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Pertinent Points of Form 990
The IRS states that if an organization's gross receipts are normally not more than $25,000, they need not file a return with the IRS unless they receive a Form 990 in the mail from the IRS. Those organizations with receipts of less than $100,000 for the year or with assets under $250,000 can use Form 990EZ. If a 501(c)(3) organization, Form Schedule A must also be filed. There is a check box on the face of Form 990 to indicate whether the return is an Initial Return, and whether an exemption application (Form 1023) is pending, and what the accounting method is (Accrual).
Conclusion
We do not need to file Form 990 for 1997 tax year.
- Part I
- wants revenue, expenses, and changes in net assets or fund balances. This equates to our Budget page.
- Part II
- wants a Balance Sheet, assets at the beginning of the year compared to end of year. This equates to the Balance Sheet in the Annual Report.
- Part III
- wants a statement of the program service accomplishments, with outlay by program. At this point we are an organization without activities, just intentions, so we could have nothing to report. As with any business, assets at beginning of year are compared with assets at end of year, along with revenue and expenses during the year.
- Part IV
- wants a list of Officers, Directors, Trustees, and key employees, even if not compensated. They also want to know hours per week devoted to the position.
- Part V
- asks questions about changed Bylaws, additional income not reported, political activity, liquidations, loans made to officers or directors, and a list of the states where the organization did business and filed a return.
Schedule A
- Part I
- wants the compensation of the five highest paid employees other than the Officers, Directors, and Trustees, paid more than $50,000. None if there are none.
- Part II
- wants the compensation of the five highest paid Independent Contractors for Professional Services, paid more than $50,000. None if there are none.
- Part III
- asks questions about political activity, and whether Officers, Directors, Trustees, key employees, or family members benefited from any lending of money, sale of property, furnishing of goods or services, transfer of assets, etc. This is a self-dealing check.
- Part IV
- ascertains whether the organization should be truly considered a nonprofit. Here we qualify in only one place, as we are not a church, a school, a hospital, etc. Our qualification is based on more than 1/3 of our support from "contributions, membership fees, and gross receipts from activities related to its functions", and also less than 1/3 from investments or running businesses on the side.
Conclusion
We qualify as a nonprofit.
- Part IV-A
- wants details about support for the four years prior to the current tax year, specifically Gifts and Grants received, Membership Fees, Gross Receipts from activities, Investment income, Net Income from unrelated side businesses that the nonprofit might run, the value of Services or Facilities received from a government unit, Other Income. Then they look for evidence of public support versus being in actuality a private foundation by the following support tests.
- Individuals giving more than 2% of the total support in any given year must be listed (this list is not open to the public).
- Public Support is calculated in two different ways
- First: By taking the total support and subtracting activities which are construed as not public support from the total. Then a percentage of the whole is calculated. Allowed for Public Support is: Gifts and Grants, Membership Fees, Gross Receipts from activities, and government support. Disallowed is Investment income, Net Income from unrelated side businesses that the nonprofit might run, etc. This check it to determine if the organization is really a rich man's way of avoiding taxes.
Conclusion
Since we don't have investments and don't run for-profit businesses on the side,
we qualify as a publicly supported organization.
Second: By taking the amount contributed, even if via purchases or buying tickets to shows, etc., from single individuals or those considered "disqualified individuals" who are basically relatives or those who might benefit financially from the nonprofit. A single individual's contribution must be more then $5,000 to even count. After subtracting these individual's contributions, the percentage of other support is calculated.
Conclusion
We appear to be 100% publicly, not privately, supported.
- Part V
- is to be completed by schools. This doesn't apply to us.
- Part VI
- covers lobbying expenses. This doesn't apply to us.
- Part VII
- covers transfers or transaction with non-charitable exempt organizations. This doesn't apply to us, or certainly not this past year.