2020 Instructions for Schedule J (Form 990) Page 3 of 6 Fileid: … S/I990SCHJ/2020/A/XML/Cycle04/Source 10:21 - 4-Dec-2020

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Department of the Treasury 2020 Internal Revenue Service Instructions for Schedule J (Form 990) Compensation Information

Section references are to the Internal Revenue benefits are reported as compensation Code unless otherwise noted. Specific Instructions in box 1 or box 5 of Form W-2, Wage and Tax Statement; box 6 of Form Part I asks questions regarding certain 1099-MISC; or box 1 of Form Future Developments compensation practices of the 1099-NEC. For each of the listed organization. Part I generally pertains to For the latest information about benefits provided to or for a listed all officers, directors, trustees, and developments related to Schedule J person, provide in Part III the following employees of the organization listed on (Form 990) and its instructions, such as information. Form 990, Part VII, Section A, legislation enacted after they were • The type of benefit. regardless of whether the organization published, go to IRS.gov/Form990. • The listed person who received the answered “Yes” to line 23 of Form 990, benefit, or a description of the types (for Part IV, for all such individuals. What’s New example, all directors) and number of However, only the organizations that are listed persons that received the benefit. Form 1099-NEC and nonemployee described in Who Must File, earlier, • Whether the benefit, or any part of it, compensation reporting. Beginning must complete Part I. Part I, lines 1, 2, 3, was treated as taxable compensation to with tax year 2020, Form 1099-NEC, 7, 8, and 9 require reporting on the the listed person. Nonemployee Compensation, is used to compensation practices of the filing report nonemployee compensation. organization, but not of related First-class travel refers to any travel Accordingly, where the Form 990 organizations. Lines 4 through 6 on a passenger airplane, train, or boat references reporting amounts of require information regarding both the with first-class seats or compensation from Form 1099-MISC, filing organization and its related accommodations by a listed person or Miscellaneous Income, be sure to organizations. Part I, lines 5 through 9, his or her companion if any portion of include nonemployee compensation must be completed only by section the cost above the lower-class fare is from box 1 of Form 1099-NEC. See the 501(c)(3), section 501(c)(4), and paid by the organization. First-class instructions for additional information. section 501(c)(29) organizations. travel doesn't include intermediate classes between first class and coach, General Instructions Part II requires detailed compensation such as business class on commercial Note. Terms in bold are defined in the information for individuals for whom the airlines. Bump-ups to first class free of Glossary of the Instructions for Form organization answered “Yes” on Form charge or as a result of using frequent 990, Return of Organization Exempt 990, Part IV, line 23. Not all persons flyer benefits, or similar arrangements From Income Tax. listed on Form 990, Part VII, Section A, that are at no additional cost to the will necessarily be listed in Schedule J, organization, can be disregarded. Purpose of Schedule Part II. Charter travel refers to travel on an Schedule J (Form 990) is used by an Part III is used to provide explanations airplane, train, or boat under a charter or organization that files Form 990 to of answers as required in Part I or II. rental arrangement. Charter travel also report compensation information for includes any travel on an airplane or certain officers, directors, individual Unless stated otherwise, all questions in boat that is owned or leased by the trustees, key employees, and this schedule pertain to activity during organization. the calendar year ending with or within highest compensated employees, Travel for companions refers to any the organization's tax year. and information on certain travel of a listed person's guest not compensation practices of the traveling primarily for bona fide business organization. Part I. Questions purposes of the organization. It also Regarding Compensation refers to any travel of a listed person's Who Must File For purposes of Part I, a listed person is family members, whether or not for An organization that answered “Yes” on a person listed on Form 990, Part VII, bona fide business purposes. Form 990, Part IV, line 23, must Section A. Tax indemnification and gross-up complete Schedule J. Do not file Line 1. Report information regarding payments refer to the organization's Schedule J for institutional trustees. certain benefits (if any) provided to payment or reimbursement of any tax If an organization isn't required to file persons listed on Form 990, Part VII, obligations of a listed person. Form 990 but chooses to do so, it must Section A, line 1a. Discretionary spending account file a complete return and provide all of refers to an account or sum of money Line 1a. Check the appropriate the information requested, including the under the control of a listed person with box(es) if the organization provided any required schedules. respect to which he or she isn't of the listed benefits to any of the accountable to the organization under persons listed on Form 990, Part VII, an accountable plan, whether or not Section A, regardless of whether such

