2013 Public Disclosure Package Consolidated Financial Statements for the Year Ended June 30, 2012 Form

990-Ts for: 2011 2010 2009

Updated documents available upon receipt and/or filing.

MARS HILL CHURCH

Consolidated Financial Statements For the Year Ended June 30, 2012

Table of Contents

Page
Independent Auditors Report Financial Statements: Consolidated Statement of Financial Position Consolidated Statement of Activities and Changes in Net Assets Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements 1

2 3 4 5 - 12

10900 NE 4th Street Suite 1700 Bellevue WA 98004 tel 425 454 4919 fax 425 454 4620 800 504 8747 clarknuber.com

Independent Auditors' Report

Board of Elders Mars Hill Church

Certified Public Accountants and Consultants

We have audited the accompanying consolidated statement of financial position of Mars Hill Church (the Church) as of June 30, 2012, and the related consolidated statements of activities and changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Churchs management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The prior year summarized comparative information has been derived from the Churchs June 30, 2011, consolidated financial statements and in our report dated November 4, 2011, we expressed an unqualified opinion on those consolidated financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Church as of June 30, 2012, and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Certified Public Accountants October 15, 2012

MARS HILL CHURCH Consolidated Statement of Financial Position June 30, 2012 (With Comparative Totals for 2011)

2012

2011

Assets
Current Assets: Cash and cash equivalents Accounts receivable Inventory and other current assets Total Current Assets Cash and cash equivalents held in escrow account Lease deposits and other assets Property and equipment, net Deferred loan costs, net Total Assets $ 3,369,472 303,302 203,685 3,876,459 136,718 28,650,133 37,273 $ 32,700,583 $ 5,165,170 81,041 5,246,211 201,684 118,011 27,099,676 41,642 $ 32,707,224

Liabilities and Net Assets

Current Liabilities: Accounts payable Accrued expenses Deferred revenue Current portion of notes payable Current portion of capital lease obligation Total Current Liabilities Notes payable, net of current portion Capital lease obligation, net of current portion Deferred rent and deposits Interest rate swap contracts Total Liabilities Net Assets: Unrestricted Temporarily restricted Total Net Assets Total Liabilities and Net Assets $ 293,962 401,921 95,868 1,104,088 35,553 1,931,392 12,366,043 90,693 388,869 439,643 15,216,640 $ 446,996 1,109,969 1,474,042 39,903 3,070,910 12,492,972 101,862 526,691 16,192,435

17,364,950 118,993 17,483,943 $ 32,700,583

16,387,843 126,946 16,514,789 $ 32,707,224

See accompanying notes. -2-

MARS HILL CHURCH Consolidated Statement of Activities and Changes in Net Assets For the Year Ended June 30, 2012 (With Comparative Totals for 2011)

Unrestricted
Revenue and Support: Tithes and offerings Ministries program income Rental and interest income Contributions released from restriction Total Revenue and Support Expenses: Personnel costs Operations Technology and equipment Administration Facilities Church planting Interest Depreciation and amortization Total Expenses Change in Net Assets before Gains and Losses Unrealized gain on interest rate swap contracts Investment gains Loss on disposal of property and equipment Total Change in Net Assets Net assets, beginning of year Net Assets, End of Year

2012 Temporarily Restricted

Total

2011 Total

$ 23,840,438 1,524,489 77,308 222,270 25,664,505

214,317

(222,270) (7,953)

$ 24,054,755 1,524,489 77,308 25,656,552

$ 18,153,776 1,225,108 104,591

19,483,475

12,047,038 2,938,080 836,602 1,418,622 3,391,113 821,182 562,135 1,680,600 23,695,372 -

12,047,038 2,938,080 836,602 1,418,622 3,391,113 821,182 562,135 1,680,600 23,695,372

8,408,764 3,534,901 859,581 676,412 1,898,844 1,764,973 647,424 1,542,266 19,333,165

1,969,133

(7,953)

1,961,180

150,310

87,048 7,302 (1,086,376) 977,107 16,387,843 $ 17,364,950 $ (7,953) 126,946 118,993

87,048 7,302 (1,086,376) 969,154 16,514,789 $ 17,483,943

146,068

(142,784) 153,594 16,361,195 $ 16,514,789

See accompanying notes. -3-

MARS HILL CHURCH Consolidated Statement of Cash Flows For the Year Ended June 30, 2012 (With Comparative Totals for 2011)

