Thursday, February 24, 2005

Those Beautiful 990's

If you have the patience to read them, IRS 990 tax returns of not-for-profit organizations can provide some eye-popping information. For me they usually generate more questions than answers, as was the case this evening when I briefly scanned the 2001, 2002, and 2003 returns of United Seniors Association (USA) http://www.guidestar.org. (See EIN# 54-1590915. You must register for free to download the documents).

Their 2001 990 indicates they had assets and a 2001 loss arising from a "subsidiary" for-profit company. Statement 12 says that in 2001, USA owned "80% interest in O'Neill Marketing", a taxable subsidiary. This asset was valued at $658,836 and the company produced red ink of ($45,582).

So my first question is, what was wrong with the management of O'Neill Marketing to cause it to produce a net loss, which had to be absorbed by USA, a not-for-profit organization?

Now check out the 2002 tax return of USA. They report the "sale of 80% interest of O'Neill Marketing for the price of $150,000." Yes, you read that right. Heck of a deal, eh? Miraculously, a company that was worth more than $650,000 in 2001 can now only be sold for $150,000. Now there must be some CPA or tax attorney out there that can explain that to us?

Questions abound. Do your own digging.
990's are exciting and beautiful.