May 31, 2012Have You Been Through the C.A.V.E.?(Non-Cash Contributions Update)Presented by:Dave Moja, PartnerRecent Not-fo...
Small Employer Health CreditAccording to the Medical Expenditure PanelSurvey (MEPS), up to 83% of employers whomay otherwi...
Reporting Partnership Interests onForm 990    • The IRS received public comments arguing that      using the organizations...
Per Diem RatesThe IRS announced that it will no longer beupdating IRS Pub. 1542 (Per Diem Rates)    • Used by employers wh...
Attack on Charitable Contributions• Current Administration has proposed five  times• Most recently in 2013 budget proposal...
Wording on Charitable Receipts• Taxpayers claimed a charitable contribution  deduction primarily made up of checks  writte...
Recent IRS GIK Audit Activity• Ignoring AICPA and industry standards• Apparently no knowledge of FAS 157• Going back to 20...
The C.A.V.E.•   Conservation Easements•   Art•   Vehicles•   EquitiesConservation Easements• Defined• “Conservation Easeme...
Conservation Easements• A restriction (granted in perpetuity) on the  use that may be made of real property  granted exclu...
Conservation EasementsFor more information, see section 170(h) andNotice 2004-41, 2004-2 C.B. 31Conservation Easement Audi...
Art (Collections, Historical Treasures...)•   Defined•   Limitations•   SFAS 116•   Form 990, Part IV, Line 8•   Schedule ...
Historical Treasure• A building, structure, area, or property (real  or personal) with recognized cultural,  aesthetic, or...
Schedule M, Line 3: Art – FractionalInterestsA contribution of the donor’s entire interestmust consist of a part of each s...
Vehicles – Schedule M, Lines 6,7• The organization is required to file Form  1098-C, Contributions of Motor Vehicles,  Boa...
IRS Publication 4302“A Charity’s Guide toVehicle Donations”Equities•   Defined•   Form 990, Part IV, Line 11b•   Form 990,...
Schedule D, Part VII• Other securities to be reported in this part  include closely held stock• They also include:    1. P...
Schedule M, Lines 9-12• Line 9 = publicly traded securities• Line 10 = securities that are not publicly  traded• Line 11 =...
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Noncash Contributions for Non Profits Form 990

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Noncash Contributions for Non Profits Form 990

