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association taxable under subchapter S),

1. The unrelated organization is

Part V. Transactions With

or T (trust taxable under subchapter J).

treated as a partnership for federal tax

Related Organizations

purposes (S corporations are excluded).

(F) Share of total income. For a related

2. The filing organization was a

Line 1. Check “Yes” in the appropriate

organization that is a C corporation, enter

partner or member of the unrelated

boxes of Line 1 if the filing organization

the dollar amount of the organization’s

partnership at any time during the filing

engaged in any of the transactions listed

share of the C corporation’s total income.

organization’s tax year.

in Part V with any of the related

To calculate this share, multiply the total

3. The filing organization conducted

organizations listed in Parts II through

income by the following fraction: the value

more than 5% of its activities, figured as

IV. A “transfer” includes any conveyance

of the filing organization’s shares of all

the greater of its total assets at the end

of funds or property not described in lines

classes of stock in the C corporation,

of its tax year or its gross revenue for its

1a – 1p, whether or not for consideration,

divided by the value of all outstanding

tax year, through the unrelated

such as a merger with a related

shares of all classes of stock in the C

partnership.

organization.

corporation. The total income is for the

related organization’s tax year ending

Line 2. All organizations filing Schedule

In determining the percentage of the

with or within the filing organization’s tax

R must report the following transactions

filing organization’s activities as

year.

with a controlled entity as defined in

measured by its total assets, use the

section 512(b)(13).

amount reported on Form 990, Part X,

•

For a related organization that is an S

The receipt of interest, annuities,

line 16, as the denominator, and the filing

corporation, enter the filing organization’s

royalties, or rent from a controlled entity

organization’s ending capital account

allocable share of the S corporation’s total

(line 1a),

balance for the partnership tax year

•

income. Use the amount on Schedule K-1

A loan made to a controlled entity (line

ending with or within the filing

(Form 1120S) for the S corporation’s tax

1d), or

organization’s tax year as the numerator

•

year ending with or within the filing

Any other transfer of funds between the

(the amount reported on Schedule K-1

organization’s tax year (Schedule K-1,

organization and the controlled entity.

may be used). In determining the

Part III, lines 1 – 10).

percentage of the filing organization’s

In addition, section 501(c)(3)

activities as measured by its gross

organizations and section 4947(a)(1)

For a related organization that is a

revenue, use the amount reported on

trusts must report transactions with

trust, enter the total income and gains

Form 990, Part VIII, line 12, as the

related exempt organizations not

reported on Part III, lines 1 – 8 of

denominator, and the filing organization’s

described in section 501(c)(3) (including,

Schedule K-1 (Form 1041) issued to the

proportionate share of the partnership’s

but not limited to, section 527 political

filing organization for the trust’s tax year

gross revenue for the partnership tax year

organizations).

ending with or within the filing

organization’s tax year.

Use a separate line for each type of

organization’s tax year as the numerator.

transaction with a particular organization.

Example. X, a section 501(c)(3)

A section 501(c)(3) organization

Add transactions of the same type with a

organization, is a partner of Y, an

TIP

that is an S corporation

particular organization, such as line a(i)

unrelated partnership, which conducts an

transactions, line a(iv) transactions, line b

shareholder must treat all

activity that constitutes an unrelated trade

allocations of income from the S

transactions, etc. Disregard transactions

or business with respect to X. X’s

of a particular type (lines (a) – (r)) between

corporation as unrelated business

proportionate share of Y’s gross revenue

income, including gain on the disposition

two organizations where the total

is $20,000 for Y’s tax year ending with or

of stock.

amounts involved during the tax year do

within X’s tax year. X has an ending

not exceed $50,000, except for receipt of

(G) Share of end-of-year assets. Enter

capital account balance in Y of $200,000

interest, annuities, royalties, or rent from

the dollar amount of the filing

as reported on Schedule K-1. X’s gross

a controlled entity, which are to be

organization’s allocable share of the

revenue and total assets for its tax year

reported regardless of amount.

related organization’s total assets as of

are $500,000 and $2,000,000,

Enter the details of each related

the end of the related organization’s tax

respectively. X conducts 4% of its

organization on a separate line of the

year ending with or within the filing

activities through Y as measured by X’s

table. If there are more related

organization’s tax year. For related C and

gross revenue ($20,000/$500,000), and

organizations to report than space

S corporations, this amount is determined

10% as measured by X’s total assets

available, use Schedule R-1, Part V. Use

by multiplying the corporation’s

($200,000/$2,000,000). Because at least

as many Schedules R-1 as needed.

end-of-year total assets by the fraction

one of these percentages exceeds 5%, X

(A) Name. State the full legal name of

described in column (F). For related

conducted more than 5% of its activities

the related organization.

trusts, this amount corresponds to the

through Y for X’s tax year and must

filing organization’s percentage ownership

(B) Transaction type. State the

identify Y in Schedule R, Part VI, and

in the trust.

transaction type (lines (a) – (r)).

provide the required information.

Disregard unrelated partnerships that

(H) Percentage ownership. For a

involved in a transaction is the fair market

meet both of the following conditions.

related organization taxable as a

value of the services, cash, and other

corporation, enter the filing organization’s

1. 95% or more of the filing

assets provided by the filing organization

percentage of stock ownership in the

organization’s gross revenue from the

during its tax year, or the fair market

corporation (total combined voting power

partnership for the partnership’s tax year

value received, whichever is higher. Any

or total value of all outstanding shares,

ending with or within the organization’s

reasonable method for determining such

whichever is greater). For a related S

tax year is described in sections

amount is acceptable.

corporation, use the percentage reported

512(b)(1) – (3) and (5), such as interest,

on Schedule K-1 (Form 1120S) for the

dividends, royalties, rents, and capital

Part VI. Unrelated

year ending with or within the filing

gains (including unrelated debt-financed

Organizations Taxable as a

organization’s tax year. For a related

income).

organization taxable as a trust, state the

2. The primary purpose of the filing

Partnership

filing organization’s percentage of

organization’s investment in the

beneficial interest. In each case, enter the

In this part, provide information on any

partnership is the production of income or

percentage interest as of the end of the

unrelated organization (an organization

appreciation of property and not the

related organization’s tax year ending

that is not a related organization with

conduct of a section 501(c)(3) charitable

with or within the filing organization’s tax

respect to the filing organization) that

activity such as program-related

year.

meets all of the following conditions.

investing.

-4-

Instructions For Schedule R (Form 990) - Related Organizations And Unrelated Partnerships - 2008 Page 4

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