Internal Revenue Service Instructions for Form 990 and ... · Short Form Return of Organization Exempt From Income Tax Under Section 501(c) of the Internal Revenue Code (except black

97 Department of the TreasuryInternal Revenue Service

Instructions for Form 990and Form 990-EZReturn of Organization Exempt From Income Tax andShort Form Return of Organization Exempt FromIncome TaxUnder Section 501(c) of the Internal Revenue Code (except black lung benefittrust or private foundation) or section 4947(a)(1) nonexempt charitable trustNote: Form 990-EZ is for use by organizations with gross receipts of less than$100,000 and total assets of less than $250,000 at the end of the year.Section references are to the Internal Revenue Code unless otherwise noted.

Paperwork Reduction Act Notice.— We ask for the information on this form to carry out theInternal Revenue laws of the United States. You are required to give us the information. We needit to ensure that you are complying with these laws.

The organization is not required to provide the information requested on a form that is subjectto the Paperwork Reduction Act unless the form displays a valid OMB control number. Books orrecords relating to a form or its instructions must be retained as long as their contents maybecome material in the administration of any Internal Revenue law. The rules governing theconfidentiality of the Form 990, and Form 990-EZ, are covered in Code section 6104.

The time needed to complete and file this form and related schedules will vary depending onindividual circumstances. The estimated average times are:

If you have comments concerning the accuracy of these time estimates or suggestions formaking these forms simpler, we would be happy to hear from you. You can write to the Tax FormsCommittee, Western Area Distribution Center, Rancho Cordova, CA 95743-0001. DO NOT sendthe form to this address. Instead, see When and Where To File.

Changes To Note●A On Form 990, enter on line 90b, the numberof employees on your payroll during the payperiod that includes March 12, 1997. See theSpecific Instructions for Form 990, Part VI, line90b.●A On Form 990, Part II, Statement ofFunctional Expenses, line 30, allocateprofessional fundraising fees into the 3functions: Program services, Management andgeneral, and Fundraising.

Purpose of Form●A Form 990 and Form 990-EZ are used bytax-exempt organizations and nonexemptcharitable trusts to provide the IRS with theinformation required by section 6033.

ÿÿ●A An organization's completed Form 990, orForm 990-EZ, (except for the schedule ofcontributors) is available for public inspectionas required by section 6104.

ÿÿ●A Some members of the public rely on Form990, or Form 990-EZ, as the primary or solesource of information about a particularorganization. How the public perceives anorganization in such cases may be determinedby the information presented on its return.Therefore, please make sure the return iscomplete and accurate and fully describes theorganization's programs and accomplishments.

ÿÿ●A Use the Form 990, and Form 990-EZ, tosend a required election to the IRS, such as theelection to capitalize costs under section 266.

Form RecordkeepingLearning about the

law or the form

Preparingthe

form

Copying,assembling, andsending the form

to the IRS

990 96 hr., 23 min. 15 hr., 48 min. 20 hr., 52 min. 48 min.

990-EZ 28 hr., 28 min. ÿÿ9 hr., 12 min. 11 hr., ÿÿ1 min. 16 min.

Schedule A (Form 990) 49 hr., 59 min. ÿÿ9 hr., 14 min. 10 hr., 28 min. –0–

M Public Inspection of CompletedExempt Organization Returns andApproved Exemption Applications.... 8

Contents Page

• Changes To Note ............................. 1

• General Instructions.......................... 2 N Disclosures Regarding CertainInformation and Services Furnished. 9A Who Must File................................... 2

O Disclosures Regarding CertainTransactions and Relationships ....... 9

B Organizations Not Required To File. 2

C Exempt Organization ReferenceChart ................................................. 3 P Excess Benefit Transactions ............ 9

Q Erroneous Backup Withholding ........ 9D Forms and Publications To File orUse .................................................... 3 R Group Return .................................... 9

E Use of Form 990, or Form 990-EZ,To Satisfy State ReportingRequirements .................................... 4

S Organizations in Foreign Countriesand U.S. Possessions ...................... 10

T Public Interest Law Firms ................. 10F Other Forms as Partial Substitutes

for Form 990 or Form 990-EZ .......... 4 U Requirements for a ProperlyCompleted Form 990 or Form990-EZ .............................................. 10G Accounting Periods and Methods..... 5

Public InspectionH When and Where To File ................. 5SignatureI Extension of Time To File ................ 5 RecordkeepingRounding Off to Whole DollarsJ Amended Return/Final Return.......... 5Completing All LinesK Penalties ........................................... 6 Assembling Form 990 or Form990-EZL Contributions— ................................. 6

Schedule of Contributors • Specific Instructions for Form 990.... 11Solicitations of NondeductibleContributions • Specific Instructions for Form

990-EZ .............................................. 28Keeping Fundraising RecordsNoncash ContributionsSubstantiation and DisclosureRequirements

Cat. No. 22386X

General InstructionsNote: The General Instructions apply toboth Form 990 and Form 990-EZ, ShortForm Return of Organization Exempt FromIncome Tax. See also the SpecificInstructions for each of these forms.

A. Who Must File

Filing testsIf the organization does not meet any of theexceptions listed in General Instruction B, andits annual gross receipts are normally morethan $25,000, it must file Form 990 or Form990-EZ. See the gross receipts discussion inGeneral Instruction B.

If the organization's gross receipts during theyear are less than $100,000 and its total assetsat the end of the year are less than $250,000,it may file Form 990-EZ, instead of Form 990.Even if the organization meets this test, it canstill file Form 990.

Combined Federal Campaign.— Smallerorganizations applying to participate in theCombined Federal Campaign may submit acompleted Form 990-EZ (instead of Form 990)to the Office of Personnel Management (OPM).

However, these organizations must alsosubmit to OPM, attached to the Form 990-EZ,pages 1 and 2 of Form 990 with the followingcompleted: Part I, lines 1a-1d and 13-15; PartII, all lines. These organizations should notsend this Form 990 attachment to the IRS.

Section 501(a), (e), (f), (k), and (n)organizationsExcept for those types of organizations listedin General Instruction B, an annual return onForm 990, or Form 990-EZ, is required fromevery organization exempt from tax undersection 501(a), including foreign organizationsand cooperative service organizationsdescribed in sections 501(e) and (f); child careorganizations described in section 501(k); andcharitable risk pools described in section501(n).

Section 501(c)(3), 501(e), (f), (k), and (n)organizations must also attach a completedSchedule A (Form 990), Organization ExemptUnder Section 501(c)(3), to their Form 990 orForm 990-EZ.

Section 4947(a)(1) nonexempt charitabletrustsAny nonexempt charitable trust (described insection 4947(a)(1)) not treated as a privatefoundation is also required to file Form 990, orForm 990-EZ, along with a completedSchedule A (Form 990). See the discussion inGeneral Instruction D for exceptions to filingForm 1041, U.S. Income Tax Return forEstates and Trusts.

If an organization's exemption applicationis pendingIf the organization's application for exemptionis pending, check the “Application pending” boxin the heading of the return and complete thereturn.

If the organization received a Form 990Package but is not required to fileIf the organization received a Form 990Package with a preaddressed label, we askthat the organization file a return even if it isnot required to do so.●A Attach the label to the name and addressspace on the return. See the SpecificInstructions for both Form 990, or Form990-EZ, Item C.

●A Check the box in the heading of the Form990, or Form 990-EZ, to indicate that theorganization's gross receipts are normally notmore than $25,000;●A Sign the return; and●A Send it to the Ogden Service Center. SeeGeneral Instruction H.●A The organization does not have to completeParts I through IX of the Form 990, or Parts Ithrough V of the Form 990-EZ.

Following the above instructions will help usto update our records, and we will not have tocontact the organization later to ask why noreturn was filed.

If the organization files a return this way, itwill not be mailed a Form 990 Package in lateryears and does not have to file Form 990, orForm 990-EZ, again until its gross receipts arenormally more than $25,000. If theorganization terminates or undergoes asubstantial contraction, see the instructions forline 79 of Form 990, or line 36 of Form 990-EZ.

Exempt organizations that filed Form 990,or Form 990-EZ, but are no longer required tofile because they meet a specific exemption(other than exemption 14 in General InstructionB) should advise their key District office so theirfiling status can be updated.

Exempt organizations that are not sure oftheir key District office may call the IRS at1-800-829-1040. Exempt organizations thatstop filing Form 990, or Form 990-EZ, withoutnotifying their key District office may receiveservice center correspondence inquiring abouttheir returns. When responding to theseinquiries, these organizations should give thespecific reason for not filing.

Failure to file and its effect on contributionsOrganizations that are eligible to receive taxdeductible contributions are listed inPublication 78, Cumulative List ofOrganizations described in Section 170(c) ofthe Internal Revenue Code of 1986. Anorganization may be removed from this listingif our records show that it is required to fileForm 990, or Form 990-EZ, but it does not filea return or advise us that it is no longerrequired to file. However, contributions to suchan organization may continue to be deductibleby the general public until the IRS publishes anotice to the contrary in the Internal RevenueBulletin.

B. Organizations Not Required To FileNote: Organizations not required to file thisform with the IRS may wish to use it to satisfystate reporting requirements. For details, seeGeneral Instruction E.

The following types of organizations exemptfrom tax under section 501(a) do not have tofile Form 990, or Form 990-EZ, with the IRS:ÿÿAAAA1. A church, an interchurch organization oflocal units of a church, a convention orassociation of churches, an integrated auxiliaryof a church (such as a men's or women'sorganization, religious school, mission society,or youth group).ÿÿAAAA2. Church-affiliated organizations that areexclusively engaged in managing funds ormaintaining retirement programs and aredescribed in Rev. Proc. 96-10, 1996-1 C.B.577.ÿÿAAAA3. A school below college level affiliatedwith a church or operated by a religious order.ÿÿAAAA4. A mission society sponsored by, oraffiliated with, one or more churches or churchdenominations, if more than half of thesociety's activities are conducted in, or directedat, persons in foreign countries.ÿÿAAAA5. An exclusively religious activity of anyreligious order.

ÿÿAAAA6. A state institution whose income isexcluded from gross income under section 115.ÿÿAAAA7. An organization described in section501(c)(1). Section 501(c)(1) organizations arecorporations organized under an Act ofCongress that are:●A Instrumentalities of the United States, and●A Exempt from Federal income taxes.ÿÿAAAA8. A private foundation exempt undersection 501(c)(3) and described in section509(a). Use Form 990-PF, Return of PrivateFoundation.ÿÿAAAA9. A black lung benefit trust described insection 501(c)(21). Use Form 990-BL,Information and Initial Excise Tax Return forBlack Lung Benefit Trusts and Certain RelatedPersons.AAAA10. A stock bonus, pension, or profit-sharingtrust that qualifies under section 401. UseForm 5500, Annual Return/Report ofEmployee Benefit Plan.AAAA11. A religious or apostolic organizationdescribed in section 501(d). Use Form 1065,U.S. Partnership Return of Income.AAAA12. A foreign organization whose annualgross receipts from sources within the U.S. arenormally $25,000 or less (Rev. Proc. 94-17,1994-1 C.B. 579). See the $25,000 grossreceipts test in 14c. See also GeneralInstruction A, if the organization received aForm 990 Package.AAAA13. A governmental unit or affiliate of agovernmental unit described in Rev. Proc.95-48, 1995-2 C.B. 418.AAAA14. An organization whose annual grossreceipts are normally $25,000 or less (but seeGeneral Instruction A, if the organizationreceived a Form 990 Package).

ÿÿÿÿAAAAa. Calculating gross receipts.— Theorganization's gross receipts are the totalamount it received from all sources during itsannual accounting period, without subtractingany costs or expenses.ÿÿAAAA1) Form 990.— Gross receipts are the sumof lines 1d, 2, 3, 4, 5, 6a, 7, 8a (both columns),9a, 10a, and 11 of Part I.ÿÿAAAA2) Form 990-EZ.— Gross receipts are thesum of lines 1, 2, 3, 4, 5a, 6a, 7a, and 8 of PartI. Gross receipts can also be calculated byadding back the amounts on lines 5b, 6b, and7b to the total revenue reported on line 9.

Example. On line 9 of its Form 990-EZ for1997, Organization M reported $50,000 as totalrevenue. M added back the costs andexpenses it had deducted on lines 5b ($2,000);6b ($1,500); and 7b ($500) to its total revenueof $50,000 and determined that its grossreceipts for the tax year were $54,000.

ÿÿÿÿAAAAb. Gross receipts when acting asagent.— If a local chapter of a section501(c)(8) fraternal organization collectsinsurance premiums for its parent lodge andmerely sends those premiums to the parentwithout asserting any right to use the funds orotherwise deriving any benefit from collectingthem, the local chapter should not include thepremiums in its gross receipts. The parentlodge should report them instead. The sametreatment applies in other situations in whichone organization collects funds merely as anagent for another.ÿÿAAAAc. $25,000 gross receipts test.— Anorganization's gross receipts are considerednormally to be $25,000 or less if theorganization is:

ÿÿÿÿAAAA1) Up to a year old and has received, ordonors have pledged to give, $37,500 or lessduring its first tax year;

Page 2 General Instructions for Form 990 and Form 990-EZ

ÿÿAAAA2) Between 1 and 3 years old and averaged$30,000 or less in gross receipts during eachof its first 2 tax years; orÿÿAAAA3) Three (3) years old or more andaveraged $25,000 or less in gross receipts forthe immediately preceding 3 tax years(including the year for which the return wouldbe filed).

C. Exempt Organization ReferenceChart

D. Forms and Publications To File orUseYou may obtain forms and publications by:Personal computer. Visit the IRS's InternetWeb Site at www.irs.ustreas.gov to get:●A Forms and instructions●A Publications●A IRS Press Releases and Fact Sheets

You can also reach us using:●A Telnet at iris.irs.ustreas.gov●A File Transfer Protocol at ftp.ir.ustreas.gov●A Direct Dial (by modem). Dial direct to theInternal Revenue Information Services (IRIS)

by calling 703-321-8020 using your modem.IRIS is an on-line information service onFedWorld.CD-ROM. A CD-ROM containing over 2,000tax products (including prior year forms) canbe purchased from the Government PrintingOffice (GPO). To order the CD-ROM, call theSuperintendent of Documents at 202-512-1800(select Option 1), or go through GPO's InternetWeb Site www.access.gpo.gov/su_docs) .By phone and in person. To order forms andpublications, call 1-800-TAX-FORM(1-800-829-3676). You can also get most formsand publications at your local IRS office.

ÿÿSchedule A (Form 990). Organization ExemptUnder Section 501(c)(3) (Except PrivateFoundation), 501(e), 501(f), 501(k), 501(n), orSection 4947(a)(1) Nonexempt CharitableTrust. The Schedule A (Form 990) is filed withForm 990, or Form 990-EZ, for a section501(c)(3) organization that is not a privatefoundation (and including an organizationdescribed in section 501(e), 501(f), 501(k), or501(n)). It is also filed with Form 990, or Form990-EZ, for a section 4947(a)(1) nonexemptcharitable trust that is not treated as a privatefoundation. An organization is not required tofile Schedule A (Form 990) if its gross receiptsare normally $25,000 or less. See the grossreceipts discussion in General Instruction B.

ÿÿForms W-2 and W-3. Wage and TaxStatement, and Transmittal of Wage and TaxStatements.

ÿÿForm 940. Employer's Annual FederalUnemployment (FUTA) Tax Return.

ÿÿForm 941. Employer's Quarterly Federal TaxReturn. Used to report social security,Medicare, and income taxes withheld by anemployer and social security and Medicaretaxes paid by an employer.

ÿÿForm 943. Employer's Annual Tax Return forAgricultural Employees.

ÿÿTrust Fund Recovery Penalty.— If certain

excise, income, social security, and Medicaretaxes that must be collected or withheld are notcollected or withheld, or these taxes are notpaid to the IRS, a Trust Fund Recovery Penaltymay apply. The Trust Fund Recovery Penaltymay be imposed on all persons (includingvolunteers) who the IRS determines wereresponsible for collecting, accounting for, andpaying over these taxes, and who acted willfullyin not doing so.

This penalty does not apply to volunteer,unpaid members of any board of trustees ordirectors of a tax-exempt organization, if thesemembers are solely serving in an honorarycapacity, do not participate in the day-to-dayor financial activities of the organization, anddo not have actual knowledge of the failure tocollect, account for, and pay over these taxes.However, the preceding sentence does notapply if it results in no person being liable forthe penalty.

The penalty is equal to the unpaid trust fundtax. See the instructions for Pub. 15 (CircularE), Employer's Tax Guide, for more details,including the definition of responsible persons.

ÿÿForm 990-T. Exempt Organization BusinessIncome Tax Return. Filed separately fororganizations with gross income of $1,000 ormore from business unrelated to theorganization's exempt purpose. The Form990-T is also filed to pay the section 6033(e)(2)proxy tax. For Form 990, see line 85 and its

instructions; for Form 990-EZ, see line 35 andits instructions.

ÿÿForm 990-W. Estimated Tax on UnrelatedBusiness Taxable Income for Tax-ExemptOrganizations.

ÿÿForm 1041. U.S. Income Tax Return forEstates and Trusts. Required of section4947(a)(1) nonexempt charitable trusts thatalso file Form 990 or Form 990-EZ. However,if such a trust does not have any taxableincome under Subtitle A of the Code, it can fileForm 990, or Form 990-EZ, and does not haveto file Form 1041 to meet its section 6012 filingrequirement. If this condition is met, completeForm 990, or Form 990-EZ, and do not fileForm 1041.

A section 4947(a)(1) nonexempt charitabletrust that normally has gross receipts of notmore than $25,000 (see the gross receiptsdiscussion in General Instruction B) and hasno taxable income under Subtitle A mustcomplete line 92 and the signature block onpage 6 of the Form 990. On the Form 990-EZ,complete line 43 and the signature block onpage 2 of the return. In addition, complete onlythe following items in the heading of Form 990or Form 990-EZ:

ÿÿForm 1096. Annual Summary and Transmittalof U.S. Information Returns.

ÿÿForm 1099 series. Information returns toreport acquisitions or abandonments ofsecured property, proceeds from broker andbarter exchange transactions, interestpayments, payments of long-term care andaccelerated death benefits, miscellaneousincome payments, distributions from a medicalsavings accounts, original issue discount,distributions from pensions, annuities,retirement or profit-sharing plans, IRAs,insurance contracts, etc., and proceeds fromreal estate transactions. Also, use certain ofthese returns to report amounts that werereceived as a nominee on behalf of anotherperson.

ÿÿForm 1120-POL. U.S. Income Tax Return forCertain Political Organizations.

ÿÿForm 1128. Application To Adopt, Change, orRetain a Tax Year.

ÿÿForm 2758. Application for Extension of TimeTo File Certain Excise, Income, Information,and Other Returns.

ÿÿForm 3115. Application for Change inAccounting Method.

ÿÿForm 4506-A. Request for Public Inspectionor Copy of Exempt Organization IRS Form.

ÿÿForm 4720. Return of Certain Excise Taxeson Charities and Other Persons UnderChapters 41 and 42 of the Internal RevenueCode. Section 501(c)(3) organizations that fileForm 990, or Form 990-EZ, as well as themanagers of these organizations, use this formto report their tax on political expenditures,certain lobbying expenditures, and excessbenefit transactions.

Type ofOrganization

I.R.C.Section

Corporations Organized UnderAct of Congress...................................... 501(c)(1)

Title Holding Corporations ........................ 501(c)(2)

Charitable, Religious, Educational,Scientific, etc., Organizations................. 501(c)(3)

Civic Leagues and Social WelfareOrganizations ......................................... 501(c)(4)

Labor, Agricultural, andHorticultural Organizations ..................... 501(c)(5)

Business Leagues, etc.............................. 501(c)(6)

Social and Recreation Clubs .................... 501(c)(7)

Fraternal Beneficiary and Domestic 501(c)(8)Fraternal Societies and Associations..... & (10)

Voluntary Employees' BeneficiaryItemAssociations ........................................... 501(c)(9)A Tax year (fiscal year or short period, if

applicable)Teachers' Retirement Fund Associations . 501(c)(11)

B Applicable checkboxesBenevolent Life Insurance Associations,C Name and addressMutual Ditch or Irrigation Companies,D Employer identification number (EIN)Mutual or Cooperative TelephoneG Section 4947(a)(1) nonexempt charitable trust

box. (Item I in Form 990-EZ)Companies, etc. ..................................... 501(c)(12)

Cemetery Companies ............................... 501(c)(13)

State Chartered Credit Unions,Mutual Reserve Funds ........................... 501(c)(14)

Mutual Insurance Companies orAssociations ........................................... 501(c)(15)

Cooperative Organizations ToFinance Crop Operations ....................... 501(c)(16)

Supplemental UnemploymentBenefit Trusts ......................................... 501(c)(17)

Employee Funded Pension Trusts(created before 6/25/59)......................... 501(c)(18)

Organizations of Past or Present 501(c)(19)Members of the Armed Forces .............. & (23)

Black Lung Benefit Trusts......................... 501(c)(21)

Withdrawal Liability Payment Funds......... 501(c)(22)

Title Holding Corporations or Trusts......... 501(c)(25)

State-Sponsored Organizations ProvidingHealth Coverage for High-RiskIndividuals ............................................... 501(c)(26)

State-Sponsored Workmen'sCompensation and ReinsuranceOrganizations ......................................... 501(c)(27)

Religious and Apostolic Associations ....... 501(d)

Cooperative Hospital ServiceOrganizations ......................................... 501(e)

Cooperative Service Organizations ofOperating Educational Organizations .... 501(f)

Child Care Organizations.......................... 501(k)

Charitable Risk Pools ............................... 501(n)

General Instructions for Form 990 and Form 990-EZ Page 3

ÿÿForm 5500, 5500-C/R. Employers whomaintain pension, profit-sharing, or otherfunded deferred compensation plans aregenerally required to file one of the 5500 seriesforms specified below. This requirementapplies whether or not the plan is qualifiedunder the Internal Revenue Code and whetheror not a deduction is claimed for the current taxyear.

Plans with 100 or more participants must fileForm 5500, Annual Return/Report ofEmployee Benefit Plan.

Plans with fewer than 100 participants mustfile Form 5500-C/R, Return/Report ofEmployee Benefit Plan.

ÿÿForm 5768. Election/Revocation of Electionby an Eligible Section 501(c)(3) OrganizationTo Make Expenditures To InfluenceLegislation.

ÿÿForm 8282. Donee Information Return.Required of the donee of “charitable deductionproperty” who sells, exchanges, or otherwisedisposes of the property within 2 years afterreceiving the property.

The form is also required of any successordonee who disposes of charitable deductionproperty within 2 years after the date that thedonor gave the property to the original donee.It does not matter who gave the property to thesuccessor donee. It may have been the originaldonee or another successor donee.

ÿÿForm 8300. Report of Cash Payments Over$10,000 Received in a Trade or Business.Used to report cash amounts in excess of$10,000 that were received in a singletransaction (or in two or more relatedtransactions) in the course of a trade orbusiness (as defined in section 162).

However, if the organization receives acharitable cash contribution in excess of$10,000, it is not subject to the reportingrequirement since the funds were not receivedin the course of a trade or business.

ÿÿForm 8822. Change of Address. Used to notifythe IRS of a change in mailing address thatoccurs after the return is filed.

ÿÿForms 8038, 8038-G, and 8038-GC.Information Return for Tax-Exempt PrivateActivity Bond Issues; Information Return forTax-Exempt Governmental Obligations; andInformation Return for Small Tax-ExemptGovernmental Bond Issues, Leases, andInstallment Sales, respectively.

ÿÿPublication 525. Taxable and NontaxableIncome.

ÿÿPublication 538. Accounting Periods andMethods.

ÿÿPublication 598. Tax on Unrelated BusinessIncome of Exempt Organizations.

ÿÿPublication 910. Guide to Free Tax Services.

ÿÿPublication 1391. Deductibility of PaymentsMade to Charities Conducting Fund-RaisingEvents.

E. Use of Form 990, or Form 990-EZ,To Satisfy State ReportingRequirementsSome states and local government units willaccept a copy of Form 990, or Form 990-EZ,and Schedule A (Form 990) in place of all orpart of their own financial report forms. Thesubstitution applies primarily to section501(c)(3) organizations, but some of the othertypes of section 501(c) organizations are alsoaffected.

If you use Form 990, or Form 990-EZ, tosatisfy state or local filing requirements, suchas those under state charitable solicitation acts,note the following:

Determine state filing requirementsYou should consult the appropriate officials ofall states and other jurisdictions in which theorganization does business to determine theirspecific filing requirements. “Doing business” ina jurisdiction may include any of the following:(a) soliciting contributions or grants by mail orotherwise from individuals, businesses, orother charitable organizations; (b) conductingprograms; (c) having employees within thatjurisdiction; (d) maintaining a checkingaccount; or (e) owning or renting propertythere.

Monetary tests may differSome or all of the dollar limitations applicableto Form 990, or Form 990-EZ, when filed withthe IRS may not apply when using Form 990,or Form 990-EZ, in place of state or local reportforms. Examples of the IRS dollar limitationsthat do not meet some state requirements arethe $25,000 gross receipts minimum thatcreates an obligation to file with the IRS (seethe gross receipts discussion in GeneralInstruction B) and the $50,000 minimum forlisting professional fees in Part II of ScheduleA (Form 990).

Additional information may be requiredState or local filing requirements may requireyou to attach to Form 990, or Form 990-EZ,one or more of the following: (a) additionalfinancial statements, such as a completeanalysis of functional expenses or a statementof changes in net assets; (b) notes to financialstatements; (c) additional financial schedules;(d) a report on the financial statements by anindependent accountant; and (e) answers toadditional questions and other information.Each jurisdiction may require the additionalmaterial to be presented on forms they provide.The additional information does not have to besubmitted with the Form 990, or Form 990-EZ,filed with the IRS.

Even if the Form 990, or Form 990-EZ, theorganization files with the IRS is accepted bythe IRS as complete, a copy of the same returnfiled with a state will not fully satisfy that state'sfiling requirement if required information is notprovided, including any of the additionalinformation discussed above, or if the statedetermines that the form was not completedby following the applicable Form 990, or Form990-EZ, instructions or supplemental stateinstructions. If so, the organization may beasked to provide the missing information or tosubmit an amended return.

Use of audit guides may be requiredTo ensure that all organizations report similartransactions uniformly, many states require thatcontributions, gifts, grants, etc., and functionalexpenses be reported according to the AICPAindustry audit guide, Not-For-ProfitOrganizations (New York, NY, AICPA, 1996),supplemented by Standards of Accounting andFinancial Reporting for Voluntary Health and

Welfare Organizations (Washington, DC,National Health Council, Inc., 1988, 3rdedition).

Donated services and facilitiesEven though reporting donated services andfacilities as items of revenue and expense iscalled for in certain circumstances by thepublications named above, many states andthe IRS do not permit the inclusion of thoseamounts in Parts I and II of Form 990 or Part Iof Form 990-EZ. The optional reporting ofdonated services and facilities is discussed inthe instructions for Part III for both Form 990and Form 990-EZ.

Amended returnsIf the organization submits supplementalinformation or files an amended Form 990, orForm 990-EZ, with the IRS, it must also senda copy of the information or amended return toany state with which it filed a copy of Form 990,or Form 990-EZ, originally to meet that state'sfiling requirement.

If a state requires the organization to file anamended Form 990, or Form 990-EZ, to correctconflicts with Form 990, or Form 990-EZ,instructions, it must also file an amended returnwith the IRS.

Method of accountingMost states require that all amounts bereported based on the accrual method ofaccounting. See also General Instruction G.

Time for filing may differThe deadline for filing Form 990, or Form990-EZ, with the IRS differs from the time forfiling reports with some states.

Public inspectionThe Form 990, or Form 990-EZ, informationmade available for public inspection by the IRSmay differ from that made available by thestates. See the Caution in General InstructionL under Schedule of contributors.

State registration numberEnter the applicable state or local jurisdictionregistration or identification number in item E(in the heading of the Form 990 or Form990-EZ) for each jurisdiction in which theorganization files Form 990, or Form 990-EZ,in place of the state or local form. If filing inseveral jurisdictions, prepare as many copiesas needed with item E blank. Then enter theapplicable registration number on the copy tobe filed with each jurisdiction.

An organization need not put any state orlocal jurisdiction registration or identificationnumber on the Form 990, or Form 990-EZ, filedwith the IRS.

F. Other Forms as Partial Substitutesfor Form 990 or Form 990-EZExcept as provided below, the InternalRevenue Service will not accept any form as asubstitute for one or more parts of Form 990or Form 990-EZ.

Labor organizations (section 501(c)(5))A labor organization that files Form LM-2,Labor Organization Annual Report, or theshorter Form LM-3, Labor Organization AnnualReport, with the U.S. Department of Labor(DOL) can attach a copy of the completed DOLform to Form 990, or Form 990-EZ, to providesome of the information required by Form 990or Form 990-EZ. This substitution is notpermitted if the organization files a DOL reportthat consolidates its financial statements withthose of one or more separate subsidiaryorganizations.


Employee benefit plans (section 501(c)(9),(17), or (18))An employee benefit plan may be able tosubstitute Form 5500, or Form 5500-C/R, forpart of Form 990 or Form 990-EZ. Thesubstitution can be made if the organizationfiling Form 990, or Form 990-EZ, and the planfiling Form 5500, or 5500-C/R, meet all thefollowing tests:ÿÿAAAA1. The Form 990, or Form 990-EZ, filer isorganized under section 501(c)(9), (17), or(18);ÿÿAAAA2. The Form 990, or Form 990-EZ, filer andForm 5500 filer are identical for financialreporting purposes and have identical receipts,disbursements, assets, liabilities, and equityaccounts;ÿÿAAAA3. The employee benefit plan does notinclude more than one section 501(c)organization, and the section 501(c)organization is not a part of more than oneemployee benefit plan;ÿÿAAAA4. The organization's accounting year andthe employee plan year are the same. If theyare not, you may want to change theorganization's accounting year, as explained inGeneral Instruction G, so it will coincide withthe plan year.

Allowable substitution areasWhether an organization files Form 990, orForm 990-EZ, for a labor organization or for anemployee benefit plan, the areas of Form 990,or Form 990-EZ, for which other forms can besubstituted are the same. These areas are:

Form 990

●A Lines 13 through 15 of Part I (but completelines 16 through 21);●A Part II; and●A Part IV (but complete lines 59, 66, and 74,columns (A) and (B)).

Form 990-EZ

●A Lines 10 through 16 of Part I (but completelines 17 through 21).●A Part II (but complete lines 25 through 27,columns (A) and (B)).

If an organization substitutes Form LM-2 orLM-3 for any of the Form 990, or Form 990-EZ,Parts or line items mentioned above, it mustattach a reconciliation sheet to show therelationship between the amounts on the DOLforms and the amounts on Form 990 or Form990-EZ. This is particularly true of therelationship of disbursements shown on theDOL forms and the total expenses on line 17,Part I, of both Form 990 and Form 990-EZ.The organization must make this reconciliationbecause the cash disbursements section of theDOL forms includes nonexpense items. If theorganization substitutes Form LM-2, be sure tocomplete its separate schedule of expenses.

