2008 Instructions For Schedule J (Form 990) (Page 3 of 6) in pdf

include a plan described in section

not contingent on revenues of the

the plan or program. The fact that a

457(b).

organization for this purpose.

person contracting with the organization

is expressly granted the choice to

Line 4c. Answer “Yes” if a listed

Line 6. Answer “Yes” if the

accept or reject any economic benefit is

person participated in or received

organization paid or accrued with

disregarded in determining whether the

payment from the organization or a

respect to a listed person any

benefit constitutes a fixed payment for

related organization of any

compensation determined in whole or in

purposes of line 7.

equity-based compensation (such as

part by the net earnings of one or more

stock, stock options, stock appreciation

activities of the organization or a

Line 8. Answer “Yes” if any amounts

rights, restricted stock, or phantom or

related organization, or by the net

from the organization reported on Form

shadow stock), or participated in or

earnings of the organization or a

990, Part VII, were paid pursuant to a

received payment from any equity

related organization as a whole.

contract subject to the initial contract

compensation plan or arrangement

Describe such arrangements in Part III.

exception described in Regulations

sponsored by the organization or a

section 53.4958-4(a)(3). Describe such

Example. A, a listed person, is an

related organization, whether the

arrangements in Part III. Fixed

employee of organization B. As part of

compensation is determined by

payments made pursuant to an initial

A’s compensation package, A is to be

reference to equity in a partnership,

contract are not subject to section

paid a bonus equal to x% of B’s net

limited liability company, or corporation.

4958. An initial contract is a binding

earnings for a specified period of time.

Equity-based compensation does not

written contract between the

This arrangement is a payment

include compensation contingent on the

organization and a person who was not

contingent on net earnings of the

revenues or net earnings of the

a disqualified person (within the

organization for line 6 purposes,

organization, which are addressed by

meaning of section 4958(f)(1)) with

regardless of whether the payment is

lines 5 and 6 later.

respect to the organization immediately

contingent on achieving a certain net

prior to entering into the contract. See

Example. A, a listed person, is an

earnings target. However, if instead the

the instructions for line 7 for the

employee of organization B. B owns an

bonus payment is a specific dollar

definition of fixed payments. For

interest in C, a for-profit subsidiary, that

amount to be paid only if a net earnings

purposes of completing line 8,

is a stock corporation. As part of A’s

target is achieved, the payment is not

disregard payments pursuant to a

compensation package, B provides

contingent on the net earnings of the

contract that was reviewed and

stock options to A that permit A to

organization for this purpose.

approved by the organization pursuant

obtain C stock for a price other than the

Line 7. Answer “Yes” if the

to the rebuttable presumption

fair market value at the time of the

organization provided any non-fixed

procedure described in Regulations

acquisition of the stock by A. This is an

payments, not described on lines 5 and

section 53.4958-6(c).

equity-based compensation

6, with respect to a listed person.

arrangement for purposes of line 4c.

Describe such arrangements in Part III.

The same would be true if C were a

Part II. Officers,

A fixed payment is an amount of cash

partnership, limited liability company, or

or other property specified in the

Directors, Trustees, Key

publicly traded corporation and B

contract, or determined by a fixed

provided A a profits interest, capital

formula specified in the contract, which

Employees, and Highest

interest, or stock in C under similar

is to be paid or transferred in exchange

terms.

Compensated

for the provision of specified services or

Line 5. Answer “Yes” if the

property. A fixed formula may

Employees

organization paid or accrued with

incorporate an amount that depends

respect to a listed person any

upon future specified events or

List and report information for certain

compensation determined in whole or in

contingencies, provided that no person

individuals listed on Form 990, Part VII,

part by the revenues (gross or net) of

exercises discretion when calculating

Section A, as described below. Report

one or more activities of the

the amount of a payment or deciding

compensation for the calendar year

organization or a related organization,

whether to make a payment, such as a

ending with or within the organization’s

or by the revenues (gross or net) of the

bonus. Amounts paid or accrued with

tax year paid to or earned by the

organization or a related organization

respect to any listed person that are not

following individuals.

•

as a whole. For this purpose, net

fixed amounts as defined above are

Each of the organization’s former

revenues means gross revenues less

non-fixed payments. For example, any

officers, former directors, former

certain expenses, but does not mean

amount paid to a person under a

trustees, former key employees, and

net income or net earnings. Describe

reimbursement arrangement where

former five highest compensated

such arrangements in Part III.

discretion is exercised by any person

employees listed on Form 990, Part VII,

with respect to the amount of expenses

Section A.

Example. A, a listed person, is a

•

incurred or reimbursed is a non-fixed

Each of the organization’s current

physician employed by organization B.

payment. See Regulations section

officers, directors, trustees, key

As part of A’s compensation package,

53.4958-4(a)(3).

employees, and five highest

A is to be paid a bonus equal to x% of

compensated employees for whom the

B’s net revenues from a particular

Exception. Amounts payable

sum of Form 990, Part VII, Section A,

department operated by B for a

pursuant to a qualified pension,

Columns (D), (E), and (F) is greater

specified period of time. This

profit-sharing, or stock bonus plan

than $150,000.

arrangement is a payment contingent

under section 401(a), or pursuant to an

•

on revenues of the organization, and

employee benefit program that is

Each of the organization’s current or

must be reported on line 5, regardless

subject to and satisfies coverage and

former officers, directors, trustees, key

of whether the payment is contingent

nondiscrimination rules under the

employees, and five highest

on achieving a certain revenue target.

Internal Revenue Code (for example,

compensated employees who received

or accrued compensation for services

However, if instead the bonus payment

sections 127 and 137), other than

rendered to the organization from an

is a specific dollar amount (for instance,

nondiscrimination rules under section

unrelated organization, and who are

$5,000) to be paid only if a gross

9802, are treated as fixed payments for

revenue or net revenue target of the

purposes of line 7, regardless of the

required to be reported on line 5 of

department is achieved, the payment is

organization’s discretion with respect to

Form 990, Part VII, Section A.

-3-

2008 Instructions For Schedule J (Form 990) Page 3

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