Deprecated: Function create_function() is deprecated in /home/f7jkkz3lfcfl/public_html/wp-content/themes/mobius/includes/custom-widgets/recent-portfolio.php on line 109

Deprecated: Function create_function() is deprecated in /home/f7jkkz3lfcfl/public_html/wp-content/themes/mobius/includes/custom-widgets/related-posts.php on line 111

Deprecated: Function create_function() is deprecated in /home/f7jkkz3lfcfl/public_html/wp-content/themes/mobius/functions.php on line 1750

Deprecated: The each() function is deprecated. This message will be suppressed on further calls in /home/f7jkkz3lfcfl/public_html/wp-content/plugins/js_composer/include/classes/core/class-vc-mapper.php on line 111
Do I Have a Sibling? – JRHaeck
Notice: Function WP_Scripts::localize was called incorrectly. The $l10n parameter must be an array. To pass arbitrary data to scripts, use the wp_add_inline_script() function instead. Please see Debugging in WordPress for more information. (This message was added in version 5.7.0.) in /home/f7jkkz3lfcfl/public_html/wp-includes/functions.php on line 6031

Do I Have a Sibling?

By admin 9 years ago
Home  /  Articles  /  Do I Have a Sibling?

Situation:                    Gentle Persuasion, Inc. (GentleP) and HammerItHome Foundation (Hammer) are 501(c)(3) charitable organizations with no overlapping boards of directors.  Nevertheless, each has taken a particular interest in two other organizations called Goodness Gracious Community Center (GGCC) and Independent Thinker (Thinker).  In addition, GentleP and Hammer each appoint 3 directors to each of GGCC’s and Thinker’s 9-person boards.

Dilemma:                    Thinker’s controller is completing its Form 990, Return of Organization Exempt from Income Tax.  Form 990, Part IV, Question 34 asks whether the organization is related to any tax-exempt or taxable entity.  If so, he wants to know whether or not he needs to complete Schedule R – Related Organizations and Unrelated Partnerships.

Rule:                           When the majority of two exempt organization’s boards are appointed by the same person or persons, then a “sibling” relationship exists between them.

Answer:                      In this case, GGCC and Thinker are related as sibling organizations because a majority of each board is appointed by the same persons.  Six directors out of nine directors for both GGCC and Thinker are appointed by GentleP and Hammer.

Significance                Sibling organizations should be reported on Form 990, Schedule R.  Since each is a charitable organization, Schedule R, Part II should be completed, which identifies related Exempt organizations.  Any transactions that occur between these organizations should be reported on Schedule R, Part V.  The IRS has become increasingly sensitive to the relationships between exempt organizations and other organizations, whether the other organizations are also exempt, or they are business partnerships or corporations.   The IRS is also interested in organizations that control other organizations.  But since no organization appoints a majority of directors of Thinker, neither need be reported as a controlling organization on Thinker’s Form 990, Schedule R.

We Can Help!            JR Haeck CPA Firm helps nonprofit organizations, like yours, to prepare and file their annual Form 990, Return of Organization Exempt from Income Tax.  Haeck is expert in this field, and will gladly work with your auditor, if you have one, or directly with your controller to complete this very important annual responsibility.  Contact us, or check out our web site at JRHaeck.com, to find out more.

JR Haeck Governance Consulting offers Board Training in a variety of contexts.

  • Board Training – Fundamentals of Board Effectiveness and Efficiency
  • New Board Member Training – Routine Orientation in Board Process and Procedure.
  • Chairman Training – Individual Counseling on What Makes Boards Effective and Efficient
  • Board Retreat – Board Training in the Context of Off-Campus Brainstorming and Deliberation

 

Categories:
  Articles, Case Studies, Not For Profit, Tax Compliance