exciting updates in accounting and tax for nonprofits · •asu 2016-14,not-for-profit entities...

November 8, 2018Seattle, Washington

Exciting Updates inAccounting and Tax

forNonprofits

Deby MacLeod & Jennifer Becker Harris

© 2018 Clark Nuber all materials included Seek permission for republishing

Exciting Updatesin

Accounting and Tax for

NonprofitsDeby MacLeod & Jennifer Becker Harris


U.S. GAAP and Tax Highlights• Financial Accounting Standards Board (FASB) Standards• ASU 2016-14, Not-for-Profit Entities (Topic 958) - Presentation of Financial

Statements of Not-for-Profit Entities• Revenue from Contracts with Customers (Topic 606) and ASU 2018-08: (Topic

958) Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made • ASU 2016-02: Leases (Topic 842)

• Tax Cuts and Jobs Act of 2017 and related guidance

• Final Charitable Contribution Regulations


ASU 2016-14 Overview

Key Changes in ASU 2016-

14

Net Assets Classes

Liquidity & Availability

Expense Reporting

Investment Return

Statement of Cash Flows


Summary of Changes – ASU 2016-14

Net Asset Classes

Liquidity & Availability

Expense Reporting

Investment Return

Statement of Cash Flows

1. 2 classes of net assets (previously 3)2. New disclosures about board designations on net assets3. Changes to accounting for underwater endowments4. Placed-in-service approach for release of restrictions on gifts of/for capital assets5. New disclosures about managing liquidity and the availability of financial

assets6. Required disclosure of analysis of expenses by function and nature7. Require disclosure about methods to allocate expenses on functional basis8. More guidance on allocating expenses from M&G9. Investment return required to be reported net of related external and direct internal

expenses10. No longer required to disclose components of investment return11. No longer required to present indirect reconciliation in statement of cash flows if the

direct method is used for reporting operating cash flows


Two Net Asset Classes

Without Donor Restrictions* With Donor Restrictions*

Amount, purpose, and type of board

designations **Nature and amount of donor restrictions

Current GAAP

Revised GAAP

Disclosures

+

Unrestricted Temp. Restricted

Perm. Restricted

* NFPs may choose to disaggregate further** New disclosure requirement

© 2018 Clark Nuber all materials included

Seek permission for republishing

Implied Time Restrictions on Capital-related Contributions

• Donations of, or contributions restricted for the purchase of, property & equipment that do

not have an explicit donor restriction on use of the property

• Accounting for the release of donor restriction:

Old GAAP Options New GAAP OptionRelease as dollars are spent

Placed-in-service approachPlaced-in-service approach

Imply a time restriction, release ratably

over useful life of asset


Underwater Endowments• New FASB ASC Master Glossary definition

• Donor-restricted endowment fund for which the fair value of the fund at the reporting date is less than either the original gift amount or the amount required to be maintained by the donor or by law that extends donor restrictions

• Report entire balance of endowment fund within “net assets with donor restrictions”

• New disclosure requirements

– For each period a statement of financial position is presented - each of the following, in the aggregate, for all underwater endowment funds:

• The fair value of the underwater endowment funds

• Original endowment gift amount or level required to be maintained by donor stipulations or by law that extends donor restrictions

• Amount of the deficiencies of the underwater endowment funds

Sample Underwater Endowment Footnote


Liquidity and Availability of Financial Assets

NFPs required to provide:

Qualitative information on how an NFP manages its liquid available resources

and its liquidity risk

Quantitative information that communicates the availability of an NFP’s financial assets at the balance sheet date

to meet cash needs for general expenditures within one year


Two-part Disclosure:

1. “Liquidity” disclosure:

Qualitative information in the notes to financial statements that is useful in assessing an entity’s liquidity and that communicates how an NFP manages its liquid resources available to meet cash needs for general expenditures within one year of the date of the statement of financial position.

2. “Availability” disclosure:

Quantitative information either on the face of the statement of financial position or in the notes, and additional qualitative information in the notes as necessary, that communicates the availability of an NFP’s financial assets at the date of the statement of financial position to meet cash needs for general expenditures within one year of the date of the statement of financial position.


