Form Instructions for S Instructions for S Instructions for Schedule K (Form 990), Supplemental Inf

2019

Instructions for Schedule K
(Form 990)

Department of the Treasury
Internal Revenue Service

Supplemental Information on Tax-Exempt Bonds
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Schedule K
(Form 990) and its instructions, such as
legislation enacted after they were
published, go to IRS.gov/Form990.

General Instructions
Note. Terms in bold are defined in the
Glossary of the Instructions for Form 990,
Return of Organization Exempt From
Income Tax.

Purpose of Schedule

Schedule K (Form 990) is used by an
organization that files Form 990 to provide
certain information on its outstanding
liabilities associated with tax-exempt
bond issues. Usually, a bond issue
associated with an exempt organization
will consist of qualified 501(c)(3) bonds,
but all types of tax-exempt bonds
benefiting the organization must be
reported. A qualified 501(c)(3) bond issue
consists of bonds, the proceeds of which
are used by a section 501(c)(3)
organization to further its charitable
purpose. Generally, applicable
requirements for qualified 501(c)(3) bonds
under section 145 include the following.
• All property financed by the bond issue
is to be owned by a section 501(c)(3)
organization or a state or local
governmental unit.
• At least 95% of the net proceeds of the
bond issue are used by either a state or
local governmental unit or a section 501(c)
(3) organization in activities which don't
constitute unrelated trades or
businesses (determined by applying
section 513).
If the organization has one or more
related organizations (for example,
parent and subsidiary relationship), it must
complete Schedule K (Form 990)
consistent with the filing(s) of its related
organization(s). The same liability
shouldn't be reported by more than one of
the related organizations. For example, if
a parent organization issues a
tax-exempt bond and loans or allocates
that issue to a subsidiary organization,
only one organization (either the parent or
Jul 18, 2019

subsidiary) should report the liability on
Form 990 and the Schedule K. Similarly, if
a parent organization loans or allocates
the proceeds of a tax-exempt bond issue
to a group of subsidiary organizations,
only one level (either the parent or the
group of subsidiaries) should report the
liability on Form 990 and the Schedule K.
For this purpose, if the subsidiary
organizations report the liability, each
subsidiary should only report the amount it
is loaned or allocated.

organization can use any other 12-month
period or periods selected by the
organization and which, used consistently
for a tax-exempt liability for purposes of
this schedule and computations, is in
accordance with the requirements under
sections 141 through 150. Under this
alternative, the organization can use
different 12-month periods for each
tax-exempt liability reported. The
alternative period(s) must be specifically
described in Part VI.

If the organization's bond liability
relates to a pooled financing issue, the
organization should report with respect to
the amount of the issue that the
organization is loaned or allocated.

Specific Instructions

Use Part VI to provide additional
information or comments relating to the
information provided on this schedule. For
example, use Part VI to provide additional
information or comments about the
reporting of liabilities by related
organizations. In addition, use Part VI to
describe certain assumptions which are
used to complete Schedule K (Form 990)
when the information provided isn't fully
supported by existing records.

Who Must File

An organization that answered “Yes” on
Form 990, Part IV, Checklist of Required
Schedules, question 24a, must complete
and attach Schedule K to Form 990. This
means the organization reported an
outstanding tax-exempt bond issue that:
• Had an outstanding principal amount in
excess of $100,000 as of the last day of
the tax year, and
• Was issued after December 31, 2002.
Up to four separate outstanding
tax-exempt liabilities can be reported on
each Schedule K (Form 990). The
schedule can be duplicated if needed to
report more than four tax-exempt
liabilities. If the organization isn't required
to file Form 990 but chooses to do so, it
must file a complete return and provide all
of the information requested, including the
required schedules.

Period Covered

The organization can complete this
schedule for any tax-exempt liability using
the same period as the Form 990 with
which it is filed. Alternatively, the
Cat. No. 20378D

