next 5 tax years.
Instructions for Form 990-T
In figuring the charitable contributions
deduction, if the corporation has an NOL
carryover to the tax year, the 10% limit is
applied using the taxable income after
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 isn't 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 may not be deducted
as a business 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
extension) 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. Don't 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.
Instructions for Form 990-T
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 statement to the return describing
the kind of property contributed and the
method used to determine its fair market
value (FMV). All organizations generally
must complete and attach Form 8283,
Noncash Charitable Contributions, to their
returns for contributions or property (other
than money) if the total claimed deduction
for all property contributed was more than
$5,000. Special rules apply to the
contribution of certain property. See the
Instructions for Form 8283. A donee
organization must use Form 8282, Donee
Information Return, to report information to
the IRS and donors about dispositions of
certain charitable deduction property
made within 3 years after the donor
contributed the property. See the
Instructions for Form 8282.
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
with its historical character. 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. 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).
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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 (including contributions
of apparently wholesome food and
contributions of qualified book inventory to
public schools) (see section 170(e)(3) and
Regulations section 1.170A-4A); and
Scientific equipment used for research
to institutions of higher learning or to
certain scientific research organizations
(see section 170(e)(4)).
See section 170, the related
regulations, and Pub. 526, Charitable
Contributions.
Line 21. Depreciation
Besides depreciation, include on line 21
the part of the cost, under section 179,
that the organization elected to expense
for certain tangible property placed in
service during the tax year or carried over
from the prior tax year. See Form 4562
and its instructions.
Line 23. Depletion
See sections 613 and 613A for
percentage depletion rates for natural
deposits. Attach Form T, Forest Activities
Schedules, if a deduction is taken for
depletion of timber.
Line 24. Contributions to
Deferred Compensation Plans
Employers who maintain pension,
profit-sharing, or other funded deferred
compensation plans are generally
required to file Form 5500. This
requirement applies whether or not the
plan is qualified under the IRC and
whether or not a deduction is claimed for
the current tax year. Section 6652(e)
imposes a penalty for late filing of these
forms. In addition, there is a penalty for
overstating the pension plan deduction.
See section 6662(f).
Line 25. Employee Benefit
Programs
Enter the amount of contributions to
employee benefit programs (such as
insurance, health, and welfare programs)
that aren't an incidental part of a deferred
compensation plan included on line 24.
Line 28. Other Deductions
Enter on this line the deduction taken for
amortization (see Form 4562) as well as
other authorized deductions for which no
space is provided on the return. Attach a
separate statement listing the deductions
claimed on this line. Deduct only items
directly connected with the unrelated trade
or business for which income is reported
in Part I.
Domestic production activities deduction. Complete Form 8903 and enter the
deduction on this line.
Don't deduct fines or penalties paid to a
government for violating any law.
Extraterritorial income exclusion.
Complete Form 8873 and enter the
deduction from line 52, on this line.
Don't deduct fines or penalties paid to a
government for violating any law. The
exclusion was repealed generally for
transactions after 2004, with some
exceptions. See Form 8873 and its
instructions.
Line 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).
Enter on line 31 the total NOL carryover
from other tax years, but don't enter more
than the amount shown on line 30. An
organization that claims the deduction with
respect to any NOL carried through
taxable years for which the organization
was not required to file Form 990-T must
show the amount of the deduction and
how it was computed, but the organization
need not file a Form 990-T in order to
preserve an NOL carryover. The amount
of an NOL carryback or carryover is
determined under section 172. See
Regulations section 1.512(b)-1(e). Attach
a statement showing the computation of
the NOL deduction.
Under Code section 172(b), an
organization generally may carry an NOL
back up to 2 tax years or forward up to 20
tax years. An organization that wishes to
carry an NOL back to a prior year must file
an amended Form 990-T for that year.
Form 1045 or 1139 can’t be used for this
purpose, though it may be attached to the
amended Form 990-T to show the NOL
computation. 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 aren't separate legal entities, but
are components of a larger entity
(diocese, province, convention, or
association). Each specific deduction will
be the smaller of $1,000 or the gross
income from any unrelated trade or
business the local unit conducts. If you
claim a total specific deduction larger than
$1,000, attach a statement showing how
you figured the amount.
The diocese, province of a religious
order, or convention or association of
churches must file a return reporting the
gross income and deductions of all its
units that aren't separate legal entities.
These local units can’t file separate
returns because they aren't separately
incorporated. Local units that are
separately incorporated must file their own
returns and can’t be included with any
other entity except for a title holding
company. See Consolidated Returns,
earlier.
For details on the specific deduction,
see section 512(b)(12) and the related
regulations.
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.
The term “controlled group” means any
parent-subsidiary group, brother-sister
group, or combined group. See the
definitions below.
Parent-subsidiary group.
Parent-subsidiary group is one or more
chains of corporations connected through
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.
-18-
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
doesn’t include item 1, earlier, 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
parent-subsidiary group, and
Included in a group of corporations in a
brother-sister group.
See section 1563.
Members of a controlled group are
entitled to one $50,000, one $25,000, and
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.
Instructions for Form 990-T
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
don't 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 can’t 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 statement that shows the taxable
income of the entire group, as well as how
its share of the additional tax was figured.
990-T, page 2. See Part IV of Form 8621,
Return by a Shareholder of a Passive
Foreign Investment Company or Qualified
Electing Fund.
For fiscal year corporate filers, a 21%
rate applies for the portion of the fiscal
year occuring in 2018. See Blended tax
rate for fiscal year filers, later.
Line 35c. Corporations
Use the Tax Rate Schedule for
Corporations shown below to figure the
tax.