Availability disclosures – practical guidance

GAAP does not define “available for general expenditures”

NFP will need to self-define for purposes of this disclosure

Approach by identifying what is not available because of external or internal limits or the nature of the asset


Expense Reporting

• Present an analysis of expenses by function and nature in one location

– May be presented in the notes, in the statement of activities, or as a separate statement

– Disaggregation of functional expense classifications by their natural expense classifications

– Voluntary Health and Welfare entities no longer required to present a separate statement of functional expenses

• Include a description of the method used to allocate costs among program and support functions

• Improved guidance about management and general expenses


Investment Return

• Net presentation of investment expenses against investment return

– Both EXTERNAL and direct INTERNAL expenses

– Removes requirement to disclose the gross investment income and expense (permitted but no longer required)

• Investment footnote

• Endowment footnote

• No longer to present investment expenses at “gross” with other expenses


Changes to Statement of Cash Flows• Can continue to use either direct or indirect method for reporting operating cash flows

• If use direct, no longer required to show indirect reconciliation

Effective Date

Years Beginning

After December 15, 2017

December 31, 2018

March 31, 2019

June 30, 2019

• If presenting comparative statements, you have the option to omit the following disclosures:

– Expenses by Nature and Function (if not already required)

– Disclosures around Liquidity and Available Resources


Revenue from Contracts with Customers (Topic 606) and ASU 2018-08: (Topic 958) Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

• Clarifying guidance to determine • Contracts vs grants• Conditional vs unconditional• Restriction vs condition

• Discuss the various effective dates



Revenue from Contracts with Customers (Topic 606) and ASU 2018-08: (Topic 958) Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made

Applies to all entities (NFPs and business entities) that receive or make contributions unless otherwise

indicated.

Excludes transfers of assets from the government to business entities.

Applies to both contributions received by a recipient and contributions made by a resource provider. The intent is simply that both apply the same guidance, the entities do not need to track each other’s accounting to achieve the same reporting results.

The term used in the presentation of financial statements to label revenue (for example, contribution, grant,

donation) that is accounted for within the Scope of Subtopic 958-605 is not a factor for determining whether

an agreement is within the scope of that guidance.



Clarifying Criteria• Contribution vs exchange transaction

• Exchange: each party directly receives commensurate value – follow Topic 606

• Contribution: a nonreciprocal transaction – follow ASU 2018-08

• Conditional vs unconditional

• Conditional: includes both a right of return/release and a barrier

• Examples of barriers from the FASB:

• Measurable performance related: specified level of service, output or outcome

• Other measurables such as matching

• Reduces subjectivity and the assessment of “likelihood” of the recipient organization satisfying the conditions


Clarification on Reciprocal vs Nonreciprocal

•The resource provider is not synonymous with the general public, even a governmental entity. If a resource provider receives value indirectly by providing a societal benefit, this would be considered a nonreciprocal transaction.

•If the primary beneficiary of a grant or contract is a third party, an NFP must use judgment to determine if the transaction is reciprocal or nonreciprocal.

•Furthering a resource provider’s mission or “feel good” sentiment does not constitute commensurate value received.

•The type of resource provider should not override the substance of the transaction.



Effective DatesRecipients* Resource Providers

Annual periods

beginning after June 15, 2018, including

interim periods:

• Public Business

Entities

• NFP that has

issued, or is a

conduit bond

obligor for

securities that are

traded, listed, or

quoted on

exchange or an

over-the-counter

market.

Annual periods

beginning after

December 15, 2018,

and interim periods

beginning after

December 15, 2019:

• All Other Entities

Annual periods

beginning after

December 15, 2018,

including interim

periods:

• Public Business

Entities

• NFP that has

issued, or is a

conduit bond

obligor for

securities that are

traded, listed, or

quoted on

exchange or an

over-the-counter

market.

Annual periods

beginning after

December 15, 2019,

and interim periods

beginning after

December 15, 2020:

• All Other Entities

*Effective dates generally

the same as Topic 606

(Revenue Recognition). The

Board delayed the effective

date for public entities that

are recipients, so as avoid

confusion about possible

restatements.

The standard will allow for

early implementation.


• Modified Prospective• Apply to all agreements:o Existing at the effective date

(only apply to the portion of existing agreements not previously recognized)

o Entered into after the effective date

• No restatement of prior amounts recognized

• Retrospective Application Permitted

Both Grantors and Grantees:

Review both existing and new grant terms and apply clarifying guidance.

Consider obtaining legal counsel to review grant agreements to ensure the terms included reflect actual intent.