Definitions
Tax-exempt bond. This is an
obligation issued by or on behalf of a
governmental issuer for which the
interest paid is excluded from the holder's
gross income under section 103. For this
purpose, a bond can be in any form of
indebtedness under federal tax law,
including a bond, note, loan, or
lease-purchase agreement.
Bond issue. This is an issue of two or
more bonds which are sold at substantially
the same time, sold pursuant to the same
plan of financing, and payable from the
same source of funds. See Regulations
section 1.150-1(c).
Governmental issuer. A state or local
governmental unit that issues
tax-exempt bonds.
Gross proceeds. This generally
means any sale proceeds, investment
proceeds, transferred proceeds, and
replacement proceeds of an issue. See
Regulations sections 1.148-1(b),
1.148-1(c), and 1.148-9(b).
Pooled financing issue. This is a
bond issue from which more than $5
million of proceeds will be used to make
loans to two or more conduit borrowers.
Proceeds. This generally means the
sale proceeds of an issue (other than
those sale proceeds used to retire bonds
of the issue that aren't deposited in a
reasonably required reserve or
replacement fund). Proceeds also include
any investment proceeds from
investments that accrue during the project
period (net of rebate amounts attributable

to the project period). See Regulations
section 1.141-1(b).
Defeasance escrow. This is an
irrevocable escrow established in an
amount that, together with investment
earnings, is sufficient to pay all the
principal of, and interest and call premium
on, bonds from the date the escrow is
established. See Regulations section
1.141-12(d)(6). A defeasance escrow
can be established for several purposes,
including the remediation of nonqualified
bonds when the defeasance provides for
redemption of bonds on the earliest call
date. However, for purposes of completing
this schedule, an escrow established with
proceeds of a refunding issue to defease
a prior issue is referred to as a refunding
escrow.
Refunding escrow. This is one or
more funds established as part of a single
transaction or a series of related
transactions, containing proceeds of a
refunding issue and any other amounts
to provide for payment of principal or
interest on one or more prior issues. See
Regulations section 1.148-1(b).
Refunding issue. This is an issue of
obligations the proceeds of which are
used to pay principal, interest, or
redemption price on another issue (a prior
issue), including the issuance costs,
accrued interest, capitalized interest on
the refunding issue, a reserve or
replacement fund, or similar costs, if any,
properly allocable to that refunding issue.
A current refunding issue is a refunding
issue that is issued not more than 90 days
before the last expenditure of any
proceeds of the refunding issue for the
payment of principal or interest on the
prior issue. An advance refunding issue is
a refunding issue that isn't a current
refunding issue. See Regulations sections
1.150-1(d)(1), (3), and (4).
Private business use. Private
business use means use of the proceeds
of an issue by the organization or another
section 501(c)(3) organization in an
unrelated trade or business as defined by
section 513. Private business use also
generally includes any use by a
nongovernmental person other than a
section 501(c)(3) organization unless
otherwise permitted through an exception
or safe harbor provided under the
regulations or a revenue procedure.
Special rules for refunding of pre-2003
issues. Bonds issued after December 31,
2002, to refund bonds issued before
January 1, 2003, have special reporting
requirements. Such refunding bonds are
subject to the generally applicable
reporting requirements of Parts I, II, and
IV. However, the organization need not
complete lines 1 through 9 of Part III to
report private business use information for

the issue for such refunding bonds. These
special rules don't apply to bonds issued
after December 31, 2002, to refund
directly or through a series of refunding
bonds that were also originally issued after
2002.
Example 1. Refunding of pre-2003
bonds. Bonds issued in 2002 to construct
a facility were current refunded in 2014. In
2017, bonds were issued to current refund
the 2014 bonds. As of December 31,
2019, the last day of the organization's tax
year, the 2017 refunding bonds had an
outstanding principal amount exceeding
$100,000. The organization must list the
refunding bond issue in Part I for each
year the outstanding principal amount
exceeds $100,000 as of the last day of
such year, and must provide all Part I, Part
II, and Part IV information for such
refunding issue. Because the original
bonds were issued prior to 2003, the
organization need not complete Part III for
the refunding bond issue.
Example 2. Refunding of post-2002
bonds. Bonds issued in 2014 were
advance refunded in 2017. As of
December 31, 2019, the last day of the
organization's tax year, the refunding
issue had an outstanding principal
amount exceeding $100,000. The
organization must list the refunding issue
in Part I for each year the outstanding
principal amount exceeds $100,000 as of
the last day of the year, and must provide
all Part I, Part II, Part III, and Part IV
information for such refunding issue. If any
outstanding bonds of the 2014 bond issue
weren't legally defeased, the organization
also must list the 2014 bond issue in Part
I, and must provide all Part I, Part II, Part
III, and Part IV information for such bond
issue.

