Instructions For Schedule R (Form 990) - 2016 (Page 3 of 7) in pdf

circumstances, Organizations B and D are

list any of the subordinate organizations of

address of the disregarded entity. Also

directly controlled by Organization A, and

the group in Part II.

enter the employer identification

Organization C is indirectly controlled by

In the case of a group return, the central

number (EIN) of the disregarded entity, if

Organization A. Therefore, Organizations

organization must attach a list of the

it has one.

B, C, and D are subsidiaries of

subordinate organizations included in the

A disregarded entity generally

Organization A; Organization C is also a

group return in response to Form 990,

must use the EIN of its sole

TIP

subsidiary of Organization B; and

page 1, Item H(b). The central

member. An exception applies to

Organizations B and C have a brother/

organization must list in Schedule R (Form

employment taxes: for wages paid to

sister relationship with Organization D.

990), Parts II–IV the related organizations

employees of a disregarded entity, the

of each subordinate organization other

Example 5. T, an exempt organization

disregarded entity must file separate

than (1) related organizations that are

described in section 501(c)(3), owns 40%

employment tax returns and use its own

included within the group exemption, or

of the stock of U, a taxable C corporation.

EIN on such returns. See Regulations

(2) related organizations that the central

T and U each own 40% of the stock of V,

sections 301.6109-1(h) and 301.7701-2(c)

organization knows to be included in

another taxable C corporation. Under

(2)(iv).

another group exemption. If an

these facts, T and U aren't related

organization isn't listed because it is

organizations as parent/subsidiary

Column (b). Primary activity. Briefly

known to be included in another group

because T doesn't own more than 50% of

describe the primary activity of the

exemption, the central organization must

U's stock. Under section 318(a)(2)(C),

disregarded entity.

explain in Part VII the relationship between

none of U's holdings are attributed to T by

Column (c). Legal domicile. List the

its own group and members and the

virtue of T's ownership of U stock,

U.S. state (or U.S. possession) or foreign

related organization known to be included

because T owns less than 50% of U stock.

country in which the disregarded entity

in another group exemption (but you

Thus, T and V aren't related organizations

is organized (the state or foreign country

needn't include the names of such related

as parent/subsidiary.

whose law governs the disregarded

organizations).

Example 6. Same facts as in

entity's internal affairs).

An organization that isn't included in a

Example 5, except that U is an S

group exemption isn't required to list in

Column (d). Total income. Enter the

corporation. Under section 318(a)(5)(E), T

Part II a related organization that is

amount of the filing organization's total

constructively owns 16% of V through U

included in a group exemption. Similarly,

revenue reported in Form 990, Part VIII,

(40% of U's 40% ownership of V), giving T

an organization that is included in a group

line 12, column (A), attributable to the

a total ownership interest of 56% in V, and

exemption isn't required to list in Part II a

disregarded entity.

making T and V related organizations as

related organization that is included in

parent/subsidiary.

Column (e). End-of-year assets. Enter

another group exemption. In either case,

the amount of the organization's total

the organization must explain in Part VII

Example 7. Same facts as in

assets reported in Form 990, Part X,

the relationship between it and the related

Example 5, except that T owns 50% of U's

line 16, column (B), attributable to the

organization included in another group

stock. T and U aren't related organizations

disregarded entity.

exemption (but you needn't include the

as parent/subsidiary because T doesn't

names of such related organizations).

own more than 50% of U's stock. Under

Column (f). Direct controlling entity.

section 318(a)(2)(C), U's holdings are

Enter the name of the entity that directly

Even if a related organization isn't required

attributed to T by virtue of T's 50%

controls the disregarded entity. For

to be listed in Part II of Schedule R (Form

ownership of U's stock. Thus, T

instance, if B is a disregarded entity of the

990), however, the organization must

constructively owns 20% of V through U

filing organization, and if C is a

report its transactions with the related

(50% of U's 40% ownership of V), giving T

disregarded entity of B, report B as the

organization in Part V, as required by the

a total ownership interest of 60% in V, and

direct controlling entity of C. If the filing

Part V instructions (for example, checking

making T and V related organizations as

organization directly controls, enter its

“Yes” to Part V, line 1b, if the organization

parent/subsidiary.

name.

made a grant to a related organization

Example 8. F is a 501(c)(3) public

included in a group exemption, and

Part II. Identification of

charity that appoints the governing body of

reporting on Part V, line 2, the

Related Tax-Exempt

G, another 501(c)(3) public charity. G is

organization's receipt of interest or

supported by H, a Type III supporting

Organizations

annuities from a controlled entity

organization within the meaning of section

included in a group exemption), including

For purposes of Schedule R (Form 990),

509(f)(1), but G doesn't control H. G and H

listing the name of the related organization

treat governmental units and

are thus related organizations because of

in Part V, line 2, column (a), for

instrumentalities and foreign

the supporting/supported relationship.

transactions that must be reported in

governments as tax-exempt

Absent other facts, F and H aren't related

line 2.

organizations.

Specific Instructions

Group exemption. Central

Enter the details of each related

organizations and subordinate

organization on separate lines of Part II.

organizations of a group exemption

If there are more related organizations to

Part I. Identification of

aren't required to be listed as related

report in Part II than space available, use

Disregarded Entities

organizations in Schedule R (Form 990),

as many duplicate copies of Part II as

Part II. All other related organizations of

needed, and number each page.

Enter the details of each disregarded

the central organization or of a

entity on separate lines of Part I. If there

Column (a). Name, address, and EIN.

subordinate organization are required to

are more disregarded entities to report in

Enter the related organization's full legal

be listed in Schedule R (Form 990). The

Part I than space available, use as many

name, mailing address, and EIN.

following rules apply.

duplicate copies of Part I as needed, and

An organization that is a central or

Column (b). Primary activity. Briefly

number each page.

subordinate organization in a group

describe the primary activity of the related

Column (a). Name, address, and EIN.

exemption (whether filing an individual

organization.

Enter the full legal name and mailing

return or a group return) isn't required to

2017 Instructions for Schedule R (Form 990)

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Instructions For Schedule R (Form 990) - 2016 Page 3

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