Implementation and Transition


Leases

• ASU 2016-02: Leases (Topic 842) § Lessees will recognize all leases as liabilities on the balance sheet

§ Term of more than one year

§ Expense recognition will remain the same for operating and financing (capital) leases.

• Effective for calendar year end 2020 and fiscal year ending in 2021


TAX UPDATE



ØElimination of Corporate AMT

on (UBTI)

ØTrusts charitable deduction

limit increases to 60% of income

(for cash contributions to public

charities and conduit private

foundations) (UBTI)

ØElimination of NOL carryback;

carryforward indefinitely (UBTI)

ØNontaxable employee benefits

generate UBI to exempt employers

ØUBTI activities to be siloed

ØUBTI Net operating loss deduction

is limited to 80% of taxable income

ØInternational provisions create

additional net investment income

for private foundations.

ØGILTI and Sec. 965

ØCompensation >$1M or certain

parachute payments is subject to a

21% excise tax (Sec. 4960)

Tax Cuts and Jobs Act of 2017PROS CONS


Corporation

ØCorporate tax rates: § 21% (One rate)

ØNo AMT

ØAMT tax credit from 2017 & prior may offset a portion of regular tax (2018-2021)

ØCharitable deduction 10% limit

TrustØTrust tax rates:

§ 10-37% § Highest rate once taxable income over $12,500

ØCapital gains and qualified dividends tax rates: § 20% (if greater than $12,500)

§ Qualified Business Income* deduction:§ 20% (may apply if taxable income is < $157,500

from QBI)§ Guidance needed to coordinate with UBTI silo

rules

ØAMT: § Exemption is $24,600§ 28% over $191,500

ØPassive activity loss rules applyØAt risk rules apply ØCharitable deduction 60%/30%/20% limit

Unrelated Business Income Tax Comparisons


• Unrelated business taxable income siloing (IRC §512(a)(6)) • IRS Notice 2018-67 Transition guidance issued• Overview: Losses from one “trade or business” can not offset

income from the same “trade or business”• Trade or business – will look to NAICS Codes• Qualified Partnership Interests –• Interim Rule - Can be aggregated if the EO (and related

interests) own less than 2% and do not control (≤ 20%) the partnership/LLC• Transition Rule - Partnership interests of >20% and owned

before August 21, 2018 – do not need look thru to the underline UBI activities for separate TorB

Tax Cuts and Jobs Act of 2017



• The new UBTI from Qualified Transportation Benefits is not considered a trade

or business

• Unrelated business taxable income on Qualified Transportation Benefits (IRC

§512(a)(7))

• Overview: A deduction for parking and other transportation benefits is now

taxable to exempt organizations.

• Provision is effective as of January 1, 2018

• Qualified transportation and commuting fringe benefits under IRC §132(f),

include:

• Transit passes;

• Qualified parking (per definition in §132(f)(5)(C)); and

• Transportation in a commuter highway transportation vehicle between the

employee’s residence and workplace paid by the employer

Tax Cuts and Jobs Acts - Qualified Transportation Benefits



Implementation Notes on IRC § 512(a)(7)• IRS publication Pub 15B (2018) states that employee qualified salary

reduction (pre-tax employee payments) are treated as not deductible to

the employer and thus within § 512(a)(7)’s reach

• From a timing perspective (given reach of law back to 1/1/2018 expense

paid/incurred), the ship sailed on having organizations NOT pay UBIT on

these amounts by treating the benefits as taxable income to employees

• The only work around is to NOT provide 132(f) benefits

• Organizations do not have option to pay UBIT in lieu of treating as

taxable income to employees

• Required to treat as taxable compensation to employees (this is the

same as for-profit employers)


• Charitable contributions are one of the most valuable deductions to taxpayers after TCJA 2017 was passed.• It is important to protect deduction and the Finalized Regulations

provide strict rules:• Donor acknowledgement letters need to have the specific

language• Qualified Appraisals and Appraisers• The attachments to the tax return (it may be for multiple filing

years)• Form 8283• Qualified Appraisal

• Noncash contributions should be coordinated with the charity to ensure the deduction can be taken.

Charitable Contribution Regulations


Questions?