Part I. Bond Issues

In Part I, provide the requested information
for each outstanding tax-exempt bond
issue (including a refunding issue) that:
• Had an outstanding principal amount in
excess of $100,000 as of the last day of
the tax year (or other selected 12-month
period), and
• Was issued after December 31, 2002.
For this purpose, bond issues that have
been legally defeased in whole, and as a
result are no longer treated as a liability of
the organization, need not be listed in Part
I and aren't subject to the generally
applicable reporting requirements of Parts
I, II, III, and IV.
Note. Continued compliance with federal
tax law requirements is required with
respect to defeased bonds.
Use one row for each issue, and use
the Part I row designation for a particular
issue (for example, “A” or “B”) consistently
throughout Parts I through IV. The
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information provided in columns (a)
through (d) should be consistent with the
corresponding information included on
Form 8038, Information Return for
Tax-Exempt Private Activity Bond Issues,
filed by the governmental issuer upon the
issuance of the bond issue. Complete
multiple schedules if necessary to account
for all outstanding post-December 31,
2002, tax-exempt bond issues. In this
case, describe in the first Schedule K, Part
VI, that additional schedules are included.
Columns (a) and (b). Enter the name
and employer identification number (EIN)
of the issuer of the bond issue. The
issuer's name is the name of the entity
which issued the bond issue (typically, a
state or local governmental unit). The
issuer's name and EIN should be identical
to the name and EIN listed on Form 8038,
Part I, lines 1 and 2, filed for the bond
issue.
Column (c). Enter the Committee on
Uniform Securities Identification
Procedures (CUSIP) number on the bond
with the latest maturity. The CUSIP
number should be identical to the CUSIP
number listed on Form 8038, Part I, line 9,
filed for the bond issue. If the bond issue
wasn't publicly offered and there is no
assigned CUSIP number, enter zeros in
place of the CUSIP number.
Column (d). Enter the issue date of the
obligation. The issue date should be
identical to the issue date listed on Form
8038, Part I, line 7, filed for the bond
issue. The issue date generally is the date
on which the issuer receives the purchase
price in exchange for delivery of the
evidence of indebtedness (for example, a
bond). In no event is the issue date earlier
than the first day on which interest begins
to accrue on the bond for federal income
tax purposes. See Regulations section
1.150-1(b).
Column (e). Enter the issue price of the
obligation. The issue price generally
should be identical to the issue price listed
on Form 8038, Part III, line 21(b), filed for
the bond issue. The issue price generally
is determined under Regulations sections
1.148-1(b) and 1.148-1(f). If the issue
price isn't identical to the issue price listed
on the filed Form 8038, use Part VI to
explain the difference.
Column (f). Describe the purpose of the
bond issue, such as to construct a
hospital or provide funds to refund a prior
issue. If any of the bond proceeds were
used to refund a prior issue, enter the date
of issue for each of the refunded issues. If
the issue has multiple purposes, enter
each purpose. If the issue financed
various projects or activities
corresponding to a related purpose, only
enter the purpose once. For example, if
proceeds are used to acquire various

2019 Instructions for Schedule K (Form 990)

items of office equipment, the amount of
such expenditures should be aggregated
and identified with the stated purpose of
“office equipment.” Alternatively, if
proceeds are used to construct and equip
a single facility, the expenditures should
be aggregated and identified with the
stated purpose of “construct & equip
facility” where the identification of the
facility is distinguishable from other
bond-financed facilities, if any. Use Part VI
if additional space is needed for this
purpose.
Column (g). Check “Yes” or “No” to
indicate whether a defeasance escrow
or refunding escrow has been
established to irrevocably defease any
bonds of the bond issue.
Column (h). Check “Yes” if the
organization acted as an “on behalf of
issuer” in issuing the bond issue. Check
“No” if the organization only acted as the
borrower of the bond proceeds under the
terms of a conduit loan with the
governmental issuer of the bond issue.
An “on behalf of issuer” is a corporation
organized under the general nonprofit
corporation law of a state whose
obligations are considered obligations of a
state or local governmental unit. See
Rev. Proc. 82-26, 1982-1 C.B. 476, for a
description of the circumstances under
which the IRS will ordinarily issue a letter
ruling that the obligations of a nonprofit
corporation will be issued on behalf of a
state or local governmental unit. See also
Rev. Rul. 63-20, 1963-1 C.B. 24; Rev. Rul.
59-41, 1959-1 C.B. 13; and Rev. Rul.
54-296, 1954-2 C.B. 59. An “on behalf of
issuer” also includes a constituted
authority organized by a state or local
governmental unit and empowered to
issue debt obligations in order to further
public purposes. See Rev. Rul. 57-187,
1957-1 C.B. 65.
Column (i). Check “Yes” or “No” to
indicate if the bond issue was a pooled
financing issue.