2012
Cash Flows Provided by Operating Activities: Change in net assets Adjustments to reconcile change in net assets to cash provided by operating activitiesDepreciation and amortization Loss on disposal of property and equipment Gain on interest rate swap contracts Changes in assets and liabilities: Accounts receivable Inventory and other current assets Lease deposits and other assets Accounts payable Accrued expenses Deferred revenue Net Cash Flows Provided by Operating Activities Cash Flows Used by Investing Activities: Purchases of property and equipment Net proceeds from sale of property and equipment Change in cash and equivalents held in escrow Net Cash Flows Used by Investing Activities Cash Flows (Used) Provided by Financing Activities: Payments on notes payable Capital lease payments Proceeds from new borrowings Net Cash Flows (Used) Provided by Financing Activities Net Change in Cash and Cash Equivalents Cash and cash equivalents, beginning of year Cash and Cash Equivalents, End of Year

2011

969,154

153,594

1,680,600 1,086,376 (87,048) (303,302) (122,644) (18,707) (153,034) (708,048) 484,737 2,828,084

1,550,885 160,697 (146,068)

60,462 (90,567) 173,804 801,354

2,664,161

(5,530,453) 1,250,532 201,684 (4,078,237)

(3,679,376) 108,278 391,128 (3,179,970)

(1,501,883) (43,662) 1,000,000 (545,545) (1,795,698) 5,165,170 $ 3,369,472 $

(1,518,026) (68,092) 2,200,000 613,882 98,073 5,067,097 5,165,170

Supplemental Cash Flow Information: Cash paid during the year for interest and interest rate swap contract payments $ Noncash investing and financing transactionsEquipment acquired by capital lease $

563,083 67,472

$ $

640,587 -

See accompanying notes. -4-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 1 - Nature of Activities and Summary of Significant Accounting Policies

Nature of Activities - Mars Hill Church is based in Seattle, Washington and is organized for making disciples and planting churches. Mars Hill Church was incorporated as a not-for-profit corporation under the laws of the State of Washington on December 22, 1995. The Church operates fourteen church locations (Ballard, Shoreline, West Seattle, Bellevue, Downtown Seattle, Olympia, Federal Way, Seattle's University District, Albuquerque, Everett, Portland, Orange County, Rainier Valley, and Sammamish). The Churchs programs include Sunday services, community-oriented ministries, leadership development, and training. One program, the Resurgence, fulfills many of the Church's leadership and training functions by publishing content online and in print, hosting conferences and events, and providing internships and classes, including Re:Train (The Resurgence Training Center), which offers graduate-level instruction for leaders from around the world. Principles of Consolidation - The consolidated financial statements include the accounts of Mars Hill Church and its wholly owned corporation, Resurgence Publishing, Inc., and wholly owned LLC, Mars Hill Properties 50th LLC, which was dissolved during the year (collectively, the Church). All material inter-organization transactions have been eliminated. Basis of Accounting - The Church presents consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). This basis of accounting involves the application of accrual accounting; consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred. Basis of Presentation - The Church is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Unrestricted Net Assets - Net assets that are not subject to donor-imposed stipulations. Temporarily Restricted Net Assets - Net assets subject to donor-imposed stipulations that will be met either by actions of the Church and/or the passage of time. Permanently Restricted Net Assets - Permanently restricted net assets must be maintained by the Church in perpetuity, the income of which is expendable for operations. Permanently restricted net assets increase when the Church receives contributions for which donor-imposed restrictions limiting the Churchs use of an asset for its economic benefits neither expire with the passage of time nor can be removed by the Church meeting certain requirements. The Church had no permanently restricted net assets at June 30, 2012 and 2011. Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