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actually used for any personal one or more listed persons, answer Independent compensation expenses. Accountable plans are “Yes” if the organization followed a consultant refers to a person outside the discussed in Accountable plan written policy regarding the payment, organization who advises the amounts, later (under the Part II, column provision, or reimbursement of all such organization regarding the top (D), instructions). benefits to listed persons. If the management official's compensation Housing allowance or residence for organization didn't follow a written policy package, holds himself or herself out to personal use refers to any payment for, for payment, provision, or the public as a compensation or provision of, housing by the reimbursement of any listed benefits, consultant, performs valuations of organization for personal use by a listed explain in Part III who determined the nonprofit executive compensation on a person, including a ministerial housing organization would provide such regular basis, and is qualified to make or parsonage allowance. benefits and the decision-making valuations of the type of services process. provided. The consultant is independent Payments for business use of if he or she doesn't have a family Line 2. Answer “Yes” if the organization personal residence refers to any relationship or business relationship required substantiation of all expenses payment by the organization for the use with the top management official, and if or benefits listed on line 1a, in of all or part of a listed person's a majority of his or her appraisals are accordance with the rules for residence for any purpose of the performed for persons other than the accountable plans discussed in organization. organization, even if the consultant's Accountable plan amounts, later (under Health or social club dues or initiation firm also provides tax, audit, and other the Part II, column (D), instructions), fees refers to any payment of dues by professional services to the before reimbursing or allowing all such the organization for the membership of organization. a listed person in a health or fitness club expenses incurred by any directors, or a social or recreational club, whether trustees, and officers, including the Form 990 of other organizations or not such clubs are tax exempt. It organization's top management refers to compensation information doesn't include membership fees for an official (all referred to as “top reported on a Form 990 series return of organization described in section 501(c) management official”). An organization similarly situated organizations, and (3) or section 501(c)(6) unless such can answer “Yes” if it checked the includes Forms 990; 990-EZ, Short organization provides health, fitness, or “Discretionary spending account” box Form Return of Organization Exempt recreational facilities available for the on line 1a and required substantiation of From Income Tax; and 990-PF, Return regular use of a listed person. Health expenses under the rules for of Private Foundation. accountable plans for all listed benefits club dues don't include provision by the Written employment contract refers organization of an on-premises athletic on line 1a other than for discretionary spending accounts. to one or more recent or current written facility described in section 132(j)(4), or employment agreements to which the provision by a school of an athletic Line 3. Check the appropriate box(es) top management official and another facility available for general use by its to indicate which methods, if any, the organization are or were parties, written students, faculty, and employees. Dues organization used to establish the employment agreements involving include the entrance fee, periodic fees, compensation of the organization's similarly situated top management and amounts paid for use of such top management official. If the officials with similarly situated facilities. organization relied on a compensation organizations, or written employment Personal services refers to any consultant that used a method offers to the top management official services for the personal benefit of a described in line 3 to help determine from other organizations dealing at listed person or the family or friends of a compensation for the top management arm's length. listed person, whether provided official, the organization may check the regularly (on a full-time or part-time box for that method in line 3. Do not Compensation survey or study refers basis) or as needed, whether provided check any box(es) for methods used by to a study of top management official by an employee of the organization or a related organization to establish the compensation or functionally independent contractor (and whether filing organization's compensation of the comparable positions in similarly the independent contractor is an filing organization's top management situated organizations. individual or an organization). They official. Explain in Part III if the Approval by board or compensation include, but aren't limited to, services of organization relied on a related committee refers to the ultimate a babysitter, bodyguard, butler, organization that used one or more of decision by the governing body or chauffeur, chef, concierge or other the methods described next to establish compensation committee on behalf of person who regularly runs nonincidental the top management official's the organization regarding whether to personal errands, escort, financial compensation. enter into an employment agreement planner, handyman, landscaper, lawyer, Compensation committee