Part II. Proceeds

Complete for each bond issue listed in
rows A through D of Part I. Complete
multiple schedules if necessary to account
for all outstanding tax-exempt bond
issues. Note that lines 3 and 5 through 12
concern the amount of proceeds of the
bond issue, but line 4 concerns the
amount of gross proceeds of the bond
issue. Because of this, the aggregate of
the amounts entered on lines 4 through 12
may not equal the amount entered on
line 3.

Line 1. Enter the cumulative principal
amount of bonds of the issue that have
been retired as of the end of the 12-month
period used in completing this schedule.

Line 2. Enter the cumulative principal
amount of bonds of the issue that haven't
been retired, but have been legally
defeased through the establishment of a
defeasance escrow or a refunding
escrow, as of the end of the 12-month
period.
Line 3. Enter the total amount of
proceeds of the bond issue as of the end
of the 12-month period. If the total
proceeds aren't identical to the issue price
listed in Part I, column (e), use Part VI to
explain the difference (for example,
investment earnings).
Line 4. Enter the amount of gross
proceeds held in a reasonably required
sinking fund, pledged fund, or reserve or
replacement fund as of the end of the
12-month period. See Regulations
sections 1.148-1(c)(2), 1.148-1(c)(3), and
1.148-2(f).
Line 5. Enter the cumulative amount of
proceeds used, as of the end of the
12-month period, to pay interest on the
applicable portion of the bond issue
during construction of a financed capital
project.
Line 6. Enter the amount of proceeds
held in a refunding escrow as of the end
of the 12-month period. For this purpose
only, include investment proceeds without
regard to the project period limitation
found in the definition of proceeds.
Line 7. Enter the cumulative amount of
proceeds used to pay bond issuance
costs, including (but not limited to)
underwriters' spread as well as fees for
trustees and bond counsel as of the end of
the 12-month period. Issuance costs are
costs incurred in connection with, and
allocable to, the issuance of a bond
issue. See Regulations section 1.150-1(b)
for an example list of issuance costs.
Line 8. Enter the cumulative amount of
proceeds used to pay fees for credit
enhancement that are taken into account
in determining the yield on the issue for
purposes of section 148(h) (for example,
bond insurance premiums and certain
fees for letters of credit) as of the end of
the 12-month period.

acquire, construct, or improve land,
buildings, and equipment. See
Regulations section 1.150-1(b). However,
don't report capital expenditures financed
by a prior issue that was refunded by the
bond issue or capitalized interest that was
reported on line 5.
Line 11. Enter the cumulative amount of
proceeds used for any item not reported
on lines 4 through 10 as of the end of the
12-month period. Include any proceeds
used or irrevocably held to redeem or
legally defease bonds of the issue.
Line 12. Enter the amount of unspent
proceeds as of the end of the 12-month
period other than those amounts identified
in lines 4, 6, and 11.
Line 13. Enter the year in which
construction, acquisition, or rehabilitation
of the financed project was substantially
completed. A project can be treated as
substantially completed when, based
upon all the facts and circumstances, the
project has reached a degree of
completion which would permit its
operation at substantially its design level
and it is, in fact, in operation at such level.
See Regulations section 1.150-2(c). If the
bond issue financed multiple projects,
enter the latest year in which construction,
acquisition, or rehabilitation of each of the
financed projects was substantially
completed. For example, if a bond issue
financed the construction of three projects
which were substantially completed in
2017, 2018, and 2019, respectively, then
enter “2019.” If the bond issue financed
working capital expenditures, provide the
latest year in which the proceeds of the
issue were allocated to those
expenditures.
Line 14. Check “Yes” if the bonds were
issued after 2017 to refund tax-exempt
bonds or if the bonds were issued prior to
2018 to currently refund tax-exempt
bonds. Otherwise, check “No.”
Line 15. Check “Yes” if the bonds were
issued after 2017 to refund taxable bonds
or if the bonds were issued prior to 2018 to
advance refund tax-exempt bonds.
Otherwise, check “No.”

Line 9. Enter the cumulative amount of
proceeds used to finance working capital
expenditures as of the end of the
12-month period. However, don't report
expenditures reported in lines 4, 6, 7, and
8. A working capital expenditure is any
cost that isn't a capital expenditure (for
example, current operating expenses).
See Regulations section 1.150-1(b).