Members of a controlled group
use the Tax Computation
CAUTION Worksheet for Members of a
Controlled Group shown below to figure
the tax. Members of a controlled group
should see the instructions, earlier, 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
If the amount on line 34 is:
Over— But not over—
$0
50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333
$50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333
-----
Tax is:
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
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 deferred tax
amount defined in section 1291(c)(1). The
portion of the deferred tax amount that is
the aggregate increases in taxes
(described in section 1291(c)(2)) must be
included in the amount entered on line 35c
or 36. Write to the left of line 35c or 36,
“Sec. 1291” and the amount.
Don't 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 Form
Instructions for Form 990-T
Of the
amount
over—
-19-
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 (Form 990-T, line 34) . . .
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). . . . . . . . .
13. If the taxable income of the
controlled group exceeds $15
million, enter this member's share of
the smaller of: (a) 3% of the excess
over $15 million, or (b) $100,000
(see instructions for additional 5%
and additional 3% tax). . . . . . .
14. Add lines 8 through 13. Enter here
and on Form 990-T, line 35c . . .
Blended tax rate for fiscal year filers.
Effective for tax years beginning after
December 31, 2017, a corporation's tax is
computed by multiplying taxable income
by 21%. However, under section 15,
corporations with fiscal tax years
beginning before January 1, 2018, and
ending after December 31, 2017, figure
and apportion their tax by blending the
rates in effect before January 1, 2018, with
the rate in effect after December 31, 2017.
Figure the corporation's tax for the 2017
fiscal tax year using the worksheet below.
1 Unrelated business taxable income (page
1, Part II, line 34) . . . . . . . . . . . .
2 Tax on line 1 figured using the tax rate
schedule or Tax Computation worksheet
for Members of a Controlled Group . .
3 Tax on line1 figured using the 21%
rate . . . . . . . . . . . . . . . . . . . .
4 Multiply line 2 by the number of days in
the corporation's tax year before January
1, 2018 . . . . . . . . . . . . . . . . .
5 Multiply line 3 by the number of days in
the corporation's tax year after December
31, 2017 . . . . . . . . . . . . . . . . .
6 Divide line 4 by the total number of days
in the corporation's tax year . . . . . .
7 Divide line 5 by the total number of days
in the corporation's tax year . . . . . .
8 Add lines 6 and 7. This is the
corporation's total tax for the fiscal tax
year . . . . . . . . . . . . . . . . . . .
Tax Rate Schedule for Trusts
___
If the amount on line 34, is:
___
Over—
But not over—
___
$0.00
2,550
6,000
9,150
12,500
$2,550
6,000
9,150
12,500
-----
___
___
___
___
Alternative tax for corporations with
qualified timber gains. For a tax year
beginning in 2017, for a corporation that
has both net capital gain and qualified
timber gain (as defined in section 1201(b)
(2)), a 23.8% alternative tax may apply on
the portion of the corporation's taxable
income attributable to the qualified timber
gain (or, if less, the corporation's net
capital gain for the tax year.) The tax is
figured on Schedule D (Form 1120), Part
IV. Enter on Part III, line 35c, the tax from
Schedule D, Part IV, line 30. See the
Instructions for Schedule D (Form 1120).
For fiscal year filers, the tax on qualified
timber gain is 23.8% for the portion of the
fiscal year occurring in 2017, and 21% for
the portion of the fiscal year occurring in
2018. See Blended tax rate for fiscal year
filers, earlier.
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 unrelated business taxable income
amount on line 34 using the Tax Rate
Schedule for Trusts, below. 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 on line 36 the tax from
Schedule D (Form 1041). Check the
“Schedule D” box on line 36 and attach
Schedule D (Form 1041) to Form 990-T.
Tax is:
15%
$382.50 + 25%
1,245 + 28%
2,127 + 33%
3,232.50 + 39.6%
Of the
amount
over—
$0.00
2,550
6,000
9,150
12,500
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 statement showing
the computation.
Exempt organizations, except section
501(c)(3) and certain other organizations,
must include certain information regarding
lobbying expenditures on Form 990. In
addition, organizations may have to
provide notices to members regarding
their share of dues to which the
expenditures are allocable. See the
Instructions for Form 990 and Rev. Proc.
98-19, 1998-1 C.B. 547, for exceptions.
If the organization elects not to provide
the notices described earlier, it must pay
the proxy tax described in section 6033(e)
(2). If the organization doesn’t include the
entire amount of allocable dues in the
notices, it may have to pay the proxy tax.
This tax isn't applicable to section 501(c)
(3) organizations. Figure the proxy tax by
multiplying the aggregate amount not
included in the notices described earlier
by 35%. No deductions are allowed.
For fiscal year corporate filers, a 21%
rate applies for the portion of the fiscal
year occurring in 2018. See Blended tax
rate for fiscal year filers, earlier.
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 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 treated as a
“small corporation” exempt from the
alternative minimum tax, may have to
attach Form 4626, Alternative Minimum
Tax—Corporations, and enter any tax
from Form 4626 on this line.
Note. The alternative minimum tax does
not apply to corporations with tax years
beginning after December 31, 2017.
However, see Alternative minimum tax for
fiscal year filers, next.
Alternative minimum tax for fiscal
year filers. Corporations with tax years
-20-
beginning before January 1, 2018, and
ending after December 31, 2017, will
figure the tentative minimum tax (TMT)
using the 20% TMT rate for the period
ending before January 1, 2018, and a 0%
TMT rate for the period beginning after
December 31, 2017. Figure the blended
alternative minimum tax by multiplying the
amount you would otherwise enter on
Form 4626, line 10, by a fraction, the
numerator of which is the number of days
in the corporation's tax year before
January 1, 2018, and the denominator of
which is the total number of days in the
corporation's fiscal year. Figure the
amount on Form 4626, line 13, using the
blended regular tax, as figured on line 35c.