refers to a with the top management official, and maid, masseur/masseuse, nanny, committee of the organization's the terms of such agreement. personal trainer, personal advisor or governing body responsible for counselor, pet sitter, physician or other determining the top management Line 4. List in Part III the names of medical specialist, tax preparer, and official's compensation package, listed persons paid amounts during the tutor for nonbusiness purposes. whether or not the committee has been year by the filing organization or a Personal services don't include services delegated the authority to make an related organization under any provided to all employees on a employment agreement with the top arrangement described in lines 4a nondiscriminatory basis under a management official on behalf of the through 4c, and report the amounts paid qualified employee benefit plan. organization. The compensation during the year to each such listed committee can also have other duties. person. Also describe in Part III the Line 1b. If the organization provided terms and conditions of any any of the benefits listed in line 1a to arrangement described in lines 4a

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through 4c in which one or more listed organization, which are addressed by organization for line 6 purposes, persons participated during the year, lines 5 and 6 later. regardless of whether the payment is regardless of whether any payments to Example. A, a listed person, is an contingent on achieving a certain net the listed person were made during the employee of organization B. B owns an earnings target. However, if instead the year. interest in C, a for-profit subsidiary that bonus payment is a specific dollar is a stock corporation. As part of A's amount to be paid only if a net earnings Line 4a. Answer “Yes” if a listed target is achieved, the payment isn't person received a severance or compensation package, B provides restricted stock in C to A. This is an contingent on the net earnings of the change-of-control payment from the organization for this purpose. organization or a related organization. equity-based compensation A severance payment is a payment arrangement for purposes of line 4c. Line 7. Answer “Yes” if the organization made if the right to the payment is The same would be true if C were a provided any non-fixed payments, not contingent upon the person's severance partnership or limited liability company described on lines 5 and 6, for a listed from service in specified circumstances, and B provided A a profits interest or person. Describe such arrangements in such as upon an involuntary separation capital interest in C. Part III. A fixed payment is an amount of from service or under a separation or Line 5. Answer “Yes” if the organization cash or other property specified in the termination agreement voluntarily paid or accrued with respect to a listed contract, or determined by a fixed entered into by the parties. Payments person any compensation contingent formula specified in the contract, which under a change-of-control arrangement upon and determined in whole or in part is to be paid or transferred in exchange are made in connection with a by the revenues (gross or net) of one or for the provision of specified services or termination or change in the terms of more activities of the organization or a property. A fixed formula can employment resulting from a change in related organization, or by the incorporate an amount that depends control of the organization. Treat as a revenues (gross or net) of the upon future specified events or severance payment any payment to a organization or a related organization as contingencies, provided that no person listed person by the organization or a a whole. For this purpose, net revenues exercises discretion when calculating related organization in satisfaction or means gross revenues less certain the amount of a payment or deciding settlement of a claim for wrongful expenses, but doesn't mean net income whether to make a payment, such as a termination or demotion. or net earnings. Describe such bonus. Amounts paid or accrued to any arrangements in Part III. listed person that aren't fixed amounts Line 4b. Answer “Yes” if a listed as defined earlier are non-fixed person participated in or received Example. A, a listed person, is a payments. For example, any amount payment from any supplemental physician employed by organization B. paid to a person under a reimbursement nonqualified retirement plan As part of A's compensation package, A arrangement where discretion is established, sponsored, or maintained is to be paid a bonus equal to x% of B's exercised by any person as to the by or for the organization or a related net revenues from a particular amount of expenses incurred or organization. A supplemental department operated by B for a reimbursed is a non-fixed payment. See nonqualified retirement plan is a specified period of time. This Regulations section 53.4958-4(a)(3). nonqualified retirement plan that isn't arrangement is a payment contingent on generally available to all employees but revenues of the organization, and must Exception. Amounts payable under is available only to a certain class or be reported on line 5, regardless of a qualified pension, profit-sharing, or classes of management or highly whether the payment is contingent on stock bonus plan under section 401(a) compensated employees. For this achieving a certain revenue target. or under an employee benefit program purpose, include as a supplemental However, if