On Dec. 2, 2020, the IRS released draft instructions for the 2020 Form 990-T, “Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e)).” The draft instructions provide early insight about the reporting requirements on the 2020 Form 990-T and the accompanying Schedule A, “Unrelated Business Taxable Income From an Unrelated Trade or Business.”
The IRS released in September 2020 draft versions of the 2020 Form 990-T and Schedule A. The forms include significant changes to reflect IRC Section 512(a)(6), which was enacted by the Tax Cuts and Jobs Act of 2017. Section 512(a)(6) requires exempt organizations to calculate unrelated business taxable income (UBTI) separately with respect to each trade or business and provides that losses from one unrelated trade or business cannot offset gains from another. Though final Section 512(a)(6) regulations were published in November 2020, the instructions for Form 990-T and Schedule A reflected prior guidance.