  1. 1. May 31, 2012Have You Been Through the C.A.V.E.?(Non-Cash Contributions Update)Presented by:Dave Moja, PartnerRecent Not-for-ProfitTax HappeningsSmall Employer Health CreditThe GAO reported that for the 2010 tax year: • 170,300 small employers claimed the small employer health insurance tax credit, but the number of eligible small businesses is potentially 1.4 1 4 million to 4 million • The average credit claimed was about $2,700 1
  2. 2. Small Employer Health CreditAccording to the Medical Expenditure PanelSurvey (MEPS), up to 83% of employers whomay otherwise be eligible for the full credit donot offer health insurance.Small Employer Health Credit• It is unlikely that small employers view the credit as a big enough incentive to begin offering health insurance and to make a credit claim• Discussion groups interviewed by the GAO indicated that the tax credit was too complicated due to various eligibility requirements, data collection, and the number of worksheets to be completedReporting Partnership Interests onForm 990The IRS announced that it has changed the 2011Form 990-EZ and Form 990 instructions • For tax year 2011, it is now optional for filers to use information from Schedule K-1 to report their interests in the income expenses and assets of income, expenses, joint ventures and other partnerships 2
  3. 3. Reporting Partnership Interests onForm 990 • The IRS received public comments arguing that using the organizations books and records (the method required in the 2010 instructions) provides a more accurate value of assets, and organizations often do not receive all Schedule g K-1s until after the Form 990 due date (IRS Ann. 2012-19 )Work Opportunity Tax Credit –Expanded• VOW to Hire Heroes Act• Available to exempt organizations• Certified Qualified Veterans – Form 8850• Hiring period = 11/22/11 to 1/1/13• EO credit = up to $6,240• Credit taken on Form 5884-C • Against Social Security taxes paid• IRS Notice 2012-13 = FAQ&ALois Lerner Speech at 4/19/12Conference• Governance• Significant Diversions of Assets• Form 990-N (ePostcard filings)• Processing Determination Applications• Form 990 and Identity Theft Potential• Conclusions 3
  4. 4. Per Diem RatesThe IRS announced that it will no longer beupdating IRS Pub. 1542 (Per Diem Rates) • Used by employers who pay a per diem allowance to employees for business travel away from home within the continental U S U.S. • Taxpayers must instead use the General Services Administration (GSA) website (www.gsa.gov) for current per diem ratesPer Diem Rates • Other information regarding the rates, such as substantiation methods and transition rules, is available in IRS Pub. 463Supreme Court to Rule on PPACA• Suit brought by 26 states• 11th Circuit has ruled unconstitutional• Highest Court began hearings in March 2012• Expect ruling by Court recess in June• What can happen?• What do we expect? 4
  5. 5. Attack on Charitable Contributions• Current Administration has proposed five times• Most recently in 2013 budget proposal• Limit value of charitable contributions to 28%• Shift in rhetoric in recent years • Support • Subsidies• Studies = $2.9B to $5.6B loss to charitiesNon-Cash Gifts/GIK UpdateNew IRS Publication 1771The IRS has released a revisedPublication 1771, “CharitableContributions – Substantiation andDisclosure Requirements” • E l i general rules and Explains l l d specifications for documenting charitable deductions • Covers new guidelines that allow charities to electronically mail documentation to donors 5
  6. 6. Wording on Charitable Receipts• Taxpayers claimed a charitable contribution deduction primarily made up of checks written to their church for amounts larger than $250Wording on Charitable Receipts• The church acknowledged its receipt of the contributions on a year-end statement to the taxpayers, but there was no language concerning whether any goods or services were provided in consideration for the ere pro ided contributionsWording on Charitable Receipts• The Tax Court disallowed the deduction and reminded taxpayers that the terms of the statute require an affirmative statement that no goods or services were received 6
  7. 7. Recent IRS GIK Audit Activity• Ignoring AICPA and industry standards• Apparently no knowledge of FAS 157• Going back to 2007 Form 990 – an “obsolete” form • I.R.C. Section 6652(c)(1)(A)(ii) penalties = $50,000/year• Why not look to the future and try to work together for a solution?IRS Preliminary Findings Letter - GIKIRS’ overtly accusatory tone: • “…employees were involved with the overestimation of GIK to deceive the general public into thinking its overhead expenses were much lower than they actually were ” (emphasis were. mine) • “[Organization] did not file a complete or accurate return. It knowingly did this to miss-lead [sic] potential donors into donating to [organization].”Schedule M• Line items – descriptions• Column A – check boxes• Column B – number of contributions/items• Column C – value/amounts • Form 990, Part VIII, Line 1g• Column D – method of determining amounts• Column C – TOTAL line?! 7
  8. 8. The C.A.V.E.• Conservation Easements• Art• Vehicles• EquitiesConservation Easements• Defined• “Conservation Easement Audit Techniques Guide”• 2011 Form 990 – significant changes g g• Form 990, Part IV, Line 7• Schedule D, Part II• Schedule M, Lines 13, 14 8
  9. 9. Conservation Easements• A restriction (granted in perpetuity) on the use that may be made of real property granted exclusively for conservation purposesConservation Easements• Conservation purposes include: • Preserving land areas for outdoor recreation by, or for the education of, the general public • Protecting a relatively natural habitat of fish, wildlife, plants, wildlife or plants or a similar ecosystemConservation Easements • Preserving open space, including farmland and forest land, where such preservation will yield a significant public benefit and is either for the scenic enjoyment of the general public or pursuant to a clearly defined federal, state, or local governmental conservation policy • Preserving a historically important land area or a certified historic structure 9
  10. 10. Conservation EasementsFor more information, see section 170(h) andNotice 2004-41, 2004-2 C.B. 31Conservation Easement AuditTechniques Guide• 14 chapters• September 30, 2011• Introduction to Conservation Easements• Statutory Requirements• Conservation Purpose• Substantiation• Appraisals, Amounts, Valuations• Conducting the Examination 10
  11. 11. Art (Collections, Historical Treasures...)• Defined• Limitations• SFAS 116• Form 990, Part IV, Line 8• Schedule D, Part III• Schedule M, Lines 1-3Works of Art• Includes paintings, sculptures, prints, drawings, ceramics, antiques, decorative arts, textiles, carpets, silver, photography, film, video, installation and multimedia arts, rare books and man scripts historical manuscripts, memorabilia, and other similar objects• Does not include collectibles or taxidermyCollectibles• Includes autographs, sports memorabilia, dolls, stamps, coins, books (other than books and publications reported on Line 4 of Schedule M), gems, and jewelry (other than costume je elr cost me jewelry reportable on Line 5 of Schedule M) 11
  12. 12. Historical Treasure• A building, structure, area, or property (real or personal) with recognized cultural, aesthetic, or historical value that is significant in the history, architecture, archeology, c lt re archeolog or culture of a country, state, or co ntr state city 12
  13. 13. Schedule M, Line 3: Art – FractionalInterestsA contribution of the donor’s entire interestmust consist of a part of each substantialinterest or right the donor owns in such work ofart and must extend over the entire term of thedonor’s interest in the propert property.Vehicles• Defined• IRS Publication 4302• Form 1098-C• Form 990, Part V, Line 7h• Schedule M, Lines 6, 7Vehicles – Schedule M, Lines 6,7• Motor vehicles manufactured primarily for use on public streets, roads, and highways• Does not include contributions of the donor’s stock in trade or property held by the donor primarily for sale to customers in the ordinary course of a trade or business 13
  14. 14. Vehicles – Schedule M, Lines 6,7• The organization is required to file Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, with the donor and the IRS with respect to these contributionsForm 990, Part V, Line 7h• A donor of (1) a motor vehicle for use on public roads, (2) a boat, or (3) an airplane cannot claim a charitable contribution deduction in excess of $500 unless the donee organi ation pro ides the donor with organization provides ith a Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the donation (or a written acknowledgment with the same information)Form 990, Part V, Line 7h• If the organization did not receive a contribution of a car, boat, airplane, or other vehicle, leave line 7h blank 14
  15. 15. IRS Publication 4302“A Charity’s Guide toVehicle Donations”Equities• Defined• Form 990, Part IV, Line 11b• Form 990, Part X, Column B, Line 12• Schedule D, Part VII• Schedule M, Lines 9-12• Schedule M, Line 32a/b (Part II) 15
  16. 16. Schedule D, Part VII• Other securities to be reported in this part include closely held stock• They also include: 1. Publicly traded stock for which the organization holds 5% or more of the outstanding shares of the same class, and 2. Publicly-traded stock in a corporation that comprised more than 5% of the organizations total assets at the end of the tax yearSchedule D, Part VII• List each separate class of publicly-traded stock held by the organization that meets either of these 5% ownership tests• Do not include program-related investments 16
  17. 17. Schedule M, Lines 9-12• Line 9 = publicly traded securities• Line 10 = securities that are not publicly traded• Line 11 = partnership, LLC, trust – not publicly traded• Line 12 = securities not listed on Lines 9-11Questions?Thank you!Contact InformationDave Mojadmoja@capincrouse.comdmoja@capincrouse com407.883.4671 © CapinCrouse LLP 2012 17

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