Line 16. Check “Yes” or “No” to indicate if
the final allocation of proceeds has been
made. Proceeds of a bond issue must be
accounted for using any reasonable,
consistently applied accounting method.
Allocations must be made by certain
applicable due dates and are generally not
considered final until the expiration of
such due dates. See Regulations section
1.148-6.

Line 10. Enter the cumulative amount of
proceeds used to finance capital
expenditures as of the end of the
12-month period. Capital expenditures
generally include costs incurred to

Line 17. Check “Yes” or “No” to indicate if
the organization maintains adequate
books and records to support the final
allocation of proceeds. Answer this

2019 Instructions for Schedule K (Form 990)

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question only with respect to the tax year
applicable to this schedule.

Part III. Private Business
Use

Complete for bond issues listed in rows A
through D of Part I, other than listed bond
issues that are post-December 31, 2002,
refunding issues which refund
pre-January 1, 2003, bond issues directly
or through a series of refundings. For this
purpose, a refunding bond issue also
includes allocation and treatment of bonds
of a multipurpose issue as a separate
refunding issue under Regulations section
1.141-13(d). Complete multiple schedules
if necessary to account for all outstanding
tax-exempt bond issues.
The organization may omit from Part III
information with respect to any bond issue
reported in Part I that is a qualified private
activity bond other than a qualified 501(c)
(3) bond. For any other qualified private
activity bonds, in Part VI the organization
must identify the issue by reference to
rows A through D of Part I, as applicable,
and identify the type of qualified private
activity bond.
Line 1. Check “Yes” or “No” to indicate if
the organization was at any time during
the reporting period a partner in a
partnership or a member of a limited
liability company which both owned
property that was financed by the bond
issue and included as partner(s) or
member(s) entities other than a section
501(c)(3) organization.
Line 2. Check “Yes” or “No” to indicate if
any lease arrangements that may result in
private business use were effective at
any time during the year with respect to
property financed by the bond issue. The
lease of financed property to a
nongovernmental person other than a
section 501(c)(3) organization is generally
private business use. Lease arrangements
that constitute unrelated trade or business
of the lessor, or that are for an unrelated
trade or business of a section 501(c)(3)
organization lessee, may also result in
private business use. See Regulations
sections 1.141-3(b)(3) and 1.145-2(b)(1).
Line 3a. Check “Yes” or “No” to indicate if
any management or service contract that
may result in private business use was
effective at any time during the year with
respect to property financed by the bond
issue. For this purpose, answer “Yes”
even if the organization has determined
that the management or service contract
meets the safe harbor under Rev. Proc.
2017-13, 2017-6 I.R.B. 787, available at
IRS.gov/irb/2017-06_IRB/ar15.html, and
won’t result in actual private business use.
A management or service contract for the
financed property can result in private
business use of the property, based on all

facts and circumstances. A management
or service contract for the financed
property generally results in private
business use of that property if the
contract provides for compensation for
services rendered with compensation
based, in whole or in part, on a share of
net profits from the operation of the facility.
See Regulations section 1.141-3(b)(4).
See also Rev. Proc. 2016-44, 2016-36
I.R.B. 316, available at IRS.gov/irb/
2016-36_IRB/ar13.html.
Line 3b. If line 3a was checked “Yes,”
check “Yes” or “No” to indicate if, during
the 12-month period used to report on the
bond issue, the organization routinely
engaged bond counsel or other outside
counsel to review any management or
service contracts relating to the financed
property.
Line 3c. Check “Yes” or “No” to indicate if
any research agreement that may result in
private business use was effective at any
time during the year for property financed
by the bond issue. For this purpose,
answer “Yes” even if the organization has
determined that the research agreement
meets the safe harbor under Rev. Proc.
2007-47, 2007-29 I.R.B. 108, available at
IRS.gov/irb/2007-29_IRB/ar12.html, and
won’t result in actual private business
use. An agreement by a nongovernmental
person to sponsor research performed by
the organization can result in private
business use of the property used for the
research, based on all the facts and
circumstances. A research agreement for
the financed property will generally result
in private business use of that property if
the sponsor is treated as the lessee or
owner of financed property for federal
income tax purposes. See Regulations
section 1.141-3(b)(6).