See Blended tax rate for fiscal year filers,
earlier, and the Instructions for Form 4626,
line 13. Enter on line 38 the amount from
Form 4626, line 14. This is the excess, if
any, of the TMT (Form 4626, line 12) over
the blended rate (Form 4626, line 13).
Line 39. Tax on Non-Compliant
Facility income.
There is a tax on a hospital organization’s
non-compliant facility income, see final
regulations section 1.501(r)-2 for more
information. This tax is an income tax and
is separate from the excise tax on a failure
to meet the community health needs
assessment requirements of section
501(r)(3) that is reported on Form 4720.
For fiscal year corporate filers, a 21%
rate applies for the portion of the fiscal
year occurring in 2018. See Blended tax
rate for fiscal year filers, earlier.
Part IV. Tax and Payments
Line 41a. Foreign Tax Credit
Corporations. See Form 1118,
Foreign Tax Credit—Corporations, for an
explanation of when a corporation can
claim this credit for payment of income tax
to a foreign country or U.S. possession.
Trusts. See Form 1116, Foreign Tax
Credit (Individual, Estate, or Trust), for
rules on how the trust computes the
foreign tax credit.
Complete the form that applies to the
organization and attach the form to its
Form 990-T. Enter the credit on this line.
Line 41b. Other Credits
Qualified electric vehicle credit.
Include on line 41b any credit from Form
8834, Qualified 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
(for bonds issued before 2010), new clean
renewable energy bonds, qualified energy
conservation bonds, qualified zone
academy bonds, qualified school
construction bonds, and Build America
bonds, and attach Form 8912.
Instructions for Form 990-T
Line 41c. General Business
Credit
Enter on line 41c the organization's total
general business credit (excluding the
work opportunity credit, employee
retention credit, the empowerment zone
employment credit, the Indian
employment credit, and the credit for
employer differential wage payments).
Additionally, in some cases, certain
general business credits should not be
claimed if the seller of the property
discloses to the organization that the seller
intends to claim the credit and discloses
the tentative amount of the credit. These
include the qualified electric vehicle credit,
the alternative motor vehicle credit, the
alternative fuel vehicle refueling property
credit, and the qualified plug-in electric
drive motor vehicle credit.
The organization is required to file
Form 3800, General Business Credit, to
claim any business credit. For a list of
credits, see Form 3800. Include the
allowable credit from Form 3800, Part II,
line 32, on Form 990-T, line 41c.
An organization described in
section 501(c) which is exempt
CAUTION from tax under section 501(a)
should not use Form 3800 to claim the
refundable small employer tax credit for
certain health insurance premiums paid on
behalf of its employees. See the
instructions for line 45f.
!
Line 41d. 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 43. Other Taxes
For fiscal year corporate filers with a tax
year beginning before January 1, 2018,
and ending after December 31, 2017, a
21% rate applies to the portion of any
applicable tax on line 43 for the portion of
the fiscal year occurring after December
31, 2017. See Blended tax rate for fiscal
year filers, earlier.
Recapture of investment credit. If
property is disposed of, or ceases to be
qualified property, before the end of the
recapture period or the useful life
applicable to the property, there may be a
recapture of the credit. See Form 4255,
Recapture of Investment Credit.
Recapture of low-income housing
credit. If the organization disposed of
property (or there was a reduction in the
qualified basis of the property) for which it
took the low-income housing credit, it may
owe a tax. See Form 8611, Recapture of
Low-Income Housing Credit, and section
42(j) for details.
Instructions for Form 990-T
Interest due under the look-back method. If the organization used the look-back
method for certain long-term contracts,
see Form 8697 for information on figuring
the interest the organization may have to
include. The organization may also have
to include interest due under the look-back
method for property depreciated under the
income forecast method. See Form 8866,
Interest Computation Under the
Look-Back Method for Property
Depreciated Under the Income Forecast
Method.
Other. Additional taxes and interest
amounts may be included in the total
entered on line 43. Check the box for
“Other” if the organization includes any of
the taxes and interest discussed. See
How to report, below, for details on
reporting these amounts on an attached
statement.
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 time-shares
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, earlier.
How to report. If the organization
checked the “Other” box, attach a
statement showing the computation of
each item included in the total for line 43.
In addition, identify (a) the applicable IRC
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
statement.
Line 44. 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 44. See Form 8621, Part V, and How
to report, later.
Subtract from the total entered on
line 44 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 statement
showing the computation of each item
included in, or subtracted from, the total
on line 44. On the dotted line next to
line 44, specify (a) the applicable IRC
section, (b) the type of tax, and (c) enter
the amount of tax.
-21-
Line 45b. Estimated Tax
Enter the total estimated tax payments
made for the tax year.
If an organization is the beneficiary of a
trust, and the trust makes a section 643(g)
election to credit its estimated tax
payments to its beneficiaries, include the
organization's share of the estimated tax
payment in the total amount entered here.
In the entry space to the left of line 45b,
write “T” and the amount attributable to it.
Line 45d. Foreign
Organizations
Enter the tax withheld on unrelated
business taxable income from U.S.
sources that isn't effectively connected
with the conduct of a trade or business
within the United States. Attach Form
1042-S, Foreign Person's U.S. Source
Income Subject to Withholding, or another
form which verifies the withheld tax
reported on line 45d.
