Tax Tips Logo ImageISSUE

There are very few changes to the 2019 Form 990.  However, the IRS beat their several years to change estimate and updated Part X for Lines 27 and 28 (Line 29 – as we’ve known it – leaves us).

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.

The CFO at SCC calls us to ask about any changes to Form 990 for their tax year ending June 30, 2020.  He says he knows about the “GAAP vs. Form 990” issues from listening to our webcasts over the past few years and wonders when those changes for “Net assets without donor restrictions” and “Net assets with donor restrictions” might be made to the actual form?

“That year is here,” we say.  The 2019 Form 990, in Part X, has changes to Lines 27 and 28.  And, Line 29 (formerly “Permanently restricted net assets”) is now omitted, with other lines moving up.

RULES

From 2019 Form 990 instructions:

CAUTION: Effective for reporting years ending after December 15, 2017, ASC 958-205, Not-for-Profit Entities–Presentation of Financial Statements (ASC 958), addresses reporting of donor-restricted endowments and board-designated (quasi) endowments. Further, most states have enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). If the organization is subject to UPMIFA or ASC 958, it may affect the amounts reported on lines 27 through 28.

Line 27. Net assets without donor restrictions. Enter the balance per books of net assets without donor restrictions. All funds without donor-imposed restrictions must be reported on line 27, regardless of the existence of any board designations or appropriations.

Line 28. Net assets with donor restrictions. Enter the balance per books of net assets with donor restrictions. Donors’ restrictions may require that resources be used after a specified date (time restrictions), or that resources be used for a specified purpose (purpose restrictions), or both. Donors may also stipulate that assets, such as land or works of art, be used for a specified purpose, be preserved, and not be sold or donated with stipulations that they be invested to provide a permanent source of income.

BOTTOM LINE

  • The 2019 Form 990, “Return of Organization Exempt From Income Tax” features only a few actual changes.
  • The Form 990 instructions, under “What’s New” discusses the coming “Required electronic filing by exempt organizations.”
  • Form 990, Part X, Lines 27 and 28 have new descriptions and instructions.
  • Form 990, Part X, Line 29 is omitted – or replaced with “Capital stock or trust principal, or current funds”.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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