Userid: CPM Schema: Leadpct: 100% Pt. size: 9.5 Draft Ok to Print instrx AH XSL/XML Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source (Init. & Date) _______ Page 1 of 20 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury Internal Revenue Service 2023 Instructions for Schedule A (Form 990) Public Charity Status and Public Support Section references are to the Internal Revenue Code unless If the accounting method the organization used in otherwise noted. completing the 2022 Schedule A (Form 990) was different from the accounting method checked on the 2023 Form 990, Future developments. For the latest information about Part XII, line 1, or the 2023 Form 990-EZ, line G, the developments related to Form 990 and its instructions, such organization shouldn't report in either Part II or Part III the as legislation enacted after they were published, go to amounts reported in the applicable columns of the 2022 IRS.gov/Form990. Schedule A (Form 990). Instead, the organization should report all amounts in Part II or Part III using the accounting method checked on the 2023 Form 990, Part XII, line 1, or the General Instructions 2023 Form 990-EZ, line G. Note. Terms in bold are defined in the Glossary of the If the organization changed its accounting method Instructions for Form 990, Return of Organization Exempt TIP from a prior year, it should provide an explanation in From Income Tax. Schedule O (Form 990), Supplemental Information to Form 990 or 990-EZ. Purpose of Schedule Schedule A (Form 990) is used by an organization that files Example 1. An organization checks “Cash” on Form 990, Form 990, Return of Organization Exempt From Income Tax, Part XII, line 1. It should report the amounts in Part II or Part III or Form 990-EZ, Short Form Return of Organization Exempt using the cash method. If the organization filed a 2022 From Income Tax, to provide the required information about Schedule A (Form 990) using the cash method, it should public charity status and public support. report in the 2019 through 2022 columns on the 2023 Schedule A (Form 990) the same amounts that it reported in Who Must File the 2019 through 2022 columns on the 2022 Schedule A An organization that answered “Yes” to Form 990, Part IV, (Form 990). line 1, must complete and attach Schedule A (Form 990) to Example 2. An organization checks “Accrual” on Form Form 990. Any section 501(c)(3) organization (or 990, Part XII, line 1. The organization reports grants on Form organization treated as such) that files a Form 990-EZ must 990, Part VIII, line 1, in accordance with the Financial complete and attach this schedule to Form 990-EZ. These Accounting Standards Board FASB ASC 958 (see the include: instructions for Form 990, Part VIII, line 1). During the year, • Organizations that are described in section 501(c)(3) and the organization receives a grant to be paid in future years. are public charities; The organization should report the grant's present value on • Organizations that are described in sections 501(e), the 2023 Schedule A (Form 990). The organization should 501(f), 501(j), 501(k), or 501(n); and report accruals of present value increments to the unpaid • Nonexempt charitable trusts described in section grant on Schedule A (Form 990) in future years. 4947(a)(1) that aren’t treated as private foundations. If an organization isn’t required to file Form 990 or 990-EZ but chooses to do so, it must file a complete return and Specific Instructions provide all of the information requested, including the Part I. Reason for Public Charity required schedules. Any organization that is exempt from tax under Status TIP section 501(c)(3) but is a private foundation and not a public charity shouldn't file Form 990, Form 990-EZ, Lines 1–12 (in general) or Schedule A (Form 990), but should file Form 990-PF, Check only one of the boxes on lines 1 through 12 to indicate Return of Private Foundation or Section 4947(a)(1) Trust the reason the organization is a public charity for the tax Treated as Private Foundation. See the instructions to Part I. year. The reason can be the same as stated in the organization's tax-exempt determination letter from the IRS (“exemption letter”) or subsequent IRS determination letter, or Accounting Method it can be different. An organization that doesn't check any of When completing Schedule A (Form 990), the organization the boxes on lines 1 through 12 shouldn't file Form 990, Form must use the same accounting method it checked on Form 990-EZ, or Schedule A (Form 990) for the tax year, but 990, Part XII, line 1, or Form 990-EZ, line G. The organization should file Form 990-PF instead. must use this accounting method in reporting all amounts on Schedule A (Form 990), regardless of the accounting method If an organization believes there is more than one reason it used in completing Schedule A (Form 990) for prior years, why it is a public charity, it should check only one box but can except that in Part V, Sections D and E, distributions must be explain the other reasons it qualifies for public charity status reported on the cash receipts and disbursements method. in Part VI. An organization that claims a public charity status Nov 14, 2023 Cat. No. 11294Q |
Page 2 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. other than section 170(b)(1)(A)(vi) can also demonstrate that 509(a)(3). Based on Rev. Proc. 2023-5, the organization it qualifies under section 170(b)(1)(A)(vi) by completing Part submitted a Form 8940 request to the IRS to change its II; it may want to do so for purposes such as qualifying for the classification to public charity status under section 509(a)(2). first Special Rule in Schedule B (Form 990), Schedule of For the tax year, it meets the requirements of section 509(a) Contributors, by meeting the 33 / % support test.1 3 (2). The organization received a determination letter that it has been reclassified as a public charity under section 509(a) The IRS doesn't update its records on an organization's (2). The organization should check the box on line 10 and public charity status based on a change the organization complete Part III. makes on Schedule A (Form 990). Thus, an organization that checks a public charity status different from the reason stated Example 5. The organization received an exemption in its exemption letter or subsequent determination letter, letter that it is a public charity under section 170(b)(1)(A)(vi). although not required, may submit a request to the IRS For the tax year, it doesn't meet the requirements for public Exempt Organizations Determinations Office for a charity status under section 170(b)(1)(A)(vi) or 509(a)(2), or determination letter confirming that it qualifies for the new as a supporting organization under section 509(a)(3). Nor public charity status if the organization wants the IRS records does it meet the requirements for public charity status under to reflect that new public charity status (also referred to as any other provision of the Internal Revenue Code. The “private foundation status”). See the Instructions for Form organization is a private foundation and shouldn't file Form 8940, Request for Miscellaneous Determination. You must 990, Form 990-EZ, or Schedule A (Form 990) for the tax year complete and submit Form 8940 with payment of a user fee but should file Form 990-PF instead. through Pay.gov. The user fees are listed in Rev. Proc. Example 6. The organization received an exemption 2023-5, 2023-1 I.R.B. 265 (updated annually). letter that it is a supporting organization under section 509(a)(3). The letter doesn't state which type of supporting A subordinate organization of a group exemption that organization it is. The organization should review the is filing its own return, but hasn't received its own tax instructions for lines 12a through 12d to determine which exemption determination letter from the IRS, should check type best describes the organization. The organization may the public charity status box which most accurately describes wish to file Form 8940 to request a determination of type. its public charity status. Line 1. Check the box for a church, convention of churches, An organization that doesn't know the public charity status or association of churches. Pub. 1828, Tax Guide for stated in its exemption letter or subsequent determination Churches and Religious Organizations, lists certain letter should call the Exempt Organizations Customer characteristics generally attributed to churches. These Account Services toll free at 877-829-5500 or write to: attributes of a church have been developed by the IRS and by court decisions. They include: distinct legal existence, Internal Revenue Service recognized creed and form of worship, definite and distinct TE/GE Customer Account Services ecclesiastical government, formal code of doctrine and P.O. Box 2508 discipline, distinct religious history, membership not Cincinnati, OH 45201 associated with any other church or denomination, organization of ordained ministers, ordained ministers See the following examples. selected after completing prescribed courses of study, Example 1. The organization received an exemption literature of its own, established places of worship, regular letter that it is a public charity under section 170(b)(1)(A)(vi). congregations, regular religious services, Sunday schools for For the tax year, it meets the requirements for public charity the religious instruction of the young, and schools for the status under section 170(b)(1)(A)(vi). The organization preparation of its ministers. The IRS generally uses a should check the box on line 7 and complete Part II. combination of these characteristics, together with other facts and circumstances, to determine whether an organization is Example 2. The organization received an exemption considered a church for federal tax purposes. letter that it is a public charity under section 170(b)(1)(A)(vi). For the tax year, it doesn't meet the Line 2. Check the box for a school whose primary function requirements for public charity status under section is the presentation of formal instruction, which regularly has a 170(b)(1)(A)(vi). Instead, it meets the requirements for public faculty, a curriculum, an enrolled body of students, and a charity status under section 509(a)(2). The organization place where educational activities are regularly conducted. A should check the box on line 10 and complete Part III. private school must have a racially nondiscriminatory policy Example 3. The organization received an exemption toward its students. For details about these requirements, letter that it is a public charity under section 509(a)(2). For the see Schedule E (Form 990), Schools, and its related tax year, it doesn't meet the requirements for public charity instructions. status under section 509(a)(2) or 170(b)(1)(A)(vi). Instead, it An organization that checks the box on line 2 must meets the requirements for public charity status as a TIP also complete Schedule E (Form 990), Schools. supporting organization under section 509(a)(3). The organization should: Line 3. Check the box for an organization whose main 1. Check the box for line 12 and either line 12a, 12b, 12c, purpose is to provide hospital or medical care. A or 12d; rehabilitation institution or an outpatient clinic can qualify as a 2. Complete line 12f; hospital if its principal purposes or functions are the providing 3. Complete the table on line 12g; and of hospital or medical care, but the term doesn't include medical schools, medical research organizations, 4. Complete Part IV and (if applicable) Part V. convalescent homes, homes for children or the aged, or Example 4. The organization received an exemption vocational training institutions for handicapped individuals. letter that it is a supporting organization under section -2- Instructions for Schedule A (Form 990) 2023 |
Page 3 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Check the box on line 3 also for a cooperative hospital Line 6. Only a federal, state, or local government or service organization described in section 501(e). governmental unit that has received an exemption letter The definition of hospital for Schedule A (Form 990), recognizing it as exempt from tax under section 501(c)(3) TIP Part I, is different from the definition for Schedule H should check this box. See Rev. Rul. 60-384, 1960-2 C.B. (Form 990), Hospitals. Accordingly, see Who Must 172. File in the Instructions for Schedule H (Form 990) about Line 7. Check the box and complete Part II if the whether the organization is also required to complete organization meets one of the section 170(b)(1)(A)(vi) public Schedule H (Form 990). support tests. See the instructions for Part II regarding how an organization can qualify as a publicly supported Line 4. Check the box for an organization whose principal organization under section 170(b)(1)(A)(vi). purpose or function is to engage in medical research, and that is directly engaged in the continuous active conduct of Line 8. Check the box and complete Part II if the medical research in conjunction with a hospital. The hospital organization is a community trust and meets a section must be described in section 501(c)(3) or operated by the 170(b)(1)(A)(vi) public support test. A community trust is a federal government, a state or its political subdivision, a U.S. charity that attracts large contributions for the benefit of a territory or its political subdivision, or the District of Columbia. particular community or area, often initially from a small If the organization primarily gives funds to other number of donors, and is generally governed by organizations (or grants and scholarships to individuals) for representatives of its particular community or area. See them to do the research, the organization isn't a medical Regulations sections 1.170A-9(f)(10), (11), and (12). research organization. A community trust claiming it qualifies as a public The organization isn't required to be an affiliate of the ! charity should check the box on line 8 whether it is hospital, but there must be a joint effort by the organization CAUTION structured as a corporation or as a trust. and the hospital to maintain continuing close cooperation in the active conduct of medical research. Line 9. Check the box if the organization is an agricultural research organization described in section 170(b)(1)(A)(ix) The definition of medical research for Schedule A operated in conjunction with a land-grant college or university TIP (Form 990), Part I, is different from the definition for or a non-land grant college of agriculture. Enter the name, Schedule H (Form 990), Hospitals. Accordingly, city, and state of the college or university. You don't have to research that is medical research for purposes of determining complete Part II. whether an organization is a medical research organization isn't necessarily medical research for Schedule H (Form 990) Line 10. Check the box and complete Part III if the reporting purposes. organization meets both of the section 509(a)(2) support tests. See the instructions for Part III regarding how an Assets test/expenditure test. An organization qualifies as organization can qualify as a publicly supported organization a medical research organization if its principal purpose is under section 509(a)(2). medical research, and if it devotes more than half its assets, Line 11. Check the box only if the organization has received or spends at least 3.5% of the fair market value of its a ruling from the IRS that it is