February 2017

Updated Form 990-EZ to Help Smaller Nonprofits Avoid Errors

The Internal Revenue Service last week announced the release of an updated Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, which it said will help tax-exempt organizations avoid common mistakes when filing their annual return.
Click here to read the whole article on www.massnonprofit.org

FASB Amends the Consolidation Guidance for Nonprofits

In ASU 2017-02, the FASB finally addresses whether a nonprofit that is a general partner (GP) in a for-profit limited partnership should apply consolidation guidance.  In previous guidance, a nonprofit general partner was presumed to have control unless the presumption could be overcome.  In order to overcome the presumption, nonprofits had to look to the Variable Interest Entity (“VIE”) guidance.  However, nonprofits were in a quandary when reviewing VIE guidance, and that is because nonprofits were generally excluded from this guidance.

A summary of the ASU 2017-02 guidance is as follows:

A nonprofit GP is presumed to have control over a for-profit limited partnership (“LP”) unless that presumption is overcome.  The presumption is overcome if the limited partners possess substantive kick-out or participating rights.  Kick-out rights are substantive if the simple majority of the limited partners can vote to exercise those rights.

The ASU adds another layer whereby a limited partner that owns either directly or indirectly more than 50% of the limited partners’ kick-out rights is deemed to have a controlling interest and must consolidate the LP. But, if the other limited partners have substantive participating rights, the limited partner having the majority kick-out rights would not have a controlling financial interest.

The guidance has a fairly involved decision tree that must be followed to determine whether a LP should be consolidated or not, so please let us know if you have questions about how this new guidance would apply to your nonprofit.

2017 Institute for Trustees

Presented by Essex County Community Foundation
As a nonprofit board member or executive director, you know how important it is to keep up with the constantly evolving nonprofit sector. At Essex County Community Foundation's Institute for Trustees - the region's premier conference for nonprofit leaders - you'll gain advice and insight from experts in the field that will help keep you up-to-date on governance, management, strategic planning and more.  
  • Saturday, March 25, 2017
Click here to register.  Register before Feb. 25 and get $20 off your registration for an incredible day of lessons for taking your nonprofit to the next level!
© 2017 Edelstein & Company LLP. All Rights Reserved.
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