The redesigned Form 990-T reflects the incorporation of the Unrelated Business Income “Silo” rules, as enacted under the 2017 Tax Cuts and Jobs Act (TCJA), as well as the Taxpayer First Act’s mandatory electronic filing requirements.
As a reminder, the TCJA added new Section 512(a)(6) of the Internal Revenue Code which introduced a new Unrelated Business Income Tax (UBIT) “silo” concept, requiring nonprofits with more than one unrelated trade or business to calculate income and deductions separately for each trade or business.
In its Form 990-T redesign, the IRS seems to be employing a methodology reminiscent of the 2008 revision of Form 990 ( Return of Organization Exempt from Income Tax), with a summary “core” form and detailed reporting of an organization’s UBIT activity on the supplementary Schedules A.
Specifically, the draft 2020 Form 990-T moves the information previously reported on Parts III through VI of the 2019 Form 990-T (calculation of tax and other general information) to new Parts I through IV of the 2020 core form. Additionally, information related to the calculation of the filing organization’s UBTI from one or more unrelated trades or businesses formerly reported on Parts I and II of the Form 990-T are now reported on Schedule A, presumably with a separate Schedule A required for each “silo” of UBIT activity.
It should be noted that these forms are only the draft versions for informational purposes, and we expect additional information once the updated instructions are released.
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