organized and operated endowment, directly in conducting medical research. Either primarily to test for public safety. test can be met based on a computation period consisting of the immediately preceding tax year or the immediately Lines 12 and 12a–12d. If the organization is a supporting preceding 4 tax years. organization, check the box for line 12 and then check the appropriate box for line 12a, 12b, 12c, or 12d to indicate the If an organization doesn't satisfy either the assets test or type of supporting organization it is. The organization must the expenditure test, it can still qualify as a medical research also complete lines 12e and 12f, the table on line 12g, and organization based on the circumstances involved. Part IV. If the organization is a Type III non-functionally These tests are discussed in Regulations sections integrated supporting organization, it must also complete 1.170A-9(d)(2)(v) and (vi). Under these tests, value the Part V. organization's assets as of any day in its tax year using the For more information about supporting organizations, see same day every year, and value the endowment at fair market Regulations section 1.509(a)-4 and sections 509(a)(3) and value using commonly accepted valuation methods. See 509(f). For a brief overview of the requirements for Regulations section 2031. qualification as a supporting organization, and the different Line 5. Check the box and complete Part II if the types of supporting organizations, see Pub. 557, Tax-Exempt organization receives and manages property for and expends Status for Your Organization, and visit IRS.gov/Charities-Non- funds to benefit a college or university that is owned or Profits/Section-509(a)(3)-Supporting-Organizations. operated by one or more states or political subdivisions. The Use the information later to determine the supporting school must be an organization described in the instructions organization's type. If the organization checks the box on for line 2. line 12e, the letter the organization received from the IRS Expending funds to benefit a college or university includes identifies its type. If the box checked on any of lines 12a acquiring and maintaining the campus, its buildings and through 12d is different from the type stated in the letter (for equipment, granting scholarships and student loans, and example, because the organization has made significant making any other payments in connection with the normal changes to its structure or operations resulting in it no longer functions of colleges and universities. qualifying as the type of supporting organization indicated in The organization must meet the same public support test its letter), provide an explanation in Part VI. If the organization described later for line 7. See Rev. Rul. 82-132, 1982-2 C.B. doesn't check the box on line 12e, it should check the box on 107. line 12a, 12b, 12c, or 12d that best describes the type of supporting organization it is. Instructions for Schedule A (Form 990) 2023 -3- |
Page 4 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. All supporting organizations, regardless of type, must Line 12e. The organization's exemption letter or subsequent ! be responsive to the needs or demands of one or determination letter may state the type of supporting CAUTION more supported organizations, and must constitute organization it is. If it does, check the box on this line. If the an integral part of, or maintain a significant involvement in, letter doesn't state the type, or if the letter states Type III but the operations of one or more supported organizations. doesn't specify whether functionally integrated or Although Type III supporting organizations have specific non-functionally integrated, leave this line blank. “responsiveness” and “integral part” tests that must be met, the relationship between a Type I or Type II supporting A grantor to a section 509(a)(3) supporting organization, organization and its supported organization(s) must also acting in good faith, can rely on this letter in determining include these responsiveness and integral part whether the organization is a Type I Type II Type III , , characteristics. The ability of the supported organization(s) in functionally integrated, or Type III non-functionally integrated a Type I or Type II relationship effectively to control the supporting organization until the IRS makes a public supporting organization's board generally ensures that these announcement of the entity’s change in status. See Rev. characteristics are present. If they aren't present, however, Proc. 2018-32, 2018-23 I.R.B. 739. don't check any box for lines 12a through 12d. For more Line 12f. A supporting organization must be organized and information, see Regulations sections 1.509(a)-4(f)(3) and operated exclusively to support or benefit one or more (4). specified publicly supported organizations. Please write in the space provided the number of supported organizations. • Type I. A Type I supporting organization is operated, Include all supported organizations that the organization was supervised, or controlled by one or more publicly supported organized to support at any time during the tax year, whether organizations . If the organization otherwise qualifies as a or not they actually received support during the tax year. supporting organization and can answer “Yes” to the following question, check the box for Type I. Line 12g. An organization checking a box on line 12a, 12b, 12c, or 12d must complete the table on line 12g. Do the supported organizations have a substantial degree of direction over the policies, programs, and activities of the • Columns (i) and (ii). Enter the name and employer identification number (EIN) for each supported supporting organization, typically by ensuring that the organization counted on line 12f. If the organization had governing body, officers, or membership of the supported more than five supported organizations during the tax year, organizations may regularly appoint or elect a majority of the enter the additional organizations on duplicate pages of supporting organization's directors or trustees? Schedule A (Form 990), Part I. Use as many duplicate copies • Type II. A Type II supporting organization is supervised as needed, and number each page. or controlled in connection with one or more publicly supported organizations. If the organization otherwise • Column (iii). For each supported organization named in column (i), enter the line number (from lines 1 through 10 qualifies as a supporting organization and can answer “Yes” above) that best describes the foundation status of the to the following question, check the box for Type II. supported organization. Do the same persons, such as directors, trustees, and officers, supervise or control the supported organization(s) Example 1. If the supported organization is a hospital, and the supporting organization? then that is an organization described in section 170(b)(1)(A) • Type III—Functionally integrated. Check this box if the (iii), and you should enter “3” in column (iii). organization qualifies as a Type III functionally integrated Example 2. If the supported organization is a federal, supporting organization by meeting the following state, or local governmental unit, or foreign government, then requirements. that is an organization described in section 170(b)(1)(A)(v), 1. The organization meets the notification requirement and you should enter “6” in column (iii). described in Part IV, Section D, line 1; Example 3. If the supported organization is exempt under 2. The organization meets the responsiveness test (both section 501(c)(4), 501(c)(5), or 501(c)(6), but can be the relationship requirement and the significant voice supported by a supporting organization (see Regulations requirement) described in Part IV, Section D, lines 2 and 3; section 1.509(a)-4(k)), enter the line number (from lines 1 and through 10 above) that would describe the section 501(c)(4), 501(c)(5), or 501(c)(6) organization if it were a section 501(c) 3. The organization meets one of the alternative integral (3) organization. Identify the specific code section (501(c)(4), part tests described in Part IV, Section E. 501(c)(5), or 501(c)(6)) for each such supported organization • Type III—Non-functionally integrated. Check this box if in Part VI. the organization qualifies as a Type III non-functionally integrated supporting organization by meeting the following The only correct entry in column (iii) is a line number requirements. ! (from lines 1 through 10) that corresponds to the 1. The organization meets the notification requirement CAUTION description of the supported organization. described in Part IV, Section D, line 1; • Column (iv). Check “Yes” if the supported organization 2. The organization meets the responsiveness test (both named in column (i) is specifically named as a supported the relationship requirement and the significant voice organization in the organization's declaration of trust, articles requirement) described in Part IV, Section D, lines 2 and 3; of incorporation, or other governing document. If the and supported organization is not named in the organizing 3. The organization meets the integral part test by documents, check “No” and explain why in Part VI. meeting either (a) the distribution and attentiveness • Column (v). Enter the total amount of monetary support requirements described in Part V, or (b) the alternative paid to, or for the benefit of, the supported organization integral part test for certain trusts in existence on November named in column (i) during the tax year. Such monetary 20, 1970, described in Part V, line 1. support may include making payments to or for the use of individual members of the charitable class benefited by the -4- Instructions for Schedule A (Form 990) 2023 |
Page 5 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. supported organization (such as scholarships), and to 501(c) admissions, merchandise, services, or the use of facilities in (3) public charities operated, supervised, or controlled a related activity, report the membership fees on line 12. To directly by or in connection with the supported organization. the extent that the membership fees are payments to See Regulations section 1.509(a)-4(e). If no monetary purchase admissions, merchandise, services, or the use of support was provided during the tax year, enter “0”. facilities in an unrelated business activity, report the • Column (vi). In this column, the organization may (but membership fees on line 9. See Regulations section isn't required to) provide an estimate of the fair market value 1.170A-9(f)(7)(iv). Include qualified sponsorship payments of goods, other property, services, and use of facilities that is under section 513(i). provided to or for the benefit of the supported organizations Noncash contributions. Use any reasonable method to during the tax year. Describe in Part VI any such goods, other determine the value of noncash contributions reported on property, services, and use of facilities, whether or not an line 1. amount is reported for them in column (vi). Don't report any donations of services (such as the value of donated advertising space or broadcast air time) or Part II. Support Schedule for donations of use of materials, equipment, or facilities, on Organizations Described in Sections line 1 as gifts, grants, or contributions. Donated services and facilities from a governmental unit only are reported on 170(b)(1)(A)(iv) and 170(b)(1)(A)(vi) line 3. If the organization checked a box in Part I, on line 5, Loss on uncollectible pledge. If an organization records a loss on an uncollectible pledge that it reported on a prior CAUTION appropriate dollar amounts. Don't leave Part II blank ! 7, or 8, it should complete Part II and insert the year's Schedule A (Form 990), it should deduct that loss from or report only zeros if the organization had any support during the contribution amount for the year in which it originally the period. If the organization checks the box in Part II, on counted that contribution as revenue. For example, if in the line 13, it should stop there and not complete the rest of Part prior tax year the organization reported a pledged II. contribution with a then-present value of $50,000 in Part II, line 1, column (e), but learned during the current tax year that If the organization checked a box in Part I, on line 5, it wouldn't receive any of that pledged contribution, it should TIP 7, or 8 and also checks the box in Part II, on line 18, deduct the $50,000 from the amount reported in Part II, the organization should complete Part III to determine line 1, column (d), for the prior tax year. if it qualifies as a publicly supported organization under Support from a governmental unit. Include on line 1 section 509(a)(2). If it does qualify, the organization should support received from a governmental unit. This includes instead check the box in Part I, on line 10. contributions, but not gross receipts from exercising or performing the organization's tax-exempt purpose or Public Support Test. For an organization to qualify as a function, which should be reported on line 12. An amount publicly supported organization under section 170(b)(1)(A) received from a governmental unit is treated as gross (vi), either: receipts from exercising or performing the organization's • 33 / % or more of its total support must come from 1 3 tax-exempt purpose or function if the purpose of the payment governmental units, contributions from the general public, is primarily to serve the direct and immediate needs of the and contributions or grants from other public charities; or payor governmental unit, and is treated as a contribution, if • 10% or more of its total support must come from the purpose is primarily to provide a direct benefit to the governmental units, contributions from the general public, public. For example, a payment to maintain library facilities and contributions or grants from other public charities and the that are open to the public should be treated as a facts and circumstances indicate it is a publicly supported contribution. See Regulations section 1.170A-9(f)(8) and organization. Rev. Rul. 81-276, 1981-2 C.B. 128. Refer to the instructions for Form 990, Part VIII, lines 1e and 2, for more examples Note. An organization won't meet either of these public addressing the distinction between government payments support tests if almost all of its support comes from gross that are contributions and government payments that are receipts from related activities and an insignificant amount of gross receipts from activities related to the organization's its support comes from governmental units and tax-exempt purpose or function. Medicare and Medicaid contributions made directly or indirectly by the general payments are treated as gross receipts from patients rather public. than as contributions from the government payor for Public support is measured using a 5-year computation purposes of the public support test. See Rev. Rul. 83-153, period that includes the current and 4 prior tax years 1983-2 C.B. 48. (including short years). If the organization's current tax year The Coronavirus Aid, Relief, and Economic Security or any of its 4 prior tax years were short years, explain in Part TIP Act (CARES Act) established the Paycheck VI. Protection Program (PPP) to provide loans to small If the organization wasn't a section 501(c)(3) organization businesses as a direct incentive to keep their workers on the for the entire 5-year period in Part II, report amounts only for payroll. The loans are forgiven if all employee retention the years the organization was a section 501(c)(3) criteria are met and the funds are used for eligible expenses. organization. Amounts of PPP loans that are forgiven may be reported on Line 1. Don't include any “unusual grants.” See Unusual line 1 as contributions from a governmental unit in the tax grants, later. Include membership fees only to the extent to year when the amounts are forgiven or at such other time as which the fees are payments to provide support for the provided in Rev. Proc. 2021-48, 2021-49 I.R.B. 835. organization rather than to purchase admissions, Unusual grants. Unusual grants are generally substantial merchandise, services, or the use of facilities. To the extent contributions and bequests from disinterested persons and that the membership fees are payments to purchase are: Instructions for Schedule A (Form 990) 2023 -5- |
