Accounting
Nonprofit Accounting
Nonprofit Management
Form 990 Schedule R: Reporting Related Organizations and Transactions
Last updated: October 10, 2026 · Independent guide · We do not sell rankings or coverage.
Form 990 Schedule R is the schedule where a tax-exempt organization lists its disregarded entities, its related organizations and certain unrelated partnerships, and reports transactions with related organizations. You must attach it if you answer “Yes” to Form 990, Part IV, line 33, 34, 35b, 36 or 37. Most of the work is applying the IRS control tests and then totaling intercompany activity by transaction type for Part V.
The rule in brief
- Who it applies to: Form 990 filers with a disregarded entity, a related organization, a controlled entity transaction, a 501(c)(3) transfer to an exempt noncharitable affiliate, or more than 5% of activity in an unrelated partnership.
- Control threshold: more than 50% ownership, or for a nonprofit, the power to appoint a majority of its board or a board majority made up of your own people.
- Transaction threshold: interest, annuities, royalties and rent from a controlled entity are listed in Part V, line 2 at any amount; other types only above $50,000 per type, per organization, per year.
- Key dates: Schedule R is filed with Form 990, due the 15th day of the 5th month after year-end (May 15 for a calendar-year filer), with an automatic extension available on Form 8868.
- Official source: IRS Instructions for Schedule R (Form 990), Rev. December 2024, checked October 10, 2026.
Which Form 990 Part IV lines trigger Schedule R
The December 2024 revision of Schedule R is a continuous-use form that applies to tax year 2024 and later until the IRS supersedes it (IRS, April 30, 2026). Each “Yes” in Part IV points to a specific part.
| Form 990, Part IV line | Question (summarized) | Who answers | Schedule R part |
|---|---|---|---|
| 33 | Did you own 100% of an entity disregarded as separate from you? | All filers | Part I |
| 34 | Were you related to any tax-exempt or taxable entity? | All filers | Parts II, III, IV as applicable, and Part V, line 1 |
| 35a / 35b | Did you have a section 512(b)(13) controlled entity, and did you receive a payment from or transact with it? | All filers | Part V, line 2 (if 35b is “Yes”) |
| 36 | Did you transfer to an exempt noncharitable related organization? | 501(c)(3) filers only | Part V, line 2 |
| 37 | Did you conduct more than 5% of activities through an unrelated entity taxed as a partnership? | All filers | Part VI |
Sources: Form 990 (2025), Part IV and the Who Must File chart in the Schedule R instructions. The Form 990 instructions add that controlled entities are a subset of related organizations, so if you had no related organizations you answer “No” to line 35a and leave 35b blank (IRS, April 30, 2026).
How to identify a related organization
An organization is related to you if, at any time during the tax year, it stands in one of these relationships: parent (it controls you), subsidiary (you control it), brother/sister (the same person or persons control both of you), supporting/supported (a section 509(a)(3) relationship in either direction), or a sponsoring organization or contributing employer of a 501(c)(9) VEBA. An affiliate dissolved in March or formed in November still counts for that year.
Control is defined by entity type in the Schedule R instructions:
- Nonprofit without owners: you have the power to remove and replace, or to appoint, elect or veto the appointment of, a majority of its directors or trustees, or a majority of its directors are your trustees, directors, officers, employees or agents.
- Stock corporation: you own more than 50% of the stock by voting power or value.
- Partnership or LLC: you own more than 50% of the profits or capital interests, or you are a managing partner or member of an entity with three or fewer managing partners or members, or a general partner of a limited partnership with three or fewer general partners.
- Trust: you own more than 50% of the beneficial interests, measured by actuarial interest at year-end.
Control can be indirect. If you control Entity A and A controls Entity B, you control B, and section 318 constructive ownership rules apply to corporations. In one IRS example, an 80% owner of a corporation holding a 60% limited partnership interest is deemed to own only 48% of the partnership and does not control it, unless the corporation is also one of three general partners. Board overlap is easy to miss: two charities whose boards are both appointed by the same parent are brother/sister organizations.