G. Accounting Periods and MethodsNote: For further information, see Pub. 538.

Accounting periodsCalendar year. Use the 1997 Form 990, orForm 990-EZ, to report on the 1997 calendaryear accounting period. A calendar yearaccounting period begins on January 1 andends on December 31.Fiscal year. If the organization hasestablished a fiscal year accounting period, usethe 1997 Form 990, or Form 990-EZ, to reporton the organization's fiscal year that began in1997 and ended 12 months later. A fiscal yearaccounting period should normally coincidewith the natural operating cycle of theorganization. Be certain to indicate in the

heading of Form 990, or Form 990-EZ, the datethe organization's fiscal year began in 1997and the date the fiscal year ended in 1998.Short period. Use the 1997 Form 990, orForm 990-EZ, to report on a short accountingperiod (less than 12 months) that began in1997 and ended November 30, 1998, or earlier.

If the organization changes its accountingperiod, it must file a return on Form 990, orForm 990-EZ, for the short period resultingfrom the change. Write “Change of AccountingPeriod” at the top of this short-period return.

If the organization changed its accountingperiod within the 10-calendar-year period thatincludes the beginning of the short period, andit had a Form 990, or Form 990-EZ, filingrequirement at any time during that 10-yearperiod, it must also attach a Form 1128 to theshort-period return. See Rev. Proc. 85-58,1985-2 C.B. 740.Group return. When affiliated organizationsauthorize their central organization to file agroup return for them, the accounting periodof the affiliated organizations and the centralorganization must be the same. See GeneralInstruction R.

Accounting methodsUnless instructed otherwise, the organizationshould generally use the same accountingmethod on the return to figure revenue andexpenses as it regularly uses to keep its booksand records. To be acceptable for Form 990,or Form 990-EZ, reporting purposes, however,the method of accounting used must clearlyreflect income.

Generally, the organization must file Form3115 to change its accounting method. Notice96-30, 1996-1 C.B. 378, provides relief fromfiling Form 3115 to section 501(c) organizationsthat change their methods of accounting tocomply with the provisions of SFAS 116, Accounting for Contributions Received andContributions Made. In SFAS 116, theFinancial Accounting Standards Board revisedcertain generally accepted accountingprinciples relating to contributions received andcontributions awarded by not-for-profitorganizations.

A not-for-profit organization that changes itsmethod of accounting for Federal income taxpurposes to conform to the method provided inSFAS 116 should report any adjustmentrequired by section 481(a) on line 20 of Form990, or Form 990-EZ, as a net assetadjustment made during the year the changeis made. The adjustment should be identifiedas the effect of changing to the methodprovided in SFAS 116. The beginning of yearstatement of financial position (balance sheet)should not be restated to reflect any priorperiod adjustments.State reporting. If the organization preparesForm 990, or Form 990-EZ, for state reportingpurposes, it may file an identical return with theIRS even though the return does not agree withthe books of account, unless the way one ormore items are reported on the state returnconflicts with the instructions for preparingForm 990, or Form 990-EZ, for filing with theIRS.

Example 1. The organization maintains itsbooks on the cash receipts and disbursementsmethod of accounting but prepares a statereturn based on the accrual method. It coulduse that return for reporting to the IRS.

Example 2. A state reporting requirementrequires the organization to report certainrevenue, expense, or balance sheet itemsdifferently from the way it normally accounts forthem on its books. A Form 990, or Form990-EZ, prepared for that state is acceptable

for the IRS reporting purposes if the statereporting requirement does not conflict with theForm 990, or Form 990-EZ, instructions.

An organization should keep a reconciliationof any differences between its books of accountand the Form 990, or Form 990-EZ, that isfiled.

Most states that accept Form 990, or Form990-EZ, in place of their own forms require thatall amounts be reported based on the accrualmethod of accounting. For further information,see General Instruction E.

H. When and Where To FileFile Form 990, or Form 990-EZ, by the 15thday of the 5th month after the organization'saccounting period ends. If the regular due datefalls on a Saturday, Sunday, or legal holiday,file on the next business day. A business dayis any day that is not a Saturday, Sunday, orlegal holiday.

If the organization is liquidated, dissolved,or terminated, file the return by the 15th dayof the 5th month after the liquidation,dissolution, or termination.

If the return is not filed by the due date(including any extension granted), attach astatement giving the reasons for not filing ontime.

Send the return to the Internal RevenueService, Ogden, UT 84201-0027.Private delivery services. You can usecertain private delivery services designated bythe IRS to meet the “timely filing as timelyfiling/paying” rule for tax returns and payments.The IRS publishes a list of designated privatedelivery services in September of each year.The list published in September 1997 includesonly the following:●A Airborne Express (Airborne): Overnight AirExpress Service, Next Afternoon Service,Second Day Service.●A DHL Worldwide Express (DHL): DHL “SameDay” Service, DHL USA Overnight.●A Federal Express (FedEx): FedEx PriorityOvernight, FedEx Standard Overnight, FedEx2Day.●A United Parcel Service (UPS): UPS Next DayAir, UPS Next Day Air Saver, UPS 2nd DayAir, UPS 2nd Day Air A.M.

The private delivery service can tell you howto get written proof of the mailing date.

I. Extension of Time To FileUse Form 2758 to request an extension of timeto file Form 990 or Form 990-EZ. Generally, theIRS will not grant an extension of time for morethan 90 days unless sufficient need for anextended period is clearly shown. In no eventwill an extension of more than 6 months begranted to any domestic organization.

J. Amended Return/Final ReturnTo change the organization's return for anyyear, file a new return including any requiredattachments. Use the revision of Form 990, orForm 990-EZ, applicable to the year beingamended. The amended return must provideall the information called for by the form andinstructions, not just the new or correctedinformation. Check the “Amended Return” boxin the heading of either return, or, if the versionof the form being used does not have such abox, write “Amended Return” at the top of thereturn.

The organization may file an amendedreturn at any time to change or add to theinformation reported on a previously filed returnfor the same period. It must make the amendedreturn available for public inspection for 3 yearsfrom the date of filing or 3 years from the datethe original return was due, whichever is later.


The organization must also send a copy ofthe information or amended return to any statewith which it filed a copy of Form 990, or Form990-EZ, originally to meet that state's filingrequirement.

Use Form 4506-A to obtain a copy of apreviously filed return. You can obtain blankforms for prior years by calling1-800-TAX-FORM (1-800-829-3676).

If the return is a final return, see the specificinstructions for Form 990 for line 79, Part VI.For Form 990-EZ, see the specific instructionsfor line 36, Part V.

K. Penalties

Against the organizationUnder section 6652(c)(1)(A), a penalty of $20a day, not to exceed the smaller of $10,000 or5% of the gross receipts of the organization forthe year, may be charged when a return is filedlate, unless the organization can show that thelate filing was due to reasonable cause.Organizations with annual gross receiptsexceeding $1 million are subject to a penaltyunder section 6652(c)(1)(A) of $100 for eachday the failure continues (with a maximumpenalty with respect to any one return of$50,000). The penalty begins on the due datefor filing the Form 990 or Form 990-EZ. Thepenalty may also be charged if the organizationfiles an incomplete return or furnishes incorrectinformation. To avoid having to supply missinginformation later, be sure to complete allapplicable line items; answer “Yes,” “No,” or“N/A” (not applicable) to each question on thereturn; make an entry (including a zero whenappropriate) on all total lines; and enter“None” or “N/A” if an entire part does not apply.

Against responsible person(s)If the organization does not file a completereturn or does not furnish correct information,the IRS will send the organization a letter thatincludes a fixed time to fulfill theserequirements. After that period expires, theperson failing to comply will be charged apenalty of $10 a day, not to exceed $5,000,unless he or she shows that not complying wasdue to reasonable cause. If more than oneperson is responsible, they are jointly andindividually liable for the penalty.

There are also penalties—fines andimprisonment—for willfully not filing returns andfor filing fraudulent returns and statements withthe IRS (sections 7203, 7206, and 7207).There are also penalties for failure to complywith public disclosure requirements asdiscussed in General Instruction M. States mayimpose additional penalties for failure to meettheir separate filing requirements. See also thediscussion of the Trust Fund Recovery Penalty,General Instruction D.

L. Contributions—ÿÿÿÿÿSchedule of Contributors,ÿÿÿÿÿSolicitations of NondeductibleÿÿÿÿÿContributions,ÿÿÿÿÿKeeping Fundraising Records,ÿÿÿÿÿNoncash Contributions, andÿÿÿÿÿSubstantiation and DisclosureÿÿÿÿÿRequirements

Schedule of contributors

Note: Not open for public inspection. See theCaution below.

Attach a schedule listing each contributorwho gave the organization, directly or indirectly,money, securities, or other property worth$5,000 or more during the year. If no onecontributed $5,000 or more, the organizationdoes not need to attach a schedule. On theschedule:

ÿÿAAAA1. Total a contributor's gifts of $1,000 ormore to determine if a contributor gave $5,000or more. Do not include smaller gifts.ÿÿAAAA2. Show the contributor's name, address,and the total of each contribution.ÿÿAAAA3. Describe a noncash contribution fully andshow the date received.ÿÿAAAA4. Report payroll contributions by listing the:ÿÿAAAAa. Employer's name,ÿÿAAAAb. Address, andÿÿAAAAc. Total amount given (unless the employeegave enough to be listed separately).ÿÿAAAA5. Report on property with readilydeterminable market value; i.e., marketquotations for securities) by:ÿÿAAAAa. Describing the property, andÿÿAAAAb. Listing its fair market value—estimate ifmarket value indeterminable.

Contributors include individuals, fiduciaries,partnerships, corporations, associations, trusts,or exempt organizations.

If the organization adjusted its accounts toconform to SFAS 116, and if the adjustmentreflected contributions unreported under the oldmethod of accounting for year(s) preceding theyear of change and not reported under the newmethod in the year of change or anysubsequent year, any contributor of an amountincluded in the adjustment who meets theabove criteria should be included in theschedule of contributors for the year of thechange. See General Instruction G.

If an organization meets either Exception 1or 2 below, some information in its schedulewill vary from that described above.

Exception 1. An organization described insection 501(c)(3) that meets the 331/3% supporttest of the Regulations under sections509(a)(1)/170(b)(1)(A)(vi) (whether or not theorganization is otherwise described in section170(b)(1)(A)).

The schedule should give the aboveinformation only for contributors whose gifts of$5,000 or over are more than 2% of the amountreported on line 1d that the organizationreceived during the year.

Exception 2. An organization described insection 501(c)(7), (8), or (10) that receivedcontributions or bequests for use exclusively forreligious, charitable, scientific, literary, oreducational purposes, or the prevention ofcruelty to children or animals (sections170(c)(4), 2055(a)(3), or 2522(a)(3)).

The schedule should list each person whosegifts total more than $1,000 during the year andshow the:ÿÿAAAA1. Donor's name,ÿÿAAAA2. Amount given,ÿÿAAAA3. Specific purpose of the gift, andÿÿAAAA4. Its specific use.

Show also the total gifts that were $1,000or less and were for a religious, charitable, etc.,purpose.

If an amount is set aside for a religious,charitable, etc., purpose described above,explain how the amount is held; e.g., whetherit is mingled with amounts held for otherpurposes. If the organization transferred the giftto another organization, name and describe therecipient and explain the relationship betweenthe two organizations.Caution: If the organization files a copy ofForm 990, or Form 990-EZ, and attachmentswith any state, do not include, in theattachments for the state, the schedule ofcontributors discussed above unless theschedule is specifically required by the statewith which the organization is filing the return.States that do not require the information mightnevertheless make it available for publicinspection along with the rest of the return.

Solicitations of nondeductible contributionsAny fundraising solicitation by or on behalf ofany section 501(c) organization that is noteligible to receive contributions deductible ascharitable contributions for Federal income taxpurposes must include an explicit statementthat contributions or gifts to it are not deductibleas charitable contributions. The statement mustbe in an easily recognizable format whether thesolicitation is made in written or printed form,by television or radio, or by telephone. Thisprovision applies only to those organizationswhose annual gross receipts are normally morethan $100,000 (section 6113).

Failure to disclose that contributions are notdeductible could result in a penalty of $1,000for each day on which a failure occurs. Themaximum penalty for failures by anyorganization, during any calendar year, shallnot exceed $10,000. In cases where the failureto make the disclosure is due to intentionaldisregard of the law, more severe penaltiesapply. No penalty will be imposed if the failureis due to reasonable cause (section 6710).

Keeping fundraising recordsSection 501(c) organizations that are eligible toreceive tax-deductible contributions undersection 170(c) of the Code must keep samplecopies of their fundraising materials, such as:●A Dues statements,●A Fundraising solicitations,●A Tickets,●A Receipts, or●A Other evidence of payments received inconnection with fundraising activities.

For each fundraising event, organizationsmust keep records to show that portion of anypayment received from patrons that is notdeductible; that is, the retail value of the goodsor services received by the patrons. See“Disclosure statement for quid pro quocontributions” below.

Noncash contributionsTo report contributions received in a form otherthan cash, use the market value as of the dateof the contribution. For marketable securitiesregistered and listed on a recognized securitiesexchange, measure market value by theaverage of the highest and lowest quotedselling prices (or the average between the bonafide bid and asked prices) on the contributiondate. See section 20.2031-2 of the Estate TaxRegulations for rules to determine the value ofcontributed stocks and bonds. When marketvalue cannot be readily determined, use anappraised or estimated value.

To determine the amount of any noncashcontribution that is subject to an outstandingdebt, subtract the debt from the property's fairmarket value. Record the asset at its full valueand record the debt as a liability in the booksof account. If the organization received apartially completed Form 8283, NoncashCharitable Contributions, from a donor,complete it and return it so the donor can get

IF . . . THEN . . .

Organizations advertisetheir fundraising events,

They must keep samplesof the advertising copy.

Organizations use radioor television to make theirsolicitations,

They must keep samplesof:(a) Scripts,(b) Transcripts, or(c) Other evidence ofon-air solicitations.

Organizations use outsidefundraisers,

They must keep samplesof the fundraisingmaterials used by theoutside fundraisers.


a charitable contribution deduction. Keep acopy for your records. See also the referenceto Form 8282 in General Instruction D.

Substantiation and disclosure requirementsAcknowledgment to substantiatecontributions. An organization (donee)should be aware that a donor of a charitablecontribution of $250 or more cannot take anincome tax deduction unless the donor obtainsthe organization's acknowledgment tosubstantiate the charitable contribution.

The organization's acknowledgment must:ÿÿAAAA1. Be writtenÿÿAAAA2. Be contemporaneousÿÿAAAA3. State the amount of any cash it receivedÿÿAAAA4. State:ÿÿAAAAa. Whether the organization gave the donorany intangible religious benefits (no valuationneeded)ÿÿAAAAb. Whether or not the organization gave thedonor any goods or services in return for thedonor's contribution (a quid pro quocontribution)ÿÿAAAA5. Describe goods or services theorganization:ÿÿAAAAa. Received (no valuation needed)ÿÿAAAAb. Gave (good faith estimate needed)Exception. An organization need not make agood faith estimate of a quid pro quocontribution if the goods or services given to adonor are:●A Insubstantial in value●A Certain membership benefits for $75 or lessper year●A Certain goods or services given to thedonor's employees or partnersDisclosure statement for quid pro quocontributions. If the organization receives aquid pro quo contribution of more than $75, anorganization must provide a disclosurestatement to the donor. The organization'sdisclosure statement must:ÿÿAAAA1. Be writtenÿÿAAAA2. Estimate in good faith the organization'sgoods or services given in return for donor'scontributionÿÿAAAA3. Describe, but need not value, certaingoods or services given donor's employees orpartnersÿÿAAAA4. Inform donor that a deductible charitablecontribution deduction is limited as follows:

Exception: No disclosure statement requiredif the organization gave:ÿÿAAAA1. Goods or services of insubstantial valueÿÿAAAA2. Certain membership benefits, orÿÿAAAA3. An intangible religious benefit

See Regulations sections 1.170A-1,1.170A-13, and 1.6115-1.Certain goods or services disregarded forsubstantiation and disclosure purposes.

Goods or services with insubstantialvalue.— Generally, under section 170, thedeductible amount of a contribution isdetermined by taking into account the fairmarket value, not the cost to the charity, of anybenefits received in return. However, the costto the charity may be used in determiningwhether the benefits are insubstantial. Seebelow.

Cost basis.— If a taxpayer makes apayment of $34.50 or more to a charity andreceives only token items in return, the itemshave insubstantial value if they:●A Bear the charity's name or logo, and●A Have an aggregate cost to the charity of$6.90 or less (“low-cost article” amount ofsection 513(h)(2)).

Fair market value basis.— If a taxpayermakes a payment to a charitable organizationin a fundraising campaign and receivesbenefits with a fair market value of not morethan 2% of the amount of the payment, or $69,whichever is less, the benefits received haveinsubstantial value in determining thetaxpayer's contribution.

The dollar amounts given above areapplicable to tax year 1997. They are adjustedannually for inflation.

When a donee organization provides adonor only with goods or services havinginsubstantial value under Rev. Proc. 96-59,1996-2 C.B. 392 (and any successordocuments), the contemporaneous writtenacknowledgment may indicate that no goodsor services were provided in exchange for thedonor's payment.

Certain membership benefits.— Othergoods or services that are disregarded forsubstantiation and disclosure purposes areannual membership benefits offered to ataxpayer in exchange for a payment of $75 orless per year that consist of:ÿÿAAAA1. Any rights or privileges that the taxpayercan exercise frequently during the membershipperiod such as:ÿÿAAAAa. Free or discounted admission to theorganization's facilities or events,ÿÿAAAAb. Free or discounted parking,ÿÿAAAA2. Admission to events that are:ÿÿAAAAa. Open only to members, and are, perperson,ÿÿAAAAb. Within the “low cost article” limitation.

Examples.ÿÿAAAA1. E offers a basic membership benefitspackage for $75. The package gives membersthe right to buy tickets in advance, free parking,and a gift shop discount of 10%. E's $150preferred membership benefits package alsoincludes a $20 poster. Both the basic andpreferred membership packages are for a 12month-period and include about 50productions. F accepts the preferredmembership benefits package for $300. E'swritten acknowledgment satisfies thesubstantiation requirement if it describes theposter, gives a good faith estimate of its fairmarket value ($20), and disregards theremaining membership benefits.ÿÿAAAA2. If F received only the basic membershippackage for its $300 payment, E'sacknowledgment need state only that no goodsor services were provided.ÿÿAAAA3. G Theater Group performs four plays.Each play is performed twice. Non-memberscan purchase a ticket for $15. For a $60membership fee, however, members areoffered free admission to any of theperformances. H makes a payment of $350and accepts this membership benefit. Becauseof the limited number of performances, themembership privilege cannot be exercisedfrequently. Therefore, G's acknowledgmentmust describe the free admission benefit andestimate its value in good faith.

Certain goods or services provided todonor's employees or partners.— Certaingoods or services provided to employees orpartners of donors may be disregarded forsubstantiation and disclosure purposes.Describe such goods or services. A good faith

estimate is not needed.Example. Museum J offers a basic

membership benefits package for $40. Itincludes free admission and a 10% gift shopdiscount. Corporation K makes a $50,000payment to J and in return, J offers K'semployees free admission, a tee shirt with J'slogo that costs J $4.50, and a 25% gift shopdiscount. Because the free admission is offeredin both benefit packages and the value of thetee shirts is insubstantial, K's writtenacknowledgment need not value the freeadmission benefit or the tee shirts. However,because the 25% gift shop discount to K'semployees differs from the 10% discountoffered in the basic membership benefitspackage, K's written acknowledgment mustdescribe the 25% discount, but need notestimate its value.Definitions.

Substantiation.— It is the responsibility ofthe donor:●A To value a donation, and●A To obtain an organization's writtenacknowledgment substantiating the donation.

There is no prescribed format for theorganization's written acknowledgment of adonation. Letters, postcards orcomputer-generated forms may be acceptable.The acknowledgment must, however, providesufficient information to substantiate theamount of the deductible contribution.

The organization may either provide:●A Separate statements for each contribution of$250 or more, or●A Furnish periodic statements substantiatingcontributions of $250 or more.

Separate contributions of less than $250 arenot subject to the requirements of section170(f)(8), regardless of whether the sum of thecontributions made by a taxpayer to a doneeorganization during a taxable year equals $250or more.

Contemporaneous.— A writtenacknowledgment is contemporaneous if thedonor obtains it on or before the earlier of:●A The date the donor files the original return forthe taxable year in which the contribution wasmade; or●A The due date (including extensions) for filingthe donor's original return for that year.

Substantiation of payroll contributions.—An organization may substantiate a payrollcontribution by:●A A pay stub, Form W-2, or other documentshowing a contribution to a donee organization;and●A A pledge card or other document from thedonee organization stating that organizationprovides no goods or services for any payrollcontributions.

The amount withheld from each payment ofwages to a taxpayer is treated as a separatecontribution.

Substantiation of payments to a collegeor university for the right to purchasetickets to athletic events.— The right topurchase tickets for an athletic event is valuedat 20% of the payment.

Example. When a taxpayer pays $312.50for the right to purchase tickets for an athleticevent, the right is valued at $62.50. Theremaining $250 is a charitable contributionwhich the taxpayer must substantiate.

Substantiation of matched payments.—If a taxpayer's payment to a donee organizationis matched by another payor, and the taxpayerreceives goods or services in consideration forits payment and some or all of the matchingpayment, those goods or services will betreated as provided in consideration for the

Donor's contribution

Less: Organization's money, and goodsor services given in return

Equals: Donor's deductible charitablecontribution


taxpayer's payment and not in consideration forthe matching payment.

Disclosure statement.— An organizationmust provide a written disclosure statement todonors who make a payment, described as a"quid pro quo contribution" in excess of $75(section 6115). This requirement is separatefrom the written substantiationacknowledgment a donor needs fordeductibility purposes. While, in certaincircumstances, an organization may be able tomeet both requirements with the same writtendocument, an organization must be careful tosatisfy the section 6115 written disclosurestatement requirement in a timely mannerbecause of the penalties involved.

Quid pro quo contribution.— A "quid proquo contribution" is a payment that is givenboth as a contribution and as a payment forgoods or services provided by the doneeorganization.

Example. A donor gives a charity $100 inconsideration for a concert ticket valued at $40(a quid pro quo contribution). In this example,$60 would be deductible. Because the donor'spayment exceeds $75, the organization mustfurnish a disclosure statement even though thetaxpayer's deductible amount does not exceed$75. Separate payments of $75 or less madeat different times of the year for separatefundraising events will not be aggregated forpurposes of the $75 threshold.

Good faith estimate.— An organizationmay use any reasonable method in making agood faith estimate of the value of goods orservices provided by an organization inconsideration for a taxpayer's payment to thatorganization. A good faith estimate of the valueof goods or services that are not generallyavailable in a commercial transaction may bedetermined by reference to the fair marketvalue of similar or comparable goods orservices. Goods or services may be similar orcomparable even though they do not have theunique qualities of the goods or services thatare being valued.

Goods or services.— Goods or servicesmean:●A Cash,●A Property,●A Services,●A Benefits, and●A Privileges.

In consideration for.— A doneeorganization provides goods or services inconsideration for a taxpayer's payment if, at thetime the taxpayer makes the payment to thedonee organization, the taxpayer receives, orexpects to receive, goods or services inexchange for that payment.

Goods or services a donee organizationprovides in consideration for a payment by ataxpayer include goods or services provided ina year other than the year in which the donormakes the payment to the donee organization.

Intangible religious benefits.— Intangiblereligious benefits must be provided byorganizations organized exclusively forreligious purposes.Examples include:●A Admission to a religious ceremony, and●A De minimis tangible benefits, such as wine,provided in connection with a religiousceremony.

Distributing organizations as donees.—An organization described in section 170(c), oran organization described as a PrincipalCombined Fund Organization for purposes ofthe Combined Federal Campaign, that receivesa payment made as a contribution is treatedas a donee organization even if theorganization distributes the amount received to

one or more organizations described in section170(c).

Penalties.— A charity that knowinglyprovides a false substantiationacknowledgment to a donor may be subject tothe penalties under section 6701 for aiding andabetting an understatement of tax liability.

Charities that fail to provide the requireddisclosure statement for a quid pro quocontribution of more than $75 will incur apenalty of $10 per contribution, not to exceed$5,000 per fundraising event or mailing. Thecharity may avoid the penalty if it can show thatthe failure was due to reasonable cause(section 6714).

M. Public Inspection of CompletedExempt Organization Returns andApproved Exemption Applications

Through the IRSForms 990, 990-EZ, and certain othercompleted exempt organization returns areavailable for public inspection and copyingupon request. Approved applications forexemption from Federal income tax are alsoavailable. However, the IRS may not discloseportions of an application relating to any tradesecrets, etc.; nor can the IRS disclose theschedule of contributors required as anattachment for line 1 of Form 990 and Form990-EZ (section 6104).

A request for inspection must:●A Be in writing.●A Include the name and address (city andstate) of the organization that filed the returnor application.●A Indicate the type (number) of the return andthe year(s) involved.●A Be sent to the District Director (Attention:Disclosure Officer) of the district in which therequester desires to inspect the return orapplication, or if inspection at the IRS NationalOffice is desired, the request should be sent to:

Commissioner of Internal RevenueAttention: Freedom of Information ReadingRoom1111 Constitution Avenue, NWWashington, DC 20224

Use Form 4506-A to request publicinspection or copy of an exempt organizationreturn through the IRS. There is a fee forphotocopying.

Through the organizationÿÿÿAnnual returnCaution: Note the discussion below for thepotential effect of the Taxpayer Bill of Rights 2(TBOR2) on these instructions.

An organization must, during the 3-yearperiod beginning with the due date (includingextensions, if any), of the Form 990, or Form990-EZ, make its return available for publicinspection upon request. All parts of the returnand all required schedules and attachments,other than the schedule of contributors to theorganization, must be made available.Inspection must be permitted during regularbusiness hours at the organization's principaloffice and at each of its regional or districtoffices having 3 or more employees.

This provision applies to any organizationthat files Form 990, or Form 990-EZ,regardless of the size of the organization andwhether or not it has any paid employees.

If an organization furnishes additionalinformation to the IRS to be made part of itsreturn, as a result of an examination orcorrespondence from the service center, itmust also make that information part of thereturn it provides for public inspection.

If the organization does not maintain apermanent office, it must provide a reasonablelocation for a requester to inspect theorganization's annual returns. The organizationmay mail the information to a requester.However, the organization can charge forcopying and postage only if the requester givesup the right to a free inspection (Notice 88-120,1988-2 C.B. 454).

Any person who does not comply with thepublic inspection requirement will be assesseda penalty of $20 for each day that inspectionwas not permitted, up to a maximum of$10,000 for each return. No penalty will beimposed if the failure is due to reasonablecause. Any person who willfully fails to complywill be subject to an additional penalty of$1,000 (sections 6652(c) and 6685).

Exemption applicationCaution: Note the discussion below for thepotential effect of the Taxpayer Bill of Rights 2(TBOR2) on these instructions.

Any section 501(c) organization thatsubmitted an application for recognition ofexemption to the Internal Revenue Serviceafter July 15, 1987, must make available forpublic inspection a copy of its application(together with a copy of any papers submittedin support of its application) and any letter orother document issued by the Internal RevenueService in response to the application. Anorganization that submitted its exemptionapplication on or before July 15, 1987, mustalso comply with this requirement if it had acopy of its application on July 15, 1987. As inthe case of annual returns, the copy of theapplication and related documents must bemade available for inspection during regularbusiness hours at the organization's principaloffice and at each of its regional or districtoffices having at least 3 employees.

If the organization does not have apermanent office, it must provide a reasonablelocation for the inspection of both its annualreturns and exemption application. Theinformation may be mailed. See the referenceto Notice 88-120 above, under Annual return.The organization need not disclose any portionof an application relating to trade secrets, etc.,that would not also be disclosable by the IRS.

The penalties for failure to comply with thisprovision are the same as those under Annualreturn above, except that the $10,000limitation does not apply.Furnishing copies of documents underTBOR2. An organization must furnish a copyof its Form 990, Form 990-EZ, or exemptionapplication, and certain related documents, ifa request is made in writing or in person. Fora request made in person, the organizationmust make an immediate response. For aresponse to a written request, the organizationmust provide the requested copies within 30days. The organization must furnish copies ofits Forms 990, or Forms 990-EZ, for any of its3 most recent taxable years. No charge is tobe made other than charging a reasonable feefor reproduction and actual postage costs. Anorganization need not provide copies if (1) theorganization has made the requesteddocuments widely available in a mannerprovided in Treasury regulations, or (2) theSecretary of the Treasury determined, uponapplication by the organization, that theorganization was subject to a harassmentcampaign such that a waiver of the obligationto provide copies would be in the publicinterest.Penalty for failure to allow public inspectionor provide copies. The section 6685 penaltyfor willful failure to allow public inspections orprovide copies was increased from the


present-law level of $1,000 to $5,000 byTBOR2.Effective date of TBOR2. These publicinspection provisions governing tax-exemptorganizations under TBOR2 generally apply torequests made no earlier than 60 days after thedate on which the Treasury Departmentpublishes the regulations required under theprovisions. However, Congress, in thelegislative history of TBOR2, indicated thatorganizations would comply voluntarily with thepublic inspection provisions prior to theissuance of such regulations.

N. Disclosures Regarding CertainInformation and Services FurnishedA section 501(c) organization that offers to sellor solicits money for specific information or aroutine service for any individual that could beobtained by such individual from a Federalgovernment agency free or for a nominalcharge must disclose that fact conspicuouslywhen making such offer or solicitation. Anyorganization that intentionally disregards thisrequirement will be subject to a penalty foreach day on which the offers or solicitations aremade. The penalty imposed for a particular dayis the greater of $1,000 or 50% of the total costof the offers and solicitations made on that daywhich lacked the required disclosure (section6711).

O. Disclosures Regarding CertainTransactions and RelationshipsIn their annual returns on Schedule A (Form990), section 501(c)(3) organizations mustdisclose information regarding their direct orindirect transfers to, and other direct or indirectrelationships with, other section 501(c)organizations (except other section 501(c)(3)organizations) or section 527 politicalorganizations (section 6033(b)(9)). Thisprovision helps prevent the diversion orexpenditure of a section 501(c)(3)organization's funds for purposes not intendedby section 501(c)(3). All section 501(c)(3)organizations must maintain records regardingall such transfers, transactions, andrelationships. See also General Instruction Kregarding penalties.

P. Excess Benefit TransactionsTBOR2 was enacted July 30, 1996, andamended by the Taxpayer Relief Act of 1997.TBOR2, as amended, imposes section 4958excise taxes on excess benefit transactions.These excise taxes are to be paid by certainindividuals who are closely connected withorganizations described in section 501(c)(3)(except private foundations) and section501(c)(4).