Page 6 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. 1. Attracted because of the organization's publicly revenue or assets on Form 990-EZ, explain in Part VI the supported nature, basis for characterizing such transfers as contributions but 2. Unusual and unexpected because of the amount, and not as revenue or assets. For example, if an organization is a community foundation that receives and holds a cash transfer 3. Large enough to endanger the organization's status as for another tax-exempt organization and reports contributions normally meeting either the 33 / % public support test or the 1 3 of such property on Schedule A (Form 990), Part II, line 1, 10%-facts-and-circumstances test. without reporting it on Form 990 as revenue in Part VIII or For a list of other factors to be considered in determining assets in Part X, explain the basis for characterizing the whether a grant is an unusual grant, see Regulations section property as contributions but not as revenue or assets. 1.509(a)-3(c)(4). Line 2. Enter tax revenue levied for the organization's benefit An unusual grant is excluded even if the organization by a governmental unit and either paid to the organization receives or accrues the funds over a period of years. or expended on its behalf. Report this amount whether or not Don't report gross investment income items as unusual the organization includes this amount as revenue on its grants. Instead, include all investment income on line 8. financial statements or elsewhere on Form 990 or 990-EZ. See Rev. Rul. 76-440, 1976-2 C.B. 58; Regulations Line 3. Enter the value of services or facilities furnished by a section 1.170A-9(f)(6)(ii); and Regulations sections governmental unit to the organization without charge. Don't 1.509(a)-3(c)(3) and (4) for details about unusual grants. include the value of services or facilities generally furnished Include in Part VI a list showing the amount, but not the to the public without charge. For example, include the fair grantor, of each unusual grant actually received each year (if rental value of office space furnished by a governmental unit the cash accounting method is used) or accrued each year (if to the organization without charge but only if the the accrual accounting method is used). governmental unit doesn't generally furnish similar office space to the public without charge. Report these amounts Don't include the names of the grantors because Part whether or not the organization includes these amounts as ! VI will be made available for public inspection. revenue on its financial statements or elsewhere on Form 990 CAUTION or 990-EZ. Unusual grants recordkeeping. An organization that received any unusual grants during the 5-year period should Line 5. Enter in column (f) the portion of total contributions also keep for its records a list showing, for each year, the by each individual, trust, or corporation included on line 1 for name of the contributor, the date and amount of the grant, the years reported that exceeds 2% of the amount reported in and a brief description of the grant. If the organization used line 11, column (f). In applying the 2% limitation, all the cash method for the applicable year, show only the contributions made by a donor and by any person or persons amounts the organization actually received during that year. If standing in a relationship to the donor that is described in the organization used the accrual method for the applicable sections 4946(a)(1)(C) through (a)(1)(G) and the related year, show only the amounts the organization accrued for that regulations (for example, spouses and certain other family year. An example of this list is given below. members, and entities where ownership or control interests exceed a threshold level) will be treated as made by one Don't file this list with the organization's Form 990 or person. However, the 2% limitation doesn't apply to ! 990-EZ because it may be made available for public contributions from organizations qualifying as publicly CAUTION inspection. supported organizations under section 170(b)(1)(A)(vi), governmental units described in section 170(b)(1)(A)(v), and other organizations, such as the following, but only if they Line 1. Example—List of unusual grants also qualify as publicly supported organizations under section 170(b)(1)(A)(vi). Year ▶ 2023 Description • Churches described in section 170(b)(1)(A)(i), Name ▶ Mr. Distinguished Donor Undeveloped land • Educational institutions described in section 170(b)(1)(A) (ii), • Hospitals described in section 170(b)(1)(A)(iii), Date of Grant ▶ January 15, • Organizations operated for the benefit of a college or 2023 university owned or operated by a governmental unit described in section 170(b)(1)(A)(iv), and Amount of Grant ▶ $600,000 Agricultural research organizations described in section • 170(b)(1)(A)(ix). Conservation easements and qualified conservation The organization should keep for its records a list showing contributions. The organization must report any qualified the name of and amount contributed by each donor (other conservation contributions and contributions of conservation than a governmental unit or publicly supported easements consistently with how it reports revenue from organization) whose total gifts during the years reported such contributions in its books, records, and financial exceed 2% of the amount reported in line 11, column (f). An statements and in Form 990, Part VIII, Statement of Revenue. example of this list is given later. Reporting contributions not reported as revenue. If the Don't file this list with the organization's Form 990 or organization reports any contributions on line 1 of ! 990-EZ because it may be made available for public Schedule A (Form 990), Part I, that it doesn't report on Form CAUTION inspection. 990 as revenue in Part VIII or as assets in Part X, or as -6- Instructions for Schedule A (Form 990) 2023 |
Page 7 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Line 5. Example—List of donors other than governmental units and publicly supported organizations Assumption: 2% of the amount on Schedule A (Form 990), Part II, line 11, column (f), is $12,000. Contributors whose total gifts from 2018 through 2022 were in excess of the 2% limitation (a) (b) (c) (d) (e) (f) (g) Name 2019 2020 2021 2022 2023 Total Excess contributions (column (f) minus the 2% limitation) XYZ Foundation $59,000 $3,000 $18,000 $80,000 $68,000 Banana Office $12,000 $3,000 $1,000 $16,000 $4,000 Supply Plum Corporation $15,000 $15,000 $30,000 $18,000 John Smith $5,000 $5,000 $5,000 $1,000 $16,000 $4,000 Sue Adams $10,000 $10,000 $10,000 $30,000 $18,000 Raisin Trade $20,000 $7,000 $27,000 $15,000 Assoc. Total. Add the items in column (g). Enter the total here and on Part II, column (f), line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $127,000 Line 8. Include the gross income from interest, dividends, • A trade or business in which substantially all work is payments with respect to securities loans (section 512(a)(5)), performed by volunteers (such as book fairs and sales of gift rents, royalties, and income from similar sources. Don't wrap paper). See section 513(a)(1). include on this line payments that result from activities of the • A trade or business carried on by the organization primarily organization that further its exempt purpose. Instead, report for the convenience of its members, students, patients, these amounts on line 12. officers, or employees. See section 513(a)(2). • A trade or business which is the selling of merchandise, Line 9. Enter the organization's net income from conducting substantially all of which the organization received as gifts or unrelated business activities, whether or not the activities contributions. See section 513(a)(3). are regularly conducted as a trade or business. See sections • “Qualified public entertainment activities” or “qualified 512 and 513 and the applicable regulations. Include convention and trade show activities” of certain membership fees to the extent they are payments to organizations. See section 513(d). purchase admissions, merchandise, services, or the use of • Furnishing certain hospital services. See section 513(e). facilities in an activity that is an unrelated business. • A trade or business consisting of conducting bingo When calculating unrelated business taxable income games, but only if the conduct of such games is lawful. See (UBTI) for this purpose, an exempt organization with more section 513(f). than one unrelated trade or business may use either its UBTI • Qualified pole rentals by a mutual or cooperative telephone calculated under section 512(a)(6) or its UBTI calculated in or electric company. See section 513(g). the aggregate. If a net loss results, enter “0” on this line. • The distribution of certain low-cost articles incidental to the solicitation of charitable contributions (except to the extent Line 10. Include all support as defined in section 509(d) that such gross receipts are properly treated as charitable isn't included elsewhere in Part II. Explain in Part VI the contributions reportable on line 1 rather than as proceeds of nature and source of each amount reported. Don't include a sale or exchange), and exchange and rental of members gain or loss from amounts reportable on line 12 or from the lists. See section 513(h). sale of capital assets. Line 13. An organization that checks this box should stop Line 12. Enter the total amount of gross receipts the here and shouldn't complete the rest of Part II. It shouldn't organization received from related activities for all years make a public support computation on line 14 or 15 or check reported in Part II. The organization won't be treated as meeting the section 170(b)(1)(A)(vi), 33 / % public support 1 3 any of the boxes on lines 16 through 18. test or the 10%-facts-and-circumstances public support test, Example. An organization receives an exemption letter if almost all of its support consists of gross receipts from from the IRS that it is exempt from tax under section related activities and an insignificant amount of its support 501(c)(3) and qualifies as a public charity under section comes from governmental units and public contributions. 170(b)(1)(A)(vi) effective on its date of incorporation. When See Regulations section 1.170A-9(f)(7)(iii). the organization prepares Part II for each of its first 5 tax Include on line 12 gross receipts from admissions, sales of years as a section 501(c)(3) organization, it should check the merchandise, performance of services, or furnishing of box on line 13 and shouldn't complete the rest of Part II. facilities in any activity which isn't an unrelated trade or When the organization prepares Part II for its sixth tax year business (within the meaning of section 513). See section and subsequent years, it shouldn't check the box on line 13 509(d)(2). Include membership fees to the extent they are and should complete the rest of Part II. payments to purchase admissions, merchandise, services, or the use of facilities in a related activity. For example, include on this line gross receipts from: Instructions for Schedule A (Form 990) 2023 -7- |
Page 8 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. An organization in its first 5 years as a section 501(c) Line 18. If the organization didn't check a box on line 13, TIP (3) organization should make the public support 16a, 16b, 17a, or 17b, it doesn't qualify as a publicly computations on a copy of Schedule A (Form 990) supported organization under section 170(b)(1)(A)(iv) or that it keeps for itself. An organization should carefully 170(b)(1)(A)(vi) for the 2023 tax year and should check the monitor its public support on an ongoing basis to ensure that box on this line. If the organization doesn't qualify as a public it will meet a public support test in the sixth year and charity under any of the boxes in Part I, lines 1 through 12, it succeeding years. is a private foundation as of the beginning of the 2023 tax year for filing purposes and shouldn't file Form 990, Form Line 14. Round to the nearest hundredth decimal point in 990-EZ, or Schedule A (Form 990) for the 2023 tax year. reporting the percentage of public support. For example, if Instead, the organization should file Form 990-PF and check the organization calculates its public support percentage as Initial return of a former public charity on Form 990-PF, at the 58.3456%, this percentage would be rounded to 58.35% top of page 1. when reported on line 14. If Form 990 or 990-EZ is for the organization's sixth Line 15. For 2023, enter the public support percentage from TIP tax year as a section 501(c)(3) organization, the the 2022 Schedule A (Form 990), Part II, line 14. Round to organization should figure the public support the nearest hundredth decimal point in reporting the percentage on its Form 990 or 990-EZ for its first 5 tax years percentage of public support. before it checks the box on line 18. If its public support Line 16a. If the organization didn't check the box on line 13, percentage for its first 5 tax years is 33 / % or more, or if it 1 3 and line 14 is 33 / % or more, 1 3 check the box on this line meets the 10%-facts-and-circumstances test for its first 5 tax and don't complete the rest of Part II. The organization years, it will qualify as a public charity for its sixth tax year. If qualifies as a publicly supported organization for 2023 and the organization qualifies under the 10% test, explain in Part 2024. VI. Line 16b. If the organization didn't check a box on line 13 or If the organization doesn't qualify as a publicly 16a, and line 15 is 33 / % or more, 1 3 check the box on this TIP supported organization under section 170(b)(1)(A) line and don't complete the rest of Part II. The (vi), it can complete Part III to determine if it qualifies organization qualifies as a publicly supported organization for as a publicly supported organization under section 509(a)(2). 