IRS Form 990 EZ Tutorial #3: Reporting Revenues, Page 1, Part I
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- Опубліковано 5 вер 2024
- www.myform990ez... In this tutorial video I explain how to report revenues received by a nonprofit organization on Form 990-EZ. Classifying revenues is critical to showing that the organization meets the various income tests used to show that the organization continue to qualify as tax-exempt.
This is a wonderful video series, so well done, easy to follow. I don't know if you can answer this question, but our non-profit had stocks donated, each year we sell stocks and the proceeds are transferred to our bank account. I'm trying to understand where to record this income, on Line 5a and 5b? and how to figure out the cost basis, very complicated!
How you handle it depends on when the stock is received and when it is sold. If your receive 10 shares of stock in 2023 valued at $1,000 on the day it was donated to you, and your broker sells it a few hours later for $975, here is how you show it on the 990EZ: The $1,000 non-cash donation of stock goes on line 1 contributions. The sales price of $975 goes on line 5a. The cost basis is the $1,000 value on the date it was received. So there would be a $25 loss on the sale which shows up on line 5c. You will notice that the stock gets counted twice in "gross receipts" (line "L" in the heading section). The IRS considers that you have received a non-cash donation of $1,000 PLUS sales proceeds of $975.
If you received 10 shares of stock in 2022 valued at $1,000 on the date you received it, on the 2022 990-EZ you would have non-cash contribution revenue on line 1 of $1,000, and you would put $1,000 on the balance sheet on line 24 Other Assets. If you sell half those shares in 2023 for $600, you would show $600 in sales proceeds on line line 5a, and $500 cost basis (the value of the shares on the date received) on line 5b, and show a $100 gain on line 5c. Also you would remove $500 worth of the stock from the balance sheet since you sold it.
Thanks so much!
Thank you
Thank you for your video series. It is most helpful! We're a Community Arts/Event Center & Rental Venue. Gross receipts hover around $5000.00 /year. Not yet tax exempt (1023EZ), but will be so trying to get educated.
Revenue Questions, please?: 1.) We hold free monthly events/classes and accept donations by attendees. Ex: CPR Class, Culture events, Music concerts. We're a low-income area, so event donations received can equate to 50 cents per attendee. Our cost for these events is no more than utility bill costs. Sometimes, we spend $10 on flowers or a small presenter gift. Instructors, presenters, performers donate their time. Even flyers are printed for free. Would this donated revenue go under line 1, and line 6b, or only line 1? 2.) We rent spaces for private functions and meetings, to pay the bills. Guessing this would go under Line 8, or is there another line # where it can go to avoid the Schedule O? Thank you again.
The value of donated services is not included on the 990 as revenue or expense. Free advertising is generally considered a donated service. I would say the value of the flyers would not be counted. Do own the building? What is the value of the building? Is there a mortgage on the building? It sounds like the building is being rented for activities other than exempt-purpose activities. Are you just renting the rooms? Or are you renting other property with the rooms? Do you provide any services to the renters? Such as set-up of the rooms, security, cleanup, etc? All of these things affect how the rental income is treated and whether it might be taxable.
@@NonprofitTaxHelp Thank you kindly. I think I talked too much in my questions. Apologies! Question: Where would we put donations received when people attend an event? Ex: We have a CPR Class that is free, but we have out a donation can. We get $20 in that can from attendees.
To your question: We own the building. Assessed value is $13,000 (1902 church). We rent different rooms as well as the whole building, with no other property. We provide setup and cleaning. Can't thank you enough.
@@kimsyoutubechannel874 A "donation" happens when a person gives a gift without expectation of a return benefit, or if the amount they pay exceeds the benefit they receive, then the excess portion is considered a gift. If a person is taking a class which has a normal price of $10 but allows smaller "donation amounts", and they "donate" $5, the five dollars would be considered Line 2 program service revenue because they are receiving the benefit of taking the class. If you offer the class/event for $10, and the person donates $15, then you have received program service revenue (line 2) of $10, and a line 1 contribution of $5.
If the class is advertised as free, then any money received would be a line 1 donation.
As to the rental income, if the tenant is conducting activities related to your exempt purpose, it would be line 2 program service revenue. If it is unrelated business taxable income, it would go on line 8 as "other income" and on a 990-T if it meets the filing threshold. I'm not offering an opinion as to whether it might be taxable rental income. That can be complicated and requires more info and analysis.
@@NonprofitTaxHelp I got it now! Thank you so much. I'm just the lackey who will have to file the yearly form. Someone else will thankfully do the taxes. :-) Thank you again and again. I fully understand now.
One more question with an example. Let's say we sell cookies for $10 that cost $3. As an incentive to sell $4 gets credited to a student account so the student can use it for camp or band trip and $3 profit goes to booster. Are gross sales defines as $10 or $6 as the pass though is not technically an expense. Or is it a selling expense?
For fundraising: If doing a silent auction and all items are donated does the amount the items are worth go on the contribution line of 6b? Also if the amount paid for total is less than the actual worth of the item, where does that number go?
Did you get a resonse? I'm trying to figure this out.
Where would cash back from credit cards go on part I?
Depends on why you got the cash back, but generally if it is rewards for making purchases it would be shown as a reduction of the expenses charged on the card rather than income. So if you purchased supplies on the credit card, I'd reduce the supplies expense by the amount of the cash back.
@@NonprofitTaxHelp Thank you so much for your quick response, also the videos have been very helpful.
If a fundraising activity has donated items greater than the value received how is this reported? Is this correct? Example donated items = 10,000 (include in line 1). Receive 8000 in auction for the items (include in 6b?) with the 10,000 included in the not including area? can someone comment?
MM Sierra House LLC, let me explain by an example. For simplicity, let's assume there was one auction item donated (a case of wine). The charity places a fair market value on the wine of $250 and records a non-cash contribution of $250, which would go on line 1 of the 990-EZ. At auction, the case of wine sells for $200. The general practice in this case is to assume that the original valuation on the contribution was too high, and that the auction price was the actual fair market value. So the charity would adjust the original valuation downward by $50. So in this case, as far as presentation on the 990-EZ, line 1 would show the $200 in-kind contribution of the wine. On line 6b, you would show the proceeds from the sale of the wine, $200. On line 6c, you would show the cost of goods sold for the wine, $200. There would be no amount showing for this transaction in the parenthetical (not including $___) since there was no contribution intended by the purchaser at auction. It was purely an exchange transaction.
Let me give a second example: Assume the same case of wine was received as a donation for the auction. The charity valued it at $250 and recorded an in-kind contribution of $250 which would show on line 1 of the 990-EZ. At auction, the winning bid was $450, which was clearly more than the wine was worth. Obviously the purchaser intended to make a donation of $200 above and beyond the value of the wine he received. In this case, you would generally record gross receipts on line 6b of $250, and cost of goods sold on line 6c of $250. You would show the cash contribution of $200 on line 1 of the 990-EZ (add it to the $250 in-kind already appearing on line 1 for a total of $450). In the parenthetical on line 6b, you would show the $200 contribution portion of the wine sale.