The IRS posted a draft version of the 2020 Form 990-T, “Exempt Organization Business Income Tax Return,” that contains several revisions to how unrelated business taxable income (UBTI) will be reported.
The draft version of the Form 990-T [PDF 142 KB] was posted with a “watermark” date of September 1, 2020, and includes a statement indicating that it is not to be filed or relied upon for filing purposes and is subject to OMB approval (and possibly to change) before being officially released.
The draft Form 990-T would change how tax-exempt organizations report UBTI from multiple trades or businesses under section 512(a)(6)—a provision enacted as part of the 2017 tax law (Pub. L. No. 115-97), the law that is commonly referred to as the “Tax Cuts and Jobs Act” (TCJA)—that requires tax-exempt organizations to compute UBTI separately for each unrelated trade or business.
Rather than report the UBTI from one trade or business on the core Form 990-T and UBIT from other trades or businesses on one or more Schedules M, “Unrelated Business Taxable Income for Unrelated Trade or Business,” as was done for 2018 and 2019, draft Form 990-T would require that for 2020, tax-exempt organizations would report UBTI from each separate trade or business on a separate Schedule A (which is has the same name as the former Schedule M). Read a draft version of Schedule A [PDF 157 KB] (watermark date of August 28, 2020).
The draft Form 990-T also contains a number of other changes such as a new line for tax-exempt trusts to report their section 199A deductions and a box to check and line to complete if the total tax includes tax previously deferred under section 1294. However, the detail of other changes is left to future instructions. For example, the draft Form 990-T includes lines for net operating loss (NOL) deductions both on the Schedule A, for reporting UBTI related to a single trade or business, and on the core form, for reporting aggregate UBTI, but it does not include any indication of how those NOL deductions are to be ordered.
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Ruth Madrigal | +1 202 533 8817 | firstname.lastname@example.org
Preston Quesenberry | +1 202 533 3985 | email@example.com
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