2023. Line 17a. If the organization didn't check a box on line 13, Part III. Support Schedule for 16a, or 16b, and line 14 is 10% or more, and if the organization meets the facts-and-circumstances test, check Organizations Described in Section the box on this line and don't complete the rest of Part 509(a)(2) II. The organization qualifies as a publicly supported organization for 2023 and 2024. If an organization checked the box in Part I, for If this box is checked, explain in Part VI how the TIP line 10, it should complete Part III and insert the organization meets the facts-and-circumstances test in appropriate dollar amounts. Don't leave Part III blank Regulations section 1.170A-9(f)(3). Include the following or report only zeros if the organization had any support during information. the period. If the organization checks the box in Part III, for • Explain whether the organization maintains a continuous line 14, it should stop there and not complete the rest of Part and bona fide program for solicitation of funds from the III. general public, community, membership group involved, governmental units, or other public charities. If the organization checked the box in Part I, for • List all other facts and circumstances, including the TIP line 10, and also checks the box in Part III, for line 20, sources of support, whether the organization has a the organization should complete Part II to determine governing body that represents the broad interests of the if it qualifies as a publicly supported organization under public, and whether the organization generally provides section 170(b)(1)(A)(vi). If it does qualify, the organization facilities or services directly for the benefit of the general should instead check the box in Part I, for line 5, 7, or 8, public on a continuing basis. whichever applies. • If the organization is a membership organization, explain Public Support Test. For an organization to qualify as a whether the solicitation for dues-paying members is designed publicly supported organization under section 509(a)(2): to enroll a substantial number of persons from the 1 3 community, whether dues for individual members have been • More than 33 / % of its support normally must come from gifts, grants, contributions, membership fees, and gross fixed at rates designed to make membership available to a receipts from admissions, sales of merchandise, broad cross-section of the interested public, and whether the performance of services, or furnishing of facilities in an activities of the organization will likely appeal to persons activity which isn't an unrelated trade or business under having some broad common interest or purpose. section 513; and Line 17b. If the organization didn't check a box on line 13, • No more than 33 / % of its support normally must come 1 3 16a, 16b, or 17a, and line 15 is 10% or more, and if the from gross investment income and net unrelated business organization meets the facts-and-circumstances test, check income (less section 511 tax) from businesses acquired by the box on this line and don't complete the rest of Part the organization after June 30, 1975. II. The organization qualifies as a publicly supported Public support is measured using a 5-year computation organization for 2023. If this box is checked, explain in Part VI period that includes the current and 4 prior tax years how the organization meets the facts-and-circumstances test (including short years). If the organization's current tax year in Regulations section 1.170A-9(f)(3). Include the same or any of its 4 prior tax years were short years, explain in Part information identified in the instructions for Line 17a, earlier. VI. -8- Instructions for Schedule A (Form 990) 2023 |
Page 9 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. In Part III, if the organization wasn't a section 501(c)(3) than as contributions from the government payor for organization for the entire 5-year period, report amounts only purposes of the public support test. See Rev. Rul. 83-153, for the years the organization was a section 501(c)(3) 1983-2 C.B. 48. organization. The Coronavirus Aid, Relief, and Economic Security Line 1. Don't include any “unusual grants.” See Unusual TIP Act (CARES Act) established the Paycheck grants, later. Include membership fees only to the extent to Protection Program (PPP) to provide loans to small which the fees are payments to provide support for the businesses as a direct incentive to keep their workers on the organization rather than to purchase admissions, payroll. The loans are forgiven if all employee retention merchandise, services, or the use of facilities. To the extent criteria are met and the funds are used for eligible expenses. that the membership fees are payments to purchase Amounts of PPP loans that are forgiven may be reported on admissions, merchandise, services, or the use of facilities in line 1 as contributions from a governmental unit in the tax a related activity, include the membership fees on line 2. See year when the amounts are forgiven or at such other time as Regulations section 1.509(a)-3(h). To the extent that the provided in Rev. Proc. 2021-48, 2021-49 I.R.B. 835. membership fees are payments to purchase admissions, merchandise, services, or the use of facilities in an activity Unusual grants. Unusual grants are generally substantial that isn't an unrelated business under section 513, report contributions and bequests from disinterested persons and the membership fees on line 3. To the extent that the are: membership fees are payments to purchase admissions, 1. Attracted because of the organization's publicly merchandise, services, or the use of facilities in an activity supported nature, that is an unrelated business, report the net amount either on 2. Unusual and unexpected because of the amount, and line 10b or 11, as appropriate. 3. Large enough to endanger the organization's status as Noncash contributions. Use any reasonable method to normally meeting the 33 / % public support test.1 3 determine the value of noncash contributions reported on line 1. For a list of other factors to be considered in determining Don't report any donations of services (such as the value whether a grant is an unusual grant, see Regulations section of donated advertising space or broadcast air time) or 1.509(a)-3(c)(4). donations of use of materials, equipment, or facilities on An unusual grant is excluded even if the organization line 1 as gifts, grants, or contributions. Donated services and receives or accrues the funds over a period of years. facilities from a governmental unit are reported on line 5. Don't report gross investment income items as unusual Loss on uncollectible pledge. If an organization records grants. Instead, include all investment income on line 10a. a loss on an uncollectible pledge that it reported on a prior See Rev. Rul. 76-440, 1976-2 C.B. 58; Regulations year's Schedule A (Form 990), it should deduct that loss from section 1.170A-9(f)(6)(ii); and Regulations sections the contribution amount for the year in which it originally 1.509(a)-3(c)(3) and (4) for details about unusual grants. counted that contribution as revenue. For example, if in the prior tax year the organization reported a pledged Include in Part VI a list showing the amount, but not the contribution with a then-present value of $50,000 in Part III, grantor, of each unusual grant actually received each year (if line 1, column (e), but learned during the current tax year that the cash accounting method is used) or accrued each year (if it wouldn't receive any of that pledged contribution, it should the accrual accounting method is used). deduct the $50,000 from the amount reported in Part III, Don't include the names of the grantors because Part line 1, column (d), for the prior tax year. ! VI will be made available for public inspection. Support from a governmental unit. Include on line 1 CAUTION support received from a governmental unit. This includes Unusual grants recordkeeping. An organization that contributions, but not gross receipts from exercising or received any unusual grants during the 5-year period, should performing the organization's tax-exempt purpose or also keep for its records a list showing, for each year, the function, which should be reported on line 2. Contributions name of the contributor, the date and amount of the grant, are sometimes difficult to distinguish from such gross and a brief description of the grant. If the organization used receipts—the label on the agreement isn't controlling. An the cash method for the applicable year, show only amounts amount received from a governmental unit is treated as gross the organization actually received during that year. If the receipts from exercising or performing the organization's organization used the accrual method for the applicable year, tax-exempt purpose or function if the purpose of the payment show only amounts the organization accrued for that year. An is primarily to serve the direct and immediate needs of the example of this list is given below. payor governmental unit. An amount is treated as a contribution if the purpose of the payment is primarily to Don't file this list with the organization's Form 990 or provide a direct benefit to the public. For example, if a state ! 990-EZ because it may be made available for public government agency pays an organization to operate an CAUTION inspection. institute to train agency employees in the principles of management and administration, the funds received should be included on line 2 as gross receipts. See Regulations section 1.509(a)-3(g). Refer to the instructions for Form 990, Part VIII, lines 1e and 2, for more examples addressing the distinction between government payments that are contributions and government payments that are gross receipts from activities related to the organization's tax-exempt purpose or function. Medicare and Medicaid payments are treated as gross receipts from patients rather Instructions for Schedule A (Form 990) 2023 -9- |
Page 10 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Line 7a. Example—List of amounts received from disqualified persons Disqualified Person (a) 2019 (b) 2020 (c) 2021 (d) 2022 (e) 2023 (f) Total David Smith $7,000 $6,000 $2,000 $15,000 Anne Parker $5,000 $7,000 $4,000 $16,000 Total $7,000 $6,000 $5,000 $7,000 $6,000 $31,000 Line 1. Example—List of unusual grants • A trade or business consisting of conducting bingo games, but only if the conduct of such games is lawful. See Year ▶ 2023 Description section 513(f). • Qualified pole rentals by a mutual or cooperative telephone Name ▶ Mr. Distinguished Donor Undeveloped land or electric company. See section 513(g). • The distribution of certain low-cost articles incidental to the Date of Grant ▶ January 15, solicitation of charitable contributions (except to the extent 2023 such gross receipts are properly treated as charitable contributions reportable on line 1 rather than as proceeds of Amount of Grant ▶ $600,000 a sale or exchange), and exchange and rental of members lists. See section 513(h). Conservation easements and qualified conservation While the activity of soliciting and receiving qualified contributions. The organization must report any qualified sponsorship payments is also excluded from unrelated conservation contributions and contributions of conservation business (see section 513(i)), the qualified sponsorship easements consistently with how it reports revenue from payments themselves are treated as charitable contributions such contributions in its books, records, and financial reportable on line 1. statements and in Form 990, Part VIII, Statement of Revenue. Line 4. Enter tax revenue levied for the organization's benefit Reporting contributions not reported as revenue. If the by a governmental unit and either paid to the organization organization reports any contributions on Schedule A (Form or expended on its behalf. Report this amount whether or not 990), Part III, line 1, that it doesn't report on Form 990, as the organization includes this amount as revenue on its revenue in Part VIII or as assets in Part X, or as revenue or financial statements or elsewhere on Form 990 or 990-EZ. assets on Form 990-EZ, explain in Part VI the basis for Line 5. Enter the value of services or facilities furnished by a characterizing such transfers as contributions but not as governmental unit to the organization without charge. Don't revenue or assets. For example, if an organization is a include the value of services or facilities generally furnished community foundation that receives and holds a cash transfer to the public without charge. For example, include the fair for another tax-exempt organization and reports contributions rental value of office space furnished by a governmental unit of such property on Schedule A (Form 990), Part III, line 1, to the organization without charge, but only if the without reporting it on Form 990, as revenue in Part VIII or governmental unit doesn't generally furnish similar office assets in Part X, explain the basis for characterizing the space to the public without charge. Report these amounts property as contributions but not as revenue or assets. whether or not the organization includes these amounts as Line 2. Include gross receipts from admissions, revenue on its financial statements or elsewhere on Form 990 merchandise sold, services performed, or facilities furnished or 990-EZ. in any activity that is related to the organization's tax-exempt Line 7a. Enter the amounts that are included on lines 1, 2, purpose (such as charitable, educational, etc.). and 3 that the organization received from disqualified To the extent that membership fees are payments to persons. See the definition of disqualified person in the purchase admissions, merchandise, services, or the use of Glossary of the Instructions for Form 990. facilities in a related activity, include the membership fees on For amounts included on lines 1, 2, and 3 that were this line 2. See Regulations section 1.509(a)-3(h). received from a disqualified person, the organization should Line 3. Include gross receipts from activities that aren't an keep for its records a list showing the name of, and total unrelated trade or business under section 513, such as: amounts received in each year from, each disqualified • A trade or business in which substantially all work is person. Enter the total of such amounts for each year on performed by volunteers (such as book fairs and sales of gift line 7a. See an example of this list above. wrap paper). See section 513(a)(1). • A trade or business carried on by the organization primarily Don't file this list with the organization's Form 990 or for the convenience of its members, students, patients, ! 990-EZ because it may be made available for public officers, or employees. See section 513(a)(2). CAUTION inspection. • A trade or business that is the selling of merchandise, Line 7b. For any gross receipts included on lines 2 and 3 substantially all of which the organization received as gifts or from related activities received from a person or from a contributions. See section 513(a)(3). bureau or similar agency of a governmental unit, other than • “Qualified public entertainment activities” or “qualified from a disqualified person, that exceed the greater of convention and trade show activities” of certain $5,000 or 1% of the amount on line 13 for the applicable year, organizations. See section 513(d). enter the excess on line 7b. The organization should keep for • Furnishing certain hospital services. See section 513(e). its records a list showing, for each year, the name of the person or government agency, the amount received during -10- Instructions for Schedule A (Form 990) 2023 |