Line 45e. Backup Withholding
Recipients of dividend or interest
payments must generally certify their
correct tax identification number to the
bank or other payer on Form W-9. If the
payer doesn’t get this information, it must
withhold part of the payments as “backup
withholding.” If your organization was
subject to erroneous backup withholding
because the payer didn’t realize you were
an exempt organization and not subject to
this withholding, you can claim credit for
the amount withheld by including it on
line 45e. See Backup withholding under
Which Parts To Complete, earlier.
Line 45f. Credit for Small
Employer Health Insurance
Premiums
An organization described in section
501(c) which is exempt from tax under
section 501(a) may be eligible to claim the
refundable small employer tax credit for a
percentage of certain health insurance
premiums paid on behalf of its employees.
A tax-exempt eligible small employer
can request the refundable credit by
attaching Form 8941, Credit for Small
Employer Health Insurance Premiums,
showing the calculation for the amount of
the refundable credit claimed. A
tax-exempt organization isn't eligible for
the refundable credit if it isn't an
organization that is described in section
501(c) which is exempt from tax under
section 501(a). The organization must
keep records to substantiate the amount
of the credit claimed.
If a tax-exempt eligible small
TIP employer is filing Form 990-T only
to request a credit for small
employer health insurance premiums paid,
complete the following steps.
1. Fill in the heading (the area above
Part I) except items E, H and I.
2. Enter -0- on line 13, column (A),
line 34, and line 44.
3. Enter the credit from Form 8941,
line 20, on line 45f.
4. Complete lines 46, 49, 50, and the
signature area.
5. Write “Request for 45R Credit Only”
on the top of Form 990-T.
Line 45g. Other Credits and
Payments
Check the appropriate box(es) and enter:
From Form 2439, Notice to Shareholder
of Undistributed Long-Term Capital Gains,
the credit from a regulated investment
company (RIC) or a real estate investment
trust (REIT). Also, attach Form 2439. If
you are filing a composite Form 990-T,
see Composite Form 990-T under Which
Parts To Complete, earlier.
From Form 4136, the credit for federal
tax paid on fuels. Also, attach Form 4136,
Credit for Federal Tax Paid on Fuels, if the
organization qualifies to claim this credit.
The credit for ozone-depleting
chemicals. Include any credit the
organization is claiming under section
4682(g) for taxes paid on chemicals used
as propellants in metered-dose inhalers.
After entering these amounts in the
appropriate spaces, add them all together
and enter the total on line 45g.
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 Pub. 510, Excise Taxes
(Including Fuel Tax Credits and Refunds).
Line 48. Tax Due
Domestic organizations owing less than
$500 and foreign organizations that don't
have an office or place of business in the
United States should enclose a check or
money order (in U.S. funds), made
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, earlier.
Part V. Statements
Regarding Certain
Activities and Other
Information
Complete all items in Part V.
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, earlier.
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 FinCEN Form 114, Report of
Foreign Bank and Financial Accounts
(FBAR), to see if the organization is
considered to have an interest in or
signature or other authority over a financial
account in a foreign country (such as a
bank account, securities account, or other
financial account). If the organization is
required to file this form, file FinCEN Form
114 electronically with the Department of
the Treasury using FinCEN's BSA E-Filing
System. Because FinCEN Form 114 isn't
a tax form, don't file it with Form 990-T.
See www.fincen.gov/ for more
information
Line 52. 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;
It is treated as the owner of any part of
the assets of a foreign trust under the
grantor trust rules; or
It received a distribution from a foreign
trust.
See the Instructions for Form 3520.
An owner of a foreign trust must
ensure that the trust files an
CAUTION annual information return on Form
3520-A, Annual Information Return of
Foreign Trust With a U.S. Owner. For
details, see the Instructions for Form
3520-A.
!
Line 53. Report any tax-exempt interest
received or accrued in the space
provided. Include any exempt-interest
dividends received as a shareholder in a
mutual fund or other regulated investment
company.
Line 51. Check “Yes” if either item 1 or 2
below applies.
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Signature
Corporations. The return must be signed
and dated by the president, vice
president, treasurer, assistant treasurer,
chief accounting officer, or by any other
corporate officer (such as a tax officer)
authorized to sign. Receivers, trustees, or
assignees must also sign and date any
return filed on behalf of the organization.
Trusts. The return must be signed and
dated by the individual fiduciary, or by the
authorized officer of the trust receiving or
having custody or control and
management of the income of the trust. If
two or more individuals act jointly as
fiduciaries, any one of them may sign.
Special rule for IRA trusts. A trustee
of IRA trusts may use a facsimile signature
if all of the following conditions are met.
Each group of returns sent to the IRS
must be accompanied by a letter signed
by the person authorized to sign the
returns declaring, under penalties of
perjury, that the facsimile signature
appearing on the returns is the signature
adopted by that person to sign the returns
filed and that the signature was affixed to
the returns by that person or at that
person's direction.
The letter must also list each return by
the name and EIN of the IRA trust.
After the facsimile signature is affixed,
no entries on the return may be altered
other than to correct discernible arithmetic
errors.
A manually signed copy (of the letter
submitted to the IRS with the returns and a
record of any arithmetic errors corrected)
must be retained on behalf of the IRA
trusts listed in the letter and it must be
available for inspection by the IRS.
Paid preparer. If an officer of the
organization filled in its return, the paid
preparer's space should remain blank.
Anyone who prepares the return but
doesn’t charge the organization should not
sign the return. Certain others who
prepare the return should not sign. For
example, a regular, full-time employee of
the organization, such as a clerk,
secretary, etc., should not sign.
Generally, anyone who is paid to
prepare the organization's tax return must
sign it and fill in the Paid Preparer Use
Only area.
The paid preparer must complete the
required preparer information.
