CPE ARTICLE
Common Errors on Form 990-PF By Stephanie Morgan, CPA
CURRICULUM: Tax LEVEL: Basic DESIGNED FOR: Tax Practitioners OBJECTIVES: To examine IRS guidance on Form 990-PF; identify common errors found when preparing the Form 990-PF and how to avoid them; and discuss the steep penalties imposed against private foundations and their managers KEY TOPICS: Expense allocations and reporting inkind donations; failing to correctly report taxes paid; attaching a complete list of investments and fixed assets; incorrectly reporting capital gains and losses from investments; failing to determine eligibility for reduced tax rate; and not deducting the cost of furniture and fixtures as qualifying distributions PREREQUISITES: None ADVANCED PREPARATION: None
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n recent years, scandalous news stories detailing the alleged misuse of public funds by certain former and sitting presidents and their family members has increased the general public’s awareness and the government’s scrutiny of private foundations.
Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation, is the annual informational return that must be filed by exempt private foundations, taxable private foundations and nonexempt charitable trusts treated as private foundations for tax purposes. The return is due by the 15th day of the 5th month following the end of the foundation’s tax year. The return of a foundation with a calendar year would be due on May 15th with the option of a six-month extension. Penalties imposed on Form 990-PF are imposed not only on late or delinquent tax returns, but also on returns that are filed before the deadline that are inaccurate or incomplete. At first, that sounds easy enough to comply with, but filing an incomplete return can be as easy as failing to check a box when the foundation is not required to attach Schedule B.
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