Page 11 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Line 7b. Example—List of amounts received from other than disqualified persons Year 2023 (a) Name (b) Amount received in (c) 1% of amount on (d) Enter the larger of (e) 2023 excess 2023 line 13 in 2023 column (c) or $5,000 (column (b) minus column (d)) Word Processing, Inc. $25,000 $2,000 $5,000 $20,000 Enter on Schedule A (Form 990), column (e), line 7b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000 the applicable year, the larger of $5,000 or 1% of the amount Example. An organization receives an exemption letter on line 13 for the applicable year, and the excess, if any. See from the IRS that it is exempt from tax under section an example of this list above. 501(c)(3) and qualifies as a public charity under section 509(a)(2) effective on its date of incorporation. When the Don't file this list with the organization's Form 990 or organization prepares Part III for its first 5 tax years, it should ! 990-EZ because it may be made available for public check the box on line 14 and shouldn't complete the rest of CAUTION inspection. Part III. When the organization prepares Part III for its sixth tax year and subsequent years, it shouldn't check the box on Line 10a. Include the gross income from interest, dividends, line 14 and should complete the rest of Part III. payments received on securities loans (section 512(a)(5)), rents, royalties, and income from similar sources. Don't An organization in its first 5 years as a section 501(c) include on this line payments that result from activities of the TIP (3) organization should make the public support and organization that further its exempt purpose. Instead, report investment income computations on a copy of these amounts on line 2. Schedule A (Form 990) that it keeps for itself. An organization should carefully monitor its public support on an ongoing Line 10b. Enter the excess of the organization's unrelated basis to ensure that it will meet the public support tests in the business taxable income (UBTI) (as defined in section sixth year and succeeding years. 512) from trades or businesses that it acquired or commenced after June 30, 1975, over the amount of tax Line 15. Round to the nearest hundredth decimal point in imposed on this income under section 511. Include reporting the percentage of public support. For example, if membership fees to the extent they are payments to the organization calculates its public support percentage as purchase admissions, merchandise, services, or the use of 58.3456%, this percentage would be rounded to 58.35% facilities in an unrelated business activity that is a trade or when reported on line 15. business that was acquired or commenced after June 30, 1975. Line 16. For 2023, enter the public support percentage from 2022 Schedule A (Form 990), Part III, line 15. Round to the When calculating UBTI for this purpose, an exempt nearest hundredth decimal point in reporting the percentage organization with more than one unrelated trade or business of public support. may use either its UBTI calculated under section 512(a)(6) or its UBTI calculated in the aggregate. Line 17. Round to the nearest whole percentage. Line 11. Enter the organization's net income from Line 18. For 2023, enter the investment income percentage conducting unrelated business activities not included on from the 2022 Schedule A (Form 990), Part III, line 17. Round line 10b, whether or not the activities are regularly conducted to the nearest whole percentage. as a trade or business. Don't include net income from Line 19a. If the organization didn't check the box on line 14, conducting trades or businesses acquired or commenced by line 15 is more than 33 / %, and line 17 isn't more than 1 3 the organization prior to July 1, 1975. See sections 512, 513, 33 / %, 1 3 check the box on this line and don't complete and 514, and the applicable regulations. Include membership the rest of this schedule. The organization qualifies as a fees to the extent they are payments to purchase admissions, publicly supported organization for 2023 and 2024. merchandise, services, or the use of facilities in an activity that is an unrelated business not included on line 10b. Line 19b. If the organization didn't check the box on line 14 When calculating UBTI for this purpose, an exempt or 19a, line 16 is more than 33 / %, and line 18 isn't more 1 3 organization with more than one unrelated trade or business than 33 / %, 1 3 check the box on this line and don't may use either its UBTI calculated under section 512(a)(6) or complete the rest of this schedule. The organization its UBTI calculated in the aggregate. If a net loss results, qualifies as a publicly supported organization for 2023. enter “0” on this line. Line 20. If the organization didn't check the box on line 14, Line 12. Include all support as defined in section 509(d) that 19a, or 19b, it doesn't qualify as a publicly supported isn't included elsewhere in Part III. Explain in Part VI the organization under section 509(a)(2) for the 2023 tax year nature and source of each amount reported. Don't include and should check the box on this line. If the organization gain or loss from the sale of capital assets. doesn't qualify as a public charity under any of the boxes on Schedule A (Form 990), Part I, lines 1 through 12, it is a Line 14. An organization that checks this box should stop private foundation for filing purposes as of the beginning of here and shouldn't complete the rest of Part III. It shouldn't the tax year and shouldn't file Form 990, Form 990-EZ, or make a public support computation on line 15 or 16 or an Schedule A (Form 990) for the 2023 tax year. Instead, the investment income computation on line 17 or 18, or check organization should file Form 990-PF, and check Initial return any of the boxes for line 19 or 20. of a former public charity on Form 990-PF, at the top of page 1. Instructions for Schedule A (Form 990) 2023 -11- |
Page 12 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. If Form 990 or 990-EZ is for the organization's sixth Regulations section 1.509(a)-4(k) and the instructions for TIP tax year as a section 501(c)(3) organization and it Part III. If the organization supports a section 501(c)(4), (5), checked the box on line 20, it should figure the public or (6) organization, check “Yes” for line 3a. support percentage and the investment income percentage Line 3b. If the organization confirmed that the supported on its Form 990 for its first 5 tax years. If its public support percentage for its first 5 tax years is more than 33 / % and 1 3 organization qualified under section 501(c)(4), (5), or (6) and met the section 509(a)(2) public support test for its most the investment income percentage for its first 5 tax years isn't more than 33 / %, it will qualify as a public charity for its sixth 1 3 recent tax year, check “Yes” and describe in Part VI how the organization made this determination. For example, the tax year. If the organization qualifies in this manner, explain in organization may ask its section 501(c)(4), (5), or (6) Part VI. supported organization to furnish a copy of its IRS If the organization doesn't qualify as a publicly determination letter and to complete annually a pro forma TIP supported organization under section 509(a)(2), it Schedule A (Form 990), Part III, and keep the letter and can complete Part II to determine if the organization support calculation in the supporting organization’s files. qualifies as a publicly supported organization under section If the supporting organization doesn't annually confirm that 170(b)(1)(A)(vi). its supported organization satisfies the section 509(a)(2) public support test, it must explain in Part VI how it knows that the supported organization would’ve been described in Part IV. Supporting Organizations section 509(a)(2) if it were described in section 501(c)(3) Complete the sections of Part IV that correspond below with during the tax year. the type of supporting organization indicated on line 12a, 12b, 12c, or 12d of Part I. Line 3c. Support given to a supported section 501(c)(4), (5), • Type I: Sections A and B; or (6) organization must be used solely for charitable • Type II: Sections A and C; purposes. If the supporting organization has put into place • Type III Functionally Integrated: Sections A, D, and E; and measures to ensure that such support is used solely for • Type III Non-Functionally Integrated: Sections A and D, charitable purposes, check “Yes” and describe those and Part V. measures in Part VI. If not, check “No” and describe in Part VI how the supporting organization ensured during the tax year Section A. All Supporting Organizations that its assets were used solely for charitable purposes. Line 1. The organization's articles of incorporation or trust Line 4a. A supporting organization can't qualify for Type III instrument must designate the publicly supported status in the tax year if any supported organization wasn't organization(s) on whose behalf the supporting organization organized in the United States. is operated. The articles of a Type I or Type II supporting Lines 4b and 4c. A supporting organization must exercise organization may designate its supported organization(s) control and discretion over funds granted to an organization either by class or purpose or by name. The articles of a Type that isn't exempt under section 501(c)(3). See Rev. Rul. III supporting organization must designate the supported 68-489, 1968-2 C.B. 210. Also, a domestic charity must organization(s) by name, unless a historic and continuing generally exercise control and discretion over funds granted relationship exists between the organizations. to a foreign organization. See Rev. Rul. 63-252, 1963-2 C.B. Check “Yes” only if the organization supports no 101, and Rev. Rul. 66-79, 1966-1 C.B. 48. organization other than those listed by name in its governing Explain in Part VI how the organization retained such instrument. If the organization supports any organization not control and discretion despite being controlled or supervised specifically listed, check “No” and describe in Part VI how the by or in connection with such foreign supported supported organizations are designated. If designated by organization(s). Also, explain what controls the organization class or purpose, describe the class or purpose. If the used to ensure that all support to the foreign supported organization and its supported organization(s) have a historic organization(s) was used exclusively for charitable, and continuing relationship, explain that relationship. If educational, etc., purposes described in section 170(c)(2)(B) support of one or more organizations is subject to certain if the foreign supported organization doesn't have an IRS future contingencies, explain those contingencies, and determination under sections 501(c)(3) and 509(a)(1) or (2). explain what organizations will be supported or benefited if those contingencies occur. Line 5. Supporting organizations may add, substitute, or remove supported organizations only in certain limited Line 2. If the organization supported any domestic or foreign situations. See Regulations section 1.509(a)-4(d). Generally, organization (other than an organization described in section a Type I or Type II supporting organization may add or 501(c)(4), (5), or (6)) that didn't have an IRS determination of substitute particular supported organizations within the class status under section 509(a)(1) or (2), check “Yes” and explain or classes designated in its articles, but may not add or in Part VI how the organization determined that the supported substitute supported organizations outside of the designated organization was described in section 509(a)(1) or (2) and class(es). A Type III supporting organization, which must why the supported organization doesn't have such an IRS specify its supported organizations by name, may only determination (for example, because it has applied for but not substitute supported organizations if such substitution is yet received such a determination, or it isn't required to obtain conditioned upon the occurrence of an event that is beyond recognition of its public charity status because it is a church, the control of the supporting organization (such as a a state university, or described in section 4948(b)). supported organization’s lapse into private foundation Line 3a. A supporting organization may support an status). organization described in section 501(c)(4), (5), or (6), if the If the organization has added, substituted, or removed any supported organization satisfies the public support tests supported organization during the tax year, check “Yes” and applicable to a section 509(a)(2) organization. See provide detail in Part VI, including (i) the names and EINs of -12- Instructions for Schedule A (Form 990) 2023 |
Page 13 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. the organizations added, substituted, or removed; (ii) the organization loses its status as a supporting organization. reasons for each addition, substitution, or removal; (iii) the Such supporting organization must file Form 990-PF unless it authority under the organization’s organizing document for qualifies as a public charity under section 509(a)(1) or (2). each addition, substitution, or removal; and (iv) an explanation of how the action was accomplished (such as by Section B. Type I Supporting Organizations amendment to the organizing document substituting a new Line 1. A Type I supporting organization must be operated, supported organization). supervised, or controlled by one or more of its supported Line 6. A supporting organization must engage solely in organizations (the “controlling supported organizations”). activities that support or benefit its supported organization(s). This means that the controlling supported organizations must In addition to making grants and providing services and have a substantial degree of direction over the policies, facilities directly to its supported organization(s), a supporting programs, and activities of the supporting organization, and organization may also generally make grants or provide the supporting organization in turn must be responsive to the services or facilities to (1) individual members of the needs or demands of the controlling supported charitable class benefited by its supported organization(s), or organizations, and must constitute an integral part of, or (2) other supporting organizations that also support or benefit maintain a significant involvement in, the operations of the its supported organization(s). See Regulations section controlling supported organizations. This relationship is most 1.509(a)-4(e). If the organization made any grants or clearly established when one or more supported provided any benefits to any other organization or individual, organizations (through their officers, directors, trustees, or check “Yes” and provide detail in Part VI. membership) have the unconditional power to remove and replace at least a majority of the supporting organization’s Lines 7 and 8. Under section 4958(c)(3), any grant, loan, directors or trustees at any time. The relationship is also compensation, or other similar payment provided by a commonly established when one or more supported supporting organization to a substantial contributor (defined organizations have the power to appoint or elect at least a in section 4958(c)(3)(C)), to a family member (defined in majority of the supporting organization’s directors or trustees section 4958(f)(4)), and to a 35% controlled entity of such at regular intervals. However, there may be other ways to persons, is considered a per se excess benefit in its entirety, establish this relationship. If the organization relies on other regardless of the fairness or reasonableness of the payment, ways to establish the