The Internal Revenue Service (IRS) has released new guidance in Announcement 2012-19. The announcement confirms that for tax year 2011 it is optional for Form 990 filers to report their interests in the income, expenses, and assets of joint ventures and other partnerships in which they have an ownership interest using information from Form 1065, U.S. Return of Partnership Income, Schedule K-1. This means that for tax year 2011 exempt organizations participating in joint ventures and other partnerships may continue to report their interests in the joint ventures and other partnerships based on their books and records, instead of reporting information from Form 1065, Schedule K.
Background: In January of 2012, the IRS revised the 2011 Form 990 and Form 990-EZ to require filing organizations to report their interests in a joint venture's or other partnership's revenue, expenses, and assets using information from the Form 1065, Schedule K. However, since publication of the revision, the IRS received comments from the public arguing that using an organization's books and records provided a more accurate value of assets than using information from the Schedule K-1.
Other comments noted that timing issues made using Schedule K-1 difficult, as they are not available until after the filing due date for Form 990. In order to consider these comments and determine how to promote compliance while minimizing reporting burdens, the IRS decided to make the new Schedule K-1 reporting instructions for Forms 990 and 990-EZ optional for tax year 2011.
Other Requirements Still Stand: Organizations that complete Form 990, Schedule H and Form 990, Schedule R must continue to use information from Form 1065, Schedule K-1 in reporting certain partnership information on those schedules, as explained in the instructions for 2011 Form 990, Schedule H and 2011 Form 990, Schedule R.