Form 990 Schedule R Instructions: Related Organizations & Unrelated Partnerships (2026)

If your nonprofit owns an LLC, controls another charity’s board, or invests in a partnership, the IRS wants to see those relationships. That reporting happens on Schedule R. It’s one of the most misunderstood schedules on Form 990, because whether you must file depends on a technical idea called “control.”

This guide explains the Form 990 Schedule R instructions in plain English: who must file, what counts as a related organization, how to complete each part, and the mistakes that lead to IRS questions.

Quick answer: Schedule R (Related Organizations and Unrelated Partnerships) is attached to Form 990 when an organization answers “Yes” on Form 990, Part IV, line 33, 34, 35b, 36, or 37. It reports disregarded entities, related tax-exempt and taxable organizations, certain transactions with them, and unrelated partnerships through which the organization conducts more than 5% of its activities.

What Is Form 990 Schedule R?

Schedule R gives the IRS a map of your organization’s family tree: the entities you control, the entities that control you, and the money that moves between them. It also captures significant activity conducted through outside partnerships.

The IRS converted Schedule R and its instructions to continuous use in December 2024. The same version now applies to tax year 2024 and later, until the IRS issues a new revision. Like the rest of Form 990, Schedule R is open to public inspection.

Who Must File Schedule R?

The Form 990 Part IV questions that trigger Schedule R

Who doesn’t file it

Schedule R attaches only to Form 990. Organizations filing Form 990-EZ, Form 990-N, or Form 990-PF don’t use it. If you’re unsure which return you file, see our Form 990 vs 990-EZ comparison. An organization that isn’t required to file Form 990 but chooses to must complete the full return, including Schedule R if it applies.

What Counts as a Related Organization?

An organization is related to yours if it holds one of the relationships below at any time during the tax year. A relationship that lasted only a few months still counts.

Parent, subsidiary and brother/sister organizations

• Parent: an organization that controls yours.

• Subsidiary: an organization you control.

• Brother/sister: an organization controlled by the same person or people who control yours. Two charities whose boards are appointed by the same members are brother/sister organizations, even if neither controls the other.

Supporting, supported and VEBA relationships

A section 509(a)(3) supporting organization and the organization it supports are related. Special rules also apply to sponsoring organizations and contributing employers of a 501(c)(9) VEBA.

The control test explained

Control is the heart of Schedule R. It works differently depending on the type of entity:

• Nonprofit (no owners): you control it if you can remove and replace a majority of its directors or trustees. You also control it if a majority of its board are your trustees, directors, officers, employees, or agents. This second test, board overlap, is the one organizations most often miss.

• Stock corporation: you own more than 50% of the stock, by vote or value.

• Partnership or LLC: you own more than 50% of the profits or capital interests. You’re also treated as controlling it if you’re one of three or fewer managing partners, managing members, or general partners.

• Trust: you own more than 50% of the beneficial interests.

Control can be indirect. If you own 100% of a taxable corporation, and that corporation owns 51% of a partnership, you control the partnership too, and both must be reported.

Form 990 Schedule R Instructions: Part-by-Part

Part I: Disregarded entities

List each disregarded entity, such as a single-member LLC, with its name, address and EIN, primary activity, legal domicile (state or country), the total income and end-of-year assets attributable to it, and its direct controlling entity. Disregarded entities appear only in Part I. Don’t report transactions with them in Part V.

Part II: Related tax-exempt organizations

Report each related exempt organization’s exempt Code section (for example, 501(c)(3) or 501(c)(4)) and, for 501(c)(3)s, its public charity status. Use the line number from Schedule A, Part I, or “PF” for a private foundation, plus the type for a supporting organization. Also report the direct controlling entity and whether it’s a Section 512(b)(13) controlled entity. Treat government units as tax-exempt here.

Group exemptions: central and subordinate organizations in the same group exemption don’t need to list each other in Part II. They still report their transactions in Part V.

