Part VI. Financial Data

Line 1. Select the option that best describes you to determine the years of revenues and expenses you need to provide.

Instructions for Form 1023 11

Figure 2.

Net Gain or Loss On Sales of Capital Assets

receipts on line 9. Include unusual grants on line 12 and not on line 1.

Examples.

1. A city pays the symphony orchestra to provide free music programs in the public schools. The programs are open to the public. This income received from a governmental unit accomplishes the orchestra's exempt purpose and directly provides a service to the general public. This income is a grant to the symphony orchestra that should be listed on line 1.

2. The symphony orchestra sells tickets to the public for its fall season. Such income is gross receipts received from the general public in performance of the symphony orchestra’s exempt function and should be listed on line 9.

3. The public school system pays the orchestra to create several musical pieces suitable for the school system’s elementary music curriculum. This payment by a governmental unit for the music compositions is primarily for the school system’s own use, not for the direct benefit of the public. Therefore, this income is gross receipts received from a governmental unit in performance of the orchestra’s exempt function that should be listed on line 9.

Line 2. Enter the amount you receive from members to provide support to the organization. Don’t include payments from members or on behalf of members to purchase admissions, merchandise, services, or use of facilities.

Line 3. Enter your gross income from dividends, interest, payments received on securities, loans, rents, and royalties you hold for investment purposes.

See Pub. 598 for additional information regarding royalties treated as unrelated business income.

Line 4. Enter your net income from unrelated business activities. “Unrelated business income” generally is income from any trade or business activity that is regularly carried on, and not related to

your exempt purpose. Certain exceptions and exclusions may apply.

Report on line 9 income from activities that aren’t related to the accomplishment of your exempt purposes, but aren’t considered unrelated business activities. For example, report income from the sale of merchandise by volunteers that isn’t treated as an unrelated trade or business on line 9.

See Pub. 598 for additional information regarding unrelated business income.

Line 5. Enter amounts any local tax authority collects from the public on your behalf.

Line 6. Enter the value of services or facilities a governmental unit furnishes to you. Use the fair market value of the services or facilities. Don’t include the value of services or facilities generally provided by the governmental unit to the public without charge.

Line 7. Enter your total income from all sources not reported on lines 1 through 6, or lines 9, 11, and 12. Provide an itemized list in line 25, showing each type and amount of income included, and a brief description of each type of income.

Line 8. Lines 1 through 7 will be added for you.

Line 9. Enter income from activities that you conduct to further your exempt purposes (excluding amounts listed on other lines). Also, include as gross receipts the income from activities conducted:

• Intermittently (not regularly carried on), such as an occasional auction;

• With substantially all (at least 85%) volunteer labor, such as a car wash;

• For the convenience of members, students, patients, officers, or employees, such as a parking lot for a school’s students and employees; or

See Pub. 598 for additional information regarding income that isn’t from an unrelated trade or business.

“ Gross receipts ” also includes payment by a governmental unit that may be called a “grant” but is actually payment for a service or facility for the use of the government payer, rather than for the direct benefit of the public.

Example. The state government gives a conservation group a grant to study the effects of a new sewage treatment plant on an ecologically significant woodland area. Although the payment is called a grant, it is actually gross receipts that should be included on line 9. The payment is by a governmental unit (state) for a study for its own use, not for the direct benefit of the general public. A for-profit consulting company could’ve done the study rather than by the tax-exempt conservation group.

Provide an itemized list of your gross receipts in line 25, describing the sources and amounts of income. For payments by a governmental unit, list the payer, the purpose of the payment, and the payment amount.

Line 10. Lines 8 and 9 will be added for you.

Line 11. Enter any net gain or loss on the sale of capital assets. Provide an itemized list by asset category (for example, real estate or securities) showing gross sales, cost or other basis/sales expenses, and gain or loss by asset category in line 25. You may use the format in Figure 2.

Line 12. Enter any “ unusual grants,” which generally are any substantial contributions and bequests you received from disinterested persons that, by their size, adversely affect your classification as a public charity . “ Unusual grants ” are unusual, unexpected, and received from an unrelated party. Provide an itemized list of any unusual grants, including the amount in line 25, and explain how it was unusual, unexpected, and from an unrelated party.