of use (clause (ii)). Enter the yearly
average percentage to the nearest tenth of
a percentage point (for example, 8.9%).
For this purpose, don't include any use
relating to either a management or service
contract identified on line 3a that the
organization has determined meets the
safe harbor under Rev. Proc. 2017-13, or
otherwise doesn't result in private
business use. See also Rev. Proc.
2016-44. Similarly, don't include any use
relating to a research agreement identified
on line 3c that the organization has
determined meets the safe harbor under
Rev. Proc. 2007-47, or otherwise doesn't
result in private business use.
Line 5. Enter the average percentage
during the year of the property financed by
the bond issue that was used in an
unrelated trade or business activity (a
private business use) by the
organization, another section 501(c)(3)
organization, or a state or local
governmental unit. See Regulations
section 1.141-3(g)(4). Enter the yearly
average percentage rounded to the
nearest tenth of a percentage point (for
example, 8.9%).
Line 7. Check “Yes” or “No” to indicate
whether, as of the end of the 12-month
period used to report on the bond issue,
the bond issue met the private security or
payment test of section 141(b)(2), as
modified by section 145 to apply to
qualified 501(c)(3) bonds. Generally, a
qualified 501(c)(3) bond issue will meet
the private security or payment test if more
than 5% of the payment of principal or
interest on the bond issue is either made
or secured (directly or indirectly) by
payments or property used or to be used
for a private business use. See
Regulations sections 1.141-4 and 1.145-2.

Line 3d. If line 3c was checked “Yes,”
check “Yes” or “No” to indicate if, during
the 12-month period used to report on the
bond issue, the organization routinely
engaged bond counsel or other outside
counsel to review any research
agreements relating to the financed
property.

Line 8a. Check "Yes" or "No" to indicate
whether the owner of any of the financed
property sold or transferred the property to
an entity other than a state or local
governmental unit or another section
501(c)(3) organization. For this purpose,
report sales and transfers on a cumulative
basis since the issuance of the bonds.

Line 4. Enter the average percentage
during the year of the property financed by
the bond issue that was used in a private
business use by a nongovernmental
person other than a section 501(c)(3)
organization. See Regulations section
1.141-3(g)(4). The average percentage is
determined by comparing (i) the amount of
private business use (see Definitions,
earlier) during the year to (ii) the total
amount of private business use and use
that isn't private business use during that
year. Don't include costs of issuance
reported in Part II in the amount of
property used in a private business use
(clause (i) of the preceding sentence), but
do include such costs in the total amount

Line 8b. If line 8a was checked "Yes,"
report the percentage of property sold or
transferred, including prior transfers on a
cumulative basis, since the issuance of
the bonds.

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Line 8c. If line 8a was checked "Yes,"
state whether the organization took any
remedial actions under the applicable
regulations with respect to any
nonqualified bonds that may have resulted
from the transfer.
Line 9. Check "Yes" or "No" to indicate
whether the organization has established
written procedures to ensure timely
remedial action with respect to all
nonqualified bonds in accordance with

2019 Instructions for Schedule K (Form 990)

Regulations sections 1.141-12 and
1.145-2 or other additional remedial
actions authorized by the Commissioner
under Regulations section 1.141-12(h).
Answer "Yes" only if the procedures
applied to the bond issue during the
12-month period used to report on the
bond issue.

Part IV. Arbitrage

Complete for each bond issue listed in
rows A through D of Part I. Complete
multiple schedules if necessary to account
for all outstanding tax-exempt bond
issues.
Line 1. Under section 148(f), interest on a
state or local bond isn't tax exempt unless
the issuer of the bond rebates to the
United States arbitrage profits earned
from investing proceeds of the bond in
higher yielding nonpurpose investments.
Issuers of tax-exempt bonds and any
other bonds subject to the provisions of
section 148 must use Form 8038-T,
Arbitrage Rebate, Yield Reduction and
Penalty in Lieu of Arbitrage Rebate, to
make arbitrage rebate and related
payments. Generally, rebate payments
are due no later than 60 days after every
fifth anniversary of the issue date and the
final payment of the bonds. Check “Yes”
or “No” to indicate whether the issuer has
filed the Form 8038-T that would have
been most recently due.
Lines 2a through 2c. If the issuer hasn't
filed Form 8038-T for the most recent
computation date for which filing would be
required if rebate were due, check “Yes”
or “No” to indicate whether any of the
explanations in lines 2a through 2c apply.
If line 2c is checked “Yes,” use Part VI to
provide the date of the rebate computation
showing that no rebate was due for the
applicable computation date.
Line 3. Check “Yes” or “No” to indicate if
the bond issue is a variable rate issue. A
variable rate issue is an issue containing a
bond with a yield not fixed and
determinable on the issue date.
Lines 4a through 4e. In general,
payments made or received by a
governmental issuer or borrower of
bond proceeds under a qualified hedge
are taken into account to determine the
yield on the bond issue. A qualified
hedge can be entered into before, at the
same time as, or after the date of issue.
Check “Yes” or “No” on line 4a to indicate