-5-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 1 - Continued
Fair Value Measurements - U.S. GAAP defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, U.S. GAAP uses a fair value hierarchy that prioritizes the inputs to valuation approaches into three broad levels. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). Assets and liabilities valued using Level 1 inputs are based on unadjusted quoted market prices within active markets. Assets and liabilities valued using Level 2 inputs are based primarily on quoted prices for similar assets or liabilities in active or inactive markets. Assets and liabilities using Level 3 inputs are primarily valued using managements assumptions about the assumptions market participants would utilize in pricing the asset or liability. Valuation techniques utilized to determine fair value are consistently applied. Cash and Cash Equivalents - For purposes of the consolidated statement of cash flows, cash and cash equivalents includes time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. The Churchs cash balances at financial institutions occasionally exceeds the FDIC insurance limit of $250,000 on interest bearing accounts and the SIPC insurance limit of $500,000. It is the Churchs policy to evaluate the financial condition of the financial institutions in which funds are on deposit on a regular basis, to determine the extent of credit risk for deposits in excess of FDIC and SIPC insurance limits. Inventory - Inventory consists of books and audio compact discs and is stated at the lower of market value or cost as determined by the first in, first out inventory method. Property and Equipment - Property and equipment purchases are stated at cost. Donated assets are stated at fair value at date of receipt. Depreciation is provided by use of the straight-line method over the estimated useful lives of the related assets ranging from three to ten years for equipment and five to forty years for leasehold improvements and buildings. All acquisitions of property and equipment in excess of $2,500 and all expenditures for repairs, maintenance, renewals, and betterments that materially prolong the useful lives of assets are capitalized. Deferred Loan Costs - Expenses relating to securing notes payable are treated as deferred costs and are amortized over the life of the notes. Amortization expense was $9,369 and $8,619 for the years ended June 30, 2012 and 2011, respectively. Federal Income Tax - The Church is exempt from federal income tax under Internal Revenue Code Section 501(c)(3) except to the extent of unrelated business taxable income, if any. The Church files income tax returns with the U.S. government. The Church is subject to income tax examinations for the current year and certain prior years based on the applicable laws and regulations. The Churchs wholly owned subsidiary, Resurgence Publishing Inc., did not have significant activity during the year or positive net income and as such has not included a deferred tax asset or liability or provision for income taxes in the consolidated financial statements.

-6-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 1 - Continued
Restricted and Unrestricted Revenue - Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the reporting period in which the revenue is recognized. All other temporarily restricted donor contributions are reported as increases in temporarily restricted net assets. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as contributions released from restrictions. Reclassifications - Certain accounts in the consolidated financial statements for the year ended June 30, 2011, have been reclassified and summarized differently to provide more meaningful comparisons with the 2012 consolidated financial statements. Comparative Financial Statements - The consolidated financial statements include certain prior year summarized comparative information in total, not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with U.S. GAAP. Accordingly, such information should be read in conjunction with the Churchs consolidated financial statements for the year ended June 30, 2011, from which the summarized information was derived.

Note 2 - Property and Equipment

Property and equipment consisted of the following at December 31:

2012
Land Buildings and improvements Leasehold improvements Furniture and equipment Construction in progress $ 9,435,739 16,188,375 3,106,145 7,590,585 262,658 36,583,502 (7,933,369) $ 28,650,133 $

2011
9,827,225 16,697,655 1,073,084 7,034,036

Less accumulated depreciation Total Property and Equipment

34,632,000 (7,532,324) $ 27,099,676

-7-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 3 - Notes Payable

Notes payable consisted of the following at June 30:

2012
Bank term loan in the original amount of $13 million, payable in monthly installments based on a 25 year amortization of the balance, including interest at a variable rate equal to the USD LIBOR BBA rate plus 1.60%, until maturity on November 1, 2016 (1.85% at June 30, 2012). The monthly payment amount approximates $78,000 at June 30, 2012 and adjusts with changes in the interest rate. This loan refinanced approximately $4,800,000 of prior debt that was subject to interest rate swap contracts still in effect (see Note 4). The note is secured by land and buildings. Bank lease lines of credit to finance the acquisition of technology equipment with current monthly installments of $6,156 through October 2012. The current rate in effect is 5.52%. The note is secured by equipment. Bank note payable on purchase of property in equal principal monthly installments of $13,167 plus interest at an annual adjustable rate equal to USD LIBOR BBA rate plus 1.75% (2.0% as of June 30, 2012). The repayment term is based on a 20 year amortization with any remaining principal balance and any unpaid accrued interest due November 1, 2014. The note is secured by land and buildings. Bank note payable in equal principal monthly installments of $16,667 plus interest at an annual adjustable rate equal to USD LIBOR BBA rate plus 1.75% (2.0% as of June 30, 2012). The repayment term is 60 months. The note is secured by real property. Note payable to a church with 5% interest through July 11, 2015, then 6% interest. A principal payment of $500,000 is due on July 11, 2015, with the remainder to be paid on August 11, 2017. The note is secured by land and buildings.