Deby McLeod, CPA, CGMA Jennifer Becker Harris, [email protected] [email protected] 425-709-6664

10900 NE 4th Street, Suite 1400Bellevue, WA 98004www.clarknuber.com

Thank You

mailto:[email protected]

mailto:[email protected]


This material is provided solely for educational purposes and enhancing knowledge of tax matters. It does not provide legal or tax advice to any taxpayer because it does not take into account any specific taxpayer’s facts and circumstances. It should not be relied on or used without consulting a lawyer to determine specific circumstances, possible changes to laws and regulations, and other legal issues. Receipt of this material does not establish an attorney-client relationship.

Disclaimer


Supplemental Materials


U.S. GAAP Update Supplemental Materials


Example financial statements Net asset changes


Net Asset Changes Implementation – balance sheet

Minimum presentation

required

Alternative disaggregation

allowed


Net Asset Changes Implementation – statement of activities

• At a minimum - present the change in both classes of net assets and the total change in net assets

40


Example disclosures – net assets with donor restrictions


Liquidity disclosures – practical guidance

• “Qualitative” indicates it will primarily be a description of how your NFP manages liquidity

• Focus your disclosure on –

• Your NFP’s measures in place to manage an “emergency” cash flow need, or

• Your NFP’s approach to cash flow management through a 1 year cycle, or

• Both a) and b)


Availability disclosure – format options• Format of disclosure should be driven by the complexity of describing the availability of

financial assets.

Complexity Options to ConsiderNo complexity = nothing impacting availability • Text-based disclosure; state fact that all financial

assets generally availableLow complexity = limits on availability very easy to describe (for example, current/noncurrent classification; non-available balances segregated on balance sheet)

• Text-based disclosure; describe the line items that are available

• Tabular disclosure repeating line items from the balance sheet that are available

Moderate to higher complexity • Tabular disclosure reporting amounts that are available

• Tabular disclosure calculating available financial assets (see following slides for examples)

Presentation in the notes or in a separate statement

Example 1 - analysis of expenses

Presentation on face of the statement of activities

Example 2 - analysis of expenses


46

Recipients Resource Providers

• No additional recurring disclosures have been added in the guidance.

• Guidance in Topic 958 includes disclosures for unconditional and conditional promises to give.

• For conditional promises to give, recipients are required to disclose:• The total of the amounts

promised• A description and amount for

each group of promises having similar characteristics

• No additional recurring disclosures have been added to the guidance.

• Guidance in Topic 958 includes a cross reference to the disclosures in Topic 450, Contingencies, and in Topic 470, Debt.

• Resource providers also are required to provide information about unconditional promises to give.

ASU 2018-08 – Contributions Disclosures


958-310-50-1 Recipients of unconditional promises to give shall disclose the following:

a. The amounts of promises receivable in less than one years, in one to five years, and in more than five years

b. The amount of the allowance for uncollectible promises receivablec. The discount that arises if measuring a promise to give at present value, if that discount is not

separately disclosed by reporting it as a deductions from contributions receivable on the face of a statement of financial position pursuant to paragraph 958-310-45-1.

958-310-50-4 Recipients of conditional promises to give shall disclose both of the following:

a. The total of the amounts promisedb. A description and amount for each group of promises having similar characteristics, such as

amounts of promises conditioned on establishing new programs, completing a new building, and raising matching gifts by a specified date.

47

Conditional Contribution Disclosures - Recipients


958-450-20-50 In conformity with Section 450-20-50, the notes to financial statements may have to include information about loss contingencies.

958-405-50-1 In addition to disclosures required by Section 450-20-50, the notes to financial statements shall include a schedule of unconditional promises to give that shows the total amount separated into amounts payable in each of the next five years, the aggregate amount due in more than five years, and for unconditional promises to give that are reported using present value techniques, the unamortized discount.

720-25-25-1 This Subtopic does not require disclosures for makers of promises and indications of intentions to give because Topics 450 and 470 provide the relevant standards.