Sign the return in the space provided
for the preparer's signature.
Give a copy of the return to the
organization.
Note. A paid preparer may sign original
returns, amended returns, or requests for
filing extension by rubber stamp,
mechanical device, or computer software
Instructions for Form 990-T
program. Also, facsimile signatures are
authorized.
Paid preparer authorization. If the
organization wants to allow the IRS to
discuss this tax return with the paid
preparer who signed it, check the “Yes”
box in the signature area of the return.
This authorization applies only to the
individual whose signature appears in the
Paid Preparer Use Only section of its
return. It doesn’t apply to the firm, if any,
shown in that section.
If the “Yes” box is checked, the
organization is authorizing the IRS to call
the paid preparer to:
Give the IRS any information that is
missing from its return,
Call the IRS for information about the
processing of its return or the status of its
refund or payment(s), and
Respond to certain IRS notices that the
organization has shared with the preparer
about a math error, offsets, and return
preparation. The notices won't be sent to
the preparer.
The organization isn't authorizing the
paid preparer to receive any refund check,
bind the organization to anything
(including any additional tax liability), or
otherwise represent the organization
before the IRS. If the organization wants to
expand the paid preparer's authorization,
see Pub. 947, Practice Before the IRS and
Power of Attorney.
The authorization can’t be revoked.
However, the authorization will
automatically end no later than the due
date (excluding extension) for filing next
year's Form 990-T.
Enter the paid preparer’s PTIN,
not his or her Social Security
CAUTION number (SSN), in the “PTIN” box
in the paid preparer’s block. Because
Form 990-T is publicly disclosable when
filed by a 501(c)(3) organization, any
information entered in this block will be
publicly disclosed. For more information
about PTIN's, visit the IRS website at
www.irs.gov/taxpros.
!
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 aren't
incidental (unless its business is a tax
shelter (as defined in section 448(d)(3))).
Instructions for Form 990-T
A qualifying taxpayer is a taxpayer that,
for each prior tax year ending after
December 16, 1998, has average annual
gross receipts of $1 million or less for the
3-tax-year period ending with that prior tax
year.
A qualifying small business taxpayer is
a taxpayer (a) that has average annual
gross receipts of $10 million or less for the
3-tax-year period ending with that prior tax
year, and (b) whose principal business
activity isn't an ineligible activity.
Under this accounting method,
inventory cost for raw materials purchased
for use in producing finished goods and
merchandise purchased for resale are
deductible in the year the finished goods
or merchandise are sold (but not before
the year the organization paid for the raw
materials or merchandise, if it is also using
the cash method). For additional guidance
on this method of accounting for
inventoriable items, see Pub. 538 and the
Instructions for Form 3115.
Enter amounts paid for all raw materials
and merchandise during the tax year on
line 2. The amount the organization can
deduct for the tax year is figured on line 7.
All filers not using the cash method of
accounting should see Section 263A
uniform capitalization rules, earlier in the
instructions for Limitations on Deductions
before completing Schedule A. The
instructions for lines 1, 4a, 4b, and 6 later
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 aren't
incidental may currently deduct
expenditures for direct labor and all
indirect costs that would otherwise be
included in inventory costs.
The average cost (rolling average)
method of valuing inventories generally
doesn’t conform to the requirement of the
regulations. See Rev. Rul. 71-234, 1971-1
C.B. 148.
Organizations that use erroneous
valuation methods must change to a
method permitted for federal income tax
-23-
purposes. File Form 3115 to make this
change.
Inventory may be valued below cost
when the merchandise is unsalable at
normal prices or unusable in the normal
way because the goods are subnormal
because of damage, imperfections, shop
wear, etc., within the meaning of
Regulations section 1.471-2(c). The
goods may be valued at the bona fide
selling price, minus direct cost of
disposition (but not less than scrap value).
Bona fide selling price means actual
offering of goods during a period ending
not later than 30 days after inventory date.
If this is the first year the Last-in
First-out (LIFO) inventory method was
either adopted or extended to inventory
goods not previously valued under the
LIFO method provided in section 472,
attach Form 970, Application To Use LIFO
Inventory Method, or a statement with the
information required by Form 970.
If the organization changed or
extended its inventory method to LIFO and
had to write up the opening inventory to
cost in the year of election, report the
effect of this write-up as other income
(line 12) 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 earlier).
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 weren’t capitalized under
the organization's method of accounting
immediately prior to the effective date of
section 263A. For details, see Regulations
section 1.263A-2(b).
For organizations that have elected the
simplified resale method, additional
section 263A costs are generally those
costs incurred with respect to the following
categories.
Off-site storage or warehousing;
Purchasing;
Handling, such as processing,
assembling, repackaging, and
transporting; and
General and administrative costs
(mixed service costs).
For details, see Regulations section
1.263A-3(d).
Enter on 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 aren't
incidental, enter on line 6 the portion of its
raw materials and merchandise
purchased for resale that are included on
line 5 and weren’t sold during the year.
Schedule C. Rent Income
Section 501(c)(7), (9), and (17)
organizations, enter gross rents in Part I,
line 6, and applicable expenses in Part II,
lines 14 through 28. All rents except those
that are exempt function income must be
included.
All organizations that have applicable
rent income, other than section 501(c)(7),
(9), and (17) organizations, should
complete Schedule C. 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 Part I, line 12.
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.
Don't include in Schedule E amounts
allocated to exempt purposes.
For section 514 purposes, don't
treat an interest in a qualified state
CAUTION tuition program (QSTP) as debt.
However, a QSTP's investment income is
treated as debt-financed income if the
QSTP incurs indebtedness when
acquiring or improving income-producing
property.
