The two public support tests have been in existence since the finalization of Regulations to 1969 law but their application remains, to most preparers, murky in spite of the tests being virtually unchanged for five decades. In this session, the author/instructor focuses on assisting participants with two key goals: first, ensuring that participants understand both the design and goal of each test; and second, being conversant (with the materials as back-up) with the reach of each test's line-by-line inputs.
Public accounting tax and audit staff, and nonprofit organization's Treasurers, CFOs and finance/compliance staff
After attending this presentation you will be able to...
- Identify the inputs of revenue streams that inform the first public support test's numerator and denominator
- Identify the additional inputs of revenue streams that inform the second public support test's numerator and denominator
- Appreciate the limit on certain "non-public" donors' dollars that is employed in the first public support test as an easy one to track and calculate
- To the end of knowing to only employ this test when the first is not available -- contrast the second public support test's limitations from those of the first test, noting that category of donor and additional testing rules limit amounts of "good" public support as well as of "good" program service revenue and that there is a second test that 'caps' the amount of investment and net unrelated business taxable income allowed in total support
The major topics that will be covered in this course include:
- Intro to the two public support tests (PSTs), including noting the various misconceptions about their application
- Review of each test, focusing on the relative ease of PST #1 (that calculated on Schedule A, Part II) which employs a sole bifurcated test (i.e., automatic versus 'facts and circumstance') versus that of PST #2 (calculated on Schedule A, Part III) with its lengthy documentation, restrictive parameters, and dual tests both of which must be passed
- Practical tips (and materials on same) translating revenue presented the Form Core Form 990 at Part VIII to the line inputs for both PSTs at Schedule A's Parts II and III
- Discussion of how to assist organizations who are in danger of flunking one or both PSTs
- Analyzing anomalies: explanation of both what comprises an unusual grant and when a filer's PST 1 "facts and circumstances test" argument ages out
Helpful to have some background with Parts II or III of Form 990 Schedule A