“Excess benefit transactions” includetransactions in which a disqualified personreceives the benefit of a non-fair-market-valuetransaction with an organization or receivesunreasonable compensation, as well asfinancial arrangements under which adisqualified person receives payment based onthe organization's income in a transaction thatviolates the prohibition against privateinurement under section 501(c)(3) or section501(c)(4).

Existing tax-law standards (see section 162)apply to determine reasonableness ofcompensation and fair market value. The totalcompensation package, including the amountof any reimbursement, must be reasonable.There is a rebuttable presumption that acompensation arrangement with a disqualifiedperson is reasonable if the board of directorsor trustees approving the compensation are (1)individuals unrelated to and not subject to thecontrol of the disqualified person(s), and who(2) relied upon comparative data (e.g.,

compensation paid by similar organizations,etc., and (3) documented the basis for theirdetermination.

In determining whether such payments ortransactions are, in fact, compensation, therelevant factors include whether theappropriate decision-making body approvedthe transfer as compensation in accordancewith established procedures and whether theorganization and the recipient reported thetransfer (except in the case of nontaxablefringe benefits) as compensation on therelevant forms (i.e., the organization's Form990, or Form 990-EZ; the Form W-2 or Form1099 provided by the organization to therecipient; the recipient's income tax return; andother required returns).

For purposes of determining reasonablecompensation, the payment of personalexpenses and benefits to or for the benefit ofdisqualified persons and non-fair-market-valuetransactions benefiting such persons aretreated as compensation only if it is clear thatthe organization intended the payments ascompensation for services.

If an organization does not treat taxablebenefits received by a disqualified person ascompensation, these amounts could be treatedas an excess benefit with the requirement thatthey be repaid even if the unreported benefitplus reported compensation was less than thefair market value of the services provided. Anyreimbursement of the excise tax liability of adisqualified person or organization managerwill be treated as an excess benefit unless (1)the organization treats the reimbursement ascompensation during the year thereimbursement is made, and (2) the totalcompensation to that person, including thereimbursement, is reasonable.

“Disqualified person” means any individualin a position to exercise substantial influenceover the affairs of the organization, whether asan organization manager or otherwise.

In addition, “disqualified persons” includecertain family members and 35%-ownedentities of a disqualified person, as well as anyperson who was a disqualified person at anytime during the 5-year period prior to thetransaction at issue.

Family members are determined undersection 4946(d), except that such membersalso would include siblings (whether by wholeor half blood) of the individual and spouses ofsuch siblings.

“35%-owned entities” are corporations inwhich disqualified persons own stockpossessing more than 35% of the combinedvoting power as well as partnerships and trustsor estates in which disqualified persons ownmore than 35% of the profits interest orbeneficial interest.

“Combined voting power” includes votingpower represented by holdings of voting stock,actual or constructive, but does not includevoting rights held only as a director or trustee.See Regulations section 53.4946-1(a)(5).

A disqualified person who benefits from anexcess benefit transaction is subject to afirst-tier penalty tax equal to 25% of the amountof the excess benefit (i.e., the amount by whicha transaction differs from fair market value; theamount of compensation exceeding reasonablecompensation; or the amount of a prohibitedtransaction based on the organization's grossor net income). Organization managers whoparticipate in an excess benefit transactionknowing that it is an improper transaction aresubject to a first-tier penalty tax of 10% of theamount of the excess benefit (subject to amaximum penalty of $10,000). Second-tiertaxes may be imposed on a disqualified personif there is no correction of the excess benefittransaction within a specified time period. In

such cases, the disqualified person is subjectto a penalty tax equal to 200% of the amountof excess benefit. For this purpose, the term“correction” means undoing the excess benefitto the extent possible and taking any additionalmeasures necessary to place the organizationin a financial position not worse than that inwhich it would be if the disqualified personwere dealing under the highest fiduciarystandards.

The intermediate sanctions for “excessbenefit transactions” may be imposed by theIRS in lieu of (or in addition to) revocation ofan organization's tax-exempt status. If morethan one disqualified person or manager isliable for a penalty excise tax, then all suchpersons are jointly and severally liable for suchtax.

The section 4958 excise taxes apply toexcess benefit transactions occurring on orafter September 14, 1995. They do not apply,however, to any benefit arising from atransaction pursuant to any written contract thatwas binding on September 13, 1995, andcontinued in force through the time of thetransaction.

Persons liable for the section 4958 taxesmust file Form 4720 to report and pay the tax.See the instructions for line 89 of Form 990,and line 40 of Form 990-EZ, which discuss therequired reporting of both the excess benefittransactions and the excise taxes imposed.

Q. Erroneous Backup WithholdingRecipients of dividend or interest paymentsgenerally must certify their correct taxpayeridentification number to the bank or other payeron Form W-9, Request for TaxpayerIdentification Number and Certification. If thepayer does not get this information, it mustwithhold part of the payments as “backupwithholding.” If the organization was subject toerroneous backup withholding because thepayer did not realize it was an exemptorganization and not subject to this withholding,it can claim credit on Form 990-T for theamount withheld. See the Instructions for Form990-T. Claims for refund must be filed within 3years after the date the original return was due;3 years after the date the organization filed it;or 2 years after the date the tax was paid,whichever is later.

R. Group ReturnIf a parent organization wants to file a groupreturn for two or more of its subsidiaries, it mustuse Form 990. The parent organization cannotuse a Form 990-EZ for the group return.

A central, parent, or “like” organization canfile a group return on Form 990 for two or morelocal organizations that are:ÿÿAAAA1. Affiliated with the central organization atthe time its annual accounting period ends,ÿÿAAAA2. Subject to the central organization'sgeneral supervision or control,ÿÿAAAA3. Exempt from tax under a groupexemption letter that is still in effect, andÿÿAAAA4. Have the same accounting period as thecentral organization.

If the parent organization is required to filea return for itself, it must file a separate returnand may not be included in the group return.See General Instruction B for a list oforganizations not required to file.

Every year, each local organization mustauthorize the central organization in writing toinclude it in the group return and must declare,under penalty of perjury, that the authorizationand the information it submits to be included inthe group return are true and complete.

If the central organization prepares a groupreturn for its affiliated organizations, check the“Yes” box in item H(a), in the heading of Form


990, and indicate the number of organizationsfor which the group return is filed in item H(b).Attach either (1) a schedule showing the name,address, and employer identification number(EIN) of each affiliated organization included,or (2) a statement indicating that the groupreturn includes all affiliated organizationscovered by the group ruling. In item I, indicatethe group exemption number (GEN). Whenpreparing the return, be sure not to confuse thefour-digit GEN number in item I with thenine-digit EIN number in item D of the form'sheading.

The central organization should send theannual information required to maintain a groupexemption letter to the Ogden Service Center,Ogden, UT 84201-0027.

An affiliated organization covered by a groupruling may file a separate return instead ofbeing included in the group return. In suchcase, check the “Yes” box in item H(c), in theheading of Form 990, and enter the GENnumber in item I.

Parts IV-A and IV-B of Form 990 do not haveto be completed on group returns.

S. Organizations in Foreign Countriesand U.S. PossessionsRefer to General Instruction B for the filingexemption for foreign organizations with$25,000 or less in gross receipts from U.S.sources.

Report amounts in U.S. dollars and statewhat conversion rate you use. Combineamounts from within and outside the UnitedStates and report the total for each item. Allinformation must be written in English.

T. Public Interest Law FirmsA public interest law firm exempt under section501(c)(3) or 501(c)(4) must attach a statementthat lists the cases in litigation, or that havebeen litigated during the year. For each case,describe the matter in dispute and explain howthe litigation will benefit the public generally.Also attach a report of all fees sought andrecovered in each case. See Rev. Proc. 92-59,1992-2 C.B. 411.

U. Requirements for a ProperlyCompleted Form 990 or Form 990-EZPublic Inspection. All information theorganization reports on or with its Form 990,or Form 990-EZ, including attachments, will beavailable for public inspection, except theschedule of contributors required for line 1, PartI, of either form. Please make sure the formsand attachments are clear enough tophotocopy legibly.Signature. To make the return complete, anofficer of the organization authorized to sign itmust sign in the space provided. For acorporation, or association, this officer may bethe president, vice president, treasurer,assistant treasurer, chief accounting officer, orother corporate, or association officer, such asa tax officer. A receiver, trustee, or assigneemust sign any return he or she files for acorporation or association. For a trust, theauthorized trustee(s) must sign.

Generally, anyone who is paid to preparethe return must sign it in the Paid Preparer'sUse Only area.

The paid preparer must:●A Sign the return, by hand, in the spaceprovided for the preparer's signature (signaturestamps and labels are not acceptable).●A Enter the preparer's social security number(SSN), or employer identification number (EIN),only if the Form 990, or Form 990-EZ, is for asection 4947(a)(1) nonexempt charitable trustthat is not filing Form 1041.●A Complete the required preparer information.●A Give a copy of the return to the organization.

Leave the paid preparer's space blank if thereturn was prepared by a regular employee ofthe filing organization.Recordkeeping. The organization's recordsshould be kept for as long as they may beneeded for the administration of any provisionof the Internal Revenue Code. Usually, recordsthat support an item of income, deduction, orcredit must be kept for 3 years from the datethe return is due or filed, whichever is later.Keep records that verify the organization's

basis in property for as long as they areneeded to figure the basis of the original orreplacement property.

The organization should also keep copiesof any returns it has filed. They help inpreparing future returns and in makingcomputations when filing an amended return.Rounding Off to Whole Dollars. You mayshow money items as whole-dollar amounts.Drop any amount less than 50 cents andincrease any amount from 50 through 99 centsto the next higher dollar.Completing All Lines. Unless theorganization is permitted to use certain DOLforms or Form 5500 series returns as partialsubstitutes for Form 990, or Form 990-EZ, (seeGeneral Instruction F), do not leave anyapplicable lines blank or attach any other formsor schedules instead of entering the requiredinformation on the appropriate line on Form990 or Form 990-EZ.Assembling Form 990 or Form 990-EZ.Before filing the Form 990, or Form 990-EZ,assemble the package of forms andattachments in the following order:●A Form 990 or Form 990-EZ●A Schedule A (Form 990). The requirement toattach Schedule A (Form 990) applies to ALLsection 501(c)(3) organizations and ALLsection 4947(a)(1) nonexempt charitable truststhat file Form 990 or Form 990-EZ.●A Attachments to Form 990 or Form 990-EZ●A Attachments to Schedule A (Form 990)Attachments. Use the schedules on theofficial form unless you need more space. Ifyou use attachments, they must:ÿÿAAAA1. Show the form number and tax year;ÿÿAAAA2. Show the organization's name and EIN;ÿÿAAAA3. Identify clearly the Part or line(s) to whichthe attachments relate;ÿÿAAAA4. Include the information required by theform and use the same format as the form;ÿÿAAAA5. Follow the same Part and line sequenceas the form; andÿÿAAAA6. Be on the same size paper as the form.


Specific Instructions for Form990Note: See also the General Instructions thatapply to both the Form 990 and Form 990-EZ.

Completing the Heading of Form 990The instructions that follow are keyed to itemsin the heading for Form 990.

Item A—Accounting periodUse the 1997 Form 990 to report on a calendaryear accounting period beginning January 1,1997, and ending December 31, 1997.

Use the 1997 Form 990 also to report on anaccounting period other than a calendar year(either a fiscal year that began in 1997 or ashort period (less than 12 months) that beganin 1997). You must show the month and day in1997 that your fiscal year began, or the shortperiod began. You must also show the day,month, and year your fiscal year, or shortperiod, ended. See General Instruction G.

Item B—CheckboxesChange of address and Initial return. Checkthe appropriate box if the organization changedits address since it filed its previous return, orif this is the organization's initial return.Final return and Amended return. Check theappropriate box if this is a final return, or anamended return. See the instructions for line79 if the final return is because of theliquidation of a corporation or termination of atrust. If amending a return, see GeneralInstruction J.

Item C—Name and addressIf we mailed the organization a Form 990Package with a preaddressed mailing label,please attach the label in the name andaddress space on the return. Using the labelhelps us avoid errors in processing the return.If any information on the label is wrong, drawa line through that part and correct it.

Include the suite, room, or other unit numberafter the street address. If the Post Office doesnot deliver mail to the street address and theorganization has a P.O. box, show the boxnumber instead of the street address.

Enter information in the following order: city,province or state, and the name of the country.Follow the foreign country's practice in placingthe postal code in the address. Please do notabbreviate the country name.

If a change in address occurs after the returnis filed, use Form 8822 to notify the IRS of thenew address.

Item D—Employer identification numberThe organization should have only one Federalemployer identification number (EIN). If it hasmore than one and has not been advised whichto use, notify the Internal Revenue Service,Ogden, UT 84201-0027. State what numbersthe organization has, the name and address towhich each number was assigned, and theaddress of its principal office. The IRS willadvise the organization which number to use.Note: Section 501(c)(9) voluntary employees'beneficiary associations must use their ownemployer identification number and not thenumber of their sponsor.

Item E—State registration numberSee General Instruction E.

Item F—Application pendingIf the organization's application for exemptionis pending, check this box and complete thereturn.

Item G—Type of organizationIf the organization is exempt under section501(c), check the applicable box and insert,within the parentheses, the number thatidentifies the type of section 501(c)organization the filer is. See the chart inGeneral Instruction C. If the organization is asection 4947(a)(1) nonexempt charitable trust,check the applicable box and note thediscussion regarding Schedule A (Form 990)and Form 1041 in General Instruction D andthe instructions to line 92 of Form 990.

Item H—Group return, etc.See General Instruction R.

Item I—Group exemption numberEnter the four-digit group exemption number(GEN) if you checked a “Yes” box in item H.Contact the central/parent organization if youare unsure of the GEN assigned.

Item J—Accounting methodAn organization must indicate the method ofaccounting used in preparing this return. SeeGeneral Instruction G.

Item K—Gross receipts of $25,000 or lessCheck this box if the organization's grossreceipts are normally not more than $25,000.However, see General Instruction A, if youreceived a Form 990 Package, and note thediscussion on gross receipts in GeneralInstruction B.

Part I—Revenue, Expenses, andChanges in Net Assets or FundBalancesAll organizations filing Form 990 with the IRSor any state must complete Part I. Some statesthat accept Form 990 in place of their ownforms require additional information.

Line 1—In GeneralÿÿÿContributions, gifts, grants, and similaramounts received

●A On lines 1a through 1c, report amountsreceived as voluntary contributions; that is,payments, or the part of any payment, forwhich the payer (donor) does not receive fullretail value (fair market value) from therecipient (donee) organization.●A For grants, see the paragraphs entitled,Grants that are equivalent to contributions,below.●A Report all expenses of raising contributionsin Fundraising, column (D), Part II, and on line15 of Part I.

Reporting for line 1, in accordance withSFAS 116, is acceptable for Form 990purposes, but not required by IRS. However,see General Instruction E.

An organization that receives a grant to bepaid in future years should, according to SFAS116, report the grant's present value on line 1.Accruals of present value increments to theunpaid grant should also be reported on line 1in future years.

Contributions can arise from special eventswhen an excess payment is received foritems offeredFundraising activities relate to soliciting andreceiving contributions. However, specialfundraising activities such as dinners,door-to-door sales of merchandise, carnivals,and bingo games can produce bothcontributions and revenue.

If a buyer, at such a “special event,” paysmore for goods or services than their retailvalue, report, as a contribution, both on line 1aand on line 9a (within the parentheses), anyamount paid in excess of the retail value. Thissituation usually occurs when organizationsseek public support through solicitationprograms that are in part special events oractivities and are in part solicitations forcontributions. The primary purpose of suchsolicitations is to receive contributions and notto sell the merchandise at its retail value eventhough this might produce a profit.

Example. An organization announces thatanyone who contributes at least $40 to theorganization can choose to receive a bookworth $16 retail value. A person who gives $40,and who chooses the book, is really purchasingthe book for $16 and also making a contributionof $24. The contribution of $24, which is thedifference between the buyer's payment andthe $16 retail value of the book, would bereported on line 1a and again on thedescription line of 9a (within the parentheses).The revenue received ($16 retail value of thebook) would be reported in the amount columnon line 9a.

If a contributor gives more than $40, thatperson would be making a larger contribution,the difference between the book's retail valueof $16 and the amount actually given. Rev. Rul.67-246, 1967-2 C.B. 104, explains this principlein detail. See also the line 9 instructions andPublication 1391.

Report the expenses that relate directly tothe sale of the book on line 9b. Report theexpenses of raising contributions (shown withinthe parentheses of line 9a and again on line1a) in Fundraising, column (D), Part II, and online 15 of Part I.Note: At the time of any solicitation orpayment, organizations that are eligible toreceive tax-deductible contributions shouldadvise patrons of the amount deductible forFederal tax purposes. See General InstructionL.

Contributions can arise from special eventswhen items of only nominal value are givenor offeredIf an organization offers goods or services ofonly nominal value through a special event ordistributes free, unordered, low-cost items topatrons, report the entire amount received forsuch benefits as a contribution on line 1a(direct public support). Report all relatedexpenses in Fundraising, column (D), Part II.See General Instruction L for a definition ofbenefits that have a nominal or insubstantialvalue.

Section 501(c)(3) organizationsCorrectly dividing gross receipts from specialevents into revenue and contributions is

Contents Page

Completing the Heading of Form 990 ................. 11

Part I—Revenue, Expenses, and Changes inNet Assets............................................................ 11

Part II—Statement of Functional Expenses ........ 15

Part III—Statement of Program ServiceAccomplishments ................................................. 18

Part IV—Balance Sheets ..................................... 18

Parts IV-A and IV-B—Reconciliation Statements. 20

Part V—List of Officers, Directors, Trustees, andKey Employees.................................................... 20

Part VI—Other Information .................................. 21

Part VII—Analysis of Income-ProducingActivities ............................................................... 25

Part VIII—Relationship of Activities to theAccomplishment of Exempt Purposes................. 26

Exclusion Codes .................................................. 27

Specific Instructions for Form 990 Page 11

especially important for a section 501(c)(3)organization that claims public support asdescribed in section 509(a)(1)/170(b)(1)(A)(vi)or section 509(a)(2). In the public supportcomputations of these Code sections, therevenue portion of gross receipts may be (a)excluded entirely, (b) treated as public support,or (c) if the revenue represents unrelated tradeor business income, treated as nonpublicsupport.

Section 501(c)(3) organizations mustseparate gross receipts from special eventsinto revenue and contributions when preparingthe Support Schedule in Part IV-A of ScheduleA (Form 990).

Section 501(c)(9), (17), and (18)organizationsThese organizations provide participants withlife, sickness, accident, welfare, andunemployment insurance, pensions, or similarbenefits, or a combination of these benefits.When such an organization receives paymentsfrom participants or their employers to providethese benefits, report the payments on line 2as program service revenue, rather than on line1 as contributions.

Donations of services are not contributionsIn Part I, do not include the value of servicesdonated to the organization, or items such asthe free use of materials, equipment, orfacilities as contributions on line 1. See theinstructions for Part III and for Part VI, line 82,for the optional reporting of such amounts inParts III and VI.

Grants that are equivalent to contributionsGrants that encourage an organizationreceiving the grant to carry on programs oractivities that further its exempt purposes aregrants that are equivalent to contributions.Report them on line 1. The grantor may requirethat the programs of the grant recipient(grantee) conform to the grantor's own policiesand may specify the use of the grant, such asuse for the restoration of a historic building ora voter registration drive.

A grant is still equivalent to a contribution ifthe grant recipient provides a service or makesa product that benefits the grantor incidentally.See examples in the line 1c instructions.However, a grant is a payment for services,and not a contribution, if the grant requires thegrant recipient to provide that grantor with aspecific service, facility, or product rather thanto give a direct benefit primarily to the generalpublic or to that part of the public served by theorganization. In general, do not report ascontributions any payments for a service,facility, or product that primarily give someeconomic or physical benefit to the payer(grantor).

Example. A public interest organizationdescribed in section 501(c)(4) makes a grantto another organization to conduct a nationwidesurvey to determine voter attitudes on issuesof interest to the grantor. The grantor plans touse the results of the survey to plan its ownprogram for the next 3 years. Under thesecircumstances, since the survey serves thegrantor's direct needs and benefits the grantormore than incidentally, the grant to theorganization making the survey is not acontribution. The grant recipient should notreport the grant as a contribution but shouldreport it on line 2 as program service revenue.

Treat research to develop products for thepayer's use or benefit as directly serving thepayer. However, generally, basic research orstudies in the physical or social sciencesshould not be treated as serving the payer'sneeds.

See Regulations section 1.509(a)-3(g) todetermine if a grant is a contribution reportableon line 1, or a revenue item reportableelsewhere on Form 990.

Line 1a—Direct public supportContributions, gifts, grants, and similaramounts received. Enter the gross amountsof contributions, gifts, grants, and bequests thatthe organization received directly from thepublic. Include amounts received fromindividuals, trusts, corporations, estates, andfoundations, or raised by an outsideprofessional fundraiser. Also includecontributions and grants from public charitiesand other exempt organizations that are neitherfundraising organizations nor affiliates of thefiling organization. See the instructions for line1b.Membership dues. Report on line 1amembership dues and assessments thatrepresent contributions from the public ratherthan payments for benefits received orpayments from affiliated organizations. See theinstructions for line 3.Government contributions (grants). Reportgovernment grants on line 1c if they representcontributions, or on line 2 (and on line 93(g) ofPart VII), if they represent fees for services.See the instructions in the paragraphs entitledGrants that are equivalent to contributionsunder Line 1—In General, and the instructionsfor line 1c.Commercial co-venture. Report amountscontributed by a commercial co-venture on line1a as a contribution received directly from thepublic. These are amounts received by anorganization (donee) for allowing an outsideorganization (donor) to use the donee's namein a sales promotion campaign. In such acampaign, the donor advertises that it willcontribute a certain dollar amount to the doneeorganization for each unit of a particularproduct or service sold or for each occurrenceof a specific type.Contributions received through specialevents. Report contributions received throughspecial events on line 1a. See the precedingline 1 instructions and the instructions for line9.

Line 1b—Indirect public supportEnter the total contributions received indirectlyfrom the public through solicitation campaignsconducted by federated fundraising agenciesand similar fundraising organizations (such asa United Way organization and certainsectarian federations). These organizationsnormally conduct fundraising campaigns withina single metropolitan area or some part of aparticular state and allocate part of the netproceeds to each participating organization onthe basis of the donors' individual designationsand other factors.

Include on line 1b amounts contributed byother organizations closely associated with thereporting organization. This includescontributions received from a parentorganization, subordinate, or anotherorganization with the same parent. Nationalorganizations that share in fundraisingcampaigns conducted by their local affiliatesshould report the amount they receive on line1b.

Line 1c—Government contributions (grants)The general line 1 instructions, under theheading, Grants that are equivalent tocontributions, apply to this item in particular.A grant or other payment from a governmentalunit is treated as a contribution if its primarypurpose is to enable the donee to provide aservice to, or maintain a facility for, the directbenefit of the public rather than to serve the

direct and immediate needs of the grantor evenif the public pays part of the expense ofproviding the service or facility.

The following are examples of governmentalgrants and other payments that are treated ascontributions:ÿÿAAAA1. Payments by a governmental unit for theconstruction or maintenance of library orhospital facilities open to the public,ÿÿAAAA2. Payments under government programsto nursing homes or homes for the aged inorder to provide health care or other servicesto their residents,ÿÿAAAA3. Payments to child placement or childguidance organizations under governmentprograms serving children in the community.The general public gets the primary and directbenefit from these payments and any benefitto the governmental unit itself would be indirectand insubstantial as compared to the publicbenefit.

Line 1d—Total contributions, etc.Enter the total of amounts reported on lines 1athrough 1c. In the entry spaces in thedescription column for line 1d, enter theseparate totals for cash and noncashcontributions, gifts, grants, and similar amountsreceived. The total of the two amounts mustequal the total on line 1d.

Report as cash contributions, etc., onlycontributions, etc., received in the form of cash,checks, money orders, credit card charges,wire transfers and other transfers and depositsto a cash account of the organization. If yourorganization records pledges as contributions,etc., at the time the pledges are made (ratherthan when the pledges are collected), includeas cash contributions, etc., only those pledgesactually collected in cash during the year andpledges uncollected at the end of the year thatare reasonably expected to be paid in cash ina later year. Report all other contributions, etc.,as noncash contributions, etc., in the spaceprovided. See General Instruction L for adiscussion of noncash contributions. Noncashcontributions do not include donated services,which may be reported on line 82 and in thenarrative section of Part III.Schedule of contributors. (Not open to publicinspection) Attach a schedule of contributorswho gave the organization, directly or indirectly,money, securities, or other property worth$5,000 or more during the year. No scheduleis needed if no one contributed $5,000 or more.See General Instruction L for the requirementsof this schedule. Note the cautionarystatement.

Lines 2 through 11

Note: Do not enter any contributions on lines2 through 11. Enter all contributions on line 1.If you enter contributions on lines 2 through 11,you will be unable to complete Part VIIcorrectly. Line 105 (the sum of amountsentered in columns (B), (D), and (E) for lines93 through 103 of Part VII, Analysis ofIncome-Producing Activities) should match thetotal of amounts entered for correlating lines 2through 11 of Part I. See the instructions forPart VII.

Line 2—Program service revenue includinggovernment fees and contractsEnter the total of program service revenue(exempt function income) as reported in PartVII, lines 93(a) through (g), columns (B), (D),and (E). Program services are primarily thosethat form the basis of an organization'sexemption from tax. For a more detaileddescription of program services, refer to theinstructions for Part II, column (B), Programservices.

Page 12 Specific Instructions for Form 990

Examples. A hospital would report on this lineall of its charges for medical services (whetherto be paid directly by the patients or throughMedicare, Medicaid, or other third-partyreimbursement), hospital parking lot fees, roomcharges, laboratory fees for hospital patients,and related charges for services.

Program service revenue includes incomeearned by the organization for providing agovernment agency with a service, facility, orproduct that benefited that government agencydirectly rather than benefiting the public as awhole. See the line 1c instructions for reportingguidelines when payments are received froma government agency for providing a service,facility, or product for the primary benefit of thegeneral public.

Program service revenue also includes:tuition received by a school; revenue fromadmissions to a concert or other performingarts event or to a museum; royalties receivedas author of an educational publicationdistributed by a commercial publisher; interestincome on loans a credit union makes to itsmembers; payments received by a section501(c)(9) organization from participants, oremployers of participants, for health andwelfare benefits coverage; insurance premiumsreceived by a fraternal beneficiary society; andregistration fees received in connection with ameeting or convention.Program-related investments. Programservice revenue also includes income fromprogram-related investments. Theseinvestments are made primarily to accomplishan exempt purpose of the investingorganization rather than to produce income.Examples are scholarship loans and lowinterest loans to charitable organizations,indigents, or victims of a disaster.

Rental income from an exempt function isanother example of program-relatedinvestment income. When an organizationrents to an unaffiliated exempt organization atless than fair rental value for the purpose ofaiding that tenant's exempt function, thereporting organization should report such rentalincome as program service revenue on line 2.See also the instructions for line 6a. Forpurposes of this return, report all rental incomefrom an affiliated organization on line 2.Unrelated trade or business activities.Unrelated trade or business activities (notincluding any special events or activities) thatgenerate fees for services may also beprogram service activities. A social club, forexample, should report as program servicerevenue the fees it charges both members andnonmembers for the use of its tennis courtsand golf course.Sales of inventory items by hospitals,colleges, and universities. Books andrecords maintained in accordance withgenerally accepted accounting principles forhospitals, colleges, and universities are morespecialized than books and records maintainedaccording to those accounting principles forother types of organizations that file Form 990.Accordingly, hospitals, colleges, anduniversities may report, as program servicerevenue on line 2, sales of inventory itemsotherwise reportable on line 10a. In that event,show the applicable cost of goods sold asprogram service expense on line 13 of Part Iand in column (B) of Part II. All otherorganizations, however, should not report salesof inventory items on line 2.

Line 3—Membership dues and assessmentsEnter members' and affiliates' dues andassessments that are not contributions.

Dues and assessments received thatcompare reasonably with available benefits.When dues and assessments are received thatcompare reasonably with membership benefitsreceived, report such dues and assessmentson line 3.

Organizations described in section501(c)(5), (6), or (7) generally provide benefitsthat have a reasonable relationship to dues,although benefits to members may be indirect.Dues or assessments received that exceedthe value of available membership benefits.Whether or not membership benefits are used,dues received by an organization, to the extentthey are more than the monetary value of themembership benefits available to the duespayer, are a contribution that should bereported on line 1a. See Rev. Rul. 54-565,1954-2 C.B. 95 and Rev. Rul. 68-432, 1968-2C.B. 104.Dues received primarily for theorganization's support. If a member paysdues mainly to support the organization'sactivities and not to obtain benefits of morethan nominal monetary value, those dues area contribution to the organization includable online 1a.Examples of membership benefits. Theseinclude subscriptions to publications,newsletters (other than one about theorganization's activities only), free orreduced-rate admissions to events theorganization sponsors, the use of its facilities,and discounts on articles or services that bothmembers and nonmembers can buy. In figuringthe value of membership benefits, do notinclude intangible benefits, such as the right toattend meetings, vote or hold office in theorganization, and the distinction of being amember of the organization.

Line 4—Interest on savings and temporarycash investmentsEnter the amount of interest income fromsavings and temporary cash investmentsreportable on line 46. So-called dividends orearnings received from mutual savings banks,money market funds, etc., are actually interestand should be entered on line 4.

Line 5—Dividends and interest fromsecuritiesEnter the amount of dividend and interestincome from equity and debt securities (stocksand bonds) of the type reportable on line 54.Include amounts received from payments onsecurities loans, as defined in section512(a)(5). Do not include any capital gainsdividends that are reportable on line 8. See theinstructions for line 2 for reporting income fromprogram-related investments.

Line 6a—Gross rentsEnter on line 6a the rental income received forthe year from investment property reportableon line 55. Do not include on line 6a rentalincome related to the reporting organization'sexempt function (program service). Reportsuch income on line 2. For example, an exemptorganization whose exempt purpose is toprovide low-rental housing to persons with lowincome would report that rental income asprogram service revenue on line 2. Rentalincome received from an unaffiliated exemptorganization is generally considered asunrelated to the reporting organization'sexempt purpose and reportable on line 6a.However, note an exception given in theinstructions for line 2 when the reportingorganization aids an unaffiliated organizationwith its exempt function.

Only for purposes of completing this return,the reporting organization must report anyrental income received from an affiliated

exempt organization as program servicerevenue on line 2.

Line 6b—Rental expensesEnter the expenses paid or incurred for theincome reported on line 6a. Include interestrelated to rental property and depreciation if itis recorded in the organization's books andrecords. Report in column (B) of Part II(Program services) any rental expensesallocable to rental income reportable asprogram service revenue on line 2.