What each part of Schedule R requires
| Part | What goes there | Key columns |
|---|---|---|
| I. Disregarded entities | Single-member LLCs and other entities you own 100% that are disregarded for tax purposes | Primary activity, legal domicile, total income, end-of-year assets, direct controlling entity |
| II. Related tax-exempt organizations | Related exempt organizations, including governmental units and foreign governments | Exempt code section, public charity status (with I, II, III-FI or III-O for supporting organizations), direct controlling entity, 512(b)(13) controlled entity Yes/No |
| III. Related organizations taxable as a partnership | Related partnerships and multi-member LLCs | Predominant income type, share of total income and assets from the K-1, disproportionate allocations, code V UBI, general or managing partner, percentage ownership |
| IV. Related organizations taxable as a corporation or trust | Taxable C and S corporations and trusts, such as charitable remainder trusts | Entity type (C, S or T), share of income and assets, percentage ownership, 512(b)(13) controlled entity Yes/No |
| V. Transactions with related organizations | Line 1 Yes/No checklist for 19 transaction types; line 2 detail for reportable transactions | Name, transaction type (a to s), amount involved, method of determining amount |
| VI. Unrelated organizations taxable as a partnership | Unrelated partnerships through which you conduct more than 5% of activities | Predominant income, whether all partners are 501(c)(3)s, share of income and assets, percentage ownership |
| VII. Supplemental information | Explanations, identified by part and line number in form order | Free text |
If a partnership, corporation or trust is related only as your parent or brother/sister and you hold no ownership interest, you complete only the name, activity and domicile columns (plus entity type in Part IV) and enter “N/A” in the direct controlling entity and financial columns. Related split-interest trusts can be grouped, such as “Charitable remainder trusts (2)” (IRS, April 30, 2026).
For Part VI, the 5% test uses whichever is greater, your total assets or your total revenue. Against total assets, you compare your ending capital account in the partnership; against total revenue, you compare your distributive share of the partnership’s gross revenue. You can leave out a partnership if at least 95% of your revenue from it is passive investment income and your primary purpose is investment return rather than charitable activity.
Part V transaction codes and the $50,000 threshold
Part V, line 1 is a checklist: you check “Yes” for every transaction type you had with any organization in Parts II to IV, at any amount. Disregarded entities are excluded. The codes come from the Schedule R form (Rev. December 2024):
| Code | Transaction | Code | Transaction |
|---|---|---|---|
| a | Receipt of interest, annuities, royalties or rent from a controlled entity | k | Lease of facilities, equipment or other assets from related organizations |
| b | Gift, grant or capital contribution to related organizations | l | Performance of services or membership or fundraising solicitations for related organizations |
| c | Gift, grant or capital contribution from related organizations | m | Performance of services or membership or fundraising solicitations by related organizations |
| d | Loans or loan guarantees to or for related organizations | n | Sharing of facilities, equipment, mailing lists or other assets |
| e | Loans or loan guarantees by related organizations | o | Sharing of paid employees |
| f | Dividends from related organizations | p | Reimbursement paid to related organizations for expenses |
| g | Sale of assets to related organizations | q | Reimbursement paid by related organizations for expenses |
| h | Purchase of assets from related organizations | r | Other transfer of cash or property to related organizations |
| i | Exchange of assets with related organizations | s | Other transfer of cash or property from related organizations |
| j | Lease of facilities, equipment or other assets to related organizations |
Line 2 is the detail table. You must list (1) every type 1a receipt or accrual from a section 512(b)(13) controlled entity, regardless of amount; (2) any type 1b through 1s transaction with a controlled entity where the total for that type with that entity exceeds $50,000 for the year; and (3) for 501(c)(3) filers only, any type 1b through 1s transaction above $50,000 with a related tax-exempt organization that is not a 501(c)(3), including a section 527 political organization. You aggregate all transactions of the same type with the same organization, put each organization and type on its own line, and report the higher of the fair market value you provided or received (IRS, April 30, 2026).