relationship, check “No” and describe in and is subject to tax under section 4958(a). The same is true Part VI how the necessary relationship is established. of any loan by a supporting organization to a disqualified person under section 4958 (other than loans to certain Line 2. The supporting organization may benefit exempt organizations). If the organization made any such organizations that don't participate in the control relationship payment or loan during the tax year, check “Yes” and report described on line 1, but only if such activity carries out the the transaction on Schedule L (Form 990), Transactions With purposes of the controlling supported organizations. Interested Persons, Part I. For more information on excess benefit transactions generally, see the Instructions for Section C. Type II Supporting Organizations Schedule L (Form 990). Line 1. A Type II supporting organization must be Line 9. A supporting organization may not be controlled by supervised or controlled in connection with its supported disqualified persons, as defined in section 4946. Section organization(s). This means that there must be common 509(a)(1) or (2) organizations, and foundation managers who supervision or control by the persons supervising or are disqualified persons only as a result of being foundation controlling both the supporting organization and the managers, aren't treated as disqualified persons for this supported organization(s) to ensure that the supporting purpose. Impermissible control may be direct or indirect. If a organization will be responsive to the needs and disqualified person holds any of the interests described on requirements of the supported organization(s). This line 9b or 9c, or derives personal benefit from any such relationship is most clearly established when the same assets, provide detail in Part VI. persons serve as all or a majority of the directors or trustees of all of the organizations involved. However, there may be Line 10. Under section 4943(f), a Type II supporting other ways to establish this relationship. If the organization organization that accepts a contribution from a person who relies on other than overlap of at least a majority of directors controls the governing body of a supported organization (or or trustees of all organizations involved, check “No” and from a family member of such person, or from a 35% describe in Part VI how the necessary relationship is controlled entity of such person) is subject to the excess established. business holdings tax under section 4943. All Type III non-functionally integrated supporting organizations are also Section D. All Type III Supporting Organizations generally subject to the tax. For more information about excess business holdings, see the Instructions for Form Line 1. A Type III supporting organization must supply 4720, Return of Certain Excise Taxes Under Chapters 41 and annually a written notice, addressed to a principal officer of 42 of the Internal Revenue Code. each supported organization, which includes the following. Line 11. Section 509(f)(2) prohibits Type I and Type III 1. A description of the type and amount of all support the supporting organizations from accepting a gift or contribution supporting organization provided to the supported from certain persons associated with a supported organization during the supporting organization’s tax year organization of such supporting organization. Specifically, if a preceding the tax year in which the notice is provided. Type I or Type III supporting organization accepts a 2. A copy of the supporting organization’s most recently contribution after August 16, 2006, from a person who filed Form 990 (the supporting organization may redact the controls the governing body of a supported organization (or names and addresses of contributors). from a family member of such person, or from a 35% 3. A copy of the supporting organization’s updated controlled entity of such person), then the supporting governing documents (including articles of organization, Instructions for Schedule A (Form 990) 2023 -13- |
Page 14 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. bylaws, and any amendments), to the extent not previously Support of governmental entity. A Type III supporting provided. organization meets the integral part test for a functionally integrated supporting organization if it (1) supports at least See Regulations section 1.509(a)-4(i)(2). The notice must be one supported organization that is a governmental entity to submitted by the last day of the fifth month of the supporting which the supporting organization is responsive (as organization's tax year being reported (May 31 for discussed in the instructions for Section D, Lines 2 and 3, calendar-year filers). An organization that doesn't timely earlier), and (2) engages in activities for or on behalf of such submit the required information in the required manner governmental supported organization that performs the doesn't qualify as a Type III supporting organization for the functions or carries out the purposes of such governmental tax year in which it fails to timely submit. supported organization and that, but for the involvement of State whether during the tax year being reported the the supporting organization, would normally be engaged in organization provided a timely notice with the required by the governmental supported organization itself. See information in the required manner. Notice 2014-4. A Type III supporting organization that claims Lines 2 and 3. A Type III supporting organization must be to meet the integral part test for a functionally integrated responsive to the needs or demands of a supported supporting organization by supporting a governmental entity organization. An organization meets this responsiveness test must describe in Part VI how it met these requirements for the with regard to a particular supported organization if: tax year. 1. The supported organization has an adequate Line 2. Activities Test. To meet the activities test of a Type relationship with the supporting organization because: III functionally integrated supporting organization, a. The supported organization regularly appoints or substantially all of the supporting organization’s activities elects (whether or not during the tax year) at least one must (1) directly further the exempt purposes of the officer, director, or trustee of the supporting organization; supported organization(s) to which the supporting b. At least one member of the governing body of the organization was responsive, and (2) be activities that such supported organization also serves as an officer, director, supported organization(s) would normally be engaged in but or trustee of the supporting organization; or for the supporting organization’s involvement. c. The officers, directors, or trustees of the supporting Direct furtherance. Substantially all of the supporting organization and of the supported organization maintain a organization’s activities must be “direct furtherance” close and continuous working relationship; and activities. Direct furtherance activities are conducted by the supporting organization itself, rather than by a supported 2. Because of this relationship, the supported organization. Holding title to exempt-use assets and organization has a significant voice in the supporting managing them are direct furtherance activities. Fundraising, organization’s investment policies, timing of grants, manner investing and managing non-exempt-use assets, of making grants, selection of grant recipients, and other use grant-making to organizations, and grant-making to of income or assets (the “significant voice” test). individuals (unless it meets the requirements of Regulations In the case of a supporting organization that supported a section 1.509(a)-4(i)(4)(ii)(D)) aren't direct furtherance supported organization before November 20, 1970, activities. additional facts and circumstances such as a historic and But for. In addition, the direct furtherance activities must continuing relationship between the organizations may also be activities in which, but for the supporting organization’s be taken into account in considering the responsiveness test. involvement, the supported organization would normally be If the organization has an adequate relationship with at involved. least one supported organization only by means of a “close Examples include holding and managing facilities used by and continuous working relationship” or a “historic and a church for its religious purposes, operating a food pantry for continuing relationship,” then in Part VI explain the a group of churches that normally would operate food relationship and how it has been maintained. Also, all Type III pantries themselves, and maintaining local parks for a supporting organizations that claim to meet the significant community foundation that otherwise would maintain those voice test must describe in Part VI the voice or role of the parks. See Regulations section 1.509(a)-4(i)(4)(v) for more supported organization(s) in directing the supporting detailed examples. organization’s use of its income or assets. Line 3. Parent of Supported Organizations. To qualify as the parent of all the supported organizations, a supporting Section E. Type III Functionally Integrated organization must (1) have the power to appoint or elect, Supporting Organizations directly or indirectly, a majority of the officers, directors, or Line 1. A Type III supporting organization must constitute an trustees of every supported organization; and (2) exercise a integral part of one or more of its supported organizations by substantial degree of direction over the policies, programs, maintaining significant involvement in its operations and and activities of every supported organization. providing support on which the supported organization is dependent. To satisfy this requirement as a Type III Part V. Type III Non-Functionally functionally integrated supporting organization, an Integrated 509(a)(3) Supporting organization may (a) pass an Activities Test (see the instructions for Line 2, later), (b) be the parent of its Organizations supported organizations (see the instructions for Line 3, A Type III supporting organization (other than a Type III later), or (c) support one or more governmental entities (see functionally integrated supporting organization) must Support of governmental entity, later). If the organization generally satisfy a distribution requirement described in can't satisfy any of these tests, it may still qualify as a Type III Regulations section 1.509(a)-4(i)(5)(ii) along with an non-functionally integrated supporting organization (see Part attentiveness requirement described in Regulations section V, later). 1.509(a)-4(i)(5)(iii) to meet the integral part test for a Type III -14- Instructions for Schedule A (Form 990) 2023 |
Page 15 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. relationship. To satisfy the distribution requirement, the Adjusted basis. The adjusted basis for purposes of organization must make a minimum amount (distributable determining gain from the sale or other disposition of amount) of distributions to or for the use of one or more property is the greater of: supported organizations. Carryovers of excess distributions from certain prior years may be used for this purpose. 1. The fair market value of such property on August 17, 2006, plus or minus all adjustments thereafter and before the Sections A through E of Part V show whether the date of disposition under sections 1011–1023, if the property organization has satisfied its distribution and attentiveness was held continuously from August 17, 2006, to the date of requirements for its tax year. Sections A and B determine the disposition. organization’s adjusted net income and minimum asset 2. The adjusted basis under sections 1011–1023, without amount. These amounts are used in determining the regard to section 362(c). If assets acquired before August 17, distributable amount in Section C. Section D determines the 2006, were subject to depreciation or depletion, to determine organization’s distributions that count toward the distributable the adjustments to basis between the date of acquisition and amount and determines whether the attentiveness August 17, 2006, straight-line depreciation or cost depletion requirement is met. Section E determines whether the must be taken into account. Any other adjustments that distributable amount is satisfied through current distributions would’ve been made during such period (such as a change in and prior-year carryovers, and determines carryovers to useful life based upon additional data or a change in facts) future years. must also be taken into account. A trust is excepted from the general distribution and The adjusted basis for purposes of determining loss is only attentiveness requirements (and need not complete Sections the amount described in item 2 above. A through E) if on November 20, 1970, it met and continues to meet the requirements set forth in Regulations section Line 2. Recoveries of prior-year distributions include the 1.509(a)-4(i)(9). A trust that claims this status by checking following. the box on line 1 at the beginning of Part V must explain in • Repayments received of amounts which were taken into Part VI how it meets each of the requirements. A trust that account as a distribution counting toward the distribution has obtained a ruling from the IRS on this issue must so requirement in a prior tax year. indicate in Part VI. • Proceeds from the sale or disposition of property to the extent that acquisition of such property was taken into Section A. Adjusted Net Income account as a distribution counting toward the distribution The principles of section 4942(f) and Regulations section requirement in a prior tax year. 53.4942(a)-2(d) apply in determining adjusted net income. • An amount set aside and taken into account as a See Regulations section 1.509(a)-4(i)(5)(ii)(B). distribution counting toward the distribution requirement in a prior tax year to the extent it is determined that such amount Prior and current year columns. The organization’s isn't necessary for the purposes for which it was set aside. adjusted net income for the prior tax year is used in determining the organization’s distributable amount for the Line 3. Report all other gross income. Gross income current tax year. The form also allows for reporting the includes all amounts derived from, or in connection with, organization’s adjusted net income for the current tax year for property held by the organization (except as specified use in next year’s calculations; this reporting is optional but otherwise in the instructions for Line 1). Include income from may be helpful if the organization anticipates being required any related or unrelated trade or business. Include income to complete Part V next year. from tax-exempt bonds. Don't include the following. • Gifts, grants, or contributions received. Definition. Adjusted net income is gross income for the tax • Long-term capital gains or losses or net short-term capital year less deductions allowable to a corporation subject to tax losses. under section 11, with certain modifications discussed in the • Income received from an estate, unless the estate is line instructions later. In computing gross income and considered terminated due to a prolonged period of deductions, the principles of the income tax provisions of the administration. Code apply (except to the extent inconsistent with section • Distributions from a trust created and funded by another 4942 or the underlying regulations), but exclusions, person. deductions, and credits aren't allowed unless expressly • Certain amounts received by an organization in the provided for under section 4942 or the underlying redemption of stock in a corporate disqualified person in regulations. See Regulations section 53.4942(a)-2(d)(1). order to avoid excess business holdings, which are treated as Line 1. Report the organization’s net short-term capital gain, not essentially equivalent to a dividend under section 302(b) if any. Long-term capital gains and losses from the sale or (1) (and thus as amounts received in exchange for the stock, disposition of property aren't taken into account in giving rise to long-term capital gain or loss) if the conditions determining adjusted net income (unless reportable on line 2 of Regulations section 53.4942(a)-2(d)(2)(iv) are met. as recoveries of prior-year distributions). Net short-term Line 5. The deduction for depreciation under section 167 is capital loss can't be carried back or forward to other tax allowed, but only on the basis of the straight-line method. The years. Amounts treated as long-term capital gains include deduction for depletion under section 611 is allowed, but capital gain dividends from a regulated investment company without regard to section 613 (percentage depletion). and net section 1231 gains (but net section 1231 losses are treated as ordinary losses and thus taken into account). If the Lines 6 and 7. No deduction is allowed except ordinary and fair market value of property distributed for charitable necessary expenses paid or incurred for the production or purposes exceeds adjusted basis, the excess isn't deemed collection of gross income, or for the management, includible in income. conservation, or maintenance of property held for the production of income. Such expenses may include operating expenses such as compensation of officers and employees, Instructions for Schedule A (Form 990) 2023 -15- |