Line 6c—Net rental income or (loss)Subtract line 6b from line 6a. Show any loss inparentheses.

Line 7—Other investment incomeEnter the amount of investment income notreportable on lines 4 through 6 and describethe type of income in the space provided or inan attachment. The income should be thegross amount derived from investmentsreportable on line 56. Include, for example,royalty income from mineral interests ownedby the organization. However, do not includeincome from program-related investments. Seethe instructions for line 2. Also, do not includeunrealized gains and losses on investmentscarried at market value. See the instructions forline 20.

Lines 8a through 8d—Gains (or losses)from sale of assets other than inventoryReport, on lines 8a through 8c, all sales ofsecurities in column (A). Use column (B) toreport sales of all other types of investments(such as real estate, royalty interests, orpartnership interests) and all othernoninventory assets (such as program-relatedinvestments and fixed assets used by theorganization in its related and unrelatedactivities).

On line 8a, for each column, enter the totalgross sales price of all such assets. Total thecost or other basis (less depreciation) andselling expenses and enter the result on line8b. On line 8c, enter the net gain or loss.

On lines 8a and 8c, also report capital gainsdividends, the organization's share of capitalgains and losses from a partnership, andcapital gains distributions from trusts. Indicatethe source on the schedule described below.

Combine the gain and/or loss figuresreported on line 8c, columns (A) and (B) andreport that total on line 8d. Do not include anyunrealized gains or losses on securities carriedat market value in the books of account. Seethe instructions for line 20.

For reporting sales of securities on Form990, you may use the more convenientaverage cost basis method to figure theorganization's gain or loss. When a security issold, compare its sales price with the averagecost basis of the particular security todetermine gain or loss. However, generally, forreporting sales of securities on Form 990-T, donot use the average cost basis to determinegain or loss.Nonpublicly traded securities andnoninventory items. Attach a scheduleshowing the sale or exchange of nonpubliclytraded securities and the sale or exchange ofother assets that are not inventory items. Theschedule should show security transactionsseparately from the sale of other assets. Showfor each of these assets:●A Date acquired and how acquired,●A Date sold and to whom sold,●A Gross sales price,●A Cost, other basis, or if donated, value at timeacquired (state which),


●A Expense of sale and cost of improvementsmade after acquisition, and●A If depreciable property, depreciation sinceacquisition.Publicly traded securities. On the attachedschedule, for sales of publicly traded securitiesthrough a broker, total the gross sales price,the cost or other basis, and the expenses ofsale on all such securities sold, and reportlump-sum figures in place of the detailedreporting required by the above paragraph.Publicly traded securities include common andpreferred stocks, bonds (includinggovernmental obligations), and mutual fundshares that are listed and regularly traded inan over-the-counter market or on anestablished exchange and for which marketquotations are published or otherwise readilyavailable.

Lines 9a through 9c—Special events andactivitiesOn the appropriate line, enter the grossrevenue, expenses, and net income (or loss)from all special events and activities, such asdinners, dances, carnivals, raffles, bingogames, other gambling activities, anddoor-to-door sales of merchandise.

These activities only incidentally accomplishan exempt purpose. Their sole or primarypurpose is to raise funds that are other thancontributions to finance the organization'sexempt activities. This is done by offeringgoods or services that have more than anominal value (compared to the price charged)for a payment that is more than the direct costof those goods or services.

The gross revenue from gambling activitiesand other special events must be reported inthe amount column on line 9a without reductionfor cash or noncash prizes, cost of goods sold,compensation, fees, or other expenses.

Characterizing any required payment as a“donation” or “contribution” on tickets or onadvertising or solicitation materials does notaffect how such payments should be reportedon Form 990 or Form 990-EZ. As discussedin the instructions for line 1, the amount of thecontribution is the excess of the amount paidover the retail value of the goods or servicesreceived by the payer. See also Publication1391.Special events may generate both revenueand contributions. Special events sometimesgenerate both contributions and revenue.When a buyer pays more than the retail valueof the goods or services furnished, enter:●A As gross revenue, on line 9a (in the amountcolumn); i.e., the retail value of the goods orservices,●A As a contribution, on both line 1a and line9a (within the parentheses), the amountreceived that exceeds the retail value of thegoods or services given.

Report on line 9b only the expenses directlyattributable to the goods or services the buyerreceives from a special event. Fundraisingexpenses attributable to contributions, reportedon both line 1a and line 9a (within theparentheses), are reportable in Part II, column(D), Fundraising. If you include an expense online 9b, do not report it again on line 10b or inPart II. Expenses reported on line 10b relate tosales of inventory. Expenses reported in PartII, column D, relate to contributions raisedthrough fundraising.

Example. At a special event, anorganization received $100 in gross receipts forgoods valued at $40. The organization enteredgross revenue of $40 on line 9a (in the amountcolumn) and entered a contribution of $60 onboth line 1a and line 9a (within theparentheses). The contribution of $60 was the

difference between the gross revenue of $40and the gross receipts of $100.

The expenses directly relating to the sale ofthe goods would be reported on line 9b.However, all expenses of raising contributionswould be reported in column (D), Fundraising,Part II and not on line 9b.

For more details about contributionsreceived through fundraising, and contributionsand revenue received through special events,see the line 1 instructions. See also GeneralInstruction L.Sales or gifts of goods or services of onlynominal value. If the goods or services givenor offered at special events have only nominalvalue, include all of the receipts ascontributions on line 1a and all of the relatedexpenses as fundraising expenses on line 15and in column (D) of Part II. See GeneralInstruction L for a description of nominal orinsubstantial benefits.An activity may generate onlycontributions. An activity that generates onlycontributions, such as a solicitation campaignby mail, is not a special event and should notbe reported on line 9.

Contributions from such an activity arereportable on line 1, and the related fundraisingexpenses are reportable in column (D), Part II.Sweepstakes, raffles, and lotteries mayproduce revenue or contributions. Theproceeds of solicitation campaigns in which thenames of contributors and other respondentsare entered in a drawing for the awarding ofprizes (so-called “sweepstakes” or “lotteries”)are contributions, reportable on line 1, and therelated expenses are fundraising expenses,reportable in column (D) of Part II. However,raffles and lotteries in which a payment of atleast a specified minimum amount is requiredfor each entry are special events, reportableon line 9, unless the prizes awarded have onlynominal value. Reporting payments in theirentirety as contributions when gifts or servicesgiven are nominal in value is discussed above.Attached schedule. Attach a schedule listingthe 3 largest special events conducted, asmeasured by gross receipts. Describe each ofthese events and show for each event: thegross receipts; the amount of contributionsincluded in gross receipts (see the instructionsabove); the gross revenue (gross receipts lesscontributions); the direct expenses; and the netincome (or loss) (gross revenue less directexpenses).

Include the same information, in totalfigures, for all other special events held thatwere not among the 3 largest. Indicate the typeand number of the events not listed individually(for example, 3 dances and 2 raffles).

An example of this schedule of specialevents might appear as follows:

If you use the above schedule, report thetotal for Contributions on line 1a of Form 990and on line 9a (within the parentheses of thedescription line). Report the totals for GrossRevenue, in the amount column, on line 9a;Direct Expenses on line 9b; and Net Incomeor (loss) on line 9c.

Lines 10a through 10c—Gross profit or(loss) from sales of inventoryEnter the gross sales (less returns andallowances), cost of goods sold, and grossprofit or (loss) from the sale of inventory items.

These sales do not include items sold atspecial events that are reportable on line 9.Sales of inventory items reportable on line 10are sales of those items the organization eithermakes to sell to others or buys for resale. Salesof investments on which the organizationexpected to profit by appreciation and sale arenot reported here. Report sales of investmentson line 8.

On line 10a, report gross sales revenue fromsales of inventory items, whether the salesactivity is an exempt function of theorganization or an unrelated trade or business.

On line 10b, report the cost of goods soldrelated to the sales of such inventory. Theusual items included in cost of goods sold aredirect and indirect labor, materials and suppliesconsumed, freight-in, and a proportion ofoverhead expenses. Marketing and distributioncosts are not included in cost of goods sold butare reported in Part II, column (B), Programservices.Attached schedule. In an attached schedule,give a breakdown of items sold; for example,sales of food, souvenirs, electronic equipment,uniforms, or educational publications.

Line 11—Other revenueEnter the total amount from Part VII, lines103(a) through (e) (Other revenue), columns(B), (D), and (E). This figure represents thetotal income from all sources not covered bylines 1 through 10 of Part I. Examples ofincome includable on line 11 are interest onnotes receivable not held as investments or asprogram-related investments (defined in theline 2 instructions); interest on loans to officers,directors, trustees, key employees, and otheremployees; and royalties that are notinvestment income or program servicerevenue.

Lines 13 through 15—Program services,management and general, and fundraisingexpensesSection 4947(a)(1) nonexempt charitabletrusts and section 501(c)(3) and (c)(4)organizations. Complete Part II and thenenter on lines 13 through 15 the appropriateamounts from the totals for columns (B), (C),and (D) reported on line 44, Part II.All other organizations. All otherorganizations are not required to complete lines13 through 15 of the Form 990.

Line 16—Payments to affiliatesThis expense classification is used to reportcertain types of payments to organizations“affiliated with” (closely related to) a reportingagency.Payments to affiliated state or nationalorganizations. Dues paid by the local charityto its affiliated state or national (parent)organization are usually reported on line 16.Report on this line predetermined quotasupport and dues (excluding membership duesof the type described below) by local agenciesto their state or national organizations forunspecified purposes; that is, general use offunds for the national organization's ownprogram and support services.Purchases from affiliates. Purchases ofgoods or services from affiliates are notreported on line 16 but are reported asexpenses in the usual manner.Expenses for providing goods or servicesto affiliates. In addition to payments madedirectly to affiliated organizations, expensesincurred in providing goods or services toaffiliates may be reported on line 16 if:ÿÿAAAA1. The goods or services provided are notrelated to the program services conducted bythe organization furnishing them (for example,

AllSpecial Events: (A) (B) (C) Other Total

Gross Receipts $xx $xx $xx $xx $xx

Less: Contributions xx xx xx xx xx

Gross Revenue xx xx xx xx xx

Less: Direct Expenses xx xx xx xx xx

Net Income or (loss) $xx $xx $xx $xx $xx


when a local organization incurs expenses inthe production of a solicitation film for the stateor national organization); andÿÿAAAA2. The costs involved are not connectedwith the management and general orfundraising functions of the reportingorganization. For example, when a localorganization gives a copy of its mailing list tothe state or national organization, the expenseof preparing the copy provided may be reportedon line 16, but not expenses of preparing andmaintaining the local organization's master list.Federated fundraising agencies. Theseagencies (see the instructions for line 1b)should include in their own support the fullamount of contributions received in connectionwith a solicitation campaign they conduct, eventhough donors designate specific agencies toreceive part or all of their individualcontributions. These fundraising organizationsshould report the allocations to participatingagencies as grants and allocations (line 22)and quota support payments to their state ornational organization as payments to affiliates(line 16).Voluntary awards or grants to affiliates. Donot report on line 16 voluntary awards or grantsmade by the reporting agency to its state ornational organization for specified purposes.Report these awards or grants on line 22,Grants and allocations.Membership dues paid to otherorganizations. Report membership dues paidto obtain general membership benefits, suchas regular services, publications, andmaterials, from other organizations as “Otherexpenses” on line 43. This is the case, forexample, if a charitable organization pays duesto a trade association comprised of otherwiseunrelated members.Attached schedule. Attach a schedule listingthe name and address of each affiliate thatreceived payments reported on line 16. Specifythe amount and purpose of the payments toeach affiliate.Note: Properly distinguishing betweenpayments to affiliates and grants andallocations is especially important if you useForm 990 for state reporting purposes. SeeGeneral Instruction E. If you use Form 990 onlyfor reporting to the IRS, payments to affiliatedstate or national organizations that do notrepresent membership dues reportable as“Other expenses” on line 43 (see instructionsabove) may be reported either on line 16 or line22 and explained in the required attachment.

Line 17—Total expensesOrganizations using only column (A) of Part IIshould enter the total of line 16 and line 44 ofcolumn (A), Part II, on line 17. Otherorganizations should enter the total of lines 13through 16. Organizations using Form 5500,5500-C/R, or an approved DOL form as apartial substitute for Form 990 should enter thetotal expense figure from Form 5500 or5500-C/R, or from the required reconciliationschedule if Form LM-2 or LM-3 is used. SeeGeneral Instruction F.

Line 18—Excess or (deficit) for the yearEnter the difference between lines 12 and 17.If line 17 is more than line 12, enter thedifference in parentheses.

Line 19—Net assets or fund balances,beginning of yearEnter the amount from column (A) of line 73 (orfrom Form 5500, 5500-C/R, or an approvedDOL form if General Instruction F applies).

Line 20—Other changes in net assets orfund balancesAttach a schedule explaining any changes innet assets or fund balances between thebeginning and end of the year that are notaccounted for by the amount on line 18.Amounts to report here include adjustments ofearlier years' activity; unrealized gains andlosses on investments carried at market value;and any difference between fair market valueand book value of property given as an awardor grant. See General Instruction G regardingthe reporting of a section 481(a) adjustment toconform to SFAS 116.

Line 21—Net assets or fund balances, endof yearEnter the total of lines 18, 19, and 20. This totalfigure must equal the amount reported incolumn (B) of line 73.

Part II—Statement of FunctionalExpensesIn General—

Column (A)All organizations must complete column (A)unless they are using an approved DOL formor Form 5500 or 5500-C/R as a partialsubstitute for Form 990. See GeneralInstruction F.

Columns (B), (C), and (D)These columns are optional for allorganizations except section 4947(a)(1)nonexempt charitable trusts and section501(c)(3) and (4) organizations. Section4947(a)(1) nonexempt charitable trusts andsection 501(c)(3) and (4) organizations mustcomplete columns (B), (C), and (D).

In Part II, the organization's expenses aredesignated by object classification (e.g.,salaries, legal fees, supplies, etc.) andallocated into 3 functions: program services(column (B)); management and general(column (C)); and fundraising (column (D)).These functions are explained below in theinstructions for the columns. Do not include inPart II any expense items you must report onlines 6b, 8b, 9b, 10b, or 16 in Part I.

For reporting to the IRS only, use theorganization's normal accounting method toreport total expenses in column (A) and tosegregate them into functions under columns(B), (C), and (D). However, for state reportingrequirements, see General Instructions E andG. If the accounting system does not providefor this type of segregation, a reasonablemethod of allocation may be used. Theamounts reported should be accurate and themethod of allocation documented in theorganization's records.

Report, in the appropriate column, expensesthat are directly attributable to a particularfunctional category. In general, allocateexpenses that relate to more than onefunctional category. For example, allocateemployees' salaries on the basis of eachemployee's time. For some shared expensessuch as occupancy, supplies, and depreciationof office equipment, use an appropriate basisfor each kind of cost. However, you shouldreport some other shared expenses in column(C) only. The column instructions belowdiscuss allocating expenses.

Column (A)—TotalFor column (A), total each line item of columns(B), (C), and (D) in Part II. Except for expensesyou report on lines 6b, 8b, 9b, 10b, or 16 ofPart I, you should use column (A) to report allexpenses the organization paid or incurred.

Column (B)—Program servicesProgram services are mainly those activitiesthat the reporting organization was created toconduct and which, along with any activitiescommenced subsequently, form the basis ofthe organization's current exemption from tax.They may be self-funded or funded out ofcontributions, accumulated income, investmentincome, or any other source.

Program services can also include theorganization's unrelated trade or businessactivities. For example, publishing a magazineis a program service even though the magazinecontains both editorials and articles that furtherthe organization's exempt purpose andadvertising, the income from which is taxableas unrelated business income.

If an organization receives a grant to doresearch, produce an item, or perform aservice, either to meet the grantor's specificneeds or to benefit the public directly, the costsincurred represent program service expenses.Do not treat these costs as fundraisingexpenses, even if you report the grant on line1 as a contribution.

Column (C)—Management and generalUse column (C) to report the organization'sexpenses for overall function andmanagement, rather than for its direct conductof fundraising activities or program services.Overall management usually includes thesalaries and expenses of the chief officer of theorganization and that officer's staff. If part oftheir time is spent directly supervising programservices and fundraising activities, theirsalaries and expenses should be allocatedamong those functions.

Other expenses to report in column (C)include those for meetings of the board ofdirectors or similar group; committee and staffmeetings (unless held in connection withspecific program services or fundraisingactivities); general legal services; accounting(including patient accounting and billing);general liability insurance; office management;auditing, personnel, and other centralizedservices; preparation, publication, anddistribution of an annual report; and investmentexpenses (however, report rental incomeexpenses on line 6b and program-relatedincome expenses in column (B)).

You should report only general expenses incolumn (C). Do not use this column to reportcosts of special meetings or other activities thatrelate to fundraising or specific programservices.

Column (D)—FundraisingFundraising expenses are the total expensesincurred in soliciting contributions, gifts, grants,etc. Report as fundraising expenses allexpenses, including allocable overhead costs,incurred in: (a) publicizing and conductingfundraising campaigns; (b) soliciting bequestsand grants from foundations or otherorganizations, or government grants reportableon line 1c; (c) participating in federatedfundraising campaigns; (d) preparing anddistributing fundraising manuals, instructions,and other materials; and (e) conducting specialevents that generate contributions reportableon line 1a, in addition to revenue reportable inthe amount column on line 9a. However, reportany expenses that are directly attributable torevenue shown on line 9a (that is, the directexpenses incurred in furnishing the goods orservices sold) on line 9b.

Allocating indirect expensesColleges, universities, hospitals, and otherorganizations that accumulate indirectexpenses in various cost centers (such as the


expenses of operating and maintaining thephysical plant) that are reallocated to theprogram services and other functional areas ofthe organization in single or multiple steps mayfind it easier to report these expenses in thefollowing optional manner:

First, report the expenses of these indirectcost centers on lines 25 through 43 of column(C), Management and general, along with theexpenses properly reportable in that column.

Second, allocate the total expenses foreach cost center to columns (B), (C), and (D)(Program services, Management and general,and Fundraising) as a separate item entry online 43, Other expenses. Enter the name of thecost center on line 43. If any of the costcenter's expenses are to be allocated to theexpenses listed in Part I (such as the expensesattributable to special events and activities),enter these expenses as a negative figure incolumns (A) and (C). This prevents reportingthe same expense in both Parts I and II. If partof the total cost center expenses are to beallocated to columns (B), Program services,and (D), Fundraising, enter these expenses aspositive amounts in these columns and assingle negative amounts in column (C),Management and general. Do not make anyentries in column (A), Total, for these offsettingentries.

Example. An organization reports in column(C) $50,000 of its actual management andgeneral expenses and $100,000 of expensesof an indirect cost center that are allocable inpart to other functions. The total of lines 25through 43 of column (C) would be $150,000before the indirect cost center allocations weremade. Assume that $10,000 (of the $100,000total expenses of the cost center) was allocableto fundraising; $70,000 to various programservices; $15,000 to management and generalfunctions; and $5,000 to special events andactivities. To report this in Part II under thisalternate method:ÿÿAAAA1. Indicate the cost center, the expensesof which are being allocated, on line 43, as“Allocation of (specify) expenses”;ÿÿAAAA2. Enter a decrease of $5,000 on the sameline in the column (A), Total, representing thespecial event expenses which were alreadyreported on line 9b in Part I;ÿÿAAAA3. Enter $70,000 on the same line incolumn (B), Program services;ÿÿAAAA4. Enter $10,000 on the same line incolumn (D), Fundraising; andÿÿAAAA5. Enter a decrease of $85,000 on thesame line in column (C), Management andgeneral, to represent the allocations tofunctional areas other than management andgeneral.

After making these allocations, the column(C) total (line 44, column (C)) would be$65,000, consisting of the $50,000 actualmanagement and general expense amount andthe $15,000 allocation of the aggregate costcenter expenses to management and general.

The above is an example of a one-stepallocation that shows how to report theallocation in Part II. This reporting methodwould actually be needed more for multiplestep allocations involving two or more costcenters. The total expenses of the first wouldbe allocated to the other functions, includingan allocation of part of these expenses to thesecond cost center. The expenses of thesecond cost center would then be allocated to

other functions and any remaining cost centersto be allocated, and so on. The greater thenumber of these cost centers that are allocatedout, the more difficult it is to preserve the objectclassification identity of the expenses of eachcost center (e.g., salaries, interest, supplies,etc.). Using the reporting method describedabove avoids this problem.Note: The intent of the above instructions isonly to facilitate reporting indirect expenses byboth object classification and function. Theseinstructions do not permit the allocation to otherfunctions of expenses that should be reportedas management and general expenses.

Line 22—Grants and allocationsEnter the amount of awards and grants toindividuals and organizations selected by thefiling organization. United Way and similarfundraising organizations should includeallocations to member agencies.

Report voluntary awards and grants toaffiliated organizations for specific (restricted)purposes or projects also on line 22, but notrequired payments to affiliates reportable online 16.

Report scholarship, fellowship, and researchgrants to individuals on line 22. Certain otherpayments to, or for the benefit of, individualsmay be reportable on line 23 instead. See theinstructions for line 23 for details.

Report only the amount of actual grants andawards on line 22. Report expenses incurredin selecting recipients, or monitoringcompliance with the terms of a grant or award,on lines 25 through 43.

In the spaces provided, give separate totalsfor cash and noncash grants and allocationsmade. Cash grants include only grants andallocations paid by cash, checks, moneyorders, wire transfers, and other chargesagainst funds on deposit at a financialinstitution.

Reporting for line 22, in accordance withSFAS 116, is acceptable for Form 990purposes, but not required by IRS. However,see General Instruction E.

An organization that makes a grant to bepaid in future years should, according to SFAS116, report the grant's present value on line 22.Accruals of present value increments to theunpaid grant should also be reported on line22 in future years.Attached schedule. Attach a schedule ofamounts reported on line 22. Any grants orallocations reported on line 22 that wereapproved during the year, but not paid by thedue date for filing Form 990 (includingextensions), must be identified and listedseparately in the schedule for line 22. Show onthe schedule: (a) each class of activity; (b)donee's name, address, and the amount given;and (c) (in the case of grants to individuals)relationship of donee if related by blood,marriage, adoption, or employment (includingemployees' children) to any person orcorporation with an interest in the organization,such as a creator, donor, director, trustee,officer, etc.

On the schedule, classify activities in moredetail than in such broad terms as charitable,educational, religious, or scientific. Forexample, identify payments for nursingservices, laboratory construction, orfellowships.

If property other than cash is given, alsoshow on the schedule: (a) a description of theproperty; (b) its book value; (c) how the bookvalue was determined; (d) its fair market value;and (e) how the fair market value wasdetermined. If the fair market value of theproperty when the organization gave it is themeasure of the award or grant, record any

difference between fair market value and bookvalue in the organization's books of accountand on line 20.

Colleges, universities, and other educationalinstitutions and agencies subject to the FamilyEducational Rights and Privacy Act (20 U.S.C.1232g) are not required to list the names ofindividuals who were provided scholarships orother financial assistance where suchdisclosure would violate the privacy provisionsof the law. Instead, such organizations shouldgroup each type of financial aid provided,indicate the number of individuals who receivedthe aid, and specify the aggregate dollaramount.

Line 23—Specific assistance to individualsEnter the amount of payments to, or for thebenefit of, particular clients or patients,including assistance rendered by others at theexpense of the filing organization. Do notinclude grants to other organizations that selectthe person(s) to receive the assistanceavailable through the use of the grant funds.For example, report a payment to a hospital tocover the medical expenses of a particularindividual on line 23, but do not report acontribution to a hospital to provide someservice to the general public or to unspecifiedcharity patients on this line. Also, do not includescholarship, fellowship, or research grants toindividuals even though selected by the grantororganization. Report these grants on line 22instead.Attached schedule. Attach a scheduleshowing the total payments for each particularclass of activity, such as food, shelter, andclothing for indigents or disaster victims;medical, dental, and hospital fees and charges;and direct cash assistance to indigents. Forpayments to indigent families, do not identifythe individuals.

Line 24—Benefits paid to or for membersFor an organization that provides benefits tomembers or dependents (such asorganizations exempt under section 501(c)(8),(9), or (17)), attach a schedule. Show amountsof: (a) death, sickness, hospitalization, ordisability benefits; (b) unemploymentcompensation benefits; and (c) other benefits(state their nature). Do not report the cost ofemployment-related benefits the organizationprovides its officers and employees on this line.Report those expenses on lines 27 and 28.

Line 25—Compensation of officers,directors, etc.Enter the total compensation paid to officers,directors, trustees, and key employees for theyear. In Part V, give the name andcompensation (if any) of each officer, director,trustee, and key employee, along with the otherinformation requested. If no compensation waspaid, enter zero. See the Part V instructions fora definition of “key employee.”

Form 941 must be filed to report income taxwithholding and social security and Medicaretaxes. The organization must also file Form 940to report Federal unemployment taxes unlessthe organization is not subject to these taxes.See Pub. 15 (Circular E) for details. See alsothe discussion of the Trust Fund RecoveryPenalty given in General Instruction D.

Line 26—Other salaries and wagesEnter the total of employees' salaries notreported on line 25.

Line 27—Pension plan contributionsEnter the employer's share of contributions thatthe organization paid to qualified andnonqualified pension plans for the year.Complete Form 5500, or 5500-C/R, as

Line (A) (B) (C) (D)25–43a ..................... ÿÿ150,000 ÿÿ__ ÿÿ150,000 ÿÿ__43b ÿÿAllocation ofthe $100,000 indirectcost centerexpenses reportedin (C) ........................ ÿÿ(5,000) 70,000 (85,000) 10,000

44 ............................. 145,000 70,000 65,000 10,000


appropriate, for the organization's plan and fileas a separate return. If the organization hasmore than one plan, complete the appropriateform for each plan. File the form by the last dayof the 7th month after the plan year ends. SeeGeneral Instruction D for a discussion of theForms 5500.

Line 28—Other employee benefitsEnter the organization's contributions toemployee benefit programs (such asinsurance, health, and welfare programs) thatare not an incidental part of a pension planincluded on line 27. Report expenses foremployee events such as a picnic or holidayparty on line 28.

Line 29—Payroll taxesEnter the amount of Federal, state, and localpayroll taxes for the year but only those taxesthat are imposed on the organization as anemployer. This includes the employer's shareof social security and Medicare taxes, theFederal unemployment tax (FUTA), stateunemployment compensation taxes, and otherstate and local payroll taxes. Do not includetaxes withheld from employees' salaries andpaid to the various governmental units such asFederal and state income taxes and theemployees' shares of social security andMedicare taxes.

Line 30—Professional fundraising feesEnter the organization's fees to outsidefundraisers for solicitation campaigns theyconducted or for consultation servicesconnected with a solicitation of contributionsby the organization itself.

Line 31—Accounting feesEnter the total accounting and auditing feescharged by outside firms and individuals whoare not employees of the reportingorganization.

Line 32—Legal feesEnter the total legal fees charged by outsidefirms and individuals who are not employeesof the reporting organization. Do not includeany penalties, fines, or judgments imposedagainst the organization as a result of legalproceedings. Report those expenses on line43, Other expenses.

Line 33—SuppliesEnter the total for office, classroom, medical,and other supplies used during the year, asdetermined by the organization's normalmethod of accounting for supplies.

Line 34—TelephoneEnter the total telephone, telegram, and similarexpenses for the year.

Line 35—Postage and shippingEnter the total amount of postage, parceldelivery, trucking, and other delivery expenses,including the cost of shipping materials. Includethe costs of outside mailing services on thisline.

Line 36—OccupancyEnter the total amount paid or incurred for theuse of office space or other facilities, heat, light,power, and other utilities (other than telephoneexpenses reported on line 34), outside janitorialservices, mortgage interest, property

insurance, real estate taxes, and similarexpenses.

Occupancy expenses paid or incurred forprogram-related income, reportable on line 2,are included on line 36. Do not subtract rentalincome received from renting or sublettingrented space from the amount reported foroccupancy expense on line 36. If the activitiesof the organization's tenant are related to thereporting organization's exempt purpose, reportrental income as program-service revenue andallocable occupancy expenses on line 36.However, if the tenant's activities are notprogram related, report such rental income online 6a and related rental expenses on line 6b.

Do not include, as an occupancy expense,depreciation (reportable on line 42) or anysalaries of the reporting organization's ownemployees (reportable on line 26).

Line 37—Equipment rental andmaintenanceEnter the cost of renting and maintaining officeequipment and other equipment, except forautomobile and truck expenses reportable onlines 35 and 39.

Line 38—Printing and publicationsEnter the printing and related costs ofproducing the reporting organization's ownnewsletters, leaflets, films, and otherinformational materials on this line. Also includethe cost of any purchased publications.However, do not include any expenses, suchas salaries or postage, for which a separateline is provided in Part II.

Line 39—TravelEnter the total travel expenses, includingtransportation costs (fares, mileageallowances, and automobile expenses), mealsand lodging, and per diem payments.

Line 40—Conferences, conventions, andmeetingsEnter the total expenses incurred by theorganization in conducting meetings related toits activities. Include such expenses as therental of facilities, speakers' fees andexpenses, and printed materials. Include theregistration fees (but not travel expenses) paidfor sending any of the organization's staff toconferences, meetings, or conventionsconducted by other organizations. However, donot include on this line the salaries and travelexpenses of the reporting organization's ownofficers, directors, trustees, and employeeswho participate.

Line 41—InterestEnter the total interest expense for the year.Do not include any interest attributable to rentalproperty (reportable on line 6b) or anymortgage interest treated as occupancyexpense on line 36.

Line 42—Depreciation, depletion, etc.If the organization records depreciation,depletion, and similar expenses, enter the totalfor the year. Include any depreciation(amortization) of leasehold improvements. Theorganization is not required to use the ModifiedAccelerated Cost Recovery System (MACRS)to compute the depreciation reported on Form990 or Form 990-EZ. If the organizationrecords depreciation using MACRS, attachForm 4562, Depreciation and Amortization, ora schedule showing the same information

required by Form 4562. If the organization doesnot use MACRS, attach a schedule showinghow depreciation was computed.

For an explanation of acceptable methodsfor computing depreciation, see Pub. 946, HowTo Depreciate Property.

If the organization claims a deduction fordepletion, attach a schedule explaining thededuction.

Line 43—Other expensesShow the type and amount of each significantexpense for which a separate line is notprovided. Report all other miscellaneousexpenses as a single total. Expenses thatmight be reported here include investmentcounseling and other professional fees, but notprofessional fundraising fees, accounting fees,or legal fees. These are reportable on lines 30through 32.

Other expenses includable on line 43 are:penalties, fines, and judgments; unrelatedbusiness income taxes; insurance and realestate taxes not attributable to rental propertyor reported as occupancy expenses; and anymarketing and distribution costs not includedon other lines of Part II. Attach a schedule ifmore space is needed.State reporting—miscellaneous expenses.Some states that accept Form 990, or Form990-EZ, in satisfaction of their filingrequirements may require that certain types ofmiscellaneous expenses be itemizedregardless of amount. See General InstructionE.