The IRS explains that interest, annuities, royalties and rent from controlled entities are reported regardless of amount because of their special unrelated business income treatment under section 512(b)(13) (IRS, June 28, 2026).
Illustration (constructed figures). A 501(c)(3) owns 100% of a taxable bookstore corporation and appoints the board of a 501(c)(4) advocacy affiliate. During the year the bookstore pays the charity $36,000 of rent (type a), reimburses $80,000 of shared staff costs (type q) and receives a $20,000 loan (type d). The charity grants $40,000 to the 501(c)(4) (type b) and receives $65,000 from it for shared office costs (type q). Line 1 shows “Yes” for a, b, d and q. Line 2 lists the $36,000 rent (no minimum for type a), the $80,000 bookstore reimbursement and the $65,000 501(c)(4) reimbursement. The $20,000 loan and $40,000 grant stay off line 2 because neither exceeds $50,000.
Who is exempt or excepted
- Form 990-EZ and 990-N filers do not attach Schedule R. However, a controlling organization of a 512(b)(13) controlled entity that must file an annual return, and that had any transfer of funds with that entity during the year, must file Form 990 rather than 990-EZ (IRS, April 30, 2026).
- Group exemptions: central and subordinate organizations generally do not list each other in Part II, but you still report reportable transactions with them in Part V.
- VEBAs: sponsors and contributing employers generally do not list the VEBA unless another relationship exists.
- Bank trustees and 401(a) trusts: a common bank trustee alone does not make two trusts related, and section 401(a) trusts are not reported in Part IV.
Deadlines and penalties
Form 990, with Schedule R attached, is due on the 15th day of the 5th month after your year ends, you request an extension on Form 8868, and 2025 returns must be e-filed. Under section 6652(c)(1)(A), the 2025 instructions set the late-filing penalty at $25 a day, capped at the lesser of $13,000 or 5% of gross receipts, rising to $130 a day with a $65,000 cap for organizations with gross receipts above $1,309,500 (IRS, April 30, 2026).
The same penalty can apply to an incomplete or incorrect return, including one that omits a required part of a schedule, and a responsible person who misses an IRS deadline to fix it can be charged $10 a day, up to $6,500 per return. A missed related organization also affects Part VII, where officer compensation from a related organization is reported once it reaches $10,000.
Records you must keep
Records supporting the return usually must be kept for at least 3 years from the later of the due date or filing date, and longer where state law or your policy requires (IRS, April 30, 2026). For Schedule R, keep:
- An organization chart with ownership percentages, board appointment rights and board overlap, including changes during the year, plus the bylaws and agreements that establish control.
- Schedules K-1 from partnerships, S corporations and trusts, which feed the share-of-income and share-of-assets columns.
- Intercompany agreements and the valuation method for each Part V amount, plus the ledger detail behind each line 2 total.
What to set up in your systems
Part V needs totals by counterparty and transaction type, which a due to/due from balance does not give you. Make every intercompany posting carry two tags: which related organization it involves, and which Schedule R code it maps to. The counterparty usually comes from your multi-entity setup; the code can come from dedicated GL accounts or a dimension. If you are choosing between platforms, our Sage Intacct vs NetSuite comparison for nonprofits covers multi-entity licensing.
Sage Intacct. With inter-entity transactions enabled in Multi-Entity Management, Intacct adds offsetting inter-entity receivable and payable lines automatically when a journal entry spans entities. The Advanced account mapping plan lets you define separate inter-entity accounts for each entity pair, configured at Company > Setup > Configuration > Inter-entity account settings > Inter-entity account mapping (Sage Intacct, October 8, 2026). Dimensions other than Location do not flow to the generated inter-entity lines, so put the Schedule R code on the original revenue or expense lines.
