Mastering Form 990 Schedule L: Reporting Transactions With Interested and Disqualified Persons

One of the most challenging Schedules on Form 990 Exempt Organization Tax Return for tax advisers to exempt organizations is Schedule L, Transactions With Interested Persons. This Schedule imposes several burdens on advisers to exempt organizations. First, a nonprofit organization must determine who qualifies as an interested person. According to the IRS, a former officer, director, trustee, or critical organization employee within the last five tax years is treated as an interested person.

More concerning, Schedule L also requires disclosure of disqualified persons participating in impermissible transactions. Section 4958(f)(1) identifies a disqualified person as any person who was, at any time during the five-year period ending on the date of such transaction, in a position to exercise substantial influence over the organization's affairs. The five-year lookback provisions alone create complex compliance burdens for nonprofit organizations and their advisers. Once applicable parties are identified, a nonprofit organization must determine reportable transactions.

Listen as our experienced panel provides detailed guidance on completing Form 990 Schedule L, with concrete examples of completed forms and schedules.

1. Identifying interested persons
2. Identifying reportable transactions
3. Reasonable effort standard
4. Completing Schedule L with examples
   1. Part I excess benefit transactions
   2. Loans to/from interested persons
   3. Grants or assistance benefiting interested persons
   4. Business transactions involving interested persons
5. Best practices

The panel will discuss these and other essential aspects to completing Schedule L:

• How does the Service define "interested person" for Form 990 reporting purposes?
• Identifying information to report on Schedule L
• What is the "reasonable effort" standard that exempt organizations must meet in determining whether they must report a transaction?
• Determining when specific transactions warrant checking the box affirming engagement in an excess benefit transaction

Learning Objectives

After completing this course, you will be able to:

• Identify individuals who qualify as an "interested person" for purposes of transactions with an exempt organization
• Recognize the "reasonable effort" standard for determining interested persons and reportable transactions
• Discern when specific transactions warrant checking the box affirming engagement in an excess benefit transaction
• Ascertain specific transactions to report on Schedule L

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Test68

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).