Line 44—Total functional expensesAdd lines 22 through 43 and enter the totalson line 44 in columns (A), (B), (C), and (D).Report the total amounts for columns (B), (C),and (D) in Part I, lines 13 through 15.

Reporting of joint costsOrganizations that included in program serviceexpenses (column (B) of Part II) any joint costsfrom a combined educational campaign andfundraising solicitation must disclose how thetotal joint costs of all such combined activitieswere reported in Part II. Organizationsanswering “Yes” to the joint-cost questionfollowing line 44 must furnish the relevantfinancial data in the spaces provided.

An organization conducts a combinededucational campaign and fundraisingsolicitation when it solicits contributions (bymail, telephone, broadcast media, or any othermeans) and includes, with the solicitation,educational material or other information thatfurthers a bona fide nonfundraising exemptpurpose of the organization.

Expenses attributable to providinginformation regarding the organization itself, itsuse of past contributions, or its planned use ofcontributions received are not program serviceexpenses and should not be included in column(B). This is true whether or not the organizationaccounts for joint costs in accordance with theAICPA's Statement of Position 87-2,incorporated in Not-For-Profit Organizations(New York, NY, AICPA, 1996). Any method ofallocating joint costs to program serviceexpenses must be reasonable under the factsand circumstances of each case. Most stateswith reporting requirements for charitable andother organizations that solicit contributionseither require or allow the reporting of jointcosts according to Statement of Position 87-2standards.


Part III—Statement of Program ServiceAccomplishmentsA program service is a major (usually ongoing)objective of an organization, such as adoptions,recreation for the elderly, rehabilitation, orpublication of journals or newsletters.

Part IV—Balance SheetsAll organizations, except those that meet oneof the exceptions in General Instruction F, mustcomplete all of Part IV and may not submit asubstitute balance sheet. Failure to completePart IV may result in penalties for filing anincomplete return. See General Instruction K.See General Instruction E for details oncompleting a Form 990, or Form 990-EZ, to befiled with any state or local governmentalagency.

When a schedule is required to be attachedfor any line item in Part IV, it is only for theend-of-year balance sheet figure reported incolumn (B). Give the end-of-year figures forany receivables or depreciable assets and therelated allowances for doubtful accounts oraccumulated depreciation reported within thedescription column.

Line 45—Cash—non-interest-bearingEnter the total of non-interest-bearing checkingaccounts, deposits in transit, change funds,petty cash funds, or any othernon-interest-bearing account. Do not includeadvances to employees or officers orrefundable deposits paid to suppliers orothers.

Line 46—Savings and temporary cashinvestmentsEnter the total of interest-bearing checkingaccounts, savings and temporary cashinvestments, such as money market funds,commercial paper, certificates of deposit, andU.S. Treasury bills or other governmentalobligations that mature in less than 1 year.Report the income from these investments online 4.

Line 47—Accounts receivableEnter the total accounts receivable (reducedby the allowance for doubtful accounts) fromthe sale of goods and/or the performance ofservices. Report claims against vendors orrefundable deposits with suppliers or othershere, if not significant in amount. Otherwise,report them on line 58, Other assets. Reportany receivables due from officers, directors,trustees, or key employees on line 50. Reportreceivables (including loans and advances)due from other employees on line 58.

Line 48—Pledges receivableEnter the total pledges receivable recorded asof the beginning and end of the year. Do notinclude the amount of pledges estimated to beuncollectible.

Line 49—Grants receivableEnter the total grants receivable fromgovernmental agencies, foundations, and otherorganizations as of the beginning and end ofthe year. Organizations that follow SFAS 116may report the present value of the grantsreceivable as of each balance sheet date.

Line 50—Receivables from officers,directors, trustees, and key employeesReport all receivables due from officers,directors, trustees, and key employees, and allsecured and unsecured loans to such persons,on line 50 and in an attached schedulediscussed below. Report interest from suchreceivables on line 11. For a definition of “keyemployee,” see the instructions in Part V.When receivables should be reportedseparately. In the required schedule, reporteach receivable separately even if more thanone loan was made to the same person or thesame terms apply to all loans. Report salaryadvances, and other advances for the personaluse and benefit of the recipient, and

receivables subject to special terms, or arisingfrom nontypical transactions, as separate loansfor each officer, director, trustee, and keyemployee.When receivables should be reported as asingle total. In the required schedule, reportreceivables that are subject to the same termsand conditions (including credit limits and rateof interest) as receivables due from the generalpublic (occurring in the normal course of theorganization's operations) as a single total forall the officers, directors, trustees, and keyemployees. Report travel advances for officialbusiness of the organization as a single total.Schedule format. For each outstanding loan,or other receivable that must be reportedseparately, the attached schedule should showthe following information (preferably incolumnar form):ÿÿAAAA1. Borrower's name and title,ÿÿAAAA2. Original amount,ÿÿAAAA3. Balance due,ÿÿAAAA4. Date of note,ÿÿAAAA5. Maturity date,ÿÿAAAA6. Repayment terms,ÿÿAAAA7. Interest rate,ÿÿAAAA8. Security provided by the borrower,ÿÿAAAA9. Purpose of the loan, andAAAA10. Description and fair market value of theconsideration furnished by the lender (forexample, cash—$1,000; or 100 shares of XYZ,Inc. common stock—$9,000).

The above detail is not required forreceivables or travel advances that may bereported as a single total. However, report andidentify those totals separately on theattachment.

Line 51—Other notes and loans receivableEnter the combined total of notes receivableand net loans receivable. For notes and loansthat represent program-related investments(defined in the line 2 instructions), report theinterest income on line 2. For all other notesand loans receivable included on line 51, reportthe income on line 11.Notes receivable. Enter the amount of allnotes receivable not listed on line 50 and notacquired as investments. Attach a schedulesimilar to that called for in the instructions forline 50. The schedule should also identify therelationship of the borrower to any officer,director, trustee, or key employee of theorganization.

Notes receivable from loans by a creditunion to its members and scholarship loans bya section 501(c)(3) organization do not have tobe itemized. However, identify these loans assuch on a schedule and indicate the totalamount of such loans that are outstanding.

For a note receivable from anotherorganization exempt under the sameparagraph of section 501(c) as the filingorganization, list only the name of the borrowerand the balance due. For example, a section501(c)(3) organization would have to providethe full details of a loan to a section 501(c)(4)organization but would have to provide only thename of the borrower and the balance due ona note from a loan to another section 501(c)(3)organization.Loans receivable. Enter the gross amount ofloans receivable, less the allowance fordoubtful accounts, from the normal activities ofthe filing organization such as loans by a creditunion to its members or scholarship loans bya section 501(c)(3) organization. A scheduleof these loans is not required.

Report loans to officers, directors, trustees,and key employees on line 50. Report loans toother employees on line 58.

Step Action

1 State the organization's primary exemptpurpose.

2 All organizations must describe theirexempt purpose achievements for eachof their 4 largest program services (asmeasured by total expenses incurred).If there were 4 or fewer of suchactivities, describe each programservice activity.

• Describe program serviceaccomplishments throughmeasurements such as clientsserved, days of care, therapysessions, or publications issued.

• Describe the activity's objective, forboth this time period and thelonger-term goal, if the output isintangible, such as in a researchactivity.

• Give reasonable estimates for anystatistical information if exact figuresare not readily available. Indicate thatthis information is estimated.

• Be clear, concise, and complete inyour description. Avoid adding anattachment.

3 If part of the total expenses of anyprogram service consists of grants andallocations reported on line 22, show theamount of grants and allocations in thespace provided and include the grantsand allocations in the “Expenses”column.

• Section 501(c)(3) and (4)organizations, and section 4947(a)(1)nonexempt charitable trusts,must show the amount of grants andallocations to others andmust enter the total expenses foreach program service reported.

• For all other organizations,completing the “Expenses” column(and the “Grants and allocations”entry) in Part III is optional.

4 Attach a schedule that lists theorganization's other program services.

• The detailed information requiredfor the 4 largest services is notnecessary for this schedule.

• Section 501(c)(3) and (4)organizations, and section 4947(a)(1)nonexempt charitable trusts,however, must show the expensesattributable to their program services.

5 The organization may show the amountof any donated services, or use ofmaterials, equipment, or facilities itreceived or utilized in connection with aspecific program service.

• Disclose the applicable amounts ofany donated services, etc., on thelines for the narrative description ofthe appropriate program service.

• Do not include these amounts inthe expense column in Part III.

• See the instructions for line 82.


Line 52—Inventories for sale or useEnter the amount of materials, goods, andsupplies purchased or manufactured by theorganization and held for future sale or use.

Line 53—Prepaid expenses and deferredchargesEnter the amount of short-term and long-termprepayments of expenses attributable to oneor more future accounting periods. Examplesinclude prepayments of rent, insurance, andpension costs, and expenses incurred for asolicitation campaign of a future accountingperiod.

Line 54—Investments—securitiesEnter the book value, which may be marketvalue, of securities held as investments. Attacha schedule that lists the securities held at theend of the year. Indicate whether the securitiesare listed at cost (including the value recordedat the time of receipt in the case of donatedsecurities) or end-of-year market value. Debtsecurities of the U.S., state, and municipalgovernments, corporate stocks and bonds, andother publicly traded securities (defined in theinstructions for line 8) do not have to be listedindividually, except for stock holdings thatrepresent 5% or more of the outstandingshares of stock of the same class. However,show separate totals for each type of security(U.S. Government obligations, corporatestocks, etc.). Do not include amounts reportedon line 46. Report dividends and interest fromthese securities on line 5.

Line 55—Investments—land, buildings, andequipmentEnter the book value (cost or other basis lessaccumulated depreciation) of all land,buildings, and equipment held for investmentpurposes, such as rental properties. Attach aschedule listing these fixed assets held asinvestments at the end of the year. Show foreach item or category listed, the cost or otherbasis, accumulated depreciation, and bookvalue. Report the income from these assets online 6a.

Line 56—Investments—otherEnter the amount of all other investmentholdings not reported on line 54 or 55. Attacha schedule listing and describing each of theseinvestments held at the end of the year. Showthe book value for each and indicate whetherthe investment is listed at cost or end-of-yearmarket value. Report the income from theseassets on line 7. Do not includeprogram-related investments. See theinstructions for line 58.

Line 57—Land, buildings, and equipmentEnter the book value (cost or other basis lessaccumulated depreciation) of all land,buildings, and equipment owned by theorganization and not held for investment. Thisincludes any property, plant, and equipmentowned and used by the organization inconducting its exempt activities. Attach aschedule listing these fixed assets held at theend of the year and showing, for each item orcategory listed, the cost or other basis,accumulated depreciation, and book value.

Line 58—Other assetsList and show the book value of each categoryof assets not reportable on lines 45 through 57.Attach a separate schedule if more space isneeded.

One type of asset reportable on line 58 isprogram-related investments. These areinvestments made primarily to accomplish an

exempt purpose of the filing organization ratherthan to produce income.

Line 59—Total assetsEnter the total of lines 45 through 58. Theamounts on line 59 must equal the amountson line 74 for both the beginning and end ofyear.

Line 60—Accounts payable and accruedexpensesEnter the total of accounts payable to suppliersand others and accrued expenses, such assalaries payable, accrued payroll taxes, andinterest payable.

Line 61—Grants payableEnter the unpaid portion of grants and awardsthat the organization has made a commitmentto pay other organizations or individuals,whether or not the commitments have beencommunicated to the grantees.

Line 62—Deferred revenueInclude revenue that the organization hasreceived but not yet earned as of the balancesheet date under its method of accounting.

Line 63—Loans from officers, directors,trustees, and key employeesEnter the unpaid balance of loans receivedfrom officers, directors, trustees, and keyemployees. See the instructions for Part V fordefinition of “key employee.” For loansoutstanding at the end of the year, attach aschedule that shows, for each loan, the nameand title of the lender and the informationspecified in items 2 through 10 of theinstructions for line 50.

Line 64a—Tax-exempt bond liabilitiesEnter the amount of tax-exempt bonds (or otherobligations) issued by the organization onbehalf of a state or local governmental unit, orby a state or local governmental unit on behalfof the organization, and for which theorganization has a direct or indirect liability.Tax-exempt bonds include state or local bondsand any obligations, including direct borrowingfrom a lender, or certificates of participation,the interest on which is excluded from theincome of the recipient for Federal income taxpurposes under section 103.

For all such bonds and obligationsoutstanding at any time during the year, attacha schedule showing for each separate issue:(a) the issue date; (b) the purpose of the issue;(c) the original amount of the issue; and (d)whether a Form 8038, 8038-G, or 8038-GCwas filed when the obligation was issued,including the date when such form was filed. Ifthe bond, obligation, or debt has been retiredor paid by the organization during the year,indicate the date that the event occurred. If thebond, obligation, or debt was outstanding at theend of the year, give: (a) the actual oranticipated completion date for the projectfinanced with the borrowed funds; (b) theamount of the issue outstanding; and (c) theunexpended bond proceeds, if any. Alsoindicate whether any portion of anybond-financed facility was used by a third party(other than a governmental unit or section501(c)(3) organization), and, if so, state thepercentage of space used by the third party.

If the tax-exempt bond or obligation is in theform of a mortgage, include the amount of themortgage on line 64a, and not on line 64b. Forsuch mortgage, include in the above listing, thematurity date of the debt, repayment terms,interest rate, and any security provided by theorganization.

Line 64a does not, however, refer tosituations where the organization only has acontingent liability, as it would if it were aguarantor of tax-exempt bonds issued by arelated entity. Contingent liabilities, such asthose that arise from guarantees, should beincluded as an entry in the separately attachedschedule required for line 64a.

Line 64b—Mortgages and other notespayableEnter the amount of mortgages and other notespayable at the beginning and end of the year.Attach a schedule showing, as of the end of theyear, the total amount of all mortgages payableand, for each nonmortgage note payable, thename of the lender and the other informationspecified in items 2 through 10 of theinstructions for line 50. The schedule shouldalso identify the relationship of the lender toany officer, director, trustee, or key employeeof the organization.

Line 65—Other liabilitiesList and show the amount of each liability notreportable on lines 60 through 65. Attach aseparate schedule if more space is needed.

Lines 67 through 69—Net assetsThe Financial Accounting Standards Boardissued Financial Statements of Not-for-ProfitOrganizations (SFAS 117). SFAS 117 providesstandards for external financial statementscertified by an independent accountant forcertain types of nonprofit organizations. SFAS117 does not apply to credit unions, voluntaryemployees' beneficiary associations,supplemental unemployment benefit trusts,section 501(c)(12) cooperatives, and othermember benefit or mutual benefitorganizations.

While some states may require reporting inaccordance with SFAS 117 (see GeneralInstruction E), IRS does not. However, a Form990, or Form 990-EZ, return prepared inaccordance with SFAS 117 will be acceptableto IRS.Organizations that follow SFAS 117. If theorganization follows SFAS 117, check the boxabove line 67. Classify and report net assets inthree groups—unrestricted, temporarilyrestricted, and permanently restricted—basedon the existence or absence of donor-imposedrestrictions and the nature of those restrictions.Show the sum of the three classes of netassets on line 73. On line 74, add the amountson lines 66 and 73 to show total liabilities andnet assets. This figure should be the same asthe figure for Total assets on line 59.

Line 67—UnrestrictedEnter the balances per books of theunrestricted class of net assets. Unrestrictednet assets are neither permanently restrictednor temporarily restricted by donor-imposedstipulations. All funds without donor-imposedrestrictions must be classified as unrestricted,regardless of the existence of any boarddesignations or appropriations.

Line 68—Temporarily restrictedEnter the balance per books for the temporarilyrestricted class of net assets. Donors'temporary restrictions may require thatresources be used in a later period or after aspecified date (time restrictions), or thatresources be used for a specified purpose(purpose restrictions), or both.

Line 69—Permanently restrictedEnter the total of the balances for thepermanently restricted class of net assets.Permanently restricted net assets are (a)assets, such as land or works of art, donated


with stipulations that they be used for aspecified purpose, be preserved, and not besold or (b) assets donated with stipulations thatthey be invested to provide a permanentsource of income. The latter result from giftsand bequests that create permanentendowment funds.Organizations that do not follow SFAS 117.If the organization does not follow SFAS 117,check the box above line 70 and report accountbalances on lines 70 through 72. Report netassets or fund balances on line 73. Alsocomplete line 74 to report the sum of the totalliabilities and net assets.

Some states that accept Form 990, or Form990-EZ, as their basic reporting form mayrequire a separate statement of changes in netassets/fund balances. See General InstructionE.

Line 70—Capital stock, trust principal, orcurrent fundsFor corporations, enter the balance per booksfor capital stock accounts. Show par or statedvalue (or for stock with no par or stated value,total amount received upon issuance) of allclasses of stock issued and, as yet,uncancelled. For trusts, enter the amount in thetrust principal or corpus account. Fororganizations continuing to use the fundmethod of accounting, enter the fund balancesfor the organization's current restricted andunrestricted funds.

Line 71—Paid-in or capital surplus, or land,bldg., and equipment fundEnter the balance per books for all paid-incapital in excess of par or stated value for allstock issued and uncancelled. If stockholdersor others gave donations that the organizationrecords as paid-in capital, include them here.Report any current-year donations youincluded on line 71 in Part I, line 1. Enter thefund balance for the land, building, andequipment fund on this line.

Line 72—Retained earnings or accumulatedincome, endowment, or other fundsFor corporations, enter the balance in theretained earnings, or similar account, minus thecost of any corporate treasury stock. For trusts,enter the balance per books in the accumulatedincome or similar account. For thoseorganizations using fund accounting, enter thetotal of the fund balances for the permanentand term endowment funds as well as balancesof any other funds not reported on lines 70 and71.

Line 73—Total net assets or fund balancesFor organizations that follow SFAS 117, enterthe total of lines 67 through 69. For all otherorganizations, enter the total of lines 70through 72. Enter the beginning-of-the-yearfigure on line 73, column (A), in Part I, line 19.The end-of-the-year figure on line 73, column(B) must agree with the figure on line 21 ofPart I.

Line 74—Total liabilities and netassets/fund balancesEnter the total of lines 66 and 73. This amountmust equal the amount for total assets reportedon line 59 for both the beginning and end of theyear.

Parts IV-A and IV-B— ReconciliationStatementsUse these reconciliation statements toreconcile the differences between the revenueand expenses shown on the organization'saudited financial statements prepared inaccordance with SFAS 117 and the revenue

and expenses shown on the organization'sForm 990.

If the organization did not receive an auditedfinancial statement for 1997 (or the fiscal yearfor which it is completing this Form 990) andprepared the return in accordance with SFAS117, it does not need to complete Parts IV-Aor IV-B and should instead enter “N/A” on linea of each Part.

These two parts also do not have to becompleted on group returns.

On line d(1) of Parts IV-A and IV-B, includeonly those investment expenses netted againstinvestment income in the revenue portion of theorganization's audited financial statements. Donot include program-related investmentexpenses or other expenses reported asprogram service expenses in the auditedstatement of activities.

Part V—List of Officers, Directors,Trustees, and Key EmployeesList each person who was an officer, director,trustee, or key employee (defined below) of theorganization at any time during the year evenif they did not receive any compensation fromthe organization. Enter a zero in columns (C),(D), or (E) if no compensation, contributions,expenses and other allowances were paidduring the reporting year, or deferred forpayment to a future accounting period. Give thepreferred address at which officers, etc., wantthe Internal Revenue Service to contact them.Use an attachment if there are more personsto list in Part V.

Show all forms of cash and noncashcompensation received by each listed officer,etc., whether paid currently or deferred.

A failure to fully complete Part V can subjectboth the organization and the individualsresponsible for such failure to penalties forfiling an incomplete return. See GeneralInstruction K. In particular, entering the phraseon Part V, “Information available uponrequest,” or a similar phrase, is not acceptable.

The organization may also provide anattachment to explain the entire 1997compensation package for any person listed inPart V.

Each person listed on Part V should reportthe listed compensation on his or her incometax return unless the Code specifically excludesany of the payments from income tax. See Pub.525 for details.

A “key employee” is any person havingresponsibilities or powers similar to those ofofficers, directors, or trustees. The termincludes the chief management andadministrative officials of an organization (suchas an executive director or chancellor) but doesnot include the heads of separate departmentsor smaller units within an organization.

A chief financial officer and the officer incharge of administration or program operationsare both key employees if they have theauthority to control the organization's activities,its finances, or both. The “heads of separatedepartments” reference applies to personssuch as the head of the radiology departmentor coronary care unit of a hospital or the headof the chemistry or history or Englishdepartment at a college. These persons aremanagers within their specific areas but not forthe organization as a whole and, therefore, arenot key employees.

Column (C)For each person listed, report salary, fees,bonuses, and severance payments paid.Include current-year payments of amountsreported or reportable as deferredcompensation in any prior year.

Column (D)Include in this column all forms of deferredcompensation and future severance payments(whether or not funded; whether or not vested;and whether or not the deferred compensationplan is a qualified plan under section 401(a)).Include also payments to welfare benefit planson behalf of the officers, etc. Such plansprovide benefits such as medical, dental, lifeinsurance, severance pay, disability, etc.Reasonable estimates may be used if precisecost figures are not readily available.

Unless the amounts were reported in column(C), report, as deferred compensation incolumn (D), salaries and other compensationearned during the period covered by the return,but not yet paid by the date the organizationfiles its return.

Column (E)Enter both taxable and nontaxable fringebenefits (other than de minimis fringe benefitsdescribed in section 132(e)). Include expenseallowances or reimbursements that therecipients must report as income on theirseparate income tax returns. Examples includeamounts for which the recipient did not accountto the organization or allowances that weremore than the payee spent on serving theorganization. Include payments made underindemnification arrangements, the value of thepersonal use of housing, automobiles, or otherassets owned or leased by the organization (orprovided for the organization's use withoutcharge), as well as any other taxable andnontaxable fringe benefits. See Pub. 525 formore information.

Line 75—Compensation from relatedorganizationsAnswer “Yes” to this question only if an officer,director, trustee, or key employee of theorganization received more than $10,000 incompensation from related organizations(defined below) AND such compensation,when added to the compensation provided tothat individual by the filing organization, totaledmore than $100,000. For this purpose,“compensation” includes any amount thatwould be reportable in column (C), (D), or (E)of Part V if provided by the filing organization.

Report any compensation paid by a relatedorganization for only that period where acontrol or other relationship existed betweenthe organizations. Report compensation paidby a related organization in the same period(calendar or fiscal year) as compensation paidby the Form 990 filer.

Organizations answering “Yes” must attacha schedule that lists, for each officer, director,trustee, or key employee receiving suchcompensation, the name of each relatedorganization that provided the compensationand the amount each provided. Use the sameformat as required by columns (C) through (E)of Part V.

Providing information on compensationreceived from related organizations does notviolate the disclosure provisions of section7216(a). See also section 6033(a)(1).

A “related organization” is any entity(whether tax-exempt or taxable) that the filingorganization directly or indirectly owns orcontrols, or that directly or indirectly owns orcontrols the filing organization. For example, ifOrganization A owns 90% of B, and B owns80% of C, then A would directly own 90% of Band indirectly own 72% (90% of 80%) of C.

“Owns” means holding (directly or indirectly)50% or more of the voting membership rights,voting stock, profits interest, or beneficialinterest.


“Control” means that:ÿÿAAAA1. Fifty percent (50%) or more of the filingorganization's officers, directors, trustees, orkey employees are also officers, directors,trustees, or key employees of the secondorganization being tested for control;ÿÿAAAA2. The filing organization appoints 50% ormore of the officers, directors, trustees, or keyemployees of the second organization; orÿÿAAAA3. Fifty percent (50%) or more of the filingorganization's officers, directors, trustees, orkey employees are appointed by the secondorganization.

Control exists if the 50% test is met by anyone group of persons even if collectively the50% test is not met.

Whether or not any elements of ownershipor control are present, a related organizationalso includes:●A A supporting organization operated inconnection with the filing organization whereone of the purposes of the supportingorganization is to benefit or further thepurposes of the filing organization; and●A A supported organization operated inconnection with the filing organization whereone of the purposes of the filing organization isto benefit or further the purposes of thesupported organization.

For example, a hospital auxiliary that raisesfunds for Hospital Y or coordinates the effortsof that hospital's volunteer staff would be asupporting organization of Hospital Y and, thus,a related organization, even if the hospital doesnot own or control the auxiliary. Hospital Y, inturn, would be a supported organization of theauxiliary. In any case where the $10,000 and$100,000 minimums were met, the hospitalmust report (on an attachment to its return) thecompensation paid by the auxiliary to theofficer, director, trustee, or key employee of thehospital. The same reporting requirementwould apply to compensation paid by HospitalY to an officer, etc., of the auxiliary.

Part VI—Other InformationNote: Section 501(c)(3) organizations andsection 4947(a)(1) nonexempt charitable trustsmust also complete and attach a Schedule A(Form 990) to their Form 990 or Form 990-EZ.See General Instruction D for a discussion ofSchedule A (Form 990).

Line 76—Change in activitiesAttach a statement to explain any significantchanges in the kind of activities theorganization conducts to further its exemptpurpose. Include new or modified activities notlisted as current or planned in theorganization's application for recognition ofexemption, or not yet reported to the IRS by aletter to its key District director or by anattachment to the organization's return for anyearlier year. Also include any major programactivities that are being discontinued.

Line 77—Changes in organizing orgoverning documentsAttach a conformed copy of any changes to thearticles of incorporation, or association,constitution, trust instrument, or otherorganizing document, or to the bylaws or othergoverning document.

A “conformed” copy is one that agrees withthe original document and all amendments toit. If the copies are not signed, they must beaccompanied by a written declaration signedby an officer authorized to sign for theorganization, certifying that they are completeand accurate copies of the original documents.

Photocopies of articles of incorporationshowing the certification of an appropriate stateofficial do not have to be accompanied by such

a declaration. See Rev. Proc. 68-14, 1968-1C.B. 768, for details. When a number ofchanges are made, attach a copy of the entirerevised organizing instrument or governingdocument.

However, if your exempt organizationchanges its legal structure, such as from a trustto a corporation, you must file a new exemptionapplication to establish that the new legal entityqualifies for exemption.

Line 78—Unrelated business incomeCheck “Yes” on line 78a if the organization'stotal gross income from all of its unrelatedtrades and businesses is $1,000 or more forthe year. Gross income is the amount of grossreceipts less the cost of goods sold. See Pub.598 for a description of unrelated businessincome and the Form 990-T filing requirementsfor section 501(c), 501(e), 501(f), 501(k), and501(n) organizations having such income.Form 990-T is not a substitute for Form 990.Report on Form 990, or Form 990-EZ, itemsof income and expense that are also reportedon Form 990-T when the organization isrequired to file both forms.Note: All tax-exempt organizations must payestimated taxes with respect to their unrelatedbusiness income if they expect their tax liabilityto be $500 or more. Use Form 990-W tocompute this tax.

Line 79—Liquidation, dissolution,termination, or substantial contractionFor a complete liquidation of a corporation ortermination of a trust, check the “Final return”box in the heading of Form 990 or Form990-EZ. If there was a liquidation, dissolution,termination, or substantial contraction, attacha statement explaining what took place.

On the attached statement, show whetherthe assets have been distributed and the dateof distribution. Also attach a certified copy ofany resolution, or plan of liquidation ortermination, etc., with all amendments orsupplements not already filed. In addition,attach a schedule listing the names andaddresses of all persons who received theassets distributed in liquidation or termination,the kinds of assets distributed to each one, andeach asset's fair market value.

A “substantial contraction” is a partialliquidation or other major disposition of assetsexcept transfers for full consideration ordistributions from current income.

A “major disposition of assets” means anydisposition for the tax year that is:ÿÿAAAA1. At least 25% of the fair market value ofthe organization's net assets at the beginningof the tax year; orÿÿAAAA2. One of a series of related dispositionsbegun in earlier years that add up to at least25% of the net assets the organization had atthe beginning of the tax year when the firstdisposition in the series was made. Whethera major disposition of assets took placethrough a series of related dispositionsdepends on the facts in each case.

See Regulations section 1.6043-3 for specialrules and exceptions.

Line 80—Relation to other organizationsAnswer “Yes” if most (more than 50%) of theorganization's governing body, officers,directors, trustees, or membership are alsoofficers, directors, trustees, or members of anyother organization.

Disregard any coincidental overlap ofmembership with another organization; that is,when membership in one organization is not acondition of membership in anotherorganization. For example, assume that amajority of the members of a section 501(c)(4)

civic organization also belong to a localchamber of commerce described in section501(c)(6). The civic organization should answer“No” on line 80 if it does not require itsmembers to belong to the chamber ofcommerce.

Also disregard affiliation with any statewideor nationwide organization. Thus, the civicorganization in the above example would stillanswer “No” on line 80 even if it belonged to astate or national federation of similarorganizations. A local labor union whosemembers are also members of a national labororganization would answer “No” on line 80.

Line 81—Expenditures for politicalpurposesA political expenditure is one intended toinfluence the selection, nomination, election,or appointment of anyone to a Federal, state,or local public office, or office in a politicalorganization, or the election of Presidential orVice Presidential electors. It does not matterwhether the attempt succeeds.

An expenditure includes a payment,distribution, loan, advance, deposit, or gift ofmoney, or anything of value. It also includes acontract, promise, or agreement to make anexpenditure, whether or not legallyenforceable.All section 501(c) organizations. Section501(c) organizations must file Form 1120-POLif their political expenditures and their netinvestment income both exceed $100 for theyear. They may be liable for a tax under section527.

If a section 501(c) organization establishesand maintains a section 527(f)(3) separatesegregated fund, it is the fund's responsibilityto file its own Form 1120-POL if the fund meetsthe Form 1120-POL filing requirements. Do notinclude the segregated fund's receipts,expenditures, and balance sheet items on theForm 990, or Form 990-EZ, of the section501(c) organization that establishes andmaintains the fund. When answering questions81a and 81b on its Form 990, this section501(c) organization should disregard thepolitical expenses and Form 1120-POL filingrequirement of the segregated fund.

However, when a section 501(c)organization transfers its own funds, to aseparate segregated section 527(f)(3) fund foruse as political expenses, the 501(c)organization must report the transferred fundsas its own political expenses on its Form 990or Form 990-EZ.Section 501(c)(3) organizations. A section501(c)(3) organization will lose its tax-exemptstatus if it engages in political activity.

A section 501(c)(3) organization must pay asection 4955 excise tax for any amount paidor incurred on behalf of, or in opposition to, anycandidate for public office. The organizationmust pay an additional excise tax if it fails tocorrect the expenditure timely.

A manager of a section 501(c)(3)organization who knowingly agrees to apolitical expenditure must pay a section 4955excise tax, unless the agreement is not willfuland there is reasonable cause. A manager whodoes not agree to a correction of the politicalexpenditure may have to pay an additionalexcise tax.