instead the bonus payment that is subject to and satisfies coverage nonqualified retirement plan a plan is a specific dollar amount (for instance, and nondiscrimination rules under the described in section 457(f) (but don't $5,000) to be paid only if a gross Internal Revenue Code (for example, include a plan described in section revenue or net revenue target of the sections 127 and 137), other than 457(b)) and a split-dollar life insurance department is achieved, the payment nondiscrimination rules under section plan. isn't contingent on revenues of the 9802, are treated as fixed payments for organization for this purpose. purposes of line 7, regardless of the Line 4c. Answer “Yes” if a listed organization's discretion with respect to person participated in or received Line 6. Answer “Yes” if the organization the plan or program. The fact that a payment from the organization or a paid or accrued with respect to a listed person contracting with the organization related organization of any person any compensation contingent is expressly granted the choice to equity-based compensation (such as upon and determined in whole or in part accept or reject any economic benefit is stock, stock options, stock appreciation by the net earnings of one or more disregarded in determining whether the rights, restricted stock, or phantom or activities of the organization or a benefit constitutes a fixed payment for shadow stock), or participated in or related organization, or by the net purposes of line 7. received payment from any equity earnings of the organization or a related compensation plan or arrangement organization as a whole. Describe such Line 8. Answer “Yes” if any amounts sponsored by the organization or a arrangements in Part III. from the organization reported on Form related organization, whether the 990, Part VII, were paid under a contract Example. A, a listed person, is an subject to the initial contract exception compensation is determined by employee of organization B. As part of reference to equity in a partnership, described in Regulations section A's compensation package, A is to be 53.4958-4(a)(3). Describe such limited liability company, or corporation. paid a bonus equal to x% of B's net Equity-based compensation doesn't arrangements in Part III. Fixed earnings for a specified period of time. payments made under an initial contract include compensation contingent on the This arrangement is a payment revenues or net earnings of the aren't subject to section 4958. An initial contingent on net earnings of the contract is a binding written contract

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between the organization and a person All current key employees For certain kinds of employees, who wasn't a disqualified person (within TIP listed on Form 990, Part VII, such as certain members of the the meaning of section 4958(f)(1)) with Section A, must also be clergy and religious workers respect to the organization immediately reported on Schedule J, Part II, because who aren't subject to social security and prior to entering into the contract. See their reportable compensation, by Medicare taxes as employees, the the instructions for line 7 for the definition, exceeds $150,000. amount in box 5 of Form W-2 may be definition of fixed payments. blank or less than the amount in box 1 of Form W-2. In this case, the amount Line 9. Answer “Yes” if the payments Do not list any individuals in required to be reported in box 1 of Form described in line 8 were made under an Schedule J, Part II, that aren't listed on W-2 for the listed persons must be initial contract that was reviewed and Form 990, Part VII, Section A. Do not list reported, as appropriate, in columns (B) approved by the organization following in Part II management companies or (i), (B)(ii), and (B)(iii). the rebuttable presumption procedure other organizations providing services described in Regulations section to the organization. Do not list highest Column (B)(i). Enter the listed 53.4958-6(c). For more information on compensated independent person's base compensation included in the initial contract exception and contractors reported on Form 990, Part box 1 or box 5 (whichever is greater) of rebuttable presumption procedure, see VII, Section B. Form W-2, box 6 of Form 1099-MISC, or Appendix G. Section 4958 Excess For each individual listed, enter box 1 of Form 1099-NEC issued to the Benefit Transactions in the Instructions compensation from the organization on person. Base compensation means for Form 990. row (i), and compensation from all nondiscretionary payments to a person related organizations on row (ii). agreed upon in advance, contingent Part II. Officers, Directors, Related organizations are explained in only on the payee's performance of Trustees, Key Employees, the Glossary in the Instructions for Form agreed-upon services (such as salary or and Highest Compensated 990. Any type and amount of reportable fees). compensation from related Employees organizations that was excluded from Column (B)(ii). Enter the listed Enter information for certain individuals Form 990, Part VII, Section A, person's bonus and incentive listed on Form 990, Part VII, Section A, column (E), under the compensation included in box 1 or as described below. Report $10,000-per-related-organization box 5 (whichever is greater) of Form compensation for the calendar year exception, must be included on W-2, box 6 of Form 1099-MISC, or ending with or within the organization's Schedule J, Part II, columns (B)(i), box 1 of Form 1099-NEC issued to