Form 990-T

Form 990-T

A form that a tax exempt organization files with the IRS to report its unrelated business income and to figure the tax owed on that income.
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If a not-for-profit has "unrelated business income" in excess of $1,000 in a given year, however, it must pay unrelated business income tax and file Form 990-T. For a not-for-profit organization, "unrelated business income" is net income 1) from a trade or business 2) that is regularly conducted by the not-for-profit entity and 3) that is not substantially related to the exempt purpose or function of the organization.
David has recently helped clients on a variety of not-for-profit tax issues including Form 990, Form 990-T, qualification and preservation of tax exemptions, executive compensation and ASC 740-10 “Accounting for Uncertainty in Income Taxes” (formerly known as FIN 48).
The new guidance includes a one-page form (Form 8941--Credit for Small Employer Health Insurance Premiums), along with instructions to Form 8941, and a newly revised Form 990-T. The IRS also issued Notice 2010-82, which, along with the instructions, will help small employers correctly calculate and claim the credit.
In addition, Form 990-T for unrelated business income is now public record.
To determine whether a substantial portion of a return is prepared the complexity and size of the organization's Form 990 and the amount of unrelated business income tax shown on Form 990-T is considered.
In addition, many of the provisions of PPA '06, such as the public disclosure requirement of an organization's unrelated business income tax return (Form 990-T, Exempt Organization Business Income Tax Return) and the more stringent rules governing donor-advised funds and supporting organizations, have created additional complexities in the nonprofit sector.
The unit will check the consistency of information on an organization's Form 990 with its filings of Form 990-T, the form for unrelated business income reporting.
Section 4 provides guidance for completing each part and line of Form 990 and Schedule A; Section 5 provides detailed instructions for Form 990-T, the unrelated business income tax.
An exempt organization that has $1,000 or more of gross UBI must file Form 990-T, "Exempt Organization Business Income Tax Return." In the case that the exempt organization fits this description, the net income will be subject to the tax rates applicable to a C corporation.
* Careful preparation of Form 990-T and review of UBI practices are crucial steps in preparing for the possibility that the IRS could contact your organization regarding UBI.
Proposals for disclosure of Form 990-T were initially introduced by the staff of the Senate Finance Committee, supported by the Joint Committee on Taxation and passed by the Senate.
The Act, in Section 306, will extend the public inspection and disclosure rules that currently apply to Forms 990 and 990-PF to Form 990-T, as well.