When a section 501(c)(3) organizationpromotes a candidate for public office (or isused or controlled by a candidate orprospective candidate), amounts paid orincurred for the following purposes are politicalexpenditures:●A Remuneration to such individual (a candidateor prospective candidate) for speeches or otherservices;


●A Travel expenses of such individual;●A Expenses of conducting polls, surveys, orother studies, or preparing papers or othermaterial for use by such individual;●A Expenses of advertising, publicity, andfundraising for such individual; and●A Any other expense that has the primaryeffect of promoting public recognition orotherwise primarily accruing to the benefit ofsuch individual.

An organization is effectively controlled by acandidate or prospective candidate only if suchindividual has a continuing, substantialinvolvement in the day-to-day operations ormanagement of the organization.

A determination of whether the primarypurpose of an organization is promoting thecandidacy or prospective candidacy of anindividual for public office is made on the basisof all the facts and circumstances. See section4955 and Regulations section 53.4955.

Use Form 4720 to figure and report theexcise taxes.

Line 82—Donated services or facilitiesBecause Form 990, or Form 990-EZ, is opento public inspection, you may want the returnto show contributions the organization receivedin the form of donated services or the use ofmaterials, equipment, or facilities at less thanfair rental value. If so, and if the organization'srecords either show the amount and value ofsuch items or give a clearly objective basis foran estimate, the organization may choose toenter this optional information on line 82b. TheIRS does not require any organization to keepsuch records. However, do not include thevalue of such items in Part I or II, or in theexpense column in Part III. You may indicatethe value of donated services or use ofmaterials, equipment, or facilities in Part III inthe narrative description of program servicesrendered. See the instructions for Part III.

Line 83—Public inspection requirementsAnswer “Yes” only if the organization compliedwith its public inspection obligations describedin General Instruction M.

Line 83b—Disclosure requirements for quidpro quo contributionsSee General Instruction L.

Line 84a—Solicitations of contributionsAll organizations that qualify under section170(c) to receive contributions that aredeductible as charitable contributions forFederal income tax purposes, enter “N/A.” SeeGeneral Instruction L.

Line 85—Section 501(c)(4), (5), or (6)organizationsReporting membership dues, lobbying, andpolitical expenses under section 6033(e).Only certain organizations that are tax exemptunder:●A Section 501(c)(4) (social welfareorganizations),●A Section 501(c)(5) (agricultural andhorticultural organizations), or●A Section 501(c)(6) (business leagues)are subject to (a) the section 6033(e) noticeand reporting requirements, and (b) a potentialproxy tax. These organizations must reporttheir total lobbying expenses, politicalexpenses, and membership dues, or similaramounts, on line 85 of Form 990.

Section 6033(e) notice and reportingrequirements and proxy tax.— Section6033(e) requires certain section 501(c)(4), (5),and (6) organizations to tell their memberswhat portion of their membership dues were

allocable to the political or lobbying activitiesof the organization. If an organization does notgive its members this information, then theorganization is subject to a proxy tax. The taxis reported on Form 990-T.

However, if the organization meetsException 1 or 2, it is excluded from thenotice, reporting, and proxy tax requirementsof section 6033(e). See also Rev. Procs. 95-35and 95-35A 1995-2 C.B. 391-2.Exception 1. Section 6033(e)(3) exceptionfor organizations whose dues arenondeductible. (Check “Yes” for line 85a.)ÿÿAAAA1. All organizations exempt from tax undersection 501(a), other than section 501(c)(4),501(c)(5), and 501(c)(6) organizations.ÿÿAAAA2. Local associations of employees' andveterans' organizations described in section501(c)(4), but not section 501(c)(4) socialwelfare organizations.ÿÿAAAA3. Labor unions and other labororganizations described in section 501(c)(5),but not section 501(c)(5) agricultural andhorticultural organizations.ÿÿAAAA4. Section 501(c)(4), (5), and (6)organizations that receive more than 90% oftheir dues from:ÿÿAAAAa. Section 501(c)(3) organizations,ÿÿAAAAb. State or local governments,ÿÿAAAAc. Entities whose income is exempt fromtax under section 115, orÿÿAAAAd. Organizations described in 1 through 3,above.ÿÿAAAA5. Section 501(c)(4) and (5) organizationsthat receive more than 90% of their annualdues from:ÿÿAAAAa. Persons,ÿÿAAAAb. Families, orÿÿAAAAc. Entities who each paid annual dues of$53 or less in 1997 (adjusted annually forinflation). See Rev. Proc. 96-59, 1996-2 C.B.392.ÿÿAAAA6. Any organization that receives a privateletter ruling from the IRS stating that theorganization satisfies the section 6033(e)(3)exception.ÿÿAAAA7. Any organization that keeps records tosubstantiate that 90% or more of its memberscannot deduct their dues (or similar amounts)as business expenses whether or not any partof their dues are used for lobbying purposes.ÿÿAAAA8. Any organization that is not amembership organization.Exception 2. Section 6033(e)(1) $2,000in-house lobbying exception. (Check “Yes”for line 85b.) An organization satisfies the$2,000 in-house lobbying exception if it:ÿÿAAAA1. Did not receive a waiver for proxy taxowed for the prior year.ÿÿAAAA2. Did not make any political or foreignlobbying expenditures during the 1997reporting year,ÿÿAAAA3. Made lobbying expenses during the 1997reporting year consisting only of in-house directlobbying expenses totaling $2,000 or less, butexcluding:ÿÿAAAAa. Any allocable overhead expenses, andÿÿAAAAb. All direct lobbying expenses of any localcouncil regarding legislation of direct interest tothe organization or its members.Dues notices. An organization that checked“No” for both lines 85a and 85b, and is thusresponsible for reporting on line 85c through85h, must send dues notices to its membersat the time of assessment or payment of dues,unless the organization chooses to pay theproxy tax instead of informing its members ofthe nondeductible portion of its dues. Thesedues notices must reasonably estimate thedues allocable to the nondeductible lobbyingand political expenditures reported on line 85d.

Members of the organization cannot take atrade or business expense deduction on theirtax returns for the portion of their dues, etc.,allocable to the organization's lobbying andpolitical activities.

ÿÿÿProxy tax.

Allocation of costs to lobbying activitiesand influencing legislation. An organizationthat is subject to the lobbying disclosure rulesof section 6033(e) must use a reasonableallocation method to determine its total costsmade to influence:●A Legislation, and●A The actions of a covered executive branchofficial through direct communication (e.g.,President, Vice President, or cabinet-levelofficials, and their immediate deputies)(sections 162(e)(1)(A) and (D)).

Expenses for de minimis in-house lobbyingor grassroots lobbying and political activitiesare not allocated.

Reasonable methods of allocating costs tolobbying activities include, but are not limitedto:●A The ratio method,●A The gross-up and alternative gross-upmethods, and

IF . . . THEN . . .

The organization'slobbying and politicalexpenses are more thanits membership dues forthe year,

The organization must:(a) Allocate allmembership dues to itslobbying and politicalactivities, and(b) Carry forward anyexcess lobbying andpolitical expenses to thenext tax year.

The organization:(a) Had only de minimisin-house expenses($2,000 or less) and noother nondeductiblelobbying or politicalexpenses; or

The organization neednot disclose to itsmembership theallocation of dues, etc., toits lobbying and politicalactivities.

(b) Paid a proxy tax,instead of notifying itsmembers on theallocation of dues tolobbying and politicalexpenses*; or(c) Established thatsubstantially all of itsmembership dues, etc.,are not deductible bymembers,

*(such as political campaign or grassroots lobbyingexpenses)

IF . . . THEN . . .

The organization's actuallobbying and politicalexpenses are more thanit estimated in its duesnotices,

The organization is liablefor a proxy tax on theexcess and reports it onForm 990-T.

The organization:(a) Elects to pay the proxytax, and(b) Chooses not to giveits members a noticeallocating dues tolobbying and politicalactivities,

All the members' duesremain eligible for asection 162 trade orbusiness expensededuction.

The organization:(a) Makes a reasonableestimate of dues allocableto nondeductible lobbyingand political activities, and(b) Agrees to adjust itsestimate in the followingyear*,

The IRS may permit awaiver of the proxy tax.

*A facts and circumstances test determines whetheror not a reasonable estimate was made in good faith.


●A A method applying the principles of section263A.

See Regulations sections 1.162-28 and1.162-29 and the special rules and definitionsfor these allocation methods given below.Special rules and definitions.

All methods.— For all the allocationmethods, include labor hours and costs ofpersonnel whose activities involve significantjudgment with respect to lobbying activities(lobbying personnel).

Ratio and gross-up methods.—ÿÿAAAA1. May use even if volunteers conductactivities.ÿÿAAAA2. May disregard labor hours and costs ofclerical or support personnel (other thanlobbying personnel) under the ratio method.

Alternative gross-up method.—●A Disregard labor hours and●A Costs of clerical or support personnel (otherthan lobbying personnel).

Third-party costs are those paid to:●A Outside parties for conducting lobbyingactivities,●A Dues paid to another membershiporganization that were declared to benondeductible lobbying expenses, and●A Travel and entertainment costs for lobbyingactivities.

Direct contact lobbying is a:●A Meeting,●A Telephone conversation,●A Letter, or●A Similar means of communication which iswith a:ÿÿAAAA1. Legislator (other than a local legislator)orÿÿAAAA2. Covered executive branch officialand which otherwise qualifies as a lobbyingactivity.

Treat all hours spent by a person inconnection with direct contact lobbying as laborhours allocable to lobbying activities.

Do not treat the hours spent by a personwho engages in research and otherbackground activities related to direct contactlobbying, but who makes no direct contact witha legislator, or covered executive branchofficial, as direct contact lobbying.

De minimis rule.— If less than 5% of aperson's time is spent on lobbying activities,and there is no direct contact lobbying, anorganization may treat that person's time spenton lobbying activities as zero.

Influencing legislation means:●A Any attempt to influence legislation througha lobbying communication; and●A All activities, such as research andcoordination for the purpose of making orsupporting a lobbying communication, even ifnot yet made.

A lobbying communication is anycommunication with any member or employeeof a legislative body, or any other governmentofficial participating in the formulation of thelegislation that:●A Refers to specific legislation and reflects aview on that legislation; or●A Provides support for views in a prior lobbyingcommunication.

Purpose for engaging in an activity isbased on all the facts and circumstances. If anorganization's lobbying communication was fora lobbying and a nonlobbying purpose, theorganization must make a reasonableallocation of costs to influencing legislation.

Correction of prior year lobbying costs.—If in a prior year, an organization treated costsincurred for a future lobbying communicationas a lobbying cost to influence legislation, but

after the organization filed a timely return, itappears the lobbying communication will notbe made under any foreseeable circumstance,the organization may apply these costs toreduce its current year's lobbying costs, but notbelow zero. The organization may carryforward any amount of the costs not used toreduce its current year's lobbying costs tosubsequent years.Example: Ratio method. X Organizationincurred:ÿÿAAAA1. 6,000 labor hours for all activitiesÿÿAAAA2. 3,000 labor hours for lobbying activities(3 employees)ÿÿAAAA3. $300,000 for operational costsÿÿAAAA4. No third-party lobbying costs

X Organization allocated its lobbying costsas follows:Lobbyinglabor hrs.

3,000 3 $300,000 + 0 = $150,0006,000

Total Total costs Allocable Costs allocablelabor hrs. of operations third-party to lobbying

costs activities

Examples: Gross-up method andAlternative gross-up method.A and B are employees of Y Organization.ÿÿAAAA1. A's activities involve significant judgmentwith respect to lobbying activities.ÿÿAAAA2. A's basic lobbying labor costs (excludingemployee benefits) are $50,000.ÿÿAAAA3. B performs clerical and support activitiesfor A.ÿÿAAAA4. B's labor costs (excluding employeebenefits) in support of A's activities are$15,000.ÿÿAAAA5. Allocable third-party costs are $100,000.

If Y Organization uses the gross-up methodto allocate its lobbying costs, Y multiplies 175%times its basic labor costs (excluding employeebenefits) for all of the lobbying of its personneland adds its allocable third-party lobbying costsas follows:

If Y Organization uses the alternativegross-up method to allocate its lobbying costs,Y multiplies 225% times its basic labor costs(excluding employee benefits) for all of thelobbying hours of its “lobbying personnel” andadds its third-party lobbying costs as follows:

Section 263A cost allocation method. Theexamples that demonstrate this method arefound in Regulations section 1.162-28(f).

Line 85a—Section 6033(e)(3) exception fornondeductible duesIf your organization meets any of the criteriaof Exception 1 in the line 85 instructions,answer “Yes” to question 85a. By doing so, youare declaring that substantially all of theorganization's membership dues werenondeductible. Skip lines 85b through 85h.

Line 85b—In-house lobbying expendituresAn organization is exempt from the notice,reporting, and proxy tax liability rules of section6033(e) if it meets Exception 2, the $2,000in-house lobbying exception. Both exceptionsare discussed in the instructions for line 85.

An organization should answer “Yes” toquestion 85b if it met all of the requirementsof Exception 2. Skip lines 85c through 85h.

If the organization's in-house direct lobbyingexpenditures during the 1997 reporting yearwere $2,000 or less, but the organization alsopaid or incurred other lobbying or politicalexpenditures during the 1997 reporting year,or received a waiver for proxy tax owed for theprior year, it should answer “No” to question85b and complete lines 85c through 85h.However, the $2,000 or less of in-house directlobbying expenditures should not be includedin the total on line 85d.Definitions.

Grassroots lobbying.— refers to attemptsto influence any segment of the general publicregarding legislative matters or referendums.

Direct lobbying includes attempting toinfluence.—●A Legislation through communication withlegislators and other government officials, and●A The official actions or positions of coveredexecutive branch officials through directcommunication.

Direct lobbying does not includeattempting to influence.—●A Any local council on legislation of directinterest to the organization or its members, and●A The general public regarding legislativematters (grassroots lobbying).

Other lobbying includes.—●A Grassroots lobbying,●A Foreign lobbying,●A Third-party lobbying, and●A Dues paid to another organization that wereused to lobby.

In-house expenditures include.—●A Salaries, and●A Other expenses of the organization's officialsand staff (including amounts paid or incurredfor the planning of legislative activities).

In-house expenditures do not include.—●A Any payments to other taxpayers engaged inlobbying or political activities as a trade orbusiness.●A Any dues paid to another organization thatare allocable to lobbying or political activities.

Line 85c—Dues, assessments, and similaramounts receivedEnter the total dues, assessments, and similaramounts allocable to the 1997 reporting year.

The term “dues” means the amount theorganization requires a member to pay in orderto be recognized as a member.

Payments that are similar to dues include:ÿÿAAAA1. Members' voluntary payments,ÿÿAAAA2. Assessments to cover basic operatingcosts, andÿÿAAAA3. Special assessments to conductlobbying and political activities.

Line 85d—Lobbying and politicalexpendituresInclude on line 85d the total amount ofexpenses paid or incurred during the 1997reporting year in connection with:ÿÿAAAA1. Influencing legislation;ÿÿAAAA2. Participating or intervening in anypolitical campaign on behalf of (or in oppositionto) any candidate for any public office;ÿÿAAAA3. Attempting to influence any segment ofthe general public with respect to elections,legislative matters or referendums; orÿÿAAAA4. Communicating directly with a coveredexecutive branch official in an attempt toinfluence the official actions or positions ofsuch official.

Also include on line 85d:ÿÿAAAA1. Excess lobbying and politicalexpenditures carried over from the precedingtaxable year.

175% × $65,000 + $100,000 ÿÿÿ= $213,750

Basic lobbying labor costsof A + B

Allocablethird-partycosts

Costs allocableto lobbyingactivities

225% × $50,000 + $100,000 ÿÿÿ= $212,500

Basic lobbying laborcosts of A

Allocablethird-partycosts

Costs allocableto lobbyingactivities


ÿÿAAAA2. An amount equal to the taxable lobbyingand political expenditures reported on line 85ffor the preceding taxable year, if theorganization received a waiver of the proxy taximposed on that amount.

Do not include:ÿÿAAAA1. Any direct lobbying of any local councilor similar governing body with respect tolegislation of direct interest to the organizationor its members.ÿÿAAAA2. In-house direct lobbying expenditures, ifthe total of such expenditures is $2,000 or less(excluding allocable overhead).ÿÿAAAA3. Political expenditures for which thesection 527 tax has been paid (on Form1120-POL).●A Reduce the current year's lobbyingexpenditures, but not below zero, by costspreviously allocated in a prior year to lobbyingactivities that were cancelled after a returnreporting those costs was filed.●A Carry forward any amounts not used as areduction to subsequent years.

Line 85e—Dues declared nondeductible innotices to membersEnter the total amount of dues, etc., allocableto the 1997 reporting year that members werenotified were nondeductible under section162(e).Example.●A Membership dues: $100,000 for the 1997reporting year●A Organization's timely notices tomembers—25% of membership duesnondeductible●A Line 85e entry—$25,000

Line 85f—Taxable lobbying and politicalexpendituresThe taxable amount reportable on line 85f isthe amount of dues, etc:ÿÿAAAA1. Allocable to the 1997 reporting year, andÿÿAAAA2. Attributable to lobbying and politicalexpenditures that the organization did nottimely notify its members were nondeductible.

If the amount on line 85c (dues, etc.) isGREATER than the amount on line 85d(lobbying & political expenses), then:

If the amount on line 85c (dues, etc.) isLESS than the amount on line 85d (lobbying &political expenses), then:

See Examples given below.

Lines 85g and 85h—Proxy tax and waiversAn organization must pay the section 6033(e)proxy tax on the amount reported on line 85f

unless it has the option to check “Yes” on line85h.

Examples. Organizations A and B:ÿÿAAAA1. Reported on the calendar year basis.ÿÿAAAA2. Incurred only grassroots lobbyingexpenses (did not qualify for the under $2,000in-house lobbying exception (de minimis rule)).ÿÿAAAA3. Allocated dues to the taxable year inwhich received.

For Organization A.— Dues, assessments,and similar amounts received in 1997 wereGREATER than its lobbying expenses for1997.

Note: The amounts on lines 1, 2, 3, and 5 ofthe workpapers were entered on lines 85cthrough 85f of the 1997 Form 990.

Because dues, etc., received wereGREATER than lobbying expenses, there is nocarryover of excess lobbying expenses to line85d of the 1998 Form 990.

See the instructions for lines 85g and 85h forthe treatment of the $500.

For Organization B.— Dues, assessments,and similar amounts received in 1997 wereLESS than its lobbying expenses for 1997.

Note: The amounts on lines 1, 2, 3, and 5 ofthe workpapers were entered on lines 85cthrough 85f of the 1997 Form 990.

Because dues, etc., received were LESSthan lobbying expenses, excess lobbyingexpenses of $200 must be carried forward toline 85d of the 1998 Form 990 (excess of $600of lobbying expenses over $400 dues, etc.,received). The $200 will be included along withthe other lobbying and political expenses paidor incurred in the 1998 reporting year andreportable on line 85d (or the equivalent line)of the 1998 Form 990.

See the instructions for lines 85g and 85h forthe treatment of the $300.Underreporting of lobbying expenses. Anorganization is subject to the proxy tax for the1997 reporting year for underreported lobbyingand political expenses only to the extent thatthese expenses (if actually reported) wouldhave resulted in a proxy tax liability for thatyear. A waiver of proxy tax for the taxable yearonly applies to reported expenditures.

An organization that underreports itslobbying and political expenses is also subjectto the section 6652(c) daily penalty for filing anincomplete or inaccurate return.

Line 86—Section 501(c)(7) organizationsGross receipts test. A section 501(c)(7)organization may receive up to 35% of its grossreceipts, including investment income, fromsources outside its membership and remaintax-exempt. Part of the 35% (up to 15% ofgross receipts) may be from public use of asocial club's facilities.

Gross receipts are the club's income from itsusual activities and include:●A Charges,●A Admissions,●A Membership fees,●A Dues,●A Assessments,●A Investment income (such as dividends, rents,and similar receipts), and normal recurringcapital gains on investments.

Gross receipts do not include:●A Capital contributions (see Regulationssection 1.118-1),●A Initiation fees, or●A Unusual amounts of income (such as thesale of the clubhouse).Note: College fraternities or sororities or otherorganizations that charge membership initiationfees, but not annual dues, do include initiationfees in their gross receipts.

If the 35% and 15% limits do not affect theclub's exempt status, include the incomeshown on line 86b on the club's Form 990-T.

Investment income earned by a section501(c)(7) organization is not tax-exemptincome unless it is set aside for:●A Religious,●A Charitable,●A Scientific,●A Literary,●A Educational purposes, or●A Prevention of cruelty to children or animals.

If the combined amount of an organization'sgross investment income and other unrelatedbusiness income exceeds $1,000, it mustreport the investment income and otherunrelated business income on Form 990-T.Nondiscrimination policy. A section501(c)(7) organization is not exempt fromincome tax if any written policy statement,including the governing instrument and bylaws,allows discrimination on the basis of race,color, or religion.

However, section 501(i) allows social clubsto retain their exemption under section501(c)(7) even though their membership islimited (in writing) to members of a particularreligion, if the social club:ÿÿAAAA1. Is an auxiliary of a fraternal beneficiarysociety exempt under section 501(c)(8), andÿÿAAAA2. Limits its membership to the membersof a particular religion; or the membershiplimitation is:ÿÿAAAAa. A good-faith attempt to further theteachings or principles of that religion, andÿÿAAAAb. Not intended to exclude individuals of aparticular race or color.

If the amount on line 85f is zero, or less thanzero, enter on:

Line 85g N/ALine 85h N/A

If the organization sent dues notices to itsmembers at the time of assessment orpayment of dues that reasonably estimated thedues allocable to the nondeductible lobbyingand political expenditures reported on line 85d,enter on:

Line 85g NoLine 85h Yes

Include the amount on the 1997 line 85f on the1998 line 85d, or its equivalent.

If the organization did not send these duesnotices, enter on:

Line 85g YesLine 85h No

Report the proxy tax on Form 990-T.

Workpapers (for 1997 Form 990)—Organization A

1. Total dues, assessments, etc., received .......... $800

2. Lobbying expenses paid or incurred ................ $600

3. Less: Total nondeductible amount of duesnotices ............................................................... 100 100

4. (Subtract line 3 from both lines 1 and 2.)......... $700 $500

5. Taxable amount of lobbying expenses (smallerof the two amounts on line 4)........................... $500

Line 85d (lobbying & politicalexpenses)

Less: Line 85e (dues shown in notices)

Equals: Line 85f (taxable lobbying & politicalexpenses)

Workpapers (for 1997 Form 990)—Organization BLine 85c (dues, etc.)

Less: Line 85e (dues shown in notices) 1. Total dues, assessments, etc., received .......... $400

2. Lobbying expenses paid or incurred ................ $600Equals: Line 85f (taxable lobbying & political

expenses), and 3. Less: Total nondeductible amount of duesnotices ............................................................... 100 100

4. (Subtract line 3 from both lines 1 and 2.)......... $300 $500

Line 85d (lobbying & politicalexpenses)

5. Taxable amount of lobbying expenses (smallerof the two amounts on line 4)........................... $300

Less: Line 85c (dues, etc.)

Equals: The excess amount to be carried overto the following taxable year andreported on line 85d (lobbying &political expenses), or its equivalent,on the 1998 form.


Line 87—Section 501(c)(12) organizationsOne of the requirements that an organizationmust meet to qualify under section 501(c)(12)is that at least 85% of its gross income consistsof amounts collected from members for thesole purpose of meeting losses and expenses.For purposes of section 501(c)(12), the term“gross income” means gross receipts minuscost of goods sold.

For a mutual or cooperative electric ortelephone company, “gross income” does notinclude amounts received or accrued as“qualified pole rentals.”

For a mutual or cooperative telephonecompany, “gross income” also does not includeamounts received or accrued either fromanother telephone company for completinglong distance calls to or from or between thetelephone company's members, or from thesale of display listings in a directory furnishedto the telephone company's members.

Line 89a—Section 501(c)(3) organizations:Disclosure of excise taxes imposed undersection 4911, 4912, or 4955Section 501(c)(3) organizations must discloseany excise tax imposed during the year undersection 4911 (excess lobbying expenditures),4912 (disqualifying lobbying expenditures), or,unless abated, 4955 (political expenditures).See sections 4962 and 6033(b).

Line 89b—Section 501(c)(3) and 501(c)(4)organizations: Disclosure of section 4958excess benefit transactions and excisetaxesSections 6033(b) and 6033(f) require section501(c)(3) and section 501(c)(4) organizationsto report the amount of taxes imposed undersection 4958 (excess benefit transactions)involving the organization, (unless abated), aswell as any other information the Secretarymay require concerning those transactions.See General Instruction P and Notice 96-46,1996-2 C.B. 212, for a discussion of excessbenefit transactions.

Attach a statement describing any excessbenefit transaction, the disqualified person orpersons involved, and whether or not theexcess benefit transaction was corrected.

Line 89c—Taxes imposed on organizationmanagers or disqualified personsFor line 89c, enter the amount of taxesimposed on organization managers ordisqualified persons under sections 4912,4955, and 4958, unless abated.

Line 89d—Taxes reimbursed by theorganizationFor line 89d, enter the amount of tax in line 89cthat was reimbursed by the organization. Anyreimbursement of the excise tax liability of adisqualified person or organization managerwill be treated as an excess benefit unless (1)the organization treats the reimbursement ascompensation during the year thereimbursement is made, and (2) the totalcompensation to that person, including thereimbursement, is reasonable.

Line 90a—List of statesList each state with which the organization isfiling a copy of this return in full or partialsatisfaction of state filing requirements.

Line 90b—Number of employeesEnter the number of employees on your payrollduring the pay period including March 12,1997, as shown on your Form 941, Employer'sQuarterly Federal Tax Return, or Form 943, Employer's Annual Tax Return for AgriculturalEmployees, (January—March calendar quarter

return only). Do not include householdemployees, persons who received no payduring the pay period, pensioners, or membersof the Armed Forces.

Line 92—Section 4947(a)(1) nonexemptcharitable trustsSection 4947(a)(1) nonexempt charitable truststhat file Form 990 instead of Form 1041 mustcomplete this line. The trust should includeexempt-interest dividends received from amutual fund or other regulated investmentcompany as well as tax-exempt interestreceived directly.

Part VII—Analysis ofIncome-Producing ActivitiesAn organization is exempt from income taxesonly if its primary purpose is to engage in thetype of activity for which it claims exemption.

An exempt organization is subject to a taxon unrelated business taxable income if suchincome is from a trade or business that isregularly carried on by the organization and isnot substantially related to the organization'sperformance of its exempt purpose or function.Generally, a tax-exempt organization withgross income of $1,000 or more for the yearfrom an unrelated trade or business must fileForm 990-T and pay any tax due.

In Part VII, show whether revenue, alsoreportable on lines 2 through 11 of Part I, wasreceived from activities related to theorganization's purpose or activities unrelated toits exempt purpose. Enter gross amountsunless indicated otherwise. Show also anyrevenue excludable from the definition ofunrelated business taxable income.

The sum of amounts entered in columns (B),(D), and (E) for lines 93 through 103 of PartVII should match amounts entered forcorrelating lines 2 through 11 of Part I. Use thefollowing table to verify the relationship of PartVII with Part I. Note that contributions that arereportable on lines 1a through 1d of Part I arenot reportable in Part VII.

Completing Part VIIÿÿÿColumn (A)In column (A), identify any unrelated businesstaxable income reportable in column (B) byselecting a business code from the Codes forUnrelated Business Activity in the Instructionsfor Form 990-T.

Column (B)In column (B), enter any revenue received fromactivities unrelated to the exempt purpose ofthe organization. See the Instructions for Form990-T and Pub. 598 for a discussion of what isunrelated business taxable income. If you enteran amount in column (B), then you must entera business code in column (A).

Column (C)In column (C), enter an exclusion code from theExclusion Codes list on the last page of the

Specific Instructions for Form 990 to identifyany revenue excludable from unrelatedbusiness taxable income. If more than oneexclusion code applies to a particular revenueitem, use the lowest numbered exclusion codethat applies. If nontaxable revenues fromseveral sources are reportable on the sameline in column (D), use the exclusion code thatapplies to the largest revenue source. If the listof exclusion codes does not include an item ofrevenue that is excludable from unrelatedbusiness taxable income, enter that item incolumn (E) and see the instruction for column(E).

Column (D)For column (D), identify any revenue receivedthat is excludable from unrelated businesstaxable income. If you enter an amount incolumn (D), you must enter an exclusion codein column (C).

Column (E)For column (E), report any revenue fromactivities related to the organization's exemptpurpose; that is, income received from activitiesthat form the basis of the organization'sexemption from taxation. Also report here anyrevenue that is excludable from gross incomeother than by Code section 512, 513, or 514,such as interest on state and local bonds thatis excluded from tax by section 103. Explain inPart VIII how any amount reported in column(E) related to the accomplishment of theorganization's exempt purposes.

Lines 93(a) through (f)—Program servicerevenueList the organization's revenue-producingprogram service activities on these lines.Program service activities are primarily thosethat form the basis of an organization'sexemption from tax. Enter, in the appropriatecolumns, gross revenue from each programservice activity and the business and exclusioncodes that identify this revenue. See theexplanation of program service revenue in theinstructions for Part I, line 2.

Line 93(g)—Fees and contracts fromgovernment agenciesIn the appropriate columns, enter grossrevenue earned from fees and contractpayments by government agencies for aservice, facility, or product that benefited thegovernment agency primarily, eithereconomically or physically. Do not includegovernment grants that enabled yourorganization to benefit the public directly andprimarily. See Part I, line 1c instructions for thedistinction between government grants thatrepresent contributions and payments fromgovernment agencies for a service, product, orfacility that primarily benefited the governmentagencies.

Report on line 2 of Part I (program servicerevenue) the sum of the entries in columns (B),(D), and (E) for lines 93(a) through (g).

Lines 94 through 96—Dues, assessments,interest, and dividendsIn the appropriate columns, report the revenuereceived for these line items. Generalinstructions for lines 94 through 96 are given inthe instructions for Part I, lines 3 through 5.

Lines 97 and 98—Rental income (loss)Report net rental income from investmentproperty on these lines. Also report here rentalincome from unaffiliated exempt organizations.Report rental income, however, from anexempt function (program service) on line 93.Refer to the instructions for Part I, line 6. Amore detailed discussion of rental income is

Amounts in Part VII on Line

Correspond toAmounts in

Part I on Line

93(a) through (g).............................................................. 2

94 ..................................................................................... 3

95 ..................................................................................... 4

96 ..................................................................................... 5

97 and 98......................................................................... 6c

99 ..................................................................................... 7

100 .................................................................................... ÿÿ8d

101 .................................................................................... ÿÿ9c

102 .................................................................................... 10c

103(a) through (e) ............................................................. ÿÿ11

105 (plus line 1d, Part I) ................................................... ÿÿ12


given in the Instructions for Form 990-T andPub. 598.

