Avoiding Form 990-PF Errors: Identifying Self-Dealing, Monitoring Minimum Distribution Requirements, Excise Taxes

Private foundations are organized for charitable purposes and required to make their annual 990-PF available for public inspection. These entities are vulnerable to at least five different excise taxes ranging from one percent to 200 percent. Private foundations may compensate disqualified persons as long as the compensation is reasonable and necessary.

Private foundations are charged with doing good and must meet specific minimum distribution requirements. Often, more or less than the calculated minimum distribution is paid out--both carry reporting conundrums. If the foundation is not generous enough in a given year, it is subject to an excise tax; if it is overly generous, it has an excess grant carryover to distribute in the future. Neglecting to include relative expenses as qualifying distributions is cited as a typical preparation error by foundation experts.

Along with concerns about what the foundation should report, advisers must determine what not to report. The IRS List, Common Errors Made by Exempt Organizations, advises "Do not include unnecessary personal identifying information."

Listen as our panel provides line-by-line advice on reporting complicated private foundation transactions, points out how and when to avoid excise taxes, and explains steps that will facilitate the preparation of a foundation's Form 990-PF.