Lines 6a through 6c—Special Events and Activities

On the appropriate line, enter the gross revenue, expenses, and net income (or loss) from all special events and activities, such as dinners, dances, carnivals, concerts, sports events, auctions, raffles, bingo games, other gaming activities, and door-to-door sales of merchandise.

Special events and activities only incidentally accomplish an exempt purpose. Their sole or primary purpose is to raise funds (that are other than contributions) to finance the organization’s exempt activities. They do not include events or activities that substantially further the organization’s exempt purpose even if they also raise funds. They do not include activities regularly carried on (except for gaming).

Example: An organization formed to promote and preserve folk music and related cultural traditions holds an annual folk music festival featuring concerts, handcraft demonstrations, and similar activities. Because the festival directly furthers the organization’s exempt purpose, income from ticket sales should be reported on line 2 as program service revenue.

Special events and activities raise funds by offering goods or services that have more than a nominal or insubstantial value (compared to the price charged) for a payment that is more than the direct cost of those goods or services. See line 1 instructions A1 and A2 for a discussion on contributions reportable on line 1 and revenue reportable on line 6.

The fact that tickets, advertising, or solicitation materials refer to a required payment as a donation or contribution does not control how these payments should be reported on Form 990-EZ.

The gross revenue from gaming activities and other special events must be reported in the right-hand column on line 6a without reduction for cash or noncash prizes, cost of goods sold, compensation, fees, or other expenses.

Gaming. Check the box for gaming if the organization conducted directly, or through a promoter, any amount of gaming during the year. Report the gross revenue, expenses, and net income (or loss) from all gaming activities, whether or not regularly carried on, in line 6.

Gaming includes (but is not limited to): bingo, pull tabs, instant bingo raffles, scratch-offs, charitable gaming tickets, break-opens, hard cards, banded tickets, jar tickets, pickle cards, Lucky Seven cards, Nevada Club tickets, casino nights, Las Vegas nights, and coin-operated gambling devices. Coin-operated gambling devices include slot machines, electronic video slot or line games, video poker, video blackjack, video keno, video bingo, video pull tab games, etc.

Many games of chance are taxable. Income from bingo games is not subject to the tax on unrelated business income if the games meet the legal definition of bingo. For a game to meet the legal definition of bingo, wagers must be placed, winners must be determined, and prizes or other property must be distributed in the presence of all persons placing wagers in that game.

A wagering game that does not meet the legal definition of bingo does not qualify for the exclusion, regardless of its name. For example, “instant bingo,” in which a player buys a pre-packaged bingo card with pull-tabs that the player removes to determine if he or she is a winner, does not qualify. See Publication 598, Tax on Unrelated Business Income of Exempt Organizations and Form 990-T.

A. What is included on line 6

A1. Gross revenue/contributions. When an organization receives payments for goods or services offered through a special event, enter:

1. As gross revenue, on line 6a (in the right-hand column), the retail value of the goods or services,

2. As a contribution, on both line 1 and line 6a (within the parentheses), any amount received that exceeds the retail value of the goods or services given.

Example. At a special event, an organization received $100 in gross receipts for goods valued at $40. The organization entered gross revenue of $40 on line 6a and entered a contribution of $60 on both line 1 and within the parentheses on line 6a. The contribution was the difference between the gross revenue of $40 and the gross receipts of $100.

A2. Raffles or lotteries. Report as revenue, on line 6a, any amount received from raffles or lotteries that require payment of a specified minimum amount for each entry, unless the prizes awarded have only nominal or insubstantial value. See line 6, instruction B1 and B2, below.

A3. Direct expenses. Report on line 6b only the direct expenses attributable to the goods or services the buyer receives from a special event. If an expense is included on line 6b, do not report it again on line 7b. Report cost of goods related to the sale of inventory on line 7b. Fundraising expenses attributable to contributions reported on lines 1 and 6a (within the parentheses) are reportable on lines 12 through 16.

B. What is not included on line 6

B1. Sales or gifts of goods or services of only nominal or insubstantial value. If the goods or services offered at the special event have only nominal or insubstantial value, include all of the receipts as contributions on line 1 and all of the related expenses on lines 12 through 16. See line 1, instruction A2 for a description of nominal or insubstantial benefits.

B2. Sweepstakes, raffles, and lotteries. Report as a contribution, on line 1, the proceeds of solicitation campaigns in which the names of contributors and other respondents (who were not required to make a minimum payment) are entered in a drawing for prizes.

Where a minimum payment is required for each raffle or lottery entry and prizes of only nominal or insubstantial value are awarded, report any amount received as a contribution. Report the related expenses on lines 12 through 16.

B3. Activities that generate only contributions are not special events. An activity that generates only contributions, such as a solicitation campaign by mail, is not a special event. Any amount received should be included on line 1 as a contribution. Related expenses are reportable on lines 12 through 16.

C. Attached Schedule G, Parts II and III

If the organization reports more than $15,000 in line 6a (not including the contribution amount in the parentheses), then it must complete Part II of Schedule G (Form 990 or 990-EZ), Supplemental Information Regarding Fundraising or Gaming Activities, for any special events (other than gaming) with gross receipts greater than $5,000. (Please note that Schedule G refers to special events other than gaming as “fundraising events.”) If the organization reports more than $15,000 in line 6a (not including the contribution amount in the parentheses) and any part of the amount is gross revenue from gaming, then it must complete Schedule G, Part III to report its gaming activities. If the organization reports more than $15,000 in line 6a (not including the contribution amount in the parentheses) but is not required to complete either Part II or Part III of Schedule G, then explain this in an attachment. Organizations filing Form 990-EZ are not required to complete Part I of Schedule G. The following examples illustrate these Form 990-EZ reporting rules for Schedule G.

Example 1. Organization X receives gross revenue of $14,000 during the tax year from the sale of pull tabs. Organization X reports $14,000 in line 6a. Organization X is not required to file Schedule G because its line 6a amount does not exceed $15,000.

Example 2. Organization Y conducted during the tax year its annual fundraising dinner plus monthly bingo nights. Organization Y received $2,000 in gross revenue (excluding $4,000 in contributions) from the dinner and $14,000 in gross revenue from the bingo nights. Organization Y is directed to Schedule G because it reports $16,000 on line 6a, which exceeds the $15,000 threshold for filing Schedule G. Organization Y must report the dinner as a fundraising event in Part II of Schedule G because the gross receipts from the dinner (including contributions) was $6,000 (in excess of $5,000). Organization Y must report the $14,000 in gross revenue from the conduct of bingo games in Part III of Schedule G, even though that amount is less than $15,000, because the total amount reported on line 6a exceeded $15,000.

Example 3. Organization Z conducted six special events (other than gaming) during the tax year. Each special event generated $3,000 in gross revenue and $1,000 in contributions. Organization Z is directed to Schedule G because it reports $18,000 in line 6a. Organization Z is not required to file Part II of Schedule G, however, as each event had gross receipts of $4,000, below the $5,000 threshold for reporting fundraising events in Part II. Because Organization Z had no gross revenue from gaming, it is not required to file Part III of Schedule G. Organization Z should describe the above facts in its attachment explaining that it is not required to file Schedule G even though its line 6a amount exceeds $15,000.