Page 16 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. interest, rent, and taxes. Where only a portion of property reasonable method to make this determination if consistently produces income (or is held for the production of income) used. For example, a value for a particular month might be and the remainder is used for charitable purposes, the determined by the closing price on the first or last trading day expenses must be apportioned between exempt and of the month or an average of the closing prices on the first non-exempt use on a reasonable basis. and last trading days of the month. Market quotations are Don't deduct the following. considered readily available if a security is any of the • Net losses from a related business or other charitable following. activity that produces gross income (no deduction in excess • Listed on the New York or American Stock Exchange or of the income from such activity). any city or regional exchange in which quotations appear on • Charitable contributions under section 170 or 642. a daily basis, including foreign securities listed on a • Net operating loss carrybacks and carryovers under recognized foreign national or regional exchange; section 172. • Regularly traded in the national or regional • Dividends under section 241 and the sections following it over-the-counter market for which published quotations are (the dividends-received deductions for corporations). available; or • Net capital losses (short-term or long-term). • Locally traded, for which quotations can be readily Expenses and interest relating to tax-exempt income under obtained from established brokerage firms. section 265 are deductible. If securities are held in trust for, or on behalf of, a supporting organization by a bank or other financial institution that Section B. Minimum Asset Amount values those securities periodically using a computer pricing The rules for determining the supporting organization’s system, the organization may use that system to determine minimum asset amount are set forth in Regulations sections the value of the securities. The system must be acceptable to 1.509(a)-4(i)(5)(ii)(C) and 1.509(a)-4(i)(8), using valuation the IRS for federal estate tax purposes. methods described in Regulations section 53.4942(a)-2(c). Line 1b. Figure cash balances on a monthly basis by Prior and current year columns. The organization’s averaging the amount of cash on hand on the first and last minimum asset amount for the prior tax year is used in days of each month. Include all cash balances and amounts, determining the organization’s distributable amount for the even if they may be used for charitable purposes (see the current tax year. The form also allows for reporting the instructions for Line 4, later) or set aside and taken as a organization’s minimum asset amount for the current tax year distribution (see the instructions for Section D, Line 5, later). for use in next year’s calculations; this reporting is optional Line 1c. The fair market value of assets other than securities but may be helpful if the organization anticipates being for which market quotations are readily available is required to complete Part V next year. determined annually except as described later. The valuation Definition. In figuring the minimum asset amount, include may be made by supporting organization employees or by only assets of the supporting organization that aren't used or any other person even if that person is a disqualified person. held for use by the supporting organization (or by a If the IRS accepts the valuation, it is valid only for the tax year supported organization, if the supporting organization for which it is made. A new valuation is required for the next provides the asset free of charge or at nominal rent) to carry tax year. out the exempt purposes of the supported organization(s). Valuation date. An asset required to be valued annually Assets held for the production of income or for investment may be valued as of any day in the supporting organization's aren't considered to be used directly for charitable functions tax year, provided the organization values the asset as of that even though the income from the assets is used for charitable date in all tax years. However, a valuation of real estate functions. It is a factual question whether an asset is held for determined on a 5-year basis by a certified, independent the production of income or for investment rather than used appraisal (discussed later) may be made as of any day in the or held for use directly by the supporting organization or a first tax year of the organization to which the valuation supported organization for charitable purposes. For example, applies. an office building used to provide offices for employees Proration of value of assets held for part of year or in a engaged in managing endowment funds for the supporting short tax year. The value of an asset held less than a full organization or supported organization isn't considered an tax year is prorated by multiplying the value of the asset by a asset used for charitable purposes. fraction, of which the numerator is the number of days the Dual-use property. When property is used for both organization held the asset during its tax year, and the charitable and other purposes, the property is considered denominator is 365 (366 if the tax year includes February used entirely for charitable purposes if 95% or more of its 29). If the supporting organization has a short tax year, the total use is for that purpose. If less than 95% of its total use is value of all assets is accordingly prorated. for charitable purposes, a reasonable allocation must be 5-year valuation for real estate. A written, certified, and made between charitable and noncharitable use. independent appraisal of the fair market value of any real Excluded property. Certain assets (in addition to estate, including any improvements, may be determined on a exempt-use assets) are excluded entirely from the 5-year basis by a qualified person. The qualified person may computation of the minimum asset amount. These include not be a disqualified person with respect to the supporting charitable pledges and interests in an estate or trust (created organization or an employee of the supporting organization. and funded by another person) prior to distribution to the Commonly accepted valuation methods must be used in supporting organization. making the real estate appraisal. A valuation based on Line 1a. Report on line 1a the average monthly fair market acceptable methods of valuing property for federal estate tax value of securities (such as common and preferred stock, purposes will be considered acceptable. bonds, and mutual fund shares) for which market quotations are readily available. A supporting organization may use any -16- Instructions for Schedule A (Form 990) 2023 |
Page 17 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. The real estate appraisal must include a closing statement necessary to pay expenses and disbursements, then the that, in the appraiser's opinion, the appraised assets were organization may enter the larger amount instead (prorated in valued according to valuation principles regularly employed the case of a short tax year). If the organization uses a larger in making appraisals of such property, using all reasonable amount, explain why in Part VI. valuation methods. The supporting organization must keep a Line 7. Enter the amount of recoveries (if any) reportable on copy of the independent appraisal for its records. If a Section A, line 2. valuation is reasonable, the organization may use it for the tax year for which the valuation is made and for each of the 4 Section C. Distributable Amount following tax years. The organization’s distributable amount for the current tax Any valuation of real estate by a certified independent year is ordinarily the greater of: appraisal may be replaced during the 5-year period by a subsequent 5-year certified independent appraisal or by an 1. 85% of its adjusted net income for the prior tax year or annual valuation, as described earlier. The most recent 2. Its minimum asset amount for the prior tax year, valuation should be used to figure the organization's less income taxes imposed on the organization during the minimum asset amount. prior tax year. See Regulations section 1.509(a)-4(i)(5)(ii)(B). If the valuation is made according to the above rules, the IRS will continue to accept it during the 5-year period for First tax year. The distributable amount for the first tax year which it applies even if the actual fair market value of the real that an organization is treated as a non-functionally estate changes during the period. integrated Type III supporting organization is zero rather than the amount as ordinarily determined. Such an organization Line 1e. If the fair market value of any securities, real estate should check the box on line 7. For purposes of determining holdings, or other assets reported on lines 1a and 1c reflects whether the organization has an excess of distributions in its a blockage discount, marketability discount, or other tax year that can be carried over to future years, the reduction from full fair market value because of the size of the distributable amount as ordinarily determined applies to asset holding or any other factor, enter on line 1e the every non-functionally integrated Type III supporting aggregate amount of the discounts claimed. Provide an organization (including an organization that checked the box explanation in Part VI that includes the following information on line 7 for the current year). The distributable amount as for each asset or group of assets involved. ordinarily determined is reported in Sections C and E. 1. A description of the asset or asset group (for example, Emergency temporary reduction. In cases of disaster or 20,000 shares of XYZ, Inc., common stock); emergency, the IRS may provide for a temporary reduction in 2. For securities, the percentage of the total issued and the distributable amount by publication in the Internal outstanding securities of the same class that is represented Revenue Bulletin. In these cases, the reduced amount should by the organization's holding; be reported on line 6 and the reduction noted in Part VI. 3. The fair market value of the asset or asset group before any claimed blockage discount or other reduction; Section D. Distributions 4. The amount of the discount claimed; and Section D sets forth the supporting organization’s distributions that count toward its distribution requirement, 5. An explanation of the reason for the discount. and determines whether the attentiveness requirement is In the case of securities, there are certain limitations on met. The amount of a distribution made to a supported the size of the reduction in value that can be claimed. The organization is the amount of cash or fair market value of organization may reduce the fair market value of securities property on the date of distribution. The organization must only to the extent that it can establish that the securities could use the cash method of accounting for this purpose. See only be liquidated in a reasonable period of time at a price Regulations section 1.509(a)-4(i)(6). less than the fair market value because: Line 1. Report amounts paid to supported organizations to • The securities are such a large block that liquidation would accomplish their exempt purposes. Distributions furthering depress the market, the “exempt” purposes of supported organizations not • The securities are in a closely held corporation, or described in section 501(c)(3) refer solely to distributions for • The sale would result in a forced or distress sale. section 501(c)(3) purposes. Any reduction in value of securities may not exceed 10% of the fair market value (determined without regard to any Line 2. Report amounts paid to perform any activity that reduction in value). directly furthers exempt purposes of supported organizations and that would otherwise normally be engaged in by the Line 2. Enter the total acquisition indebtedness that applies supported organizations, but only to the extent that expenses to assets included on line 1 (prorated in the case of assets from the activity exceed income from the activity. See the held for a portion of the year or in a short tax year). For details Schedule A (Form 990), Part IV, Section E, Line 2, on acquisition indebtedness, see section 514(c)(1). instructions on “direct furtherance” activities. Line 4. Supporting organizations may exclude from the Line 3. Report reasonable and necessary administrative minimum asset amount the reasonable cash balances expenses paid to accomplish exempt purposes of supported necessary to cover current administrative expenses and organizations. Don't include expenses incurred in the other normal and current disbursements directly connected production of investment income. with the charitable, educational, or other similar activities. The amount of cash that may be excluded is generally 1.5% Line 4. Report amounts paid to acquire exempt-use assets. of the fair market value of all assets (minus any acquisition Such assets must be used (or held for use) to carry out the indebtedness). However, if under the facts and exempt purposes of the supported organizations. The assets circumstances an amount larger than the deemed amount is may be used or held by either the supporting organization or one or more supported organizations; if the latter, the Instructions for Schedule A (Form 990) 2023 -17- |