the tax year paid to or earned by the (B)(ii), and (B)(iii). If there is no person. Examples include payments following individuals. compensation to report in a particular based on satisfaction of a performance • Each of the organization's former column, enter “-0-.” target (other than mere longevity of officers, former directors, former service), and payments at the beginning trustees, former key employees, and If the organization answered “Yes” to of a contract before services are former five highest compensated Form 990, Part VII, Section A, line 5, rendered (for example, signing bonus). employees listed on Form 990, Part VII, report such compensation from the Column (B)(iii). Enter all other Section A. unrelated organization as if it were payments issued to the listed person Each of the organization's current received from the organization, and • and included in box 1 or box 5 officers, directors, trustees, key enter the name of the unrelated (whichever is greater) of Form W-2, employees, and five highest organization in Part III. box 6 of Form 1099-MISC, or box 1 of compensated employees for whom the Form 1099-NEC but not reflected in sum of Form 990, Part VII, Section A, For a table showing how and where column (B)(i) or (B)(ii). Examples columns (D), (E), and (F) (disregarding to report certain types of compensation include, but aren't limited to, any decreases in the actuarial value of on Schedule J, see the instructions for current-year payments of amounts defined benefit plans) is greater than line 1 of Form 990, Part VII, Section A. earned in a prior year, payments under $150,000. Any type and amount of other a severance plan, payments under an Each of the organization's current and • compensation that was excluded from arrangement providing for payments former officers, directors, trustees, key Form 990, Part VII, Section A, under the upon the change in ownership or control employees, and five highest $10,000-per-item exception for certain of the organization or similar compensated employees who received other compensation items, must be transaction, deferred amounts and or accrued compensation from any included in Schedule J, Part II, column earnings or losses in a nonqualified unrelated organization or individual for (C) or (D). defined contribution plan subject to services rendered to the filing section 457(f) when they become organization, as reported on line 5 of For purposes of Part II, a listed substantially vested, and awards based Form 990, Part VII, Section A. List in person is a person required to be listed on longevity of service. Part III the name of each unrelated in Part II. organization that provided Column (C). Enter all current-year compensation to such persons, the type Column (A). Enter the name and title deferrals of compensation for the listed and amount of compensation it paid or of each person who must be listed in person under any retirement or other accrued, and the person receiving or Part II. deferred compensation plan, whether accruing such compensation, as Column (B). Amounts reported on qualified or nonqualified, that is explained in the instructions for Form Form 990, Part VII, Section A, columns established, sponsored, or maintained 990, Part VII, Section A, line 5. (D) and (E), must be broken out by or for the organization or a related between columns (B)(i), (B)(ii), and organization. Report as deferred (B)(iii). compensation the annual increase or

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decrease in actuarial value, if any, of a The following examples illustrate productivity savings are $95,000. For defined benefit plan, but don't report when deferred compensation is each of years 3, 4, and 5, Organization earnings or losses accrued on deferred considered earned or accrued, as well C's total productivity savings are amounts in a defined contribution plan. as when and how it is to be reported. In $120,000. Accordingly, the executive Do not enter in column (C) any these examples, assume that the earns $1,200 of incentive compensation payments of compensation included in amounts deferred aren't reported in in each of years 3, 4, and 5. She doesn't box 1 or box 5 (whichever is greater) of box 1 or box 5 of Form W-2, prior to the earn anything under the incentive Form W-2, box 6 of Form 1099-MISC, or year during which the amounts are paid. compensation plan in years 1 and 2 box 1 of Form 1099-NEC issued to the Example 1. An executive because the relevant performance listed person for the calendar year participates in Organization A's criteria weren't met in those years. ending with or within the organization's nonqualified deferred compensation Although the amounts earned under the tax year. Enter a reasonable estimate if plan. Under the terms of the plan plan for years 3, 4, and 5 are dependent actual numbers aren't readily available. beginning January 1 of calendar year 1, upon there being a sufficient incentive For this purpose, deferred she earns for each year of service an compensation pool from which to make compensation is compensation that is amount equal to 2% (0.02) of her base the payment, Organization C enters earned or accrued in, or is attributable salary of $100,000 for that year. These $1,200 of deferred compensation in to, 1 year and deferred for any reason to additional amounts are deferred and column (C) in years 3, 4, and 5. In year a future year, whether or not funded, aren't vested until the executive has 6, Organization C pays $3,600 vested, or subject to a substantial risk of completed 3 years of service with