Part III: Related organizations taxable as a partnership

Most of this information comes from the Schedule K-1 (Form 1065) you receive. Report the predominant type of income (related, unrelated, or excluded), your share of total income and end-of-year assets, disproportionate allocations, the Code V unrelated business income amount from box 20, whether you’re a general or managing partner, and your ownership percentage. If the partnership is your parent or brother/sister and you hold no interest in it, complete only the name, activity and domicile columns.

Part IV: Related organizations taxable as a corporation or trust

Report related C corporations, S corporations, and trusts, including split-interest trusts such as charitable remainder trusts, with the entity type code (C, S or T), your share of income and assets, your ownership percentage, and Section 512(b)(13) status. A 501(c)(3) that owns S corporation stock must treat all of that income as unrelated business income.

Part V: Transactions with related organizations

• Line 1: check “Yes” for each type of transaction (grants, loans, sales, leases, shared expenses and more) with any related organization except disregarded entities.

• Line 2: list details for transactions with your controlled entities:

  • Interest, annuities, royalties, and rent received from a controlled entity: always, regardless of amount.

  • All other transaction types: only if the total of that type with that entity exceeds $50,000 for the year.

• Extra rule for 501(c)(3)s: also report transactions over $50,000 with related tax-exempt organizations that aren’t 501(c)(3)s, such as a related 501(c)(4) or a 527 political organization.

The amount reported is the fair market value of what you gave or received, whichever is higher. Briefly describe how you calculated it.

Part VI: Unrelated organizations taxable as a partnership

Report an unrelated partnership only if you were a partner and conducted more than 5% of your activities through it. Measure this using whichever is greater: your total assets or your total revenue. Purely passive investments are generally excluded, meaning 95% or more of your income from the partnership is interest, dividends, rents, royalties, or capital gains, and the investment’s main purpose is income rather than charitable activity.

Part VII: Supplemental information

Use Part VII to explain any answer that needs more detail. Identify the part and line each explanation supports.

Worked Example (Illustrative)

Riverbend Community Health is a fictional 501(c)(3) with $1.5 million in total assets and $1.2 million in revenue.

• It owns 100% of Riverbend Clinic LLC, a single-member LLC → Part I.

• It appoints the entire board of Riverbend Foundation, a 501(c)(3) → Part II (subsidiary).

• It owns 60% of Riverbend Properties, Inc., a C corporation → Part IV.

• Riverbend Properties pays it $24,000 in rent for office space → Part V, line 2. Rent from a controlled entity is reported regardless of amount.

• It lent Riverbend Properties $80,000 → Part V, line 2, because this transaction type exceeds $50,000.

• It holds a $90,000 capital account in an unrelated housing partnership. Total assets ($1.5 million) are greater than revenue, so 90,000 ÷ 1,500,000 = 6%. That’s above 5%, so it goes in Part VI, unless the passive investment exclusion applies.

How Schedule R Connects to Form 990 and Other Schedules

• Part VII compensation: pay that officers and directors receive from related organizations is reported on Form 990, Part VII. Combined amounts can push someone over the threshold that requires Schedule J.

• Part VIII revenue: contributions from related organizations are reported separately on the Statement of Revenue.

• Schedule A: a related 501(c)(3)’s public charity status in Part II comes from Schedule A.

• Form 990-T: Code V unrelated business income from partnerships may also create a Form 990-T filing requirement.

Common Schedule R Mistakes to Avoid

• Missing brother/sister organizations that share the same controlling members

• Overlooking control through board overlap, not just bylaws

• Ignoring indirect control through subsidiaries

• Reporting disregarded entity transactions in Part V

• Forgetting that controlled-entity interest, annuities, royalties, and rent have no minimum

• Leaving “direct controlling entity” blank instead of entering “N/A”

• Skipping entities that were related for only part of the year

• Using figures that don’t match the Schedule K-1 you received

Conclusion

Schedule R tells the IRS, and the public, how your organization connects to other entities. Start by mapping every entity you control or that controls you, apply the control tests carefully (including board overlap and indirect control), and then complete only the parts your Form 990 Part IV answers require. Following the Form 990 Schedule R instructions closely keeps your return consistent and avoids follow-up questions.

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