I have experience working with small non-profits, but their investments generally revolve around securities or simple interest
I am doing work for a 990-PF that lost their exempt status for failure to file for three consecutive years. By the time i received even basic information from the former CPA and client, we were past the 15 month "simplified" retroactive reinstatement process per Rev. Proc. 2014-11. CYs 2014-2017 contain investments in partnerships that provide a routine (monthly or quarterly) stream of income from dividends. These business are NOT in any way associated with the PF's exempt purpose, and only serve to grow the funds on hand. Roughly 6% is distributed each year for the PF's original exempt purpose. They are owing taxes based on their minimum net investment income.
These K1s contain entries for Boxes 1, 5, 6a, 13, 16, 19, and 20. The investment in the partnership amounts to .068%. There are nonrecourse liabilities.
I am at a bit of a loss as to how to report this K1 activity. Like I said, they are from several different partnerships. I know dividends and interest are not deemed UBI, but it seems this may be deemed UBI since there is a small amount listed in Box 1 (I'm specifically referring to the single K1 from 2014). Line 20A matches the total of boxes 5 and 6a. 13K matches 20B. 20V? Missing statement and the client cannot seem to obtain it. I recognize a lot of this is redundant information on the K1 and will not necessarily flow through to return(s).
I have PPC's Desktop books for 990s and while they are helpful, they have only a brief excerpt on this topic under UBI and partnership K1s. The checklist they provide for determining if investment qualifies as UBI is helpful, and I am currently leaning towards this activity simply being part of net investment activity, not UBI necessitating 990-T.
If this were an ordinary tax return and I was handed these K1s, I would easily be able to get them entered in UltraTax. But, there obviosuly are not any such "K1" fields on 990s/990-PFs, and it seems the various activity needs to be entered on different screens. I read guidance for completing Form 1116, but it requires Form 990-T. Not attempting to avoid doing the proper work, just need to be certain my thoughts are correct, as the client does not understand any of this including why they owe tax on investment income.
Anyone encounter similar situations that provide some advice/guidance?39