attributable to years 3, 4, and 5, and forfeiture. This includes earned but Organization A. In year 4, the deferred enters $3,600 in column (B)(ii) and unpaid incentive compensation deferred amounts for years 1 through 3 are paid $3,600 in column (F). under a deferred compensation plan. to the executive. For each of the years 1 Example 4. A new executive But don't report in column (C) a deferral through 3, Organization A enters $2,000 participates in Organization D's of compensation that causes an amount of deferred compensation for the nonqualified defined benefit plan, under to be deferred from the calendar year executive in column (C). For year 4, which she will receive a fixed dollar ending with or within the tax year to a Organization A enters $6,000 in column amount per year for a fixed number of date that isn't more than 21/2 months (B)(iii) and $6,000 in column (F). years beginning with the first after the end of the calendar year Example 2. Under the terms of his anniversary of her retirement. The ending with or within the tax year. Note employment contract with Organization benefits don't vest until she serves for that different rules can apply for B beginning July 1 of calendar year 1, 15 years with Organization D. Because determining whether an arrangement an executive is entitled to receive the benefits should be treated as provides for deferred compensation for $50,000 of additional compensation accruing ratably over the 15 years, for purposes of Internal Revenue Code after he has completed 5 years of year 1 the actuarial value of 1/15th of provisions such as section 83, 409A, service with the organization. The the benefits is reported as deferred 457(f), or 3121(v). compensation is contingent only on the compensation in column (C). For year 2, Do not report deferred compensation longevity of service. The $50,000 is the actuarial value of 2/15ths of the in column (C) before it is earned or treated as accrued or earned ratably benefits minus last year's value of accrued under the principles described. over the course of the 5 years of 1/15th is reported as deferred For this purpose, deferred service, even though it isn't funded or compensation in column (C). For year 3, compensation is generally treated as vested until the executive has the actuarial value of 3/15ths of the earned or accrued in the year that completed the 5 years. Organization B benefits minus last year's value of services are rendered, except when makes payment of $50,000 to the 2/15ths is reported, and so on. entitlement to payment is contingent on executive in calendar year 6. Column (D). Nontaxable benefits are satisfaction of specified organizational Organization B enters $5,000 of benefits specifically excluded from goals or performance criteria (other than deferred compensation in column (C) taxation under the Internal Revenue mere longevity of service) under the for calendar year 1 and $10,000 for Code. Report the value of all nontaxable deferred compensation plan. If the each of calendar years 2 through 5. For benefits provided to or for the benefit of payment of an amount of deferred calendar year 6, Organization B enters the listed person, other than benefits compensation requires the employee to $50,000 in column (B)(iii) and $45,000 disregarded for purposes of section perform services for a period of time, in column (F). 4958 under Regulations section the amount is treated as accrued or 53.4958-4(a)(4). Common nontaxable earned ratably over the course of the Example 3. An executive participates in Organization C's and section 4958 disregarded benefits, service period, even though the amount referred to as fringe benefits below, are isn't funded and may be subject to a incentive compensation plan. The plan covers calendar years 1 through 5. discussed in detail beginning on this substantial risk of forfeiture until the page. service period is completed. Under the terms of the plan, the executive is entitled to earn 1% (0.01) of Depending on the type of benefit, Report deferred compensation for Organization C's total productivity fringe benefits can be provided only to each listed person regardless of savings for each year during which employees or also to persons other than whether such compensation is deferred Organization C's total productivity employees, such as directors, as part of a deferred compensation plan savings exceed $100,000. Earnings trustees, and independent that is administered by a separate trust, under the incentive compensation plan contractors. Fringe benefits can be as long as the plan is established, will be payable in year 6, to the extent entirely personal in nature or can sponsored, or maintained by or for the funds are available in a certain combine personal and business organization or a related organization “incentive compensation pool.” For elements. for the benefit of the listed person. years 1 and 2, Organization C's total