For additional information about unusual grants and a description of public charity classifications, see Pub. 557.

Line 13. Lines 10 through 12 will be added for you.

Lines 14. Enter the total expenses you incur for soliciting gifts, grants, and contributions included on line 1. Include fees paid to professional fundraisers for soliciting gifts, grants, and contributions.

Line 15. Enter the total amount you pay out to both individuals and organizations. Provide an itemized list in line 25, identifying recipients (using letter designations such as A, B, C, etc.), a brief

• With substantially all contributed merchandise, such as a thrift store.

12 Instructions for Form 1023

Maintain (but don’t submit) a list showing the names of borrowers associated with each letter designation.

Line 7. Enter the total book value of your other investments. Include the total book value of government securities (federal, state, and municipal), and buildings and equipment held for investment purposes. Provide an itemized list in line 19 identifying and reporting the book value of each building/item of equipment held for investment purposes.

Line 8. Enter the total book value of buildings and equipment not held for investment purposes. This includes facilities you own and equipment you use in conducting your exempt activities. Provide an itemized list in line 19 of these assets held at the end of the current tax year/period, including the cost or other basis.

Line 9. Enter the total book value of land not held for investment purposes.

Line 10. Enter the total book value of any other category of your assets not reported on lines 1 through 9, for example, patents, copyrights, or other intangible assets. Provide an itemized list of each asset in line 19.

Line 11. Lines 1 through 10 will be added for you.

Line 12. Enter the total amount of your accounts payable to suppliers and others, such as salaries payable, accrued payroll taxes, and interest payable.

Line 13. Enter the total unpaid portion of grants and contributions you committed to pay to other organizations or individuals.

Line 14. Enter the total of your mortgages and other notes payable outstanding at the end of the current tax year/period. Provide an itemized list in line 19 showing each note separately, including the lender’s name, purpose of loan, repayment terms, interest rate, and original amount.

Line 15. Enter the total amount of any other liabilities not reported on lines 12 through 14. Provide an itemized list in line 19 of these liabilities, including the amounts you owe.

Line 16. Lines 12 through 15 will be added for you.

Line 17. Under fund accounting, an organization segregates its assets, liabilities, and net assets into separate funds according to restrictions on the use of certain assets. Each fund is like a separate entity in that it has a self-balancing set of accounts showing assets, liabilities, equity (fund balance), income, and expenses. If you don’t use fund accounting, report only the “net assets” account balances, which include capital stock, paid-in capital, retained

description of the purposes or conditions of payments, and the amounts paid.

Colleges, universities, and other educational institutions and agencies subject to the Family Educational Rights and Privacy Act (20 U.S.C. 1232g) don’t need to list the names of individuals to whom they provided scholarships or other financial assistance where such disclosure would violate the privacy provisions of the law. Instead, group each type of financial aid provided, indicate the number of individuals who received the aid, and specify the aggregate dollar amount.

Maintain (but don’t submit) a list showing the names of recipients associated with each letter designation.

Line 16. Enter total payments you make to or for the benefit of your members (not including any amounts listed on line 15). Provide an itemized list in line 25, identifying recipients (using letter designations), a brief description of the purposes or condition of payments, and the amounts paid.

Maintain (but don’t submit) a list showing the names of recipients associated with each letter designation.

Line 17. Enter the total amount of compensation you pay to your officers, directors, and trustees.

Line 18. Enter the total amount of salaries and wages you pay to employees (not reported on line 17).

Line 19. Enter your total interest expenses for the year. Don’t include mortgage interest treated as an occupancy expense on line 20.

Line 20. Enter the amount you pay for the use of office space or other facilities, heat, light, power and other utilities, outside janitorial services, mortgage interest, real estate taxes, and similar expenses.

Line 21. Enter the total depreciation, depletion, and similar expenses you incur.

Line 22. Enter the total professional fees you pay. Professional fees are amounts charged by individuals and entities that aren’t your employees. They include fees for professional fundraisers (other than fees listed on line 14, earlier), accounting services, legal counsel, consulting services, contract management, or any independent contractors .

