Form 990 Schedule L, Transactions with Interested Persons
Wednesday, September 16, 2020
Schedule L reports in two different directions: its primary reach extends to three categories of transactions with a filer's "Interested Persons": loans outstanding with them, grants or assistance being provided to them, and business transacted with them. It also reports on whether any prohibited (and thus subject to excise tax) intersections have occurred with impermissible parties. This introduction to Schedule L is designed to ensure that preparers will not "lose their minds" over this schedule's inherent complexity.
The materials and the author/instructor provide a Plain English explanation of who are the parties the 990 considers "Interested Persons" and when (and why) their intersections with the filer are made the subject of this schedule's "sunlight". This session will aid preparers in both understanding what each of Schedule L's parts is looking for, and in appreciating the importance of accessing data necessary to these parts' completion.
This event may be a rebroadcast of a live event and the instructor will be available to answer your questions during the event.
After attending this presentation you will be able to...
- Recognize that there is a hierarchy within Schedule L's Parts II, III and IV by which the three types of intersections are to be reported
- Appreciate the far reach of the five uniform categories that are used to define baseline IPs in Parts II-IV
- Ability to distinguish when Part IV requires multiple business transactions with a particular IP to be reported based on each individual transaction's amount rather than based on all transactions' aggregated amounts
- Identify the separate Part IV threshold that applies for reporting the fact of compensation being provided to a family member of an IP
- Familiarity with identifying what constitutes a disclosable loan in Part II and the fact of a reportable grant or assistance in Part III
The major topics that will be covered in this class include:
- Overview of the methodology that Schedule L employs in its Parts II, III and IV to cast sunlight on the fact of that an "Interested Person" (IP) remained engaged with the filer in loan arrangements, or was the beneficiary of grants or assistance from the filer, or had business transactions with the filer that exceeded de minimis thresholds
- Introduction to the five categories by which IP status vests in reporting on non-excise-tax reached intersections (i.e., the five categories that apply across each of Schedule L's Parts II-IV)
- Explanation of the dollar-amount thresholds employed solely in Schedule L's Part IV (which is where disclosure of "business transactions" with IPs is required), along with preparation tips for this part
- Summary of Schedule L's Part III instructions as to what constitutes the provision of grants or assistance to an IP
- Overview of the special rule educational institutions have allowing them to not disclose the names of their scholarship or fellowship recipients in Part III
- The reach of Schedule L's Part II reporting on loans outstanding with IPs, along with preparation tips for this part
- Quick review of the Internal Revenue Code section 4958 excise tax scheme that 501(c)(3), (c)(4), and (c)(29) filers are subject to should they have conveyed "excess benefit" in any transaction with a disqualified person; and timing and disclosure considerations behind Schedule L's Part I