!
Column 1. Any property held to produce
income is debt-financed property if at any
time during the tax year there was
acquisition indebtedness outstanding for
the property. When 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. Acquisition
indebtedness also includes indebtedness
incurred:
1. Before the property was acquired
or improved, if the indebtedness would not
have been incurred but for such
acquisition or improvement of the
property; or
2. After the property was acquired or
improved, if the indebtedness would not
have been incurred but for such
acquisition or improvement and the
incurrence of such indebtedness was
reasonably foreseeable at the time of such
-24-
acquisition or improvement. See
Regulations section 1.514(c)-1(a).
With certain exceptions, acquisition
indebtedness doesn’t include debt
incurred by:
1. A qualified (section 401) trust in
acquiring or improving real property. See
section 514(c)(9).
2. A tax-exempt school (section
170(b)(1)(A)(ii)) and its affiliated support
organizations (section 509(a)(3)) for
indebtedness incurred after July 18, 1984.
3. An organization described in
section 501(c)(25) in tax years beginning
after December 31, 1986.
4. An obligation, to the extent that it is
insured by the Federal Housing
Administration, to finance the purchase,
rehabilitation, or construction of housing
for low and moderate income persons, or
indebtedness incurred by a small business
investment company licensed after
October 22, 2004, under the Small
Business Investment Act of 1958 if such
indebtedness is evidenced by a debenture
issued by such company under section
303(a) of that Act, and held or guaranteed
by the Small Business Administration (see
section 514(c)(6)(B) for limitations).
5. A retirement income account
described in section 403(b)(9) in acquiring
or improving real property in tax years
beginning on or after August 17, 2006.
See Pub. 598 for additional exceptions
to the rules for debt-financed property.
Column 2. Income isn't unrelated
debt-financed income if it is otherwise
included in unrelated business taxable
income. For example, don't include rents
from personal property shown in
Schedule C, or rents and interest from
controlled organizations shown in
Schedule F.
Column 4. Average acquisition
indebtedness for any tax year is the
average amount of the outstanding
principal debt during the part of the tax
year the property is held by the
organization. To figure the average
amount of acquisition debt, determine the
amount of the outstanding principal debt
on the first day of each calendar month
during that part of the tax year that the
organization holds the property. Add these
amounts together, and divide the result by
the total number of months during the tax
year that the organization held the
property. See section 514(a) and the
related regulations for property acquired
for an indeterminate price.
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.
Instructions for Form 990-T
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 earlier) 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 statements 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
Special Deductions) of Form 1120, U.S.
Corporation Income Tax Return, to
determine the dividends-received
deductions to include in column 3(b).
Enter on the last line of Schedule E the
total dividends-received deductions (after
reduction, when applicable, by the
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, don't apply
Instructions for Form 990-T
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 conducted.
Controlled organization. An entity is a
“controlled organization” if the controlling
organization owns:
By vote or value more than 50% of a
corporation's stock (for an organization
that is a corporation);
More than 50% of a partnership's profits
or capital interests (for an organization
that is a partnership); or
More than 50% of the beneficial
interests in an organization (for an
organization other than a corporation or
partnership).
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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, 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.
Column 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 aren't, 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 isn't exempt
from tax under section 501(a). Net
unrelated income is that portion of the
controlled entity's taxable income that
would be unrelated business taxable
income if the entity were exempt under
section 501(a) and had the same exempt
purposes as the controlling organization.
Net unrelated loss is the controlled
organization's net operating loss adjusted
under rules similar to those used to
determine net unrelated income.
Column 4 or 9. For each controlled
organization, enter the total of specified
payments received from each controlled
organization. If the organization received
both specified payments and qualifying
specified payments from a controlled
organization, enter specified payments on
one line and qualifying specified payments
on another so that there are dual entries
for that controlled organization.
Column 5 or 10. For specified payments,
enter the portion of columns 4 or 9 to the
extent that the payment reduced the net
unrelated income (or increased the net
unrelated loss) of the controlled entity.
Column 6 or 11. Enter only those
deductions directly connected with the
income entered in columns 5 or 10.
With respect to qualifying specified
payments, enter only that portion of
expenses directly connected to the
amounts included in columns 5 or 10, that
is, the excess of the payment over the fair
market value amount as determined in
accordance with section 482. Don't enter
any expenses relating to the portion of
such payment that isn't includible in
income under this special rule.
For valuation misstatements
regarding qualifying specified
CAUTION payments, there is a 20% addition
to tax. See section 512(b)(13)(E)(ii).
!
Excess qualifying specified
payments. Excess qualifying specified
payments received or accrued from a
controlled entity (that is, the amount of
qualifying specified payments in excess of
what would have been paid or accrued if
the payments had been determined under
section 482) are included in a controlling
exempt organization's unrelated business
taxable income.
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. Don't 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. Don't 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 aren't 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 can’t 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 won't be taxed on income
set aside for:
1. Religious, charitable, scientific,
literary, or educational purposes, or for the
prevention of cruelty to children or
animals;
2. The payment of life, sickness,
accident, or other benefits by a section
501(c)(9) or (17) organization. The
amount allowed as a set aside may not
exceed a limit determined using section
419A. See sections 419A and 512(a)(3)
(E) for details; or
3. Reasonable administration costs
directly connected with 1 and 2, earlier.
Report income set aside in
Schedule G, column 4. Amounts set aside
aren't deductible under section 170 or any
other section of the IRC.
The organization may elect to treat
income set aside by the date for filing the
return, including any extension of time, as
income set aside in the tax year for which
the return is filed. The income set aside
must have been includible in gross income
for that earlier tax year.
