IRS Form 990 (Schedule N) – IRS Forms, Instructions, Pubs 2026 – In the world of tax-exempt organizations, maintaining compliance with IRS regulations is crucial for preserving nonprofit status. One key aspect of this compliance involves reporting major changes like liquidation, termination, dissolution, or significant disposition of assets. This is where IRS Form 990 Schedule N comes into play. Whether you’re a nonprofit leader navigating a merger, asset sale, or complete shutdown, understanding Schedule N ensures accurate reporting and avoids penalties. In this comprehensive guide, we’ll break down what Schedule N is, who must file it, how to complete it, and recent updates as of 2026.
This article draws from official IRS resources to provide up-to-date, reliable information. For the latest form, download the PDF directly from the IRS website: https://www.irs.gov/pub/irs-pdf/f990sn.pdf.
What is IRS Form 990 Schedule N?
IRS Schedule N (Form 990 or 990-EZ) is titled “Liquidation, Termination, Dissolution, or Significant Disposition of Assets.” It’s a supplementary schedule attached to Form 990 or Form 990-EZ, used by tax-exempt organizations to report when they cease operations or dispose of a substantial portion of their assets. Specifically, it covers events like:
- Liquidation: The process of selling off assets to pay debts and distribute remaining funds.
- Termination: Ending the organization’s existence, often after fulfilling its purpose.
- Dissolution: Legally disbanding the entity, typically through state filings.
- Significant Disposition of Assets: Any sale, exchange, transfer, or other disposition of more than 25% of the organization’s net assets during the tax year, regardless of whether fair market value was received.
This schedule helps the IRS track these events under Internal Revenue Code Section 6043(b) and Treasury Regulations Section 1.6043-3, ensuring proper closure of the organization’s tax account and removal from exempt listings. Filing Schedule N is mandatory for the final return in cases of termination, and it must include details on asset distributions, recipients, and fair market values.
Who Needs to File Schedule N?
Not every nonprofit files Schedule N—it’s triggered by specific responses on the main form:
- Organizations answering “Yes” to Form 990, Part IV, line 31 (liquidation, termination, or dissolution) or line 32 (significant disposition of assets).
- Those answering “Yes” to Form 990-EZ, Part V, line 36 (similar events).
All Section 501(c)(3) organizations must complete and attach Schedule N if applicable. For private foundations filing Form 990-PF, similar information must be attached as a statement, though Schedule N itself isn’t used.
If your organization is terminating before the end of its normal tax year, file the final return (with Schedule N) by the 15th day of the 5th month after termination. Failure to file can result in penalties under Section 6652(c), starting at $25 per day, up to $13,000 or 5% of gross receipts.
Understanding the Parts of Schedule N
Schedule N is divided into three parts, with instructions embedded in the form itself (no separate instruction document exists for this schedule). Each part requires detailed reporting on assets, transactions, and recipients. Parts can be duplicated if more space is needed.
Part I: Liquidation, Termination, or Dissolution
This section is for organizations that have ceased operations or undergone liquidation, termination, or dissolution. Key lines include:
- Line 1: Indicate if the organization liquidated, terminated, dissolved, or ceased operations during the tax year.
- Lines 2a-2e: Provide details on asset distributions, including date of distribution, fair market value (FMV) of assets, method used to determine FMV, transaction expenses, EIN and address of recipients, and their IRC section or entity type.
- Line 3: Disclose if any officer, director, trustee, or key employee is involved (or expects to be) in a successor or transferee organization, including their name and explanation.
Attach certified copies of articles of dissolution, resolutions, or plans of liquidation/merger.
Part II: Sale, Exchange, Disposition, or Other Transfer of More Than 25% of the Organization’s Assets
Focuses on significant asset dispositions without full termination. It’s required if more than 25% of net assets (based on FMV) were transferred, sold, or disposed of.
- Line 1: Confirm the significant disposition.
- Lines 2a-2e: Similar to Part I, report distribution date, FMV, valuation method, expenses, recipient EIN/address, and entity type.
A “significant disposition” includes any transfer over 25% of net assets, even if compensation was received.
Part III: Supplemental Information
Use this for additional explanations related to Parts I and II, such as details on lines 2e, 3, or 6c in Part I, or line 2e in Part II. Duplicate as needed for more space.
How to Complete and File Schedule N?
- Gather Documents: Collect asset details, recipient info, and legal documents like dissolution articles.
- Determine FMV: Use appraisals, market quotes, or other reliable methods to value assets.
- Attach to Form 990/990-EZ: File electronically if required (most organizations with gross receipts over $200,000 must e-file).
- Due Date: Aligns with Form 990—15th day of the 5th month after the tax year ends. For early terminations, file sooner.
- Amended Returns: If needed, check the “Amended return” box and explain changes on Schedule O.
For small organizations (gross receipts ≤ $50,000), consider Form 990-N if no major events occurred, but Schedule N overrides this if applicable.
Important Considerations and Updates for 2025 Tax Year
As of February 2026, the 2025 version of Schedule N (released September 2025) remains current, with no major changes noted from prior years. However, always check IRS.gov for updates, as forms are revised annually. Key reminders:
- State laws may require additional filings or amended returns.
- Noncompliance risks losing tax-exempt status or facing audits.
- For mergers, report relationships with successor entities to avoid conflicts.
Consult a tax professional for complex scenarios.
Frequently Asked Questions About IRS Schedule N
1. What counts as a “significant disposition of assets”?
Any transfer exceeding 25% of net FMV, including sales or gifts.
2. Do I need to file Schedule N if my organization merged?
Yes, if it involves dissolution or asset transfer over 25%.
3. Where can I find the latest Schedule N form?
Download from IRS.gov: https://www.irs.gov/pub/irs-pdf/f990sn.pdf.
4. What if I miss the filing deadline?
Penalties apply, but reasonable cause may waive them.
By properly filing IRS Form 990 Schedule N, nonprofits can ensure a smooth transition during major changes while staying compliant. For personalized advice, reach out to the IRS or a qualified expert.