Mastering Form 990 Schedule L: Reporting Transactions With Interested Persons

Meeting the Reasonable Effort Standard and Navigating New Placeholder Disclosure for Substantial Contributors

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, January 10, 2017
Recorded event now available


This webinar will provide tax advisers to exempt organizations with a thorough and practical guide to completing Form 990 Schedule L, Transactions With Interested Persons, focusing on Parts II through V. The panel will go into detail on the “reasonable effort” requirement to identify interested persons, navigating the placeholder disclosure requirements for substantial contributors in light of recent IRS relief, and determining reportable transactions. The webinar will also offer guidance on translating the form instructions onto the Schedule, and will include examples of completed Schedules showing required disclosures.

Description

One of the most challenging Schedules on Form 990 Exempt Organization Tax Return for tax advisers to exempt organizations is Schedule L, Transactions With Interested Persons. This Schedule imposes several burdens on advisers to exempt organizations, as nonprofit organizations must first determine who qualifies as an “interested person,” before recognizing what transactions must be reported.

To complicate matters further, the IRS guidance on completing Schedule L has at times been contradictory with respect to other reporting obligations. This combination of a lack of guidance and complex reporting requirements present a particular challenge to nonprofit advisers in reporting related organizational transactions.

The Service has included “substantial contributors” as persons whose transactions with the exempt org must be reported in Parts II, III and IV, contrary to the anonymity provisions for contributors granted in Schedule B disclosures. To remedy this, the IRS has provided informal guidance, that allows the nonprofit to enter “placeholder” information in Parts II and IV to comply with the contributor anonymity provisions of Section 6104(b). Before a filing organization begins preparing its Form 990, the tax professional must use “reasonable efforts” in determining whether it must report specific transactions.

Listen as our experienced panel provides detailed guidance on completing Form 990 Schedule L, with concrete examples of completed forms and schedules.

Outline

  1. Identifying interested persons
  2. Reasonable effort standard in identifying reportable transactions
  3. Placeholder provisions for Parts II and IV of Schedule L
  4. Completing Schedule L with examples
    1. Part I excess benefit transactions
    2. Loans to/from interested persons
    3. Grants or assistance benefiting interested persons
    4. Business transactions involving interested persons

Benefits

The panel will discuss these and other important aspects to completing Schedule L:

  • How does the Service define “interested person” for Form 990 reporting purposes?
  • Identifying information that must be reported on Schedule L
  • What is the “reasonable effort” standard that exempt orgs must meet in determining whether they must report a transaction?
  • Using “placeholder” information in Parts II and IV of Schedule L based on October 2016 IRS suggestions

Learning Objectives

After completing this course, you will be able to:

  • Identify individuals who qualify as an “interested person” for purposes of transactions with an exempt organization
  • Recognize the “reasonable effort” standard for determining interested persons and reportable transactions
  • Discern the “placeholder” information allowances under new IRS guidance for Parts II and IV of Schedule L to preserve contributor anonymity

Faculty

Frank Giardini, Principal, Tax Services
Grant Thornton, Philadelphia

Mr. Giardini leads his firm's not-for-profit health care tax group. He assists in the development of tax policies and procedures, and the structural tax aspects of constructed agreements. He advises clients on intermediate sanctions planning and compliance, IRS/state tax audit representation, executive compensation, unrelated business tax planning, fundraising, taxable subsidiaries, community benefit rules, Schedule H, and corporate governance. His clients include private foundations, colleges and universities, health care organizations, governmental and quasi-governmental entities, public charities, unions, trade associations, and other tax-exempt organizations.

Jennifer Becker Harris, CPA, Principal
Clark Nuber, Bellevue, Wash.

Ms. Harris provides consulting and compliance to not-for-profit organizations and private foundations. Through her nonprofit experience, she also provides charitable gift planning to individuals.Her specialties include compliance for not-for-profit organizations and private foundations, international tax matters for exempt organizations, consulting and planning for the Revised Form 990 implementation, grant file reviews & recommendations for private foundations, and payout consulting for private foundations related to qualifying distributions. She is a co-author and editor of the Form 990 Compliance Guide published by CCH and presents at various industry conferences.

Michele Melchior, Tax Director
Grant Thornton, Charlotte, N.C.

Ms. Melchior provides tax and consulting services to the healthcare and not-for-profit industry, including private foundations, educational institutions, healthcare organizations, public charities and trade organizations. Her specialties include Form 990 reporting requirements, exemption application, intermediate sanctions compliance, unrelated business income analysis, FIN 48 analysis, joint venture analysis, compensation issues, physician practice acquisition, regulatory issues and IRS matters, and corporate and partnership liquidation and structuring.


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