Session 1 of Borenstein's Form 990 Foundational Series (NOTE: CREDITS & LEVEL HAVE BEEN EXPANDED FOR 2023-2024 YEAR!) A "related organization" for Form 990 purposes is a unique concept that does not tie to generally employed business or accounting definitions. Identifying such entities is a crucial first preparation step called for in the 990 instructions. Indeed, the presence of "related organizations" impacts the managers reported on the Core Form's Part VII-A and various other 990-reporting disclosures! This 990 "term-of-art" is deceptive, starting out with "parents," "subsidiaries," and "siblings," but applying a unique and extremely broad definition of "control". This session fully illuminates, with real-world explanations, both key "basics" and common nuances that readers and preparers of the 990 need be aware of in testing for "control" of a nonprofit organization or when control is not direct but may be "indirect." Multiple examples covering the precepts in this realm are provided. While the focus here is on properly identifying a filer's related organizations, the disclosures required on Form 990's Schedule R are also covered. This event may be a rebroadcast of a live event and the instructor will be available to answer your questions during the event.
Learning Objectives
After attending this presentation, you will be able to...
- Identify the principles by which control vests in determining parent (of subsidiary), subsidiary (of parent), or sibling status between the filer and a not-for-profit organization
- Identify how control vests over an entity that is a stock corporation
- Apply the principles that yield "commonly controlled" related organizations (i.e., sibling organizations)
- Distinguish the baseline information required when reporting existence of related organizations in Schedule R's Parts II (tax-exempt entities), Part IV (corporations or trusts), and Part III (partnerships)
- Recognize the info disclosure sought in Schedule R's Part V with respect to TYPES of transactions with related organizations and when specific dollar disclosure is required
Major Topics
The major topics covered in this class include:
- The reach of "parent-subsidiary" and "sibling" status when the party who is the subject of "control" is a nonprofit/nonstock entity [note this applies both to ascertaining whether the filer is "controlled by" a related organization OR itself "controls" another nonstock entity]
- Understanding what is considered "control" when a potential related organization is: a stock corporation versus a partnership or an LLC taxed as a partnership versus a trust
- The challenges of both finding "directly-controlled" related organizations versus imputing related organization status through "indirect control"
- The two automatic status categories of related organizations: supporting organization connections (one entity being a 501(c)(3) with 509(a)(3) sub-classification from connection to another entity) and VEBA-unique categories
- Overview information sought on Schedule R's Parts II-IV once the presence of one or more related organizations is ascertained
- Schedule R Part V disclosure demands when a related organization is a "controlled entity" under, and thus subject to, Code section 512(b)(13)'s UBIT-reach
- Overview of the Schedule R Part V disclosure requirements for 501(c)(3) filers who have a related organization itself recognized as tax-exempt under 501(c)(x) other than 501(c)(3)