48

Contribution Disclosures - Resource Providers


Tax Update Supplemental Materials

Changes in UBI Rules

• Organizations electing to pay UBIT (discussed earlier) will file a 990-T to remit tax on the value of employee benefits not treated as taxable compensation

• Law requires isolation of income and losses from separate UBI “business lines” - the loss from one business line is not allowed to offset the income from another

• Losses may be carried forward to offset income in future periods (see discussion on NOL next)

• Isolation of business lines will require additional Treasury Guidance

IRS Issued Notice 2018-67 Giving UBI Guidance

• Proposes reasonable good=faith interpretation utilizing NAICS codes to aggregate business activities together

• Allows two alternative rules for determining a “qualified partnership interest (QPI)” which may be aggregated with other QPI as one business activity for purpose of §512(a)(6) segregation of losses and income. § Interim Rule – holds either de minimis amount or lacks control§ Transition Rule – Allows top level aggregation of a partnerships owned 8/21/2018 to

be a single business without having to disaggregate activities within the partnership

• Debt financed income (outside of partnerships) are a single business

Net Operating Losses

• Net operating loss rules follow the normal corporate or trust rules.

• Corporate losses created after 1/1/2018 may no longer be carried back

• NOL may be carried forward indefinitely to offset income from the same business line in future periods

• The NOL deduction for any business line is limited to 80% of taxable income in the future year for the business line in the future year

• The result is at least 20% of the net taxable income before NOL deduction will be subject to taxable income

Transportation Benefits or rarely On-site Athletic Facilities

• Effective for amounts PAID/INCURRED 1/1/2018 and later (thus Form 990-T implications here go beyond employer’s tax year)

• Reach is to the benefits denoted in IRC §132(f) when same are provided to filer’s employees (these are the employer-provided benefits that TCJA makes non-deductible to taxable employers)

• Amounts paid/incurred are “deemed UBTI” meaning the exempt organization must add the cost onto their 990-T (unless the expense was incurred as a non-deductible expense of a taxable unrelated business activity)

• 2018 excluded benefit on non-taxable transportation benefits is $260/month each for parking and transportations ($520 if both are provided) – Indexed annually

What Benefits are Impacted

• Qualified transportation and commuting fringe benefits under IRC

§132(f), include:

§ Transit passes;

§ Qualified parking (per definition in §132(f)(5)(C)); and

§ Transportation in a commuter highway transportation vehicle between the

employee’s residence and workplace paid by the employer.

• On-premises athletic facilities defined in section 132(j)(4)(B) (these are

those that discriminate in favor of highly-compensated employees) are

also captured, but these are rare!

Other Benefits – No Longer Excluded From Income

• Organizations do not have option to pay UBIT in lieu of treating as taxable income to employees• Required to treat as taxable compensation to employees (this is the same

as for-profit employers)• If associated with Unrelated Business Income or IRC §4940 net investment

excise tax also not allowed as a deduction against such income unless included in compensation§ Moving/relocation expenses§ §274 Membership dues associated with social clubs§ Meal and entertainment expenses formerly subject to the 50%

limitation• Should still be qualified charitable expense §170 and §4942

• Guidance on certain issues relating to the excise tax on excess remuneration paid by “applicable tax-exempt organizations” under §4960 Notice 2018-55• Guidance computation of unrelated business taxable income for

separate trades or businesses under new §512(a)(6) Notice 2018-67

TCJA Guidance

• Revenue procedures updating grantor and contributor reliance criteria under §§170 and 509 – Final Regs issued Aug 2018 non-cash contribution donor acknowledgment

• Revenue procedure to update Revenue Procedure 2011-33 for EO Select Check – Issued Rev. Proc. 2018-32

• Final regulations under §§501(a), 501(c)(3), and 508 relating to a streamlined application process for eligible organizations to apply for recognition of tax-exempt status under §501(c)(3)§ Final and temporary regulations were published on July 02, 2014 (this was

the issuance of IRS Form 1023-EZ)§ Rev. Proc. 2018-5, 2018-1, IRB 233

IRS Priority Guidance Plan Accomplishments

• Update to Revenue Procedure 92-94 on §§4942 and 4945 Modified and superseded by Rev. Proc. 2017-53• Guidance regarding the excise taxes on donor advised funds and fund

management§ Notice 2017-73 Issued December 2017

IRS Priority Guidance Plan Accomplishments

• Donor acknowledgment issues … what you need to keep in mind• Contemporaneous (before tax return filed, taking an income tax deduction)• All required language present in donor acknowledgment letter (Pub 1771) IRS

continues to WIN consistently on technical missteps• Quid pro quo is the value of what the donor receives … not the cost of the

item to the organization • Be aware of donated partnerships with debt (Rev. Rul. 75-194)

Donor Acknowledgment Language

• IRS issued proposed Treas. Reg 1.170A-13(f)(1)

