Tax Tips for Higher Education
ISSUE: Tax reform – the 2017 “TCJA” – rendered moving expenses nondeductible and employee reimbursements of moving expenses taxable after 12/31/17. Now, the IRS has clarified the treatment of 2017 moving expenses paid in 2018. SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually.read more
ISSUE: Our prayers go out to victims of Hurricane Florence. As we pray for them and consider funding relief efforts, the IRS warns of possible charitable scams. SITUATION: Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. SCC calls us to say that they are praying for the victims of Hurricane Florence. Their students are organizing a fundraising effort aimed at aiding those affected. SCC’s Accounting Team asks us about any pitfalls they might encounter in connecting with a charity to partner with financially in assisting the hurricane victims.read more
ISSUE: The IRS appears unable to update the 2018 Form 990 to accommodate recent changes to the classifications of net assets. How shall we then report? SITUATION: Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. MBC’s Accounting Team met with us to discuss changes wrought by ASU 2016-14 upon their financial statements. In the conversation, they said, “We understand that the IRS may not update Form 990 to reflect the change to two net asset classifications (“net assets without donor restrictions” and “net assets with donor restrictions”). Is it true that the Form 990 will still show three classes of net assets? If so, how do we report our net assets?” We tell them that these are timely questions as the IRS just released a DRAFT of the 2018 Form 990 Instructions. It appears that Form 990, Part X will not be updated. However, the IRS gives guidance in the new draft instructions about how to report net assets under the new FASB rules.read more
As noted in previous “Tax Tips,” it is more important than ever to adhere to the IRS’ Form 990 instructions.
The instructions clearly state that the “name of the person” should be entered at Part VI, Line 20. If appropriate, the business address and phone number of the organization may be entered. Do not include personal information about the “person who possesses the organization’s books and records.” Throughout Form 990, just because other schools take an erroneous approach to line item answers does not mean that we can/should.
Recent interim guidance on UBIT “Silo-ing” under I.R.C. Section 512(a)(6) contains some interesting provisions with respect to our ongoing discussion on “imputed income” from parking and other fringe benefits. It may affect your institution. SITUATION – Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. DCC’s CFO has been following the “silo-ing” issue closely as their institution has several unrelated business activities. He calls to ask whether or not our much-discussed (and still unresolved) UBIT and Parking “activity” would be a separate, additional “silo” or business activity for purposes on Internal Revenue Code Section 512(a)(6).read more