Looking for a Form 990 Ez Templates? Download it for free!

exceeded $100,000; (2) all payments

organization’s tax year. The organization

Compensation reported in Form 990,

during the tax year from a single

must report all payments made during its

Part VII, Section A, unless the

transaction between such parties

tax year to the law firm for the transaction.

compensation was to a family member of

exceeded the greater of $10,000 or 1% of

another person reported in Form 990, Part

Example 5. The facts are the same as

the filing organization's total revenue for

VII, Section A.

in Example (3), except that X is the child of

the tax year; (3) compensation payments

Deposits into or withdrawals from a

a former director listed in Form 990, Part

during the tax year by the organization to a

bank account (when the bank is an

VII, Section A. The organization is

family member of a current or former

interested person) in the ordinary course

required to report the business

officer, director, trustee, or key employee

of business, on the same terms as the

transaction, as family members of former

of the organization listed in Form 990, Part

bank offers to the general public.

directors listed in Part VII are interested

VII, Section A exceeded $10,000; or (4) in

The organization's charging of

persons.

the case of a joint venture with an

membership dues to its officers, directors,

Example 6. The facts are the same as

interested person, the organization has

etc.

in Example (3), except that the

invested $10,000 or more in the joint

If the organization transfers funds to an

organization pays $75,000 in total during

venture, whether or not during the tax

interested person to make investments on

the organization's tax year for 15 separate

year, and the profits or capital interest of

behalf of the organization as its agent or

transactions to collect debts owed to the

the organization and of the interested

contractor (but not as part of a joint

organization. None of the transactions

person each exceeds 10% at some time

venture), the amount of the transaction for

involves payments to the law partnership

during the tax year.

purposes of Part IV reporting is not the

in excess of $10,000. The organization is

entire amount transferred but the

Business transactions. Business

not required in this instance to report the

management fees or other service fees or

transactions include but are not limited to

business transactions, because the dollar

carried interest (if any) of the interested

joint ventures and contracts of sale, lease,

amounts do not exceed either the $10,000

person.

license, insurance, and performance of

transaction threshold or the $100,000

Transactions with publicly-traded

services, whether initiated during the

aggregate threshold.

companies in the ordinary course of the

organization's tax year or ongoing from a

Example 7. The facts are the same as

publicly-traded company’s business, on

prior year.

in Example (6), except that the

the same terms as it generally offers to the

Certain management company trans-

organization pays $105,000 instead of

public (or more favorable for the filing

actions with former officers, etc. A

$75,000. Because the aggregate

organization).

business transaction also includes a

payments for the business transactions

transaction between the organization and

exceed $100,000, the organization must

a management company of which a

Example 1. T, a family member of an

report all the business transactions. The

former officer, director, trustee, or key

officer of the organization, serves as an

organization can report the transactions

employee of the organization (within the

employee of the organization and

on an aggregate basis or list them

last five tax years, even if not listed in

receives during the organization's tax

separately.

Form 990, Part VII, Section A, because the

year compensation of $15,000, which is

Column (a). Enter the name of the

individual did not receive any

not more than 1% of the organization's

interested person involved in the direct or

compensation from the organization) is a

total revenue. The organization is required

indirect business relationship with the

direct or indirect 35% owner (as measured

to report T's compensation as a business

organization.

by stock ownership (voting power or

transaction in Schedule L, Part IV,

value, whichever is greater) of a

because the organization's compensation

Column (b). Enter the relationship

corporation, profits or capital interest

to a family member of an officer exceeds

between the interested person and the

(whichever is greater) in a partnership or

$10,000, whether or not T's compensation

organization. For example:

limited liability company, or beneficial

is reported in Form 990, Part VII.

Key employee of the organization,

interest in a trust), or an officer, director, or

Family member of Freda Jones,

Example 2. X, the child of a current

trustee.

former director, or

director listed in Form 990, Part VII,

Entity more than 35% owned by (1)

Aggregate reporting. The organization

Section A, is a first-year associate at a law

Freda Jones, former director, and (2) Lisa

can aggregate multiple individual

partnership that the organization pays

Lee, President.

transactions between the same parties, or

$150,000 during the organization's tax

list them separately. If aggregation is

year. The organization is not required to

Column (c). The dollar amount of the

chosen, report the aggregate amount in

report this business transaction on

transaction is the cash or fair market

column (c) and describe the various types

account of X's employment relationship to

value of other assets and services

of transactions (for example, “consulting,”

the law firm.

provided by the organization during the

“rental of real property”) in column (d).

tax year, net of reimbursement of

Example 3. The facts are the same as

expenses. For joint ventures with

in Example (2), except that X is a partner

Exceptions. Do not report the following

interested persons, report the total amount

of the law firm and has an ownership

in Part IV:

invested by the organization in the joint

interest in the law firm of 36% of the

Excess benefit transactions reported

venture as of the end of the organization's

profits. The organization must report the

in Schedule L, Part I.

tax year, whether or not the organization

business transaction because the law firm

Loans reported (or not required to be

invested any part of the amount during the

is a 35% controlled entity of X and the

reported) in Schedule L, Part II.

tax year.

dollar amount is in excess of the $100,000

Grants and other assistance reported

aggregate threshold.

(or not required to be reported) in

Column (d). Describe the transaction(s)

Schedule L, Part III (however, this

by type, such as employment or

Example 4. The facts are the same as

exception does not apply to transactions

independent contractor arrangement,

in Example (3), except that the law firm

covered by the business transaction

entered into the transaction with the

rental of property, or sale of assets.

exception described in Part III instructions

organization before X's parent became a

Column (e). State “Yes” if all or part of

earlier; such transactions may need to be

director of the organization. X’s parent

the consideration paid by the organization

reported in Part IV).

became a director during the

is based on a percentage of revenues of

Instructions for Schedule L

-4-

Instructions For Schedule L (Form 990 Or 990-Ez) - Transactions With Interested Persons - 2014 Page 4

Related Articles

Related forms

Related Categories