Rents from real property are usuallyexcluded in computing unrelated businesstaxable income, as are incidental amounts(10% or less) of rental income from personalproperty leased with real property (mixedlease). In a mixed lease where the rentattributable to personal property is more than50% of the total rent, neither rent from real orpersonal property is excluded from unrelatedbusiness taxable income. The exclusion alsodoes not apply when the real or personalproperty rentals depend wholly or partly on theincome or profits from leased property, otherthan an amount based on a fixed percentageor percentage of gross receipts or sales.

The rental exclusion from unrelatedbusiness taxable income does not apply todebt-financed real property. In general,debt-financed property is any property that theorganization finances by debt and holds toproduce income instead of for exemptpurposes. An exempt organization's incomefrom debt-financed property is treated asunrelated business taxable income and issubject to tax in the same proportion as theproperty remains financed by the debt. Ifsubstantially all (85% or more) of any property

is used for an organization's exempt purposes,the property is not treated as debt-financedproperty. The rules for debt-financed propertydo not apply to rents from personal property.

Lines 99 through 102In the appropriate columns, report the revenuereceived for these line items. Generalinstructions for lines 99 through 102 are givenin the instructions for Part I, lines 7 through 10.

Lines 103(a) through (e)—Other revenueList any “Other revenue” activity on these lines.These activities are discussed in theinstructions for line 11, Part I. In the appropriatecolumns, enter the revenue received fromthese activities. Select applicable business andexclusion codes. Report as “Other revenue,”on line 11 of Part I, the total revenue enteredin columns (B), (D), and (E) for lines 103(a)through (e).

Line 105—TotalEnter the total revenue reported on line 104 forcolumns (B), (D), and (E). The amount reportedon line 105, plus the amount on line 1d of PartI, should equal the amount entered for “Totalrevenue” on line 12 of Part I.

Part VIII—Relationship of Activities tothe Accomplishment of ExemptPurposesTo explain how an amount entered in Part VII,column (E), was related or exempt functionincome, show the line number of the amount incolumn (E) and give a brief description of howthe activity reported in column (E) specificallycontributed to the accomplishment of theorganization's exempt purposes (other than byproviding funds for such purposes). Activitiesthat generate exempt-function income areactivities that form the basis of theorganization's exemption from tax.

Also give the line number and anexplanation for any income entered in column(E) that is specifically excluded from grossincome other than by Code sections 512, 513,or 514. If no amount is entered in column (E),do not complete Part VIII.

Example. M, an organization described insection 501(c)(3), operates a school for theperforming arts. Admission is charged atstudent performances. M reported admissionincome in column (E) of Part VII and explainedin Part VIII that performances before anaudience were an essential part of thestudents' training and related to the exemptpurpose of the organization.

Because M also reported interest from statebonds in column (E) of Part VII, M explained inPart VIII that such interest was excluded fromgross income by Code section 103.


Exclusion Codes

Real property rental income that does notdepend on the income or profits derived bythe person leasing the property and isexcluded by section 512 (b)(3)

16—

General Exceptions Debt-financed IncomeIncome exempt from debt-financed(section 514) provisions because at least85% of the use of the property is for theorganization’s exempt purposes (Note:This code is only for income from the15% or less non-exempt purpose use.)(section 514(b)(1)(A))

Income from an activity that is not regularlycarried on (section 512(a)(1))

01— 30—

Income from an activity in which labor is amaterial income-producing factor andsubstantially all (at least 85%) of the workis performed with unpaid labor (section513(a)(1))

02—

17— Rent from personal property leased withreal property and incidental (10% or less) inrelation to the combined income from thereal and personal property (section512(b)(3))

Gross income from mortgaged propertyused in research activities described insection 512(b)(7), (8), or (9) (section514(b)(1)(C))

31—Section 501(c)(3) organization—Incomefrom an activity carried on primarily for theconvenience of the organization’smembers, students, patients, visitors,officers, or employees (hospital parking lotor museum cafeteria, for example) (section513(a)(2))

03—

18— Gain (or loss, to the extent allowed) fromthe sale of investments and othernon-inventory property and from certainproperty acquired from financial institutionsthat are in conservatorship or receivership(sections 512(b)(5) and (16)(A))

19— Income or loss from the lapse ortermination of options to buy or sellsecurities, or real property, and from theforfeiture of good-faith deposits for thepurchase, sale, or lease of investment realproperty (section 512(b)(5))

Gross income from mortgaged propertyused in any activity described in section513(a)(1), (2), or (3) (section 514(b)(1)(D))

32—

20— Income from research for the UnitedStates; its agencies or instrumentalities; orany state or political subdivision (section512(b)(7))

Section 501(c)(4) local association ofemployees organized before 5/27/69—Income from the sale of work-relatedclothes or equipment and items normallysold through vending machines; fooddispensing facilities; or snack bars for theconvenience of association members attheir usual places of employment (section513(a)(2))

04— Income from mortgaged property(neighborhood land) acquired for exemptpurpose use within 10 years (section514(b)(3))

33—

21— Income from research conducted by acollege, university, or hospital (section512(b)(8))

Income from mortgaged propertyacquired by bequest or devise (applies toincome received within 10 years from thedate of acquisition) (section 514(c)(2)(B))

34—

22— Income from research conducted by anorganization whose primary activity isconducting fundamental research, theresults of which are freely available to thegeneral public (section 512(b)(9))

Income from the sale of merchandise,substantially all of which (at least 85%) wasdonated to the organization (section513(a)(3))

05—Income from mortgaged propertyacquired by gift where the mortgage wasplaced on the property more than 5 yearspreviously and the property was held bythe donor for more than 5 years (appliesto income received within 10 years fromthe date of gift) (section 514(c)(2)(B))

35—

23— Income from services provided underlicense issued by a Federal regulatoryagency and conducted by a religious orderor school operated by a religious order, butonly if the trade or business has beencarried on by the organization since beforeMay 27, 1959 (section 512 (b)(15))

Specific ExceptionsSection 501(c)(3), (4), or (5) organizationconducting an agricultural or educationalfair or exposition—Qualified publicentertainment activity income (section513(d)(2))

06— Income from property received in returnfor the obligation to pay an annuitydescribed in section 514(c)(5)

36—

Income from mortgaged property thatprovides housing to low and moderateincome persons to the extent themortgage is insured by the FederalHousing Administration (section 514(c)(6))(Note: In many cases, this would beexempt function income reportable incolumn (E). It would not be so in the caseof a section 501(c)(5) or (6) organization,for example, that acquired the housing asan investment or as a charitable activity.)

37—

Foreign OrganizationsSection 501(c)(3), (4), (5), or (6)organization—Qualified convention andtrade show activity income (section513(d)(3))

07—

Foreign organizations only—Income from atrade or business NOT conducted in theUnited States and NOT derived from UnitedStates sources (patrons) (section 512(a)(2))

24—

Income from hospital services described insection 513(e)

08—

Income from noncommercial bingo gamesthat do not violate state or local law(section 513(f))

09—Social Clubs and VEBAs

Section 501(c)(7), (9), or (17) organization—Non-exempt function income set aside fora charitable, etc., purpose specified insection 170(c)(4) (section 512(a)(3)(B)(i))

25—Income from games of chance conductedby an organization in North Dakota (section311 of the Deficit Reduction Act of 1984,as amended)

10— Income from mortgaged real propertyowned by: a school described in section170(b)(1)(A)(ii); a section 509(a)(3) affiliatedsupport organization of such a school; asection 501(c)(25) organization, or by apartnership in which any of the aboveorganizations owns an interest if therequirements of section 514(c)(9)(B)(vi) aremet (section 514(c)(9))

38—

Section 501(c)(7), (9), or (17) organization—Proceeds from the sale of exempt functionproperty that was or will be timelyreinvested in similar property (section512(a)(3)(D))

26—Section 501(c)(12) organization—Qualifiedpole rental income (section 513(g))

11—

Income from the distribution of low-costarticles in connection with the solicitation ofcharitable contributions (section 513(h))

12—

Section 501(c)(9), or (17) organization—Non-exempt function income set aside forthe payment of life, sick, accident, or otherbenefits (section 512(a)(3)(B)(ii))

27—Special RulesIncome from the exchange or rental of

membership or donor list with anorganization eligible to receive charitablecontributions by a section 501(c)(3)organization; by a war veterans’organization; or an auxiliary unit or societyof, or trust or foundation for, a warveterans’ post or organization (section513(h))

13—Section 501(c)(5) organization—Farmincome used to finance the operation andmaintenance of a retirement home,hospital, or similar facility operated by theorganization for its members on propertyadjacent to the farm land (section1951(b)(8)(B) of Public Law 94-455)

39—

Veterans’ OrganizationsSection 501(c)(19) organization—Paymentsfor life, sick, accident, or health insurancefor members or their dependents that areset aside for the payment of suchinsurance benefits or for a charitable, etc.,purpose specified in section 170(c)(4)(section 512(a)(4))

28—

Trade or Business41— Gross income from an unrelated activity

that is regularly carried on but, in light ofcontinuous losses sustained over anumber of tax periods, cannot beregarded as being conducted with themotive to make a profit (not a trade orbusiness)

Modifications and Exclusions14—

Section 501(c)(19) organization—Incomefrom an insurance set-aside (see code 28above) that is set aside for payment ofinsurance benefits or for a charitable,etc., purpose specified in section170(c)(4) (Regulations section1.512(a)–4(b)(2))

29—

Royalty income excluded by section512(b)(2)

15—

Dividends, interest, payments with respectto securities loans, annuities, income fromnotional principal contracts, loancommitment fees, and other substantiallysimilar income from ordinary and routineinvestments excluded by section 512(b)(1)

40— Annual dues not exceeding $106 (subjectto inflation) paid to a section 501(c)(5)agricultural or horticultural organization(section 512(d))


Specific Instructions for Form990-EZNote: See also the General Instructions thatapply to both Form 990 and Form 990-EZ.

Completing the Heading of Form990-EZThe instructions that follow are keyed to itemsin the heading for Form 990-EZ.

Item A—Accounting periodUse the 1997 Form 990-EZ to report on acalendar year accounting period beginningJanuary 1, 1997, and ending December 31,1997.

Use the 1997 Form 990-EZ to report on anaccounting period other than a calendar year(either a fiscal year that began in 1997 or ashort period (less than 12 months) that beganin 1997). You must show the month and day in1997 that your fiscal year began, or the shortperiod began. You must also show the day,month, and year your fiscal year or short periodended. See General Instruction G.

Item B—CheckboxesChange of address and Initial return. Checkthe appropriate box if the organization changedits address since it filed its previous return, orif this is the organization's initial return.Final return and Amended return. Check theappropriate box if this is a final return, or anamended return. See the instructions for line36 if the final return is because of theliquidation of a corporation or termination of atrust. If amending a return, see GeneralInstruction J.

Item C—Name and addressIf we mailed the organization a Form 990Package with a preaddressed mailing label,attach the label in the name and address spaceon the organization's return. Using the labelhelps us avoid errors in processing the return.If any information on the label is wrong, drawa line through that part and correct it.

Include the suite, room, or other unit numberafter the street address. If the Post Office doesnot deliver mail to the street address and theorganization has a P.O. box, show the boxnumber instead of the street address.

Enter information in the following order: city,province or state, and the name of the country.Follow the foreign country's practice in placingthe postal code in the address. Please do notabbreviate the country name.

If a change of address occurs after thereturn is filed, use Form 8822 to notify the IRSof the new address.

Item D—Employer identification numberThe organization should have only one Federalemployer identification number (EIN). If theorganization has more than one EIN and hasnot been advised which to use, notify theInternal Revenue Service, Ogden, UT84201-0027. State what numbers the

organization has, the name and address towhich each number was assigned, and theaddress of its principal office. The IRS willadvise the organization which number to use.Note: Section 501(c)(9) voluntary employees'beneficiary associations must use their ownemployer identification number and not thenumber of their sponsor.

Item E—State registration numberSee General Instruction E.

Item F—Application pendingIf the organization's application for recognitionof exemption is pending, check this box andcomplete the return.

Item G—Accounting methodIndicate the method of accounting used inpreparing this return. See General InstructionG.

Item H—Group exemption numberIf the organization is covered by a groupexemption letter, enter the four-digit groupexemption number (GEN). Contact thecentral/parent organization if you are unsureof the GEN assigned.

Item I—Type of organizationIf the organization is exempt under section501(c), check the applicable box and insert,within the parentheses, the number thatidentifies the type of section 501(c)organization the filer is. See the chart inGeneral Instruction C. If the organization is asection 4947(a)(1) nonexempt charitable trust,check the applicable box and note thediscussion in General Instruction D forSchedule A (Form 990) and Form 1041 as wellas the instructions for line 43.

Item J—Gross receipts of $25,000 or lessCheck this box if the organization's grossreceipts are normally not more than $25,000.However, if the organization received a Form990 Package, see General Instruction A andthe discussion on gross receipts in GeneralInstruction B.

Item K—Calculating gross receiptsOnly those organizations with gross receiptsof less than $100,000 and total assets of lessthan $250,000 at the end of the year can usethe Form 990-EZ. If the organization does notmeet these requirements, it must file Form 990.See the gross receipts discussion in GeneralInstruction B.

Part I—Revenue, Expenses, andChanges in Net Assets or FundBalancesAll organizations filing Form 990-EZ with theIRS or any state must complete Part I. Somestates that accept Form 990-EZ in place of theirown forms may require additional information.See General Instruction E.

Line 1.—Contributions, Gifts, Grants, andSimilar Amounts ReceivedÿÿÿA. What is included on line 1

●A Report amounts received as voluntarycontributions; that is, payments, or the part ofany payment, for which the payer (donor) doesnot receive full retail value (fair market value)from the recipient (donee) organization.●A Enter the gross amounts of contributions,gifts, grants, and bequests that the organizationreceived from individuals, trusts, corporations,estates, affiliates, foundations, public charities,and other exempt organizations, or raised byan outside professional fundraiser.

●A Report all related expenses on lines 12through 16.

Reporting for line 1, in accordance withSFAS 116, Accounting for ContributionsReceived and Contributions Made, isacceptable for Form 990-EZ or Form 990purposes, but not required by IRS. However,see General Instruction E.

An organization that receives a grant to bepaid in future years should, according to SFAS116, report the grant's present value on line 1.Accruals of present value increments to theunpaid grant should also be reported on line 1in future years.1. Contributions can arise from specialevents when an excess payment is receivedfor items offered. Fundraising activities relateto soliciting and receiving contributions.However, special fundraising activities such asdinners, door-to-door sales of merchandise,carnivals, and bingo games can produce bothcontributions and revenue. Report as acontribution, both on line 1 and on line 6a(within the parentheses), any amount receivedthrough such a “special event” that is greaterthan the fair market value (retail value) of themerchandise or services furnished by theorganization to the contributor.

This situation usually occurs whenorganizations seek support from the publicthrough solicitation programs that are in partspecial events or activities and are in partsolicitations for contributions. The primarypurpose of such solicitations is to receivecontributions and not to sell the merchandiseat its retail value even though this mightproduce a profit.

Example. An organization announces thatanyone who contributes at least $40 to theorganization can choose to receive a bookworth $16 retail value. A person who gives $40,and who chooses the book, is really purchasingthe book for $16 and also making a contributionof $24. The contribution of $24, which is thedifference between the buyer's payment andthe $16 retail value of the book, would bereported on line 1 and again on the descriptionline of 6a (within the parentheses). Therevenue received ($16 retail value of the book)would be reported in the amount column on line6a. Any expenses directly relating to the saleof the book would be reported on line 6b. Anyfundraising expenses relating to thecontribution of $24 would be reported on lines12 through 16.

If a contributor gives more than $40, thatperson would be making a larger contribution,the difference between the book's retail valueof $16 and the amount actually given. See alsothe instructions for line 6 and Publication 1391.Note: At the time of any solicitation orpayment, organizations that are eligible toreceive tax-deductible contributions shouldadvise patrons of the amount deductible forFederal tax purposes. See General InstructionL.2. Contributions can arise from specialevents when items of only nominal valueare given or offered. If an organization offersgoods or services of only nominal valuethrough a special event, or distributes free,unordered, low-cost items to patrons, report theentire amount received for such benefits as acontribution on line 1. Report all relatedexpenses on lines 12 through 16.

See General Instruction L for a definition ofbenefits that have a nominal or insubstantialvalue.3. Section 501(c)(3) organizations. Theseorganizations must compute the amounts ofrevenue and contributions received fromspecial events according to the aboveinstructions when preparing their Support

Contents Page

• Completing the Heading of Form 990-EZ... 28

• Part I—Revenue, Expenses, and Changesin Net Assets............................................... 28

• Part II—Balance Sheets.............................. 32

• Part III—Statement of Program ServiceAccomplishments ........................................ 32

• Part IV—List of Officers, Directors,Trustees, and Key Employees.................... 32

• Part V—Other Information .......................... 33

Page 28 Specific Instructions for Form 990-EZ

Schedule in Part IV-A of Schedule A (Form990).4. Grants equivalent to contributions.Grants made to encourage an organizationreceiving the grant to carry on programs oractivities that further the grant recipient'sexempt purposes are grants that are equivalentto contributions. Report them on line 1. Thegrantor may specify which of the recipient'sactivities the grant may be used for, such asan adoption program or a disaster relief project.

A grant is still equivalent to a contribution ifthe grant recipient performs a service, orproduces a work product, that benefits thegrantor incidentally (but see line 1, instructionB1, below).5. Contributions received through otherfundraising organizations. Contributionsreceived indirectly from the public throughsolicitation campaigns conducted by federatedfundraising agencies (such as United Way) areincluded on line 1.6. Contributions received from associatedorganizations. Include on line 1 amountscontributed by other organizations closelyassociated with the reporting organization. Thisincludes contributions received from a parentorganization, subordinate, or anotherorganization having the same parent.7. Contributions from a commercialco-venture. Include amounts contributed bya commercial co-venture on line 1. Thesecontributions are amounts received by theorganization for allowing an outsideorganization (donor) or individual to use therecipient organization's name in a salespromotion campaign.8. Contributions or grants fromgovernmental units. A grant, or otherpayment from a governmental unit, is treatedas a grant equivalent to a contribution if itsprimary purpose is to enable the recipient toprovide a service to, or maintain a facility for,the direct benefit of the public rather than toserve the direct and immediate needs of thegrantor (even if the public pays part of theexpense of providing the service or facility).(See also line 1, instruction B1, below.)9. Contributions in the form of membershipdues. Include on line 1 membership dues andassessments to the extent they arecontributions and not payments for benefitsreceived (see line 3, instruction C1).

B. What is not included on line 11. Grants that are payments for services arenot contributions. A grant is a payment forservices, and not a contribution, when theterms of the grant provide the grantor with aspecific service, facility, or product, rather thanproviding a benefit to the general public or thatpart of the public served by the grant recipient.The recipient organization would report such agrant as income on line 2 (program servicerevenue).2. Donations of services. Do not include thevalue of services donated to the organization,or items such as the free use of materials,equipment, or facilities, as contributions on line1. However, for the optional reporting of suchamounts, see the instruction for donatedservices in Part III.3. Section 501(c)(9), (17), and (18)organizations. These organizations provideparticipants with life, sickness, accident,welfare and unemployment insurance,pension(s), or similar benefits, or a combinationof these benefits. When such an organizationreceives payments from participants, or theiremployers, to provide these benefits, report thepayments on line 2 as program servicerevenue, rather than on line 1 as contributions.

C. How to value noncash contributionsSee General Instruction L.

D. Schedule of contributors(Not open to public inspection) Attach aschedule listing each contributor who, duringthe year, gave the organization, directly orindirectly, money, securities, or other propertyworth $5,000 or more. If no one contributed$5,000 or more, you do not need to attach aschedule. See General Instruction L forguidelines. Note the cautionary statement.

Line 2—Program Service Revenue IncludingGovernment Fees and ContractsEnter the total program service revenue(exempt function income). Program servicesare primarily those that form the basis of anorganization's exemption from tax.1. Examples. A clinic would include on line 2all of its charges for medical services (whetherto be paid directly by the patients or throughMedicare, Medicaid, or other third-partyreimbursement), laboratory fees, and relatedcharges for services.

Program service revenue also includestuition received by a school; revenue fromadmissions to a concert or other performingarts event or to a museum; royalties receivedas author of an educational publicationdistributed by a commercial publisher;payments received by a section 501(c)(9)organization from participants or employers ofparticipants for health and welfare benefitscoverage; and registration fees received inconnection with a meeting or convention.2. Program-related investment income.Program service revenue also includes incomefrom program-related investments. Theseinvestments are made primarily to accomplishan exempt purpose of the investingorganization rather than to produce income.Examples are scholarship loans andlow-interest loans to charitable organizations,indigents, or victims of a disaster. Rentalincome received from an exempt function isanother example of program-relatedinvestment income. See also the instructionsfor line 4.3. Unrelated trade or business activities.Unrelated trade or business activities (notincluding any special events or activities) thatgenerate fees for services may also beprogram service activities. A social club, forexample, should report as program servicerevenue the fees it charges both members andnonmembers for the use of its tennis courtsand golf course.4. Government fees and contracts. Programservice revenue includes income earned by theorganization for providing a governmentagency with a service, facility, or product thatbenefited that government agency directlyrather than benefiting the public as a whole.See line 1, instruction A8, for reportingguidelines when payments are received froma government agency for providing a service,facility, or product for the primary benefit of thegeneral public.

Line 3—Membership Dues andAssessmentsEnter members' and affiliates' dues andassessments that are not contributions. Seealso General Instruction L.

A. What is included on line 31. Dues and assessments received thatcompare reasonably with the benefits ofmembership. When the organization receivesdues and assessments that comparereasonably with membership benefits, reportsuch dues and assessments on line 3.

2. Organizations that generally match duesand benefits. Organizations described insection 501(c)(5), (6), or (7) generally providebenefits with a reasonable relationship to dues,although benefits to members may be indirect.

B. Examples of membership benefitsThese include subscriptions to publications;newsletters (other than one about theorganization's activities only); free orreduced-rate admissions to events theorganization sponsors; use of its facilities; anddiscounts on articles or services that bothmembers and nonmembers can buy. In figuringthe value of membership benefits, disregardsuch intangible benefits as the right to attendmeetings, vote or hold office in theorganization, and the distinction of being amember of the organization.

C. What is not included on line 31. Dues or assessments received thatexceed the value of available membershipbenefits. Whether or not membership benefitsare used, dues received by an organization, tothe extent they exceed the monetary value ofthe membership benefits available to the duespayer, are a contribution that should bereported on line 1.2. Dues received primarily for theorganization's support. If a member paysdues primarily to support the organization'sactivities, and not to obtain benefits of morethan nominal monetary value, those dues area contribution to the organization includable online 1.

Line 4—Investment IncomeÿÿÿA. What is included on line 41. Interest on savings and temporary cashinvestments. Include the amount of interestreceived from interest-bearing checkingaccounts, savings, and temporary cashinvestments, such as money market funds,commercial paper, certificates of deposit, andU.S. Treasury bills or other governmentalobligations that mature in less than 1 year.So-called dividends or earnings received frommutual savings banks, money market funds,etc., are actually interest and should beincluded on this line.2. Dividends and interest from securities.Include the amount of dividend and interestincome from equity and debt securities (stockand bonds) on this line. Include amountsreceived from payments on securities loans,as defined in section 512(a)(5).3. Gross rents. Include gross rental incomereceived during the year from investmentproperty.4. Other investment income. Include, forexample, royalty income from mineral interestsowned by the organization.

B. What is not included on line 41. Capital gains dividends and unrealizedgains and losses. Do not include on this lineany capital gains dividends. They are reportedon line 5. Also do not include unrealized gainsand losses on investments carried at marketvalue. See the instructions for line 20.2. Exempt function revenue (programservice). Do not include on line 4 amountsthat represent income from an exempt function(program service). Report these amounts online 2 as program service revenue. Reportexpenses related to this income on lines 12through 16.

An organization whose exempt purpose is toprovide low-rental housing to persons with lowincome receives exempt function income fromsuch rentals. An organization receives exempt

Specific Instructions for Form 990-EZ Page 29

function income if it rents or sublets rentalspace to a tenant whose activities are relatedto the reporting organization's exempt purpose.Exempt function income also arises when anorganization rents to an unaffiliated exemptorganization at less than fair rental value for thepurpose of helping that unaffiliated organizationcarry out its exempt purpose. Report rentalincome received in these instances on line 2and not on line 4.

Only for purposes of completing this return,treat income from renting property to affiliatedexempt organizations as exempt functionincome and include such income on line 2 asprogram service revenue.

Lines 5a–c—Gains (or Losses) From Saleof Assets Other Than InventoryÿÿÿA. What is included on line 5Report on line 5a all sales of securities andsales of all other types of investments (suchas real estate, royalty interests, or partnershipinterests) as well as sales of all othernoninventory assets (such as program-relatedinvestments and fixed assets used by theorganization in its related and unrelatedactivities).

Total the cost or other basis (lessdepreciation) and selling expenses and enterthe result on line 5b. On line 5c, enter the netgain or loss. Report capital gains dividends, theorganization's share of capital gains and lossesfrom a partnership, and capital gainsdistributions from trusts on lines 5a and 5c.Indicate the source on the schedule describedbelow.

For this return, you may use the moreconvenient way to figure the organization's gainor loss from sales of securities by comparingthe sales price with the average-cost basis ofthe particular security sold. However,generally, the average-cost basis is not usedto figure the gain or loss from sales ofsecurities reportable on Form 990-T.

B. What is not included on line 5Do not include on line 5 any unrealized gainsor losses on securities that are carried in thebooks of account at market value. See theinstructions for line 20.

C. Attached schedule1. Nonpublicly traded securities andnoninventory items. Attach a schedule toshow the sale or exchange of nonpubliclytraded securities and the sale or exchange ofother assets that are not inventory items. Theschedule should show security transactionsseparately from the sale of other assets. Showfor these assets:●A Date acquired and how acquired,●A Date sold and to whom sold,●A Gross sales price,●A Cost, other basis, or if donated, value at timeacquired (state which),●A Expense of sale and cost of improvementsmade after acquisition, and●A Depreciation since acquisition, if depreciableproperty.2. Publicly traded securities. For sales ofpublicly traded securities through a broker, youmay total the gross sales price, the cost orother basis, and the expenses of sale, andreport lump-sum figures in place of providingthe detailed reporting required in the aboveparagraph.

Publicly traded securities include commonand preferred stocks, bonds (includinggovernmental obligations), and mutual fundshares that are listed and regularly traded inan over-the-counter market or on anestablished exchange and for which market

quotations are published or otherwise readilyavailable.

Lines 6a–c—Special Events and ActivitiesOn the appropriate line, enter the grossrevenue, expenses, and net income (or loss)from all special events and activities, such asdinners, dances, carnivals, raffles, bingogames, other gambling activities, anddoor-to-door sales of merchandise.

These activities only incidentally accomplishan exempt purpose. Their sole or primarypurpose is to raise funds that are other thancontributions to finance the organization'sexempt activities.

This is done by offering goods or servicesthat have more than a nominal value(compared to the price charged) for a paymentthat is more than the direct cost of those goodsor services. See line 1 instructions A1 and A2for a discussion on contributions reportable online 1 and revenue reportable on line 6. Seealso General Instruction L.

Calling any required payment a “donation”or “contribution” on tickets, advertising, orsolicitation materials does not change howthese payments should be reported on Form990-EZ.

The gross revenue from gambling activitiesand other special events must be reported inthe amount column on line 6a without reductionfor cash or noncash prizes, cost of goods sold,compensation, fees, or other expenses.

A. What is included on line 61. Gross revenue/contributions. When anorganization receives payments for goods orservices offered through a special event, enter:ÿÿAAAA1. As gross revenue, on line 6a (in theamount column) i.e., the retail value of thegoods or services.ÿÿAAAA2. As a contribution, on both line 1 and line6a (within the parentheses), any amountreceived that exceeds the retail value of thegoods or services given.

Example. At a special event, anorganization received $100 in gross receipts forgoods valued at $40. The organization enteredgross revenue of $40 on line 6a and entered acontribution of $60 on both line 1 and within theparentheses on line 6a. The contribution wasthe difference between the gross revenue of$40 and the gross receipts of $100.2. Raffles or lotteries. Report as revenue, online 6a, any amount received from raffles orlotteries that require payment of a specifiedminimum amount for each entry, unless theprizes awarded have only nominal value. Seeline 6, instruction B1 and B2, below.3. Direct expenses. Report on line 6b only thedirect expenses attributable to the goods orservices the buyer receives from a specialevent. If you include an expense on line 6b, donot report it again on line 7b. Report cost ofgoods related to the sale of inventory on line7b. Fundraising expenses attributable tocontributions reported on the description lineof 6a (within the parentheses), and also on line1, are reportable on lines 12 through 16.

B. What is not included on line 61. Sales or gifts of goods or services of onlynominal value. If the goods or servicesoffered at the special event have only nominalvalue, include all of the receipts ascontributions on line 1 and all of the relatedexpenses on lines 12 through 16. See GeneralInstruction L for a description of nominal orinsubstantial benefits.2. Sweepstakes, raffles, and lotteries.Report as a contribution, on line 1, theproceeds of solicitation campaigns in which the

names of contributors and other respondentsare entered in a drawing for prizes.

When a minimum payment is required foreach raffle or lottery entry and prizes of onlynominal value are awarded, report any amountreceived as a contribution. Report the relatedexpenses on lines 12 through 16.3. Activities that generate onlycontributions are not special events. Anactivity that generates only contributions, suchas a solicitation campaign by mail, is not aspecial event. Any amount received should beincluded on line 1 as a contribution. Relatedexpenses are reportable on lines 12 through16.

C. Attached scheduleAttach a schedule listing the 3 largest specialevents conducted, as measured by grossreceipts. Describe each of these events andindicate for each event: the gross receipts; theamount of contributions included in grossreceipts (see line 6, instruction A1, above); thegross revenue (gross receipts lesscontributions); the direct expenses; and the netincome (gross revenue less direct expenses).

Furnish the same information, in totalfigures, for all other special events held that arenot among the largest 3. Indicate the type andnumber of the events not listed individually (forexample, 3 dances and 2 raffles).

An example of this schedule of specialevents might appear in columnar form asfollows:

If you use this format, report the total forContributions on line 1 of Form 990-EZ and online 6a (within the parentheses of thedescription line). Report the totals for GrossRevenue, in the amount column, on line 6a;Direct Expenses on line 6b; and Net Incomeor (loss) on line 6c.

Lines 7a–c—Gross Sales of Inventory1. Sales of inventory. Include on line 7a thegross sales (less returns and allowances) ofinventory items, whether the sales activity isan exempt function or an unrelated trade orbusiness. Include all inventory sales exceptsales of goods at special events, which arereportable on line 6.2. Cost of goods sold. On line 7b, report thecost of goods sold related to sales of suchinventory. The usual items included in cost ofgoods sold are direct and indirect labor,materials and supplies consumed, freight-in,and a proportion of overhead expenses.Marketing and distribution expenses are notincludable in cost of goods sold. Include thoseexpenses on lines 12 through 16.3. Investments. Do not include on line 7 salesof investments on which the organizationexpected to profit by appreciation and sale.Report sales of these investments on line 5.