NetSuite OneWorld. NetSuite automatically generates a representing customer record and a representing vendor record for each subsidiary, linked from the Subsidiaries list page (Oracle NetSuite, no date shown). Intercompany journal entries require OneWorld, and with Automated Intercompany Management you select an intercompany customer or vendor on each line and flag lines for elimination at period end (Oracle NetSuite, no date shown). A saved search grouped by representing entity and account then returns the line 2 totals.
Blackbaud Financial Edge NXT. Financial Edge NXT balances activity between funds with interfund sets, set up at Settings > General ledger > GL setup > Interfund sets (Blackbaud, no date shown). Interfund sets give you fund-to-fund balances. To total activity by counterparty, you can assign one transaction code per related organization, and the Income and Expense Report for transaction codes, under Analysis > Dashboards, shows revenue, expenses, gifts and transfers across accounts for each code (Blackbaud, no date shown).
Affiliates outside your ledger, such as a brother/sister charity, still need flagged vendor and customer records so you can pull activity by counterparty. Our guide to intercompany accounting in multi-entity organizations covers the matching and elimination side, and our nonprofit accounting software guide compares fund accounting systems more broadly.
How we researched this
We read the current IRS Instructions for Schedule R (Rev. December 2024), the Schedule R form, Form 990 (2025) Part IV and the 2025 Form 990 instructions, and the IRS page on related organization and controlled entity reporting, all checked on October 10, 2026. We then reviewed Sage Intacct, Oracle NetSuite and Blackbaud documentation and the pages that currently rank for this topic, which come from firms that sell tax services or e-filing. No vendor paid for inclusion.
Related guides
- Form 990 Schedule A: The Public Support Test Explained
- Form 990-T: Filing Rules and Pulling UBTI From the Ledger
- Nonprofit Statement of Financial Position: Template
Frequently asked questions
Is a single-member LLC a related organization on Schedule R?
A disregarded single-member LLC you own 100% goes in Part I only. You do not report transactions with it in Part V, because the IRS treats its activity as yours.
Do I have to list a related organization if we had no transactions with it?
Yes. Parts II, III and IV list related organizations based on the relationship, not on activity. You answer “No” on Part V, line 1 for types you did not have.
Does the $50,000 threshold apply per transaction or per year?
Per year, per organization, per transaction type. You aggregate same-type transactions with one organization and list them on line 2 only if the total exceeds $50,000. Interest, annuities, royalties and rent from a controlled entity have no threshold.
What amount do I report for shared employees or shared space?
Report the higher of the fair market value you provided or received, and describe your method in column (d). Any reasonable method is acceptable, such as allocated payroll cost or rent per square foot.
Sources
- IRS, Instructions for Schedule R (Form 990), Rev. December 2024, page last reviewed April 30, 2026.
- IRS, Schedule R (Form 990), Rev. December 2024, no date shown beyond revision.
- IRS, Form 990 (2025), no date shown beyond tax year.
- IRS, 2025 Instructions for Form 990, page last reviewed April 30, 2026.
- IRS, Form 990 Schedule R: Related Organization and Controlled Entity Reporting Differences, page last reviewed June 28, 2026.
- Sage Intacct, Overview of inter-entity transactions, last modified October 8, 2026 (vendor documentation).
- Oracle NetSuite, Making Intercompany Journal Entries, no date shown (vendor documentation).
- Oracle NetSuite, Access Representing Entity Records From the Subsidiaries List Page, no date shown (vendor documentation).
- Blackbaud, Interfund Sets (Financial Edge NXT help), no date shown (vendor documentation).
- Blackbaud, Income and Expense Report for Transaction Codes, no date shown (vendor documentation).
- Clark Schaefer Hackett, Form 990 Schedule R: Key Reporting Requirements, January 28, 2026 (accounting firm that sells nonprofit tax services).
- Tax990, Schedule R overview, updated August 21, 2024 (e-file provider that sells Form 990 filing).
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
