What I Learned From the IRS, Part 1

No longer in draft form!Questions and Answers from the latest New Form 990 training I did:

For calculating our total assets to determine which form we use, do we exclude property, plant and equipment?

Nope, you use total assets for figuring out which form, either the 990, 990 EZ or the 990 N, to fill out.

When filling out the functional expense section and calculating the advertising expenses, do we include money we spent to advertise open positions within the organization?

Not as I read the instructions.  Here is what it says for line 12 in part IX:

Advertising expenses. Enter amounts paid for advertising. Include amounts for print and electronic media advertising. Also include Internet site link costs, signage costs, and advertising costs for the organization’s in-house fundraising campaigns. Do not include fees paid to independent contractors for conducting professional fundraising services or campaigns (these amounts must be reported on line 11e).

With the economic downturn and the decreased value of endowments and reserves, will more organizations be filling out Schedule N of the form 990?

Probably not.  As excerpted from page 5 of the instructions for Schedule N, Liquidation, Termination, Dissolution, or Significant Disposition of Assets :

The following types of situations are not required to be reported in Part II:

  • The change in composition of publicly traded securities held in an exempt organization’s passive investment portfolio.
  • A decrease in the value of net assets due to market fluctuation in the value of assets held by the organization.

Check out the rest of the instructions to see what does qualify as a reason to fill out the schedule.

Is deferred revenue, as reported on line 19 in Part X of the form 990 the same as the temporarily restricted net assets reported on line 28?

Not exactly.  Temporarily restricted net assets, and asset of the organization,  generally are some type of contribution given to an organization for a specific purpose (narrower than the overall scope of the organization), or for use in a future period, or both.  For the most part the organization will have already counted it as current income, already earned the money.  The type of donor imposed restriction on that contribution would not come into play here. But always check the agreement with the funder to make sure you are handling the funds properly.

Typically what would be listed as deferred income, a liability to the organization, would be income received which you have not earned the money; rents received in advance, payments for services not yet delivered, etc.  This would come under earned income as opposed to contributed income.  Once you earn the income, it would move out of deferred and into current income.

Part 2 will be posted next week, if you have any other questions please post them in the comment form below.

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