Line 23. Enter any expenses you didn’t include in the lines above, such as for program services. Provide an itemized list in line 25, showing the type and amount of each significant expense.

Line 24. Lines 14 through 23 will be added for you.

B. Balance Sheet Complete the balance sheet for your most recently completed tax year. If you haven’t completed a full tax year, use the most current information available. Be sure to enter the year-end date for the information provided and not the date you prepare this application. Enter “0” if a particular asset or liability doesn’t apply to you.

Line 1. Enter your total cash in checking and savings accounts, temporary cash investments (money market funds, CDs, treasury bills, or other obligations that mature in less than 1 year), and petty cash funds.

Line 2. Enter your total accounts receivable that arose from the sale of goods and/or performance of services, less any reserve for bad debt.

Line 3. Enter the amount of materials, goods, and supplies you purchased or manufactured and held to be sold or used in some future period.

Line 4. Enter the total amount of bonds or notes you issued that will be repaid to you. Provide an itemized list in line 19, that shows the name of each borrower (using a letter designation), the borrower’s relationship to you, a brief description of the obligation, the rate of return, the due date, and the amount due.

Maintain (but don’t submit) a list showing the names of borrowers associated with each letter designation.

Line 5. Enter the total fair market value of corporate stocks you hold. Provide an itemized list of your corporate stock holdings in line 19.

For stock of closely held corporations, list the name or the corporation, a brief summary of the corporation’s capital structure, the number of shares held, and their value as carried on your books. If valuation doesn’t reflect current fair market value, also include fair market value.

For stock traded on an organized exchange or in substantial quantities over the counter, list the name of the corporation, a description of the stock, and the principal exchange on which it is traded, the number of shares held, their value as carried on your books, and their fair market value.

Line 6. Enter your total amount of loans (personal and mortgage loans) receivable. Provide an itemized list in line 19 that identifies each borrower (using a letter designation), the borrower’s relationship to you, purpose of loan, repayment terms, interest rate, and original amount of loan. Report each loan separately, even if more than one loan was made to the same person.

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children or the aged, or institutions whose principal purpose or function is to train handicapped individuals to pursue some vocation.

Cooperative hospital service organizations described in section 501(e) should also check this box and complete Schedule C.

509(a)(1) and 170(b)(1)(A)(iv). Select this classification if you’re organized and operated exclusively to benefit a college or university owned or operated by a governmental unit. You must also normally receive a substantial part of your support from a governmental unit or from contributions from the general public.

509(a)(1) and 170(b)(1)(A)(ix). Select this classification if you’re an agricultural research organization described in section 170(b)(1)(A)(ix) operated in conjunction with a land grant college or university or a non-land grant college of agriculture.

In Part IV, line 1, include information detailing your agricultural research program and how you will spend contributions to your program, including a description of how you’re engaged in the continuous active conduct of agricultural research (as defined in Section 1404 of the Agricultural Research, Extension, and Teaching Policy Act of 1977), information showing that you’re operated in conjunction with a land grant college or university or a non-land grant college of agriculture (as defined in Section 1404 of the Agricultural Research, Extension, and Teaching Policy Act of 1977), and information discussing the timing of when you will spend contributions for research.

509(a)(3). Select this classification if you’re organized and operated to support one or more public charities described in section 509(a)(1) or 509(a)(2) or an organization that is tax exempt under section 501(c)(4), (5), or (6) and meets the public support test of section 509(a)(2). See the instructions for Schedule D for more information about the requirements for this classification, including the required relationship you must have with your supported organization(s). Complete Schedule D.

509(a)(4). Select this classification if your primary purpose is to test products to determine their acceptability for use by the general public.

Contributions to organizations of this type aren’t deductible under section 170(c). Also, organizations that primarily test for specific manufacturers don’t qualify for exemption under section 501(c) (3).

Select my classification for me. Select this option if you believe you’re a public charity but would like the IRS to select the correct public charity classification (509(a)

earnings or accumulated income, and endowment funds.

Line 18. Lines 16 and 17 will be added for you.