Although set aside income may be
accumulated, any accumulation that is
unreasonable will be evidence that the set
aside wasn’t for the purposes previously
mentioned.
Net investment income set aside must
be specifically earmarked as such, or
placed in a separate account or fund
(except for an employees' association
which, by the terms of its governing
instrument, must use its net investment
income for the purposes stated in 2 ,
earlier).
These rules apply to a corporation
described in section 501(c)(2) (title
-26-
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 earlier) sells property that was
used for the exempt function of the section
501(c)(7), (9), or (17) organization and
buys other property used for the
organization's exempt function within a
period beginning 1 year before the date of
the sale, and ending 3 years after the date
of the sale, the gain from the sale will be
recognized only to the extent that the
sales price of the old property is more than
the cost of the other property. The other
property need not be similar in type or use
to the old property. The organization must
notify the IRS of the sale by a statement
attached to the return, or other written
notice.
To compute the gain on the sale of
depreciable property, see the instructions
for Schedule E, column 5, to determine
the adjusted basis of the property.
Schedule I. Exploited
Exempt Activity Income,
Other Than Advertising
Income
Exempt organizations that have gross
income from an unrelated trade or
business activity that exploits an exempt
activity (other than periodical advertising
income reportable in Schedule J) should
complete Schedule I. See Regulations
section 1.513-1(d)(4)(iv) for a definition of
exploited exempt activity. Report income
from advertising other than in a periodical
in Schedule I.
An exempt organization may take all
deductions directly connected with the
gross income from the unrelated trade or
business activity. In addition, the exempt
organization may take into account all
deductible items attributable to the
exploited exempt activity, with the
following limitations.
1. Reduce the deductible items of the
exempt activity by the income from the
activity;
2. Limit the net amount of deductible
items arrived at in item 1 , earlier, 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
Instructions for Form 990-T
or business income from an activity that
isn't exploiting the same exempt activity.
As a result, the net includible exploited
exempt activity income is the unrelated
business taxable income minus the
excess of the exempt activity expenses
over the exempt activity income. If the
income from the exempt activity exceeds
the exempt activity expenses, don't add
that profit to the net income from the
unrelated business activity. 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 statement showing the
computation.
Schedule J. Advertising
Income
An exempt 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 as follows.
1. If direct advertising costs
(expenses directly connected with
advertising income) are more than
advertising income (unrelated business
income), deduct that excess in figuring
unrelated business taxable income from
any other unrelated trade or business
activity conducted by the organization.
2. If advertising income is more than
direct advertising costs, and circulation
income (exempt activity income) equals or
exceeds readership costs (exempt activity
expenses), then unrelated business
taxable income is the excess of
advertising income over direct advertising
costs.
3. If advertising income is more than
direct advertising costs, and readership
costs are more than circulation income,
then unrelated business taxable income is
the excess of total income (advertising
income and circulation income) over total
periodical costs (direct advertising costs
and readership costs).
Recordkeeping
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
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. Don't 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 are used both to conduct
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
for the part of the president's salary
allocable to the unrelated trade or
business activity. However, the remaining
$58,500 (90% of $65,000) cannot be
deducted on Form 990-T because it isn't
directly attributable to the organization's
unrelated trade or business activities.
If taxable fringe benefits are provided to
your employees, such as personal use of
a car, don't deduct as salaries and wages
the amounts you deducted for
depreciation and other deductions.
Paperwork Reduction Act Notice. We
ask for the information on this form to carry
out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
You aren't required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The rules governing the confidentiality of
Form 990-T are covered in sections 6103
and 6104.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated average
time is:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form .
Preparing the form .
67 hrs., 12 min.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 hrs., 10 min.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43 hrs., 25 min.
Copying, assembling, and sending the form to the IRS .
Comments and suggestions. We
welcome your comments about these
instructions and your suggestions for
future editions. You can write to us at the
following address:
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Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by
telephone. Therefore, it would be helpful if
you would include your daytime phone
Instructions for Form 990-T
-27-
4 hrs., 1 min.
number, including the area code, in your
correspondence.
You can also send us comments from
IRS.gov/formspubs. Click on “More
Information” and then on “Comment on
Tax Forms and Publications.”
Although we cannot respond
individually to each comment received, we
do appreciate your feedback and will
consider your comments as we revise our
tax products.
Don't sent the Form 990-T to this
address. Instead, see Where To File
earlier.
-28-
Instructions for Form 990-T
Photographs of Missing Children
The IRS 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
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1-800-THE-LOST
form, please call
1-877-829-5500. This toll-free
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Monday through Friday.
(1-800-843-5678) if you
recognize a child.
Phone Help
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need help completing this
How To Get Forms and Publications
Internet
You can access the IRS
website 24 hours a day, 7 days
a week, at IRS.gov to:
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and publications. You can
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Research your tax
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Search publications online
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Use the online Internal
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View Internal Revenue
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Ordering Forms and
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-29-
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to order current and prior-year
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order should arrive within 10
business days.
