When reporting independent directors in Part VI, line 2, the definition of "independence" includes a director who was neither involved nor had a family member who was involved in a transaction reportable on Schedule L during the year. What types of transactions are reportable on Schedule L?
These transactions include--
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Excess benefit transactions (see Appendix G in Form 990 instructions PDF for an explanation of excess benefit transactions)
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Loans to or from the filing organization and current or former officers, directors, trustees, key employees and highest compensated employees
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Grants or other assistance to an officer, director, trustee, key employee, substantial contributor or member of a selection committee
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Business transactions between the organization and an officer, director, trustee or key employee of the organization.
Transactions between the organization and such person¡¯s family members or affiliated entities are also included. Various thresholds and exceptions may determine whether a given transaction needs to be reported in this part, and filers should review Schedule L PDF and its instructions PDF before answering the independent Board member question in Part VI, line 1b. Then filers can determine whether any of the organization¡¯s governing Board members are involved in a Schedule L reportable transaction, and thus not independent for purposes of Part VI, line 1b.