An Important Heads Up for Charities: The 2011 Form 990

The final Form 990 for the 2011 tax year has been released by the IRS and includes a few significant changes that charities should be aware of. The 2011 Form contains a requirement that an organization must complete Form 990, Part I of Schedule F, Statement of Activities outside the United States, if it had foreign investments during the tax year valued at $100,000 or more. Previously, Part I of Schedule F was only required if the organization had aggregate revenues or expenses of more than $10,000 attributable to various foreign activities.

Additionally, organizations must also complete Part X, Balance Sheet, by reporting their distributive share of assets in any joint ventures or other partnerships according to the ending capital account in the partnership reported on Schedule K-1.

Other smaller changes include: (1) Contributions of conservation easements and other qualified conservation contributions must be reported consistently with how the organization reports revenue from such contributions in its books, records and financial statements, (2) the organization’s distributive share of investment income, royalties and rental income from joint ventures should be reported on specific lines of Part VIII, Statement of Revenue, and (3) an amendment to Appendix K, Contributions, which states that a donor’s phone bill for a text message meets the Sec. 170(f)(17) requirement for a reliable written record if it shows that donee organization’s name and the date and amount of the contribution.

In addition to substantive changes on the new Form, changes have been made to the Glossary section of the Form’s instructions including revising the definition of “grants and other assistance” to exclude certain payments by voluntary employees’ beneficiary associations.

Ellis Carter is a nonprofit lawyer licensed to practice in Washington and Arizona. Ellis advises tax-exempt clients on federal tax matters nationwide.

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