Line by Line IRS Instructions
IRS Form 1023 - Part IX(A) - Statement of Revenues and Expenses
Years in Existence- (refers to completed tax years)
- Completed less than 1 year.
- If you've existed for less than 1 year, provide projections of your likely income and expenses for your current year and projections of your likely income and expenses for the next 2 years based on a reasonable and good faith estimate of your future finances for a total of 3 years of financial information. Place financial information for the year you're filing this application in the column marked Current tax year.
- Completed more than 1 year, fewer than 5 years.
- If you've existed for more than 1 year but fewer than 5 years, provide your actual income and expenses for each completed year you've existed and projections of your likely income and expenses based on a reasonable and good faith estimate of your future finances for your current year and each year you haven't existed, for a total of 4 years of financial information. Place financial information for the year you're filing this application in the column marked Current tax year.
- Completed 5 years or more.
If you've existed for 5 years or more, provide your actual income and expenses for your 5 most recently completed tax years. Place financial information for your most recently completed tax year in the column marked Current tax year.
Preparing the statement. Prepare the statements using the method of accounting you use in keeping your books and records. If you use a method other than the cash receipts and disbursements method, attach a statement explaining the method used. For example, state whether you used the accrual method of accounting to prepare the financial statements included with this application.Prepare the statements using the accounting period entered on Part I, line 5. Financial information should reflect projected activities reported elsewhere in this application.
Line 1 - Include funds or other items of value that you receive as gifts, grants, or contributions.
For example, if one of your activities is a food drive, the value of the donated food must be included on this line. Also include on this line payments a governmental unit makes to enable you to ot :
- Accomplish your exempt purpose(s), and
- Provide a service or facility directly to the general public.
See the instructions to line 9 if you are uncertain whether revenue should be included as a grant in line 1 or as gross receipts in line 9. Unusual grants are not included on this line, but are included on line 12.
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.
The 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 orchestra's exempt function and should be listed on line 9.
3. The public school system pays the symphony 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 its (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 - Include amounts received from members to provide support to the organization. Do not include payments from members or on behalf of members to purchase admissions, merchandise, services, or use of facilities.
Line 3 - Include gross income from dividends, interest, payments received on securities, loans, rents, and royalties that are held for investment purposes.
Line 4 - Net income from unrelated business activities generally includes income from any trade or business activity that is regularly carried on, not conducted with substantially all (at least 85%) volunteer labor, and not related to your exempt purposes. (This amount can be taken from Form 990-T, if filed.)
Report on line 9 income from activities that are not related to the accomplishment of your exempt purposes, but are not considered unrelated business activities. For example, income from the sale of merchandise by volunteers that is not treated as an unrelated trade or business is reported on line 9.
See Publication 598 for additional information regarding unrelated business income.
Line 5 - Include the amount collected by any local tax authority from the public on your behalf.
Line 6 - To determine the value of services or facilities furnished by a governmental unit, use the fair market value of the services or facilities furnished to you. Do not include the value of services or facilities generally provided to the public without charge.\
Line 7 - Enter the total income from all sources not reported on lines 1 through 6, or lines 9, 11, and 13. Submit an itemized list showing each type and amount of income included on this line.
Also, briefly describe each type of income.
Line 8 - Add lines 1 through 7 and enter the amount.
Line 9 - "Gross receipts" is income from activities that you conduct to further your exempt purposes (excluding amounts listed on other lines). It includes payments by a governmental unit that may be called a "grant," but that 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 consequences to an ecologically significant woodland area of a new sewage treatment plan. 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. The study could have been done by a for-profit consulting company rather than by the tax-exempt conservation group.
Submit an itemized list of payments by any governmental units showing:
- Payer (governmental unit or bureau).
- Purpose of payment.
- Amount.
Include as gross receipts the income from activity 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.
- With substantially all contributed merchandise, such as a thrift store.
See Publication 598 for additional information regarding income that is not from an unrelated trade or business.
Line 10 - Add lines 8 and 9 and enter the amount.
Line 11 - Attach a schedule with total amounts entered (rather than each individual transaction) for each category using the format in Figure 2.
Line 12 - "Unusual grants” generally are substantial contributions and bequests from disinterested persons that by their size adversely affect classification as a public charity. They are unusual, unexpected, and received from an unrelated party.
You must fully describe your unusual grants in Paer, line 7. For additional information about unusual grants and a description of public charity classification see Publication 557.
Line 13 - Add lines 10 through 12 and enter the amount.
Line 14 - Fundraising expenses include the total expenses incurred by you for soliciting gifts, grants, and contributions included on line 1. Where you allocate a portion of your other expenses to fundraising, submit an itemized list describing the amounts allocated. Include fees paid to professional fundraisers for soliciting gifts, grants, and contributions.
Line 15 - If distributions have been made, submit an itemized list showing the name of each recipient, a brief description of the purposes or conditions of payment, and the amount paid.
Colleges, universities, and other educational institutions and agencies subject to the Family Educational Rights and Privacy Act (20 U.S.C. 1232g) need not list the names of individuals who were provided scholarships or other financial assistance where such disclosure would violate the privacy provisions of the law. lnstead, such organizations should group each type of financial aid provided, indicate the number of individuals who received the aid, and specify the aggregate dollar amount.
Line 16 - If payments have been made, submit an itemized list showing the name of each recipient, a brief description of the purposes or condition of payment, and amount paid. Do not include any amounts on line 15.
Line 17 - Enter the total amount of compensation. Be consistent with information provided in Part V, lines 1a, 1b, and 1c.
Line 18 - Enter the total amount of employees' salaries and wages not reported on line 17, above.
Line 19 - Enter the total interest expense for the year, excluding mortgage interest treated as an occupancy expense on Line 20.
Line 20 - Enter the amount paid 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 - If you record depreciation, depletion, and similar expenses, enter the total amount.
Line 22 - Professional fees are those charged by individuals and entities that are not your employees. They include fees for professional fundraisers (other than fees listed on line 14, above), accounting services, legal counsel, consulting services, contract management, or any independent contractors.
Line 23 - Submit an itemized list showing the type and amount of each significant expense for which a separate line is not provided.
Line 24 - Add lines 14 through 23 and enter the amount on line 24.