• In response to IRS disallowing deductions based upon flawed Contemporaneous Written Acknowledgment (“CWA”); charities filing amended Forms 990 to assist donors in not losing deduction

• Tax Court Case: 15 West 17th Street LLC v. Commissioner, 147 T.C. No. 19

§ Form 990 is NOT “the proscribed Form” described in 170(f)(8)(A)

• Treasury does not plan to issue a new form

§ Must rely on proper CWA (OMB Control number 1545-0754)

§ New Treasury Regulations T.D. 9836

Donor Acknowledgment Issue

• Revenue recognition does not follow GAAP for in-kind contributions§ Donated services or use of facilities is not reported as revenue (Part VIII) or

expense (Part IX) on Form 990§ Free services and/or use of facilities from a governmental unit are included in

Public Support, Schedule A, Part II, line 3 or Part III, line 5

• Donor acknowledgment should never provide a value for donated item FROM the donor; only value is the quid pro quo the charity provides TO the donor

In-Kind Contributions

• Three important Sections:

• Section 3 - Ticket purchase with a quid pro quo value to the donor fund advisor - Impermissible

• Section 4 – Satisfying a personal pledge out of a DAF – Permissible (pending additional guidance)

• Section 5 – Changing they way 509(a)(1) and (2) public charities calculate public support when they receive certain funds from a DAF

Donor Advised Funds – Read Notice 2017-73

• Comments requested before March 5, 2018

• Section 3 mirrors PLR 9021066 applicable to private foundations controlled by corporation – may be inappropriate as DAFs are required to give written notice to donors in no uncertain terms the gifts are a complete gift. Donor only have advisory privileges and all assets are the property of the sponsoring organization.

• Why would a donor not be allowed to do something indirectly they would be allowed to do directly? i.e. make a gift to a public charity which resulted in “no substantial goods or services being received in exchange for the contribution”

Section 3 - Notice 2017-73

• Allows DAFs to satisfy personal pledges of donor/donor advisors if:

§ Distribution makes no mention of a personal pledge in the DAF distribution

§ Donor/donor advisor receives no more than incidental benefits (see section 3)

§ Donor/donor advisor does not attempt to claim a § 170 charitable deduction even if the distribute charity erroneously sends a donor acknowledgment letter

• Section 4 may be relied upon by taxpayers until further guidance issued

• Makes sense for all of the reasons cited in the Notice – what is an enforceable pledge?

• Relives burdens on the recipient charities, sponsoring orgs and IRS


• This section would be burdensome on recipient charities • Considering recalculating 509(a)(1) and 509(a)(2) for pass-thru contributions • Treasury may want to consider another solution similar to the penalty on private

foundations who “tip” a public charity• Alternatively, if the contribution is truly a completed gift and the donor only has

advisory privileges, Section 5 does not seem a reasonable change to the public support test – the sponsoring organization is now the donor and is usually a 509(a)(1) charity not subject to the 2% limitation on public support – who is being harmed by allowing this public support to flow to small public charities if they are not controlled by a single donor?


• 21% excise tax on certain employers who provide a “covered employee” compensation in excess of $1 million OR any “excess parachute payments” reaches “applicable tax-exempt organizations:” § Organizations exempt under IRC§501(a) (= all 501(c)’s) § Political organizations described in IRC§527(e)(1)§ Organizations with income excluded from tax under IRC §115(1) – note intent

by Congress to reach ALL state schools does not mirror language of statute!• Tax on FILER’s share of compensation that exceeds $1M is applied pro

rata based on filer’s share of compensation provided by all “related organizations” – each related organization pays tax on their own share

§4960 Excise Tax on Excessive Compensation – 1/2

• Reach here is to compensation provided beginning 1/1/2018 (excluding licensed medical and veterinary professionals)• Generally applies to the top five “covered employees” from each tax

year: individuals who in the current taxable year OR any prior taxable year beginning AFTER 12/31/2016 were one of the “five highest-paid employees.” NOTE that this is ongoing list!• Compensation includes amounts paid by the filing organization and

all related organizations • Excise tax is paid via Form 4720 [draft of that Form’s 2018 instructions

was released in September]• Further reach applies to “excess parachute payments”

§4960 Excise Tax on Excessive Compensation - 2

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exciting updates in accounting and tax for nonprofits · •asu 2016-14,not-for-profit entities...

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