The 990-PF form is used to calculate a private foundation's tax liabilities based on investment income, and to report charitable distributions and activities.

Foundation Source said the 990-PF is a “potential minefield” for the unwary, with common pitfalls including: Failing to fully complete the form; calculating the minimum distribution requirement; using the accrual method of accounting to show satisfaction of MDR; failing to make estimated tax payments; and not tracking foundation insiders.

Missed opportunities for savings are often caused, it added, by: Not counting administrative expenses; not using investment-related expenses to offset investment income; failing to determine eligibility for the reduced 1 per cent tax rate; and failing to properly calculate excess grant carryover.

Foundation Source's chief legal officer, Jeffrey Haskell, will be leading a webinar on April 22 about common tax reporting errors made by private foundations on their 990-PF form.