if the organization or the governmental
issuer has entered into a qualified hedge
and identified it on the governmental
issuer's books and records. See
Regulations section 1.148-4(h). If the
answer to line 4a is “Yes”:
• Enter the name of the provider of the
hedge on line 4b;
• Enter the term of the hedge rounded to
the nearest tenth of a year (for example,
2.4 years) on line 4c;
• Enter “Yes” or “No” on line 4d to
indicate if, as a result of the hedge,
variable yield bonds will be treated as
fixed yield bonds (superintegration of the
hedge) (see Regulations section
1.148-4(h)(4)); and
• Enter “Yes” or “No” on line 4e to
indicate if the hedge was terminated prior
to its scheduled termination date.
Lines 5a through 5d. Check “Yes” or
“No” on line 5a to indicate if any gross
proceeds of the bond issue were
invested in a guaranteed investment
contract (GIC). A GIC includes any
nonpurpose investment that has
specifically negotiated withdrawal or
reinvestment provisions and a specifically
negotiated interest rate, including
“negotiations” through requests for bids. It
also includes any agreement to supply
investments on two or more dates (for
example, a forward supply contract). If the
answer on line 5a is “Yes”:
• Enter the name of the provider of the
GIC on line 5b,
• Enter the term of the GIC rounded to
the nearest tenth of a year on line 5c, and
• Enter “Yes” or “No” on line 5d to
indicate if the regulatory safe harbor for
establishing fair market value provided in
Regulations section 1.148-5(d)(6)(iii) was
satisfied.
Line 6. Check “Yes” or “No” to indicate if
any gross proceeds were invested
beyond a temporary period (for example,
the 3-year temporary period applicable to
proceeds spent on expenditures for
capital projects, or the 13-month
temporary period applicable to proceeds
spent on working capital expenditures), or
if any gross proceeds were invested in a
reserve or replacement fund in an amount
exceeding applicable limits. See
Regulations sections 1.148-2(e) and (f).
Line 7. Check “Yes” or “No” to indicate if
the organization has established written
procedures to monitor compliance with the
arbitrage, yield restriction, and rebate

2019 Instructions for Schedule K (Form 990)

-5-

requirements of section 148. Answer
“Yes” only if the procedures applied to the
bond issue during the 12-month period are
used to report on the bond issue.

Part V. Procedures To
Undertake Corrective
Action

Regulations section 1.141-12 and other
available remedies for noncompliance
may not cover all violations of the
requirements of section 145 and other
applicable requirements for tax-exempt
bonds benefiting the organization. Certain
remedial provisions also require that the
noncompliance be identified and remedial
action taken within a limited time after the
deliberate action or other cause of the
violation. In instances where applicable
remedial provisions aren't available under
the regulations, an issuer of bonds may
request a voluntary closing agreement to
address the violation under the Tax
Exempt Bonds Voluntary Closing
Agreement Program described under
Notice 2008-31, 2008-11 I.R.B. 592.
Check “Yes” or “No” to indicate whether
the organization has established written
procedures to ensure timely identification
of violations of federal tax requirements
and timely correction of any identified
violation(s) through use of the voluntary
closing agreement program if
self-remediation isn't available under
applicable regulations. Answer “Yes” only
if the procedures applied during the
12-month period are used to report on the
bond issue.

Part VI. Supplemental
Information

Use Part VI to provide the narrative
explanations required, if applicable, to
supplement Part I, columns (e) and (f); to
provide additional information or
comments relating to the reporting of
liabilities by related organizations; and to
describe certain assumptions which are
used to complete Schedule K (Form 990)
when the information provided isn't fully
supported by existing records. Also use
Part VI to supplement responses to
questions on Schedule K (Form 990).
Identify the specific part and line number
that the response supports, in the order in
which the responses appear on
Schedule K (Form 990). Part VI can be
duplicated if more space is needed.