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Common questions about Form 990 net investment income/adjusted net income in ProConnect Tax

by ProConnect Tax Online Updated 7 months ago

Below are solutions to frequently asked questions about entering Form 990/990-PF net investment income or adjusted net income in the Exempt Organization return.

Why do gross rents entered in Rental Income show on Form 990-PF line 11 instead of line 5a? 

Rents will show on Form 990-PF, line 5a (Gross rents) or Form 990-PF, line 11 (Other revenue) based on whether they're considered investment income or noninvestment income.

Gross rents that are noninvestment income show on Form 990-PF, line 11. The default is to show rents as noninvestment income. Noninvestment income may require reconciliation to the books on line 11.

Follow these steps to reconcile noninvestment income:

  1. Go to Input Return Revenue Net Invest. Inc./Adj. Net Inc. (990-PF)
  2. Enter the amount in the applicable column for the Rental income - noninvestment property field.

Gross rents that are investment income show on Form 990-PF, line 5(a).

Follow these steps to show gross rents as investment income:

  1. Go to Input Return Revenue Rental Income. 
  2. Scroll down to the General Information section.
  3. Mark the checkbox labeled Investment income (990-PF).
    How do I input 990-PF. lines 3a and 3b?
  4. Go to Input Return Revenue Other income Producing Act. 
  5. Scroll down to the Related or Exempt Function Income section.
  6. Enter the total taxable and tax-exempt interest received in the Interest on savings & cash investments field.
    • This entry flows to Form 990-PF, Part I, line 3(a).
  7. Select Net Invest. Inc./Adj. Net Inc. (990-PF)
  8. Enter the taxable interest received in the ** Interest on savings & cash investments ** field.
  • This entry flows to Form 990-PF, Part I, line 3(b).

Where can I enter Schedule K-1 information flowing into an exempt organization return? 

There's no specific detail screen to enter income reported to the organization from a K-1 in the Exempt Organization module. Income and expenses reported on the Schedule K-1 may be entered on different screens based on the kind of income or expense and how it should be reported on Form 990, 990-PF, or 990-T.

Below are examples of which screens can be used:

  • Other Revenue
  • Rental Income
  • Investment Income
  • Dispositions
  • Passthroughs Income (990-T)
  • Unrelated Business (990-T)

This list doesn't cover every screen where you can report the income or expenses. It's up to the preparer to determine where to report the amounts from the K-1 on the return.

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