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Page 4 of 5 Fileid: … 0-ez(schl)/2022/a/xml/cycle05/source 10:02 - 6-Jan-2023
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
“related to substantial contributor” (as the case may be) instead Business transactions. Business transactions include but
of the interested person's name, in order to protect the aren't limited to joint ventures and contracts of sale, lease,
confidentiality of the substantial contributor. license, insurance, and performance of services, whether
Column (b). Describe the relationship between the interested initiated during the organization's tax year or ongoing from a
person that benefited from the grant or assistance and the prior year.
organization, such as “spouse of the Director.” If “substantial Certain management company transactions with former of-
contributor” was entered in column (a), enter “substantial ficers, etc. A business transaction also includes a transaction
contributor” here as well. If “related to substantial contributor” between the organization and a management company of
was entered in column (a), then describe the relationship without which a former officer, director, trustee, or key employee of the
referring to specific names, for example, “child of employee of organization (within the last 5 tax years, even if not listed on
35% controlled entity of substantial contributor.” Form 990, Part VII, Section A, because the individual didn’t
If an interested person has status as such other than by being receive any compensation from the organization) is a direct or
a substantial contributor or related to one, then make no indirect 35% owner (as measured by stock ownership (voting
reference to the substantial contributor status. For example, if power or value, whichever is greater) of a corporation, profits or
grantee Jane Smith is both a substantial contributor and the capital interest (whichever is greater) in a partnership or limited
spouse of Director John Smith, then they must be listed by name liability company, or beneficial interest in a trust), or an officer,
in column (a), and column (b) must state “spouse of Director director, or trustee.
John Smith” or words to similar effect.
Aggregate reporting. The organization can aggregate multiple
Column (c). Enter the total dollar amount of grants and other individual transactions between the same parties, or list them
assistance provided to the interested person during the separately. If aggregation is chosen, report the aggregate
organization's tax year. amount in column (c) and describe the various types of
transactions (for example, “consulting,” “rental of real property”)
Column (d). Describe the type of assistance provided to the
interested person. in column (d).
Exceptions. Don't report the following in Part IV.
Column (e). Describe the organization's purpose in providing
assistance to the interested person. • Excess benefit transactions reported on Schedule L, Part I.
• Loans reported (or not required to be reported) on
Schools. Colleges, universities, and primary and secondary Schedule L, Part II.
schools aren't required to identify interested persons to whom • Grants and other assistance reported (or not required to be
they provided scholarships, fellowships, and similar financial reported) on Schedule L, Part III (however, this exception
assistance. Instead, these organizations must, on Part III, group doesn't apply to transactions covered by the business
each type of financial assistance (for example, need-based transaction exception described in the Part III instructions earlier;
scholarships, merit scholarships, discounted tuition) provided to such transactions may need to be reported in Part IV).
interested persons on separate lines. For each line, the school • Compensation reported on Form 990, Part VII, Section A,
should report in column (c), the aggregate dollar amount of each unless the compensation was to a family member of another
type of assistance, the type of assistance in column (d), and the person reported on Form 990, Part VII, Section A.
purpose of the assistance in column (e), unless such reporting • Deposits into or withdrawals from a bank account (when the
would be an unauthorized disclosure of student education bank is an interested person) in the ordinary course of business,
records under the Family Educational Rights and Privacy Act on the same terms as the bank offers to the general public.
(FERPA). Columns (a) and (b) should be left blank for these • The organization's charging of membership dues to its
lines. officers, directors, etc.
• If the organization transfers funds to an interested person to
Part IV. Business Transactions make investments on behalf of the organization as its agent or
contractor (but not as part of a joint venture), the amount of the
Involving Interested Persons transaction for purposes of Part IV reporting isn't the entire
Report on Part IV business transactions for which payments amount transferred but the management fees or other service
were made during the organization's tax year between the fees or carried interest (if any) of the interested person.
organization and an interested person, if such payments • Transactions with publicly traded companies in the ordinary
exceeded the reporting thresholds described below, and course of the publicly traded company’s business, on the same
regardless of when the transaction was entered into by the terms as it generally offers to the public (or more favorable for
parties. The “ordinary course of business” exception to reporting the filing organization).
business relationships on Form 990, Part VI, line 2, doesn't apply
for purposes of Schedule L, but see the exception below for
publicly traded companies. Example 1. T, a family member of an officer of the
In general, an organization must report business transactions organization, serves as an employee of the organization and
on Part IV with an interested person if (1) all payments during the receives during the organization's tax year compensation of
tax year between the organization and the interested person $15,000, which isn't more than 1% of the organization's total
exceeded $100,000; (2) all payments during the tax year from a revenue. The organization is required to report T's compensation
single transaction between such parties exceeded the greater of as a business transaction on Schedule L, Part IV, because the
$10,000 or 1% of the filing organization's total revenue for the organization's compensation to a family member of an officer
tax year; (3) compensation payments during the tax year by the exceeds $10,000, whether or not T's compensation is reported
organization to a family member of a current or former officer, on Form 990, Part VII.
director, trustee, or key employee of the organization listed on Example 2. X, the child of a current director listed on Form
Form 990, Part VII, Section A, exceeded $10,000; or (4) in the 990, Part VII, Section A, is a first-year associate at a law
case of a joint venture with an interested person, the partnership that the organization pays $150,000 during the
organization has invested $10,000 or more in the joint venture, organization's tax year. The organization isn't required to report
whether or not during the tax year, and the profits or capital this business transaction on account of X's employment
interest of the organization and of the interested person each relationship to the law firm.
exceeds 10% at some time during the tax year.
-4- Instructions for Schedule L
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