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ExpressTaxExempt Blog

Thursday, November 3, 2016

Reporting Sales of Assets for Tax-Exempt Groups

For many tax-exempt organizations with significant gross receipts, some of that revenue may have come from the selling of assets.

An asset is usually an owned item or resource with monetary value or worth. The seller of an asset typically receives some form of cash or an equivalent, while the buyer becomes the new owner of the sold asset.

Types of Asset Sales
With IRS Form 990 and 990-EZ, the federal government requires exempt organizations to report any sale of assets occurring within the filing year. The amounts receive count as revenue; however, there are assets that the IRS specifically asks for on the form:

  • Sale of Securities - Usually stocks, bonds, or options
  • Sale of Other Types of Investments - Includes real estate, royalty interests, or partnership interests 
  • Sale of Non-Inventory Assets - Contains program-related investments and an organization’s fixed assets in its related and unrelated activities
  • Sale of Capital Gains Dividends and Distribution - Involves your organization’s share of capital gains and losses from a joint venture, limited liability company, trusts or other entities treated as a partnership

Reporting Sales of Assets
On the Form 990/990-EZ, tax-exempt organizations can use the average cost basis method to calculate its gain or loss. When selling an asset, you typically subtract your sales price from the average value of the property. If the outcome is negative, then you took a loss in that sale.

Recorded Information of Assets
Your tax-exempt group must maintain strong records of sold assets in which market quotations are not published or readily available. The information should report the following:

  • Description of Asset
  • Date Asset was Acquired
  • Whether Asset was a Donation or Purchase
  • Date Asset was Sold and to Whom
  • Gross Sales Price of Asset
  • Cost or Value When Asset was Acquired
  • Expense of Sale and Improvements After Purchase, if applicable
  • Depreciation Since Purchase, if applicable

With ExpressTaxExempt.com, you can report your organization’s sales of assets quickly and easily with our streamlined, interview-style questions. Our internal audit check will also ensure you enter all the required information before transmitting to the IRS.

Feel free to contact our U.S. - based customer support team - 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or email us at support@ExpressTaxExempt.com - for questions or assistance e-filing your IRS Form 990/990-EZ.


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