Line 8—Other RevenueEnter the total income from all sources notcovered by lines 1 through 7. Examples oftypes of income includable on line 8 areinterest on notes receivable not held asinvestments or as program-related investments(defined in the line 2 instructions); interest onloans to officers, directors, trustees, keyemployees, and other employees; and royaltiesthat are not investment income or programservice revenue.

AllSpecial Events: (A) (B) (C) Other Total

Gross Receipts $xx $xx $xx $xx $xx

Less: Contributions xx xx xx xx xx

Gross Revenue xx xx xx xx xx

Less: Direct Expenses xx xx xx xx xx

Net Income or (loss) $xx $xx $xx $xx $xx


Line 10—Grants and Similar Amounts PaidReporting for line 10, in accordance with SFAS116, is acceptable for Form 990-EZ purposes,but not required by IRS. However, see GeneralInstruction E.

An organization that makes a grant to bepaid in future years should, according to SFAS116, report the grant's present value on line 10.Accruals of present value increments to theunpaid grant should also be reported on line10 in future years.

A. What is included on line 10Enter the amount of actual grants and similaramounts paid to individuals and organizationsselected by the filing organization. Includescholarship, fellowship, and research grants toindividuals.1. Specific assistance to individuals.Include on this line the amount of payments to,or for the benefit of, particular clients orpatients, including assistance by others at theexpense of the filing organization.2. Payments, voluntary awards, or grants toaffiliates. Include on line 10 certain types ofpayments to organizations “affiliated with”(closely related to) the reporting organization.These payments include predetermined quotasupport and dues payments by localorganizations to their state or nationalorganizations.Note: If the organization uses Form 990-EZ forstate reporting purposes, be sure to distinguishbetween payments to affiliates and awards andgrants. See General Instruction E.

B. What is not included on line 101. Administrative expenses. Do not includeon this line expenses made in selectingrecipients or monitoring compliance with theterms of a grant or award. Enter thoseexpenses on lines 12 through 16.2. Purchases of goods or services fromaffiliates. Do not report the cost of goods orservices purchased from affiliates on line 10.Report these as expenses on lines 12 through16.3. Membership dues paid to anotherorganization. Report membership dues thatthe organization pays to another organizationfor general membership benefits, such asregular services, publications, and materials online 16, as “Other expenses.”

C. Attached scheduleAttach a schedule to explain the amountsreported on line 10. Show on this schedule:●A Each class of activity,●A The donee's name and address,●A The amount given, and●A The relationship of the donee (in the case ofgrants to individuals) if the relationship is byblood, marriage, adoption, or employment(including employees' children) to any personor corporation with an interest in theorganization, such as a creator, donor, director,trustee, officer, etc.

Any grants reported on line 10 that wereapproved during the year, but not paid by thedue date for filing Form 990-EZ (includingextensions), must be identified and listedseparately in the line 10 schedule.

Give the name and address of each affiliatethat received any payment reported on line 10.Specify both the amount and purpose of thesepayments.

Classify activities on this schedule in moredetail than by using such broad terms ascharitable, educational, religious, or scientific.For example, identify payments to affiliates;

payments for nursing services; fellowships; orpayments for food, shelter, or medical servicesfor indigents or disaster victims. For paymentsto indigent families, do not identify theindividuals.

If an organization gives property other thancash and measures an award or grant by theproperty's fair market value, also show on thisschedule:●A A description of the property,●A The book value of the property,●A How you determined the book value,●A How you determined the fair market value,and●A The date of the gift.

Any difference between a property's fairmarket value and book value should berecorded in the organization's books of accountand on line 20.

Educational institutions and agenciessubject to the Family Educational Rights andPrivacy Act (20 U.S.C. 1232g) are not requiredto list the names of individuals who wereprovided scholarships or other financialassistance where such disclosure would violatethe privacy provisions of the law. Instead, suchorganizations should group each type offinancial aid provided, indicate the number ofindividuals who received the aid, and specifythe aggregate dollar amount.

Line 11—Benefits Paid To or For MembersFor an organization that gives benefits tomembers or dependents (such asorganizations exempt under section 501(c)(8),(9), or (17)), enter the amounts paid for: (a)death, sickness, hospitalization, or disabilitybenefits; (b) unemployment compensationbenefits; and (c) other benefits. Do not include,on this line, the cost of employment-relatedbenefits the organization gives its officers andemployees. Report them on line 12.

Line 12—Salaries, Other Compensation,and Employee BenefitsEnter the total salaries and wages paid to allemployees and the fees paid to officers,directors, and trustees. Include the total of theemployer's share of the contributions theorganization paid to qualified and nonqualifiedpension plans and the employer's share ofcontributions to employee benefit programs(such as insurance, health, and welfareprograms) that are not an incidental part of apension plan. Complete the Form 5500 seriesreturn/report that is appropriate for theorganization's plan.

Also include in the total the amount ofFederal, state, and local payroll taxes for theyear that are imposed on the organization asan employer. This includes the employer'sshare of social security and Medicare taxes,Federal unemployment tax (FUTA), stateunemployment compensation tax, and otherstate and local payroll taxes. Taxes withheldfrom employees' salaries and paid over to thevarious governmental units (such as Federaland state income taxes and the employees'share of social security and Medicare taxes)are part of the employees' salaries included online 12. Report expenses paid or incurred foremployee events such as a picnic or holidayparty on this line.

Line 13—Professional Fees and OtherPayments to Independent ContractorsEnter the total amount of legal, accounting,auditing, other professional fees (such as feesfor fundraising or investment services) andrelated expenses charged by outside firms andindividuals who are not employees of the

organization. Do not include any penalties,fines, or judgments imposed against theorganization as a result of legal proceedings.Report and identify those expenses on line 16.Report fees paid to directors and trustees online 12.

Line 14—Occupancy, Rent, Utilities, andMaintenanceEnter the total amount paid or incurred for theuse of office space or other facilities, heat, light,power, and other utilities, outside janitorialservices, mortgage interest, real estate taxesand property insurance attributable to rentalproperty, and similar expenses. Do not subtractfrom rental expenses reported on line 14 anyrental income received from renting orsubletting rented space. See instructions forline 2 and 4 to determine whether such incomeis reportable as exempt function income orinvestment income. However, report on line 14any rental expenses for rental income reportedon lines 2 and 4. If the organization recordsdepreciation on property it occupies, enter thetotal for the year.

For an explanation of acceptable methodsfor computing depreciation, see Pub. 946, Howto Depreciate Property.

Line 15—Printing, Publications, Postage,and ShippingEnter the printing and related costs ofproducing the reporting organization's ownnewsletters, leaflets, films, and otherinformational materials on this line. Include thecosts of outside mailing services on this line.Also include the cost of any purchasedpublications as well as postage and shippingcosts not reportable on lines 5b, 6b, or 7b. Donot include any expenses, such as salaries, forwhich a separate line is provided.

Line 16—Other ExpensesInclude here such expenses as penalties, fines,and judgments; unrelated business incometaxes; insurance and real estate taxes notattributable to rental property or reported asoccupancy expenses; depreciation oninvestment property; travel and transportationcosts; interest expense; and expenses forconferences, conventions, and meetings.

Some states that accept Form 990-EZ insatisfaction of their filing requirements mayrequire that certain types of miscellaneousexpenses be itemized. See General InstructionE.

Line 18—Excess or (Deficit) for the YearEnter the difference between lines 9 and 17. Ifline 17 is more than line 9, enter the differencein parentheses.

Line 19—Net Assets or Fund Balances atBeginning of YearEnter the amount from the prior year's balancesheet or from Form 5500, 5500-C/R, or anapproved DOL form if General Instruction Fapplies.

Line 20—Other Changes in Net Assets orFund BalancesAttach a statement explaining any changes innet assets or fund balances between thebeginning and end of the year that are notaccounted for by the amount on line 18.Amounts to report here include adjustments ofearlier years' activity; unrealized gains andlosses on investments carried at market value;and any difference between fair market valueand book value of property given as an awardor grant. See General Instruction G regardingthe reporting of a section 481(a) adjustment toconform to SFAS 116.


Part II—Balance SheetsAll organizations, except those that meet oneof the exceptions in General Instruction F, mustcomplete columns (A) and (B) of Part II of thereturn and may not submit a substitute balancesheet. Failure to complete Part II may result inpenalties for filing an incomplete return. SeeGeneral Instruction K.

Some states require more information. SeeGeneral Instruction E for more informationabout completing a Form 990-EZ to be filedwith any state or local government agency.

Line 22—Cash, Savings, and InvestmentsInclude all interest and non-interest bearingaccounts such as petty cash funds, checkingaccounts, savings accounts, money marketfunds, commercial paper, certificates ofdeposit, U.S. treasury bills, and othergovernment obligations. Also include the bookvalue of securities held as investments, and allother investment holdings including land andbuildings held for investment. Report theincome from these investments on line 4.

Line 23—Land and BuildingsEnter the book value (cost or other basis lessaccumulated depreciation) of all land andbuildings owned by the organization and notheld for investment.

Line 24—Other AssetsEnter the total of other assets along with adescription of those assets. Amounts to includehere are (among others) receivable accounts,inventories, and prepaid expenses.

Line 25—Total AssetsEnter the amount of total assets. If theend-of-year total assets entered in column (B)are $250,000 or more, Form 990 must be filedinstead of Form 990-EZ.

Line 27—Net Assets or Fund BalancesSubtract line 26 (total liabilities) from line 25(total assets) to determine net assets. Enterthis net asset amount on line 27. The amountentered in column (B) should agree with the netasset or fund balance amount on line 21.

States that accept Form 990-EZ as theirbasic report form may require a separatestatement of changes in net assets. SeeGeneral Instruction E.

Part III—Statement of Program ServiceAccomplishmentsA program service is a major (usually ongoing)objective of an organization, such as adoptions,recreation for the elderly, rehabilitation, orpublication of journals or newsletters.

Part IV—List of Officers, Directors,Trustees, and Key EmployeesList each person who was an officer, director,trustee, or key employee (defined below) of theorganization at any time during the year evenif they did not receive any compensation fromthe organization. Enter a zero in columns (C),(D), or (E) if no compensation, contributions,expenses and other allowances were paidduring the reporting year, or deferred forpayment to a future accounting period. Give thepreferred address at which officers, etc., wantthe Internal Revenue Service to contact them.Use an attachment if there are more than fourpersons to list in Part IV.

Show all forms of cash and noncashcompensation received by each listed officer,etc., whether paid currently or deferred.

A failure to fully complete Part IV can subjectboth the organization and the individualsresponsible for such failure to penalties for

filing an incomplete return. See GeneralInstruction K. In particular, entering the phraseon Part IV, “Information available uponrequest,” or a similar phrase, is not acceptable.

The organization may also provide anattachment to explain the entire 1997compensation package for any person listed inPart IV.

Key employee.— A “key employee” is anyperson having responsibilities or powers similarto those of officers, directors, or trustees. Theterm includes the chief management andadministrative officials of an organization (suchas an executive director or chancellor) but doesnot include the heads of separate departmentsor smaller units within an organization.

A chief financial officer and the officer incharge of administration or program operationsare both key employees if they have theauthority to control the organization's activities,its finances, or both. The “heads of separatedepartments” reference applies to personssuch as the heads of the radiology departmentor coronary care unit of a hospital or the headof the chemistry or history or Englishdepartment at a college. These persons aremanagers within their specific areas but not forthe organization as a whole and, therefore, arenot key employees.

Column (C)For each person listed, report salary, fees,bonuses, and severance payments paid.Include current-year payments of amountsreported or reportable as deferredcompensation in any prior year.

Column (D)Include in this column all forms of deferredcompensation and future severance payments(whether or not funded; whether or not vested;and whether or not the deferred compensationplan is a qualified plan under section 401(a)).Include also payments to welfare benefit planson behalf of the officers, etc. Such plansprovide benefits such as medical, dental, lifeinsurance, severance pay, disability, etc.Reasonable estimates may be used if precisecost figures are not readily available.

Unless the amounts were reported in column(C), report, as deferred compensation incolumn (D), salaries and other compensationearned during the period covered by the return,but yet not paid by the date the organizationfiles its return.

Column (E)Enter both taxable and nontaxable fringebenefits (other than de minimis fringe benefitsdescribed in section 132(e)). Include amountsthat the recipients must report as income ontheir separate income tax returns. Examplesinclude amounts for which the recipient did notaccount to the organization or allowances thatwere more than the payee spent on serving theorganization. Include payments made underindemnification arrangements, the value of thepersonal use of housing, automobiles, or otherassets owned or leased by the organization (orprovided for the organization's use withoutcharge), as well as any other taxable andnontaxable fringe benefits. See Pub. 525 formore information.

Form 941 must be filed to report income taxwithholding and social security and Medicaretaxes. The organization must also file Form 940to report Federal unemployment tax, unless theorganization is not subject to these taxes. SeePub. 15 (Circular E), for more information. Seealso the Trust Fund Recovery Penaltydiscussion in General Instruction D.

• Describe the activity's objective, forboth this time period and thelonger-term goal, if the output isintangible, such as in a researchactivity.

• Give reasonable estimates for anystatistical information if exact figuresare not readily available. Indicate thatthis information is estimated.

• Be clear, concise, and complete inyour description. Avoid adding anattachment.

3 If part of the total expenses of anyprogram service consists of grantsreported on line 10, show the amountof the grants in the space provided andinclude the grants in the “Expenses”column.

• Section 501(c)(3) and (4)organizations, and section 4947(a)(1)nonexempt charitable trusts,must show the amount of grants andallocations to others andmust enter the total expenses foreach program service reported.

• For all other organizations,completing the “Expenses ” column(and the “Grants” entry) in Part III isoptional.

4 Attach a schedule that lists theorganization's other program services.

• The detailed information requiredfor the 3 largest services is notnecessary for this schedule.

• Section 501(c)(3) and (4)organizations, and section 4947(a)(1)nonexempt charitable trusts,however, must show the expensesattributable to their program services.

5 The organization may show the amountof any donated services, or use ofmaterials, equipment, or facilities itreceived or utilized in connection with aspecific program service.

• Disclose the applicable amounts ofany donated services, etc., on thelines for the narrative description ofthe appropriate program service.

• Do not include these amounts inthe expense column in Part III.

• See the instructions for line 1, B2.

Step Action

1 State the organization's primary exemptpurpose.

2 All organizations must describe theirexempt purpose achievements for eachof their 3 largest program services (asmeasured by total expenses incurred).If there were 3 or fewer of suchactivities, describe each programservice activity.

• Describe program serviceaccomplishments throughmeasurements such as clientsserved, days of care, therapysessions, or publications issued.


Part V—Other InformationNote: Section 501(c)(3) organizations andsection 4947(a)(1) nonexempt charitable trustsmust also complete and attach a Schedule A(Form 990) to their Form 990-EZ or Form 990.See the discussion in General Instruction D forSchedule A (Form 990).

Line 33—Change in ActivitiesAttach a statement to explain any significantchanges in the kind of activities theorganization conducts to further its exemptpurpose. Include new or modified activities notlisted as current or planned in theorganization's application for recognition ofexemption or not already made known to theIRS by a letter to its key District director or byan attachment to the organization's return forany earlier year. Also include any majorprogram activities that are being discontinued.

Line 34—Changes in Organizing orGoverning DocumentsAttach a conformed copy of any changes to thearticles of incorporation, or association,constitution, trust instrument, or otherorganizing document, or to the bylaws or othergoverning document.

A “conformed copy” is one that agrees withthe original document and all amendments toit. If the copies are not signed, they must beaccompanied by a written declaration signedby an officer authorized to sign for theorganization, certifying that they are completeand accurate copies of the original documents.

Photocopies of articles of incorporationshowing the certification of an appropriate stateofficial need not be accompanied by such adeclaration. See Rev. Proc. 68-14, 1968-1 C.B.768, for details. When a number of changesare made, attach a copy of the entire revisedorganizing instrument or governing document.

However, if your exempt organizationchanges its legal structure, such as from a trustto a corporation, you must file a new exemptionapplication to establish that the new legal entityqualifies for exemption.

Line 35—Unrelated Business Income andLobbying Proxy TaxÿÿÿUnrelated business incomeCheck “Yes” on line 35a if the organization'stotal gross income from all of its unrelatedtrades and businesses is $1,000 or more forthe year. Gross income is gross receipts lessthe cost of goods sold. See Pub. 598 for adescription of unrelated business income andthe Form 990-T filing requirements. Form990-T is not a substitute for Form 990-EZ.Items of income and expense reported on Form990-T must also be reported on Form 990-EZwhen the organization is required to file bothforms.Note: All tax-exempt organizations must payestimated taxes with respect to their unrelatedbusiness income if they expect their tax liabilityto be $500 or more. Use Form 990-W tocompute this tax.

Section 6033(e) tax for lobbyingexpendituresIf you check “No” to line 35a, you are certifyingthat the organization was not subject to thenotice and reporting requirements of section6033(e) and that the organization had nolobbying and political expenditures potentiallysubject to the proxy tax.Section 6033(e) notice and reportingrequirements and proxy tax. Section 6033(e)requires certain section 501(c)(4), (5), and (6)organizations to tell their members the portionof their membership dues that were allocable

to the political or lobbying activities of theorganization. If an organization does not giveits members this information, then theorganization is subject to a proxy tax. The taxis reported on Form 990-T.

If you check “Yes” on line 35a to declare thatyour organization had reportable section6033(e) lobbying and political expenses in the1997 reporting year (and potential liability forthe proxy tax):ÿÿAAAA1. Complete lines 85a-h, page 5, of Form990 (note instructions), andÿÿAAAA2. Attach page 5 to Form 990-EZ.

Only certain organizations that are taxexempt under sections:●A 501(c)(4) (social welfare organizations)●A 501(c)(5) (agricultural and horticulturalorganizations), or●A 501(c)(6) (business leagues)are subject to (a) the section 6033(e) noticeand reporting requirements, and (b) a potentialproxy tax.

If your organization is not tax-exemptunder sections 501(c)(4), (5), or (6), check“No” on line 35a, unless there wasunrelated business income.

If the organization meets Exception 1 or 2below, it is excluded from the notice, reporting,and proxy tax requirements of section 6033(e),and you should check “No” to line 35a, unlessthe organization had $1,000 or more ofunrelated business income. See also Rev.Procs. 95-35 and 95-35A, 1995-2 C.B. 391-2.Exception 1. Section 6033(e)(3) exceptionfor nondeductible dues.ÿÿAAAA1. All organizations exempt from tax undersection 501(a), other than section 501(c)(4),501(c)(5), and 501(c)(6) organizations.ÿÿAAAA2. Local associations of employees' andveterans' organizations described in section501(c)(4), but not section 501(c)(4) socialwelfare organizations.ÿÿAAAA3. Labor unions and other labororganizations described in section 501(c)(5),but not section 501(c)(5) agricultural andhorticultural organizations.ÿÿAAAA4. Section 501(c)(4), (5), and (6)organizations that receive more than 90% oftheir dues from:ÿÿAAAAa. Section 501(c)(3) organizations,ÿÿAAAAb. State or local governments,ÿÿAAAAc. Entities whose income is exempt fromtax under section 115, orÿÿAAAAd. Organizations described in 1 through 3,above.ÿÿAAAA5. Section 501(c)(4) and (5) organizationsthat receive more than 90% of their annualdues from:ÿÿAAAAa. Persons,ÿÿAAAAb. Families, orÿÿAAAAc. Entities who each paid annual dues of$53 or less in 1997 (adjusted annually forinflation). See Rev. Proc. 96-59, 1996-2 C.B.392.ÿÿAAAA6. Any organization that receives a privateletter ruling from the IRS stating that theorganization satisfies the section 6033(e)(3)exception.ÿÿAAAA7. Any organization that keeps records tosubstantiate that 90% or more of its memberscannot deduct their dues (or similar amounts)as business expenses whether or not any partof their dues are used for lobbying purposes.ÿÿAAAA8. Any organization that is not amembership organization.Exception 2. Section 6033(e)(1) $2,000in-house lobbying exception. Anorganization satisfies the $2,000 in-houselobbying exception if it:ÿÿAAAA1. Did not receive a waiver for proxy taxowed for the prior year.

ÿÿAAAA2. Did not make any political or foreignlobbying expenditures during the 1997reporting year,ÿÿAAAA3. Made lobbying expenses during the 1997reporting year consisting only of in-house directlobbying expenses totaling $2,000 or less, butexcluding:ÿÿAAAAa. Any allocable overhead expenses, andÿÿAAAAb. All direct lobbying expenses of any localcouncil regarding legislation of direct interest tothe organization or its members.Definitions.

Grassroots lobbying refers to attempts toinfluence any segment of the general publicregarding legislative matters or referendums.

Direct lobbying includes attempting toinfluence.—●A Legislation through communication withlegislators and other government officials, and●A The official actions or positions of coveredexecutive branch officials through directcommunication.

Direct lobbying does not includeattempting to influence.—●A Any local council on legislation of directinterest to the organization or its members, and●A The general public regarding legislativematters (grassroots lobbying).

Other lobbying includes.—●A Grassroots lobbying,●A Foreign lobbying,●A Third-party lobbying, and●A Dues paid to another organization that wereused to lobby.

In-house expenditures include.—●A Salaries, and●A Other expenses of the organization's officialsand staff (including amounts paid or incurredfor the planning of legislative activities).

In-house expenditures do not include.—●A Any payments to other taxpayers engaged inlobbying or political activities as a trade orbusiness.●A Any dues paid to another organization thatare allocable to lobbying or political activities.

Line 36—Liquidation, Dissolution,Termination, or Substantial ContractionIf there was a liquidation, dissolution,termination, or substantial contraction, attacha statement explaining what took place.

For a complete liquidation of a corporationor termination of a trust, check the “FinalReturn” box in the heading of the return. On theattached statement, show whether the assetshave been distributed and the date. Also attacha certified copy of any resolution, or plan ofliquidation or termination, etc., with allamendments or supplements not already filed.In addition, attach a schedule listing the namesand addresses of all persons who received theassets distributed in liquidation or termination;the kinds of assets distributed to each one; andeach asset's fair market value.

A “substantial contraction” is a partialliquidation or other major disposition of assetsexcept transfers for full consideration ordistributions from current income.

A “major disposition of assets” means anydisposition for the tax year that is:ÿÿAAAA1. At least 25% of the fair market value ofthe organization's net assets at the beginningof the tax year; orÿÿAAAA2. One of a series of related dispositionsbegun in earlier years that add up to at least25% of the net assets the organization had atthe beginning of the tax year when the firstdisposition in the series was made. Whethera major disposition of assets took place


through a series of related dispositionsdepends on the facts in each case.

See Regulations section 1.6043-3 for specialrules and exceptions.

Line 37—Expenditures for PoliticalPurposesA political expenditure is one intended toinfluence the selection, nomination, election,or appointment of anyone to a Federal, state,or local public office, or office in a politicalorganization, or the election of Presidential orVice Presidential electors. It does not matterwhether the attempt succeeds.

An expenditure includes a payment,distribution, loan, advance, deposit, or gift ofmoney, or anything of value. It also includes acontract, promise, or agreement to make anexpenditure, whether or not legallyenforceable.All section 501(c) organizations. Section501(c) organizations must file Form 1120-POLif their political expenditures and their netinvestment income both exceed $100 for theyear. They may be liable for a tax under section527.

If a section 501(c) organization establishesand maintains a section 527(f)(3) separatesegregated fund, see the specific instructionsfor line 81, Form 990.Section 501(c)(3) organizations. A section501(c)(3) organization will lose its tax-exemptstatus if it engages in political activity.

A section 501(c)(3) organization must pay asection 4955 excise tax for any amount paidor incurred on behalf of, or in opposition to, anycandidate for public office. The organizationmust pay an additional excise tax if it fails tocorrect the expenditure timely.

A manager of a section 501(c)(3)organization who knowingly agrees to apolitical expenditure must pay a section 4955excise tax, unless the agreement is not willfuland there is reasonable cause. A manager whodoes not agree to a correction of the politicalexpenditure may have to pay an additionalexcise tax.

When an organization promotes a candidatefor public office (or is used or controlled by acandidate or prospective candidate), amountspaid or incurred for the following purposes arepolitical expenditures:●A Remuneration to such individual (a candidateor prospective candidate) for speeches or otherservices;●A Travel expenses of such individual;●A Expenses of conducting polls, surveys, orother studies, or preparing papers or othermaterial for use by such individual;●A Expenses of advertising, publicity, andfundraising for such individual; and●A Any other expense that has the primaryeffect of promoting public recognition orotherwise primarily accruing to the benefit ofsuch individual.

An organization is effectively controlled by acandidate or prospective candidate only if suchindividual has a continuing, substantialinvolvement in the day-to-day operations ormanagement of the organization.

A determination of whether the primarypurpose of an organization is promoting thecandidacy or prospective candidacy of anindividual for public office is made on the basisof all the facts and circumstances. See section4955 and Regulations section 53.4955.

Use Form 4720 to figure and report theseexcise taxes.

Line 38—Loans To or From Officers,Directors, Trustees, and Key EmployeesEnter the end-of-year unpaid balance ofsecured and unsecured loans made to orreceived from officers, directors, trustees, andkey employees. For example, if theorganization borrowed $1,000 from one officerand loaned $500 to another, none of which hasbeen repaid, report $1,500 on line 38b.

For loans outstanding at the end of the year,attach a schedule as described below. Reportany interest expense on line 16 and anyinterest income on line 2, 4, or 8, dependingon the nature of the receivable that created theinterest income.When loans should be reported separately.In the required schedule, report each loanseparately, even if more than one loan wasmade to or received from the same person, orthe same terms apply to all loans made. Salaryadvances and other advances for the personaluse and benefit of the recipient, andreceivables subject to special terms or arisingfrom nontypical transactions, must be reportedas separate loans for each officer, director,trustee, and key employee.When loans should be reported as a singletotal. In the required schedule, reportreceivables that are subject to the same termsand conditions (including credit limits and rateof interest) as receivables due from the generalpublic (occurring in the normal course of theorganization's operations) as a single total forall the officers, directors, trustees, and keyemployees. Report travel advances for officialbusiness of the organization as a single total.Schedule format. For each outstanding loanor other receivable that must be reportedseparately, the attached schedule should showthe following information (preferably incolumnar form):●A Borrower's name and title;●A Original amount;●A Balance due;●A Date of note;●A Maturity date;●A Repayment terms;●A Interest rate;●A Security provided by the borrower;●A Purpose of the loan; and●A Description and fair market value of theconsideration furnished by the lender (forexample, cash—$1,000; or 100 shares of XYZ,Inc., common stock—$9,000).

The above detail is not required forreceivables or travel advances that may bereported as a single total. However, report andidentify those totals separately in theattachment.

Line 39—Section 501(c)(7) OrganizationsGross receipts test. A section 501(c)(7)organization may receive up to 35% of its grossreceipts, including investment income, fromsources outside its membership and remaintax-exempt. Part of the 35% (up to 15% ofgross receipts) may be from public use of asocial club's facilities.

Gross receipts are the club's income from itsusual activities and include:●A Charges,●A Admissions,●A Membership fees,●A Dues,●A Assessments,●A Investment income (such as dividends, rents,and similar receipts), and normal recurringcapital gains on investments.

Gross receipts do not include:●A Capital contributions (see Regulationssection 1.118-1),●A Initiation fees, or●A Unusual amounts of income (such as thesale of the clubhouse).Note: College fraternities or sororities or otherorganizations that charge membership initiationfees, but not annual dues, do include initiationfees in their gross receipts.

If the 35% and 15% limits do not affect theclub's exempt status, include the incomeshown on line 39b on the club's Form 990-T.

Investment income earned by a section501(c)(7) organization is not tax-exemptincome unless it is set aside for:●A Religious,●A Charitable,●A Scientific,●A Literary,●A Educational purposes, or●A Prevention of cruelty to children or animals.

If the combined amount of an organization'sgross investment income and other unrelatedbusiness income exceeds $1,000, it mustreport the investment income and otherunrelated business income on Form 990-T.Nondiscrimination policy. A section501(c)(7) organization is not exempt fromincome tax if any written policy statement,including the governing instrument and bylaws,allows discrimination on the basis of race,color, or religion.

However, section 501(i) allows social clubsto retain their exemption under section501(c)(7) even though their membership islimited (in writing) to members of a particularreligion, if the social club:ÿÿAAAA1. Is an auxiliary of a fraternal beneficiarysociety exempt under section 501(c)(8), andÿÿAAAA2. Limits its membership to the membersof a particular religion; or the membershiplimitation is:ÿÿAAAAa. A good-faith attempt to further theteachings or principles of that religion, andÿÿAAAAb. Not intended to exclude individuals of aparticular race or color.

Line 40a—Section 501(c)(3) organizations:Disclosure of excise taxes imposed undersection 4911, 4912, or 4955Section 501(c)(3) organizations must discloseany excise tax imposed during the year undersection 4911 (excess lobbying expenditures),4912 (disqualifying lobbying expenditures), or,unless abated, 4955 (political expenditures).See sections 4962 and 6033(b).

Line 40b—Section 501(c)(3) and 501(c)(4)organizations: Disclosure of section 4958excess benefit transactions and excisetaxesSections 6033(b) and 6033(f) require section501(c)(3) and section 501(c)(4) organizationsto report the amount of taxes imposed undersection 4958 (excess benefit transactions)involving the organization, (unless abated), aswell as any other information the Secretarymay require concerning those transactions.See General Instruction P and Notice 96-46,1996-2 C.B. 212, for a discussion of excessbenefit transactions.

Attach a statement describing any excessbenefit transaction, the disqualified person orpersons involved, and whether or not theexcess benefit transaction was corrected.

Line 40c—Taxes imposed on organizationmanagers or disqualified personsFor line 40c, enter the amount of taxesimposed on organization managers or


disqualified persons under sections 4912,4955, and 4958, unless abated.

Line 40d—Taxes reimbursed by theorganizationFor line 40d, enter the amount of tax on line40c that was reimbursed by the organization.Any reimbursement of the excise tax liability ofa disqualified person or organization managerwill be treated as an excess benefit unless (1)

the organization treats the reimbursement ascompensation during the year thereimbursement is made, and (2) the totalcompensation to that person, including thereimbursement, is reasonable.

Line 41—List of statesList each state with which the organization isfiling a copy of this return in full or partialsatisfaction of state filing requirements.

Line 43—Section 4947(a)(1) nonexemptcharitable trustsSection 4947(a)(1) nonexempt charitable truststhat file Form 990-EZ instead of Form 1041must complete this line. The trust shouldinclude exempt-interest dividends receivedfrom a mutual fund or other regulatedinvestment company as well as tax-exemptinterest received directly.