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The taxability of a benefit can depend • Qualified retirement planning The method by which benefits under upon the form in which it is provided. services. an accountable plan are provided For example, a cash housing allowance • Qualified military base realignment (whether reimbursement, cash is ordinarily reportable in box 5 of Form and closure fringe. advances with follow-up accounting, or W-2. Under section 119, housing charge by the employee on company provided for the convenience of the De minimis fringe. A de minimis credit card) isn't material. Payments that employer can be excludable, and the fringe is a property or service the value don't qualify under the accountable plan fair rental value of in-kind housing of which, after taking into account the rules, such as payments for which the provided to certain school employees frequency with which similar fringes are employee didn't adequately account to can be part taxable and part excludable, provided by the employer to the the organization, or allowances that depending on facts and circumstances. employees, is so small as to make were more than the payee spent on Taxable benefits must be reported on accounting for it unreasonable or serving the organization, are Form W-2. administratively impractical. compensation. The following benefits provided for a Working condition fringe. A Directors and trustees are treated as listed person must be reported in working condition fringe is any property employees for purposes of the working column (D) to the extent not reported as or service provided to an employee to condition fringe provisions of section taxable compensation in box 1 or box 5 the extent that, if the employee paid for 132. Therefore, treat cash payments to of Form W-2, box 6 of Form 1099-MISC, the property or service, the payment directors or trustees made under or box 1 of Form 1099-NEC. would be deductible by the employee circumstances substantially identical to • Value of housing provided by the under section 162 (ordinary and the accountable plan provisions as a employer, except to the extent such necessary business expense) or section section 132 working condition fringe. value is a working condition fringe. 167 (depreciation). See Pub. 15-B, Employer's Tax • Educational assistance. In some cases, property provided to Guide to Fringe Benefits; Pub. 521, • Health insurance. employees may be used partly for Moving Expenses; and Unreimbursed • Medical reimbursement programs. business and partly for personal Employee Expenses in Pub. 529, • Life insurance. purposes, such as automobiles. In that Miscellaneous Deductions, for further • Disability benefits. case, the value of the personal use of explanation of section 132 fringe • Long-term care insurance. such property is taxable benefits and for determining whether a • Dependent care assistance. compensation, and the value of the given section 132 fringe benefit is • Adoption assistance. use for business purposes properly available to nonemployees, such as • Payment or reimbursement by the accounted for is a working condition directors and trustees, or to persons organization of (or payment of liability fringe benefit. Cell phones provided to who no longer work for the organization. insurance premiums for) any penalty, employees primarily for business tax, or expense of correction owed purposes (other than compensation) are Column (F). Enter in column (F) any under chapter 42 of the Internal a working condition fringe benefit; in payment reported in this year's column Revenue Code, any expense not such case, the employee's personal use (B) to the extent such payment was reasonably incurred by the person in is a de minimis fringe. See Notice already reported as deferred connection with a civil judicial or civil 2011-72, 2011-38 I.R.B. 407. See Pub. compensation to the listed person on a administrative proceeding arising out of 587, Business Use of Your Home, for prior Form 990, 990-EZ, or 990-PF. For the person's performance of services on special rules regarding deductibility of this purpose, the amount must have behalf of the organization, or any home expenses for business use. been reported as compensation expense resulting from an act or failure specifically for the listed person on the to act with respect to which the person Accountable plan amounts. An prior form. has acted willfully and without accountable plan is a reimbursement or reasonable cause. other expense allowance arrangement Part III. Supplemental that meets each of the following rules. The list above is not all-inclusive. Information 1. The expenses covered under the Use Part III to provide narrative Disregarded benefits. Disregarded plan must be reasonable employee information, explanations, or benefits under Regulations section business expenses that are deductible descriptions required for Part I, lines 1a, 53.4958-4(a)(4) need not be reported in under section 162 or other provisions of 1b, 3, 4a, 4b, 4c, 5a, 5b, 6a, 6b, 7, and column (D). Disregarded benefits the Code. 8, and for Part II. List in Part III the name generally include fringe benefits 2. The employee must adequately of each unrelated organization that excluded from gross income under account to the employer for the provided compensation to persons section 132. These benefits include the expenses within a reasonable period of listed in Form 990, Part VII, Section A; following. time. the type and amount of compensation • No-additional cost service. the unrelated organization paid or • Qualified employee discount. 3. The employee must return any accrued; and the person receiving or • De minimis fringe. excess allowance or reimbursement accruing such compensation. Also use • Reimbursements under an within a reasonable period of time. See Part III to provide other narrative accountable plan. Regulations section 1.62-2 and Pub. explanations and descriptions, as • Working condition fringe. 535, Business Expenses, for applicable. Identify the specific part and • Qualified transportation fringe. explanations of accountable plans. line(s) that the response supports. • Qualified moving expense reimbursement.

-6- 2020 Instructions for Schedule J (Form 990)