Page 18 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. supporting organization must make the asset available to the 2. The amount of support received from the supporting supported organization(s) free of charge or for nominal rent. organization is necessary to avoid the interruption of a See Regulations section 53.4942(a)-2(c)(3) for further particular function or activity of the supported organization. discussion of exempt-use assets. 3. The amount of support received from the supporting Line 5. Report qualified amounts set aside for a specific organization is a sufficient part of the supported project that accomplishes the exempt purposes of a organization’s total support to ensure attentiveness, based on supported organization to which the supporting organization all pertinent facts, including the number of supported is responsive. A qualified set-aside counts toward the organizations, the length and nature of the relationship distribution requirement in the tax year set aside but not between the supporting organization and supported again when paid. organization, and the purpose to which the funds are put. The attentiveness of a supported organization is normally Approval required. For each set-aside, a supporting influenced by the amounts received from the supporting organization must obtain the written approval of both the organization, but evidence of actual attentiveness to the pertinent supported organization(s) and the IRS. The operations (including investments) of the supporting supporting organization must apply to the IRS for approval organization is of almost equal importance. Where the (using Form 8940) before the end of its tax year in which the supporting organization supports a particular department or amount is set aside. Explain in Part VI whether the school of a university, hospital, or church, the department’s or organization has requested and obtained the necessary school’s total support is considered instead of the supported approvals for the set-aside. See Regulations section organization’s total support. 1.509(a)-4(i)(6)(v) for more information. Amounts received from a supporting organization that are Line 6. Report any other distributions not described above held in a donor-advised fund of the supported organization that the organization claims are for the use of its supported are disregarded in determining attentiveness. organizations, and describe such distributions in detail in Part VI. See the examples in Regulations section 1.509(a)-4(i)(5) (iii)(D). Lines 8–10. Report on line 8 the amount of distributions Responsiveness test. A supporting organization is reported on line 1 to supported organizations that met the “responsive” to the needs and demands of a supported attentiveness and responsiveness tests, discussed later, and organization if it meets the responsiveness test set forth in provide in Part VI the supplemental information, discussed the instructions for Part IV, Section D, Lines 2 and 3, with later. respect to the supported organization. A Type III non-functionally integrated supporting Supplemental information required. In Part VI, identify organization must distribute at least one-third of its each of the supported organizations listed in Part I, line 12g, distributable amount each tax year to one or more supported column (i), that met both of the following conditions for the tax organizations that are “attentive” to its operations and to year. which the supporting organization is “responsive” (as 1. The supporting organization was responsive to the described later); thus, the line 10 amount must be at least supported organization, and 0.333. Carryovers of excess distributions from prior years don't count toward the attentiveness requirement. 2. The supported organization was attentive to the supporting organization. With respect to each of the identified If the line 10 amount is less than one-third (that is, the supported organizations, set forth the facts that show how amount of distributions to supported organizations that met both the attentiveness test and the responsiveness test were both the attentiveness test and responsiveness test is less met by the supporting organization and the supported than one-third of the distributable amount), then the organization. organization doesn't qualify as a Type III non-functionally integrated supporting organization for the tax year. See Section E. Distribution Allocations Regulations sections 1.509(a)-4(i)(5)(i) and (iii). If the organization doesn't otherwise qualify as a public charity, Section E determines whether the distributable amount for then the organization is a private foundation and must file the current tax year (and any underdistribution for reasonable Form 990-PF for the tax year. cause in a prior year) is satisfied through current-year distributions and carryovers of prior-year excess distributions. Attentiveness test. A supported organization is Section E also determines carryovers of excess distributions “attentive” to the operations of a supporting organization if, to future years. Several lines in Section E aren't yet applicable during the tax year, at least one of the following requirements during the phase-in period of the new regulations for Type III is satisfied. non-functionally integrated supporting organizations. Those 1. The supporting organization distributes to the lines are grayed out. supported organization at least 10% of the supported organization’s total support in its tax year ending before the In applying distributions, there are three basic steps. beginning of the supporting organization’s tax year. For 1. First, apply distributions to eliminate any example, if the supporting organization and the supported underdistribution for reasonable cause in a prior tax year. organization both use a calendar year, and the supported 2. Second, apply distributions to satisfy the distributable organization has total support of $X in a year, then the amount for the current year. supporting organization’s support in the following year must be at least 10% of $X. Where the supporting organization 3. Third, carry over to future years any remaining excess supports a particular department or school of a university, distributions. hospital, or church, the department’s or school’s total support Apply the oldest distributions first. Carryovers of excess is considered instead. distributions from prior years are always applied in full before current-year distributions (unlike the rules for qualifying -18- Instructions for Schedule A (Form 990) 2023 |
Page 19 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. distributions by private foundations), and older carryovers are Line 2. An organization that is treated as a Type III applied before newer carryovers. Excess distributions of a non-functionally integrated supporting organization for the given year can't be carried over for more than 5 years. first time in its 2022 tax year will have a distributable amount Example 1. X is a Type III non-functionally integrated of zero during the 2022 tax year. supporting organization that for its tax year including If the organization had any underdistributions for a prior December 28, 2020, and through its following 2021 tax year tax year (2021 or 2022), then it didn't qualify as a Type III meets the requirements of Regulations section 1.509(a)-4(i) non-functionally integrated supporting organization in that tax (3)(iii) as in effect prior to December 28, 2020. Under year and subsequent years (and would be classified as a transition rules, X is deemed to meet its distribution private foundation unless it met the requirements of another requirement for 2021, but its distributable amount is public charity status) unless it met the requirements of the calculated in the ordinary manner to determine its excess reasonable cause exception or the judicial proceeding distributions. For 2021, X had a distributable amount, as exception discussed in the instructions for Lines 5 and 6, ordinarily determined, of $80,000 and distributions of later. If the organization met either of these exceptions, $100,000. Accordingly, X had excess distributions of explain in detail in Part VI how the organization met the $20,000. For 2022, X had a distributable amount of $95,000 requirements for the exception. and distributions of $85,000. X first applied its 2021 excess distributions carryover of $20,000 to the 2022 distributable Line 3. On lines 3d and 3e, enter the amounts reported on amount of $95,000. Then, X applied $75,000 of its 2022 lines 8d and 8e, respectively, from the organization's return distributions of $85,000 to the remaining 2022 distributable for the 2022 tax year. The sum of the amounts on lines 3d amount. Accordingly, X has excess distributions of $10,000 and 3e is also reported on line 3f. The amount reported on from 2022 (2022 distributions of $85,000 minus $75,000 line 3f is then applied in the following priority. applied to the 2022 distributable amount), which it may carry 1. First to any prior-year underdistributions on line 3g, over to 2023. For 2023, X has a distributable amount of 2. Second (if any remaining amount) to the current-year $100,000 and distributions of $150,000. X applies the distributable amount on line 3h, and $10,000 excess distribution carryover from 2022 to the 2023 3. Third (if any remaining amount) on line 3j for carryover distributable amount. Then, X applies $90,000 of its 2023 to future years. distributions to the remaining 2023 distributable amount. Section E will show $0 carryovers for 2021 and 2022 Excess distributions can't be carried over for more than 5 tax (because the excess carryovers for each of those years were years immediately following the tax year in which the excess previously applied). In addition, Section E will show excess amount is created, and thus are forfeited if not used in the distributions of $60,000 in 2023 (2023 distributions of fifth year of carryover. Such amounts are set forth on line 3i $150,000 minus $90,000 applied to the 2023 distributable (not applicable to the 2023 tax return). amount), which it may carry over in the next 5 tax years until Line 4. Apply the current-year distributions (from Section D, applied. line 7) in the same order of priority as described in the Example 2. Y is a Type III supporting organization that for instructions for Line 3 to any prior-year underdistributions its tax year including December 28, 2020, meets the (line 4a) and current-year distributable amount (line 4b) requirements of Regulations section 1.509(a)-4(i)(3)(iii) as in remaining after applying carryovers on line 3. Any remaining effect prior to such date, but doesn't meet such requirements distributions are reported on line 4c for carryover to future in its following 2021 tax year (because of underdistributions years. for which the prior regulation didn't expressly provide a reasonable cause exception). Therefore, Y didn't benefit from Lines 5 and 6. If the current-year distributable amount is the transition rule for its 2021 tax year. Y's distributable greater than the sum of the excess distributions carryover amount was $120,000 for 2021. Y made distributions of that from the prior year plus the current-year distributions, then amount and had no excess distributions to carry over to the organization doesn't meet the distribution requirement 2022. Y calculated that its distributable amount was and can't qualify as a Type III non-functionally integrated $150,000 for 2022 and made distributions of exactly that supporting organization for the tax year, unless an exception amount in 2022. Early in its 2023 tax year, Y discovers that its applies. If the organization doesn't qualify as a supporting distributable amount for 2022 actually was $200,000. Within organization or otherwise as a public charity for the tax year, 180 days, Y makes a $110,000 distribution ($50,000 to cover then it is a private foundation and must file Form 990-PF for the underdistribution for 2022 and $60,000 as part of its 2023 the tax year and subsequent years until private foundation distributions). Later in the 2023 tax year, Y makes additional status is terminated under section 507. If either the distributions totaling $200,000. Y’s distributable amount in reasonable cause or judicial proceeding exception applies, the 2023 tax year is $190,000. In its 2023 Form 990, Y claims then explain in detail in Part VI how the organization met the reasonable cause for the 2022 underdistribution due to a requirements for the exception. clerical error. Under these circumstances, Y first applies Reasonable cause exception. An organization that fails $50,000 of its 2023 distributions of $310,000 to the 2022 to distribute its distributable amount won't be classified as a underdistribution of $50,000 ($200,000 minus $150,000), private foundation for the year of the failure if the organization then applies $190,000 of its remaining 2023 distributions of establishes to the satisfaction of the IRS that: $260,000 ($310,000 minus $50,000) to satisfy its 2023 1. The failure was due to unforeseen events or distributable amount. Y’s remaining $70,000 of distributions circumstances beyond its control, a clerical error, or an in 2023 ($310,000, minus $50,000 allocated to 2022, and incorrect valuation of assets; minus $190,000 allocable to 2023) are excess distributions 2. The failure was due to reasonable cause and not to that may be carried over to future years. willful neglect; and Line 1. Report the distributable amount for 2023 from 3. The distribution requirement is met within 180 days Section C, line 6. after the organization is first able to distribute its distributable Instructions for Schedule A (Form 990) 2023 -19- |
Page 20 of 20 Fileid: … 0-ez(scha)/2023/a/xml/cycle02/source 10:05 - 14-Nov-2023 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. amount notwithstanding the unforeseen events or distributable amount (and not already carried over for 5 tax circumstances, or within 180 days after the clerical error or years). The organization may carry over these amounts to incorrect valuation was or should have been discovered. future years. Prior-year carryovers are applied before current-year distributions. Amounts paid to meet a distribution requirement of a prior tax year can't also be counted toward the distribution Part VI. Supplemental Information requirement for the tax year in which paid. Use Part VI to provide narrative information required by these Judicial proceeding exception. An organization is instructions or to supplement responses to questions on excused from meeting the distribution requirements to the Schedule A (Form 990). Identify the specific part and line extent of a conflicting mandatory provision in its governing number that the response supports, in the order in which they instrument, if a judicial proceeding is pending to reform a appear on Schedule A (Form 990). Part VI can be duplicated governing instrument that prohibits compliance, under the if more space is needed. circumstances set forth in Regulations section 1.509(a)-4(i) (11)(ii)(E). Don't include in Part VI the names of any donors, grantors, or contributors because Part VI will be Lines 7 and 8. Enter on line 7 the prior-year carryover and CAUTION! made available for public inspection. the current-year distributions to the extent not applied to prior-year underdistributions and the current-year -20- Instructions for Schedule A (Form 990) 2023 |