Business Activity Codes
The codes listed in this section
are a selection from the North
American Industry
Classification System (NAICS)
that should be used in
completing Form 990, Part VIII,
lines 2 and 11. If you don't see
a code for the activity you are
trying to categorize, select the
appropriate code from the
NAICS website at
www.census.gov/cgi-bin/sssd/
Principal Business Activity Codes
(If engaged in more than one unrelated business
activity, select up to two codes for the principal
Agriculture, Forestry, Hunting
and Fishing
Code
110000
111000
Mining
Code
211110
211120
211130
212000
Agriculture, forestry, hunting and
fishing
Crop production
Oil and gas extraction
Crude petroleum extraction
Natural gas extraction
Mining (except oil and gas)
Utilities
Construction
Code
230000
236000
Construction
Construction of buildings
Manufacturing
Code
310000
323100
339110
Manufacturing
Printing and related support
activities
Medical equipment and supplies
manufacturing
Wholesale Trade
Code
423000
424000
Merchant wholesalers, durable
goods
Merchant wholesalers,
nondurable goods
Retail Trade
Code
441100
442000
444100
445100
445200
446110
446199
448000
451110
451211
452000
453000
453220
453310
454110
Automobile dealers
Furniture and home furnishings
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
485000
493000
Transportation
Transit and ground passenger
transportation
Warehousing and storage
Information
Code
511110
511120
511130
511190
512000
515100
517000
Utilities
Code
221000
511140
Newspaper publishers (except
Internet)
Periodical publishers (except
Internet)
Book publishers (except Internet)
519100
519130
naics/naicsrch?chart=2017.
Select the most specific 6-digit
code available that describes
the activity producing the
income being reported. Note
that most codes describe more
activities. List first the largest in terms of gross unrelated
income, then the next largest. When classifying your
unrelated activities for example, code income from
advertising in publications as 541800, Advertising and
Professional, Scientific, and
Technical Services
Data Processing, Hosting, and
Related Services
541800
541860
541900
541200
541300
541380
541511
541519
541610
541700
Data Processing Services
Code
518210
Finance and Insurance
Code
522100
522200
522110
522220
522291
522292
522298
523000
523920
523930
524113
524114
524126
524130
524292
524298
525100
525920
525990
Depository credit intermediation
(including commercial banking,
savings institutions, and credit
unions)
Nondepository credit
intermediation (including credit
card issuing and sales financing)
Credit card issuing
Sales Financing
Consumer lending
Real estate credit
Other nondepository credit
intermediation
Securities, commodity contracts,
and other financial investments
and related activities
Portfolio management
Investment advice
Direct life insurance carriers
Direct health and medical
insurance carriers
Direct property and casualty
insurance carriers
Reinsurance carriers
Third-party administration of
insurance and pension funds
All other insurance-related
activities
Insurance and employee benefit
funds
Trusts, estates, and agency
accounts
Other Financial vehicles
(including mortgage REITs)
Real Estate and Rental Leasing
Code
531110
531120
531190
531310
531390
532000
532420
533110
related services, rather than selecting a code describing
a printing or publishing activity.)
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)
Other information services
(including news syndicates and
libraries)
Internet Publishing and
Broadcast
Code
541100
541990
Lessors of residential buildings
and dwellings (including equity
REITs)
Lessors of nonresidential
buildings (except
minwarehouses) (including
equity REITs)
Lessors of other real estate
property (including equity REITs)
Real estate property managers
Other activities related to real
estate
Rental and leasing services
Office machinery and equipment
rental and leasing
Lessors of nonfinancial
intangible assets (except
copyrighted works)
Legal services
Consumer credit counseling
services
Accounting, tax preparation,
bookkeeping, and payroll
services
Architectural, engineering, and
related services
Testing laboratories
Custom computer programming
services
Other computer-related services
Management consulting services
Scientific research and
development services
Advertising and related services
Direct mail advertising
Other professional, scientific,
and technical services
Management of Companies and
Enterprises
Code
551111
551112
Offices of bank holding
companies
Offices of other holding
companies
Administrative and Support
Services
Code
561000
561300
561439
561499
561500
561520
561700
Administrative and support
services
Employment services
Other business service centers
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)
Educational Services
Code
611420
611430
611600
611710
Computer training
Professional and management
development training
Other schools and instruction
(other than elementary and
secondary schools or colleges
and universities, which should
select a code to describe their
unrelated activities)
Educational support services
Healthcare and Social
Assistance
Code
621110
621300
621400
621500
621610
-30-
than one type of activity. Avoid
using codes that describe the
organization rather than the
income-producing activity.
Offices of physicians
Offices of other health
practitioners
Outpatient care centers
Medical and diagnostic
laboratories
Home health care services
621910
621990
623000
623990
624100
624110
624200
624210
624310
624410
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, or 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 similar 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
721110
721210
721310
722320
722440
722511
722513
722514
722515
Accommodation
Hotels (except casino hotels)
and motels
RV (recreational vehicle) parks
and recreational camps
Rooming and boarding houses,
dormitories, and workers’ camps
Caterers
Drinking places (alcoholic
beverages)
Full-service restaurants
Limited-service restaurants
Cafeterias and buffets
Snack and non-alcoholic
beverage bars
Other Services
Code
811000
812300
812900
812930
Other
Code
900001
900002
900003
900004
900099
Repair and maintenance
Drycleaning and laundry services
Other personal services
Parking lots and garages
Investment activities of section
501(c)(7), (9), or (17)
organizations
Rental of personal property
Passive income activities with
controlled organizations
Exploited exempt activities
Other activity
Index
A
Attachments 7
B
Business Activity Codes 30
S
Schedule E.:
Unrelated Debt-Financed
Income 24
Schedule G.:
Investment Income of a
Section 501(c)(7), (9), or
(17) Organization 26
Schedule K.:
Compensation of Officers,
Directors, and
Trustees 27
U
Unrelated Trade or Business
Income 10
W
When To File 3
Who Must File 2
T
Tax rate schedule for
Corporations 19
-31-
| File Type | application/pdf |
| File Title | 2017 Instructions for Form 990-T |
| Subject | Instructions for Form 990-T, Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e)) |
| Author | W:CAR:MP:FP |
| File Modified | 2018-04-12 |
| File Created | 2018-03-27 |