2011

7,755,592

8,537,926

24,343

351,922

2,435,833

2,593,833

83,333

283,333

2,200,000

2,200,000

-8-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 3 - Continued
2012
Bank term loan in the original amount of $1 million, payable in monthly installments based on a 15 year amortization of the balance, including interest at a variable rate equal to the USD LIBOR BBA rate plus 2.5%, until maturity on September 1, 2016 (2.75% at June 30, 2012). The monthly payment amount approximates $5,900 at June 30, 2012 and adjusts with changes in the interest rate.

2011

971,030 13,470,131 (1,104,088) $ 12,366,043 13,967,014 (1,474,042) $ 12,492,972

Less current maturities Noncurrent Portion of Notes Payable

Principal payments required for the next five years ending June 30 are as follows:

For the Years Ending June 30,

2013 2014 2015 2016 2017 Thereafter $ 1,104,088 1,016,643 1,033,077 1,551,615 5,420,874 3,343,834

$ 13,470,131

Terms of the $13 million mortgage loan include financial covenants that the Church will: a) maintain a debt service coverage ratio of at least 1:1.05 and b) maintain a minimum of six months of consolidated debt service in cash or cash equivalents and investments. Other requirements include a restriction on incurring additional debt without bank approval and maintenance of key man life insurance on the Preaching Pastor in the amount of $5 million.

Note 4 - Interest Rate Swap Contracts

The Church holds two interest rate swap contracts with notional amounts totaling $3,942,655 at June 30, 2012. These contracts have been designated as a cash flow hedge to reduce the impact of changes in the variable rates of a note payable described in Note 3. These swap agreements effectively limit the interest rate on the notional amount of the note payable to a weighted-average fixed rate of 6.8% at June 30, 2012. The two contracts expire in 2014 and 2015. As of June 30, 2012 and 2011, the Church recognized a liability of $439,643 and $526,691, respectively, for the fair value of the swap contracts. For the years ended June 30, 2012 and 2011, the Church recognized gains of $87,048 and $146,068, respectively, on the swap contracts in the statement of activities and changes in net assets. Fair value for the contracts is determined primarily using quoted prices for similar liabilities in active markets (Level 2 inputs). -9-

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 5 - Leases
Capital Leases - The Church currently has equipment under capital leases expiring at various times until August 2017. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lower of their related lease terms or their estimated productive lives. Depreciation of assets under capital leases is included in depreciation expense. The following is a summary of property and equipment held under capital leases as of June 30:

2012
Equipment Less accumulated depreciation $ 172,185 (66,359) 105,826 $

2011
203,079 (102,831) 100,248

Minimum future lease payments under capital leases for the next five years ending June 30 are as follows:

For the Year Ending June 30,

2013 2014 2015 2016 2017 Subsequent to fiscal 2017 Total minimum lease payments Less amount representing interest Present value of net minimum lease payment Less current portion Noncurrent Capital Lease Obligation $ $ 40,758 40,758 26,643 13,494 13,477 3,373 138,503 (12,257) 126,246 (35,553) 90,693

Interest rates on capitalized leases are based on the Churchs incremental borrowing rate for similarly financed assets.

- 10 -

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 5 - Continued
Operating Leases - The Church has operating leases for certain church locations, parking, office space, and equipment. Minimum future rental payments under noncancelable operating leases having remaining terms in excess of one year as of June 30, 2012, for each of the next five years and in the aggregate are:

For the Year Ending June 30,

2013 2014 2015 2016 2017 Subsequent to fiscal 2017 Total Minimum Lease Payments $ 1,605,673 1,672,886 1,672,796 1,508,068 1,177,160 923,313

$ 8,559,896

Operating lease payments included in expense for the years ended June 30, 2012 and 2011, were $2,138,976 and $959,840, respectively, and include base rent payments plus any common area charges and other rental costs. Certain operating leases provide for renewal options for periods from one to five years at their fair rental value at the time of renewal. In the normal course of business, operating leases are generally renewed or replaced by other leases. Subsequent to June 30, 2012, the Church entered into a lease for a new facility for the Downtown Seattle Church location. The lease term begins August 2012 and ends July 2017 and provides for monthly rental payments ranging from $12,500 to $14,069. These future rental payments are not included in the minimum lease payments disclosure above.

Note 6 - Functional Expenses

Expenses allocated on a functional basis, including depreciation, were as follows for the years ended June 30:

2012
Program services General and administration $ 19,486,293 4,209,079 $ 23,695,372

2011
$ 15,642,730 3,690,435 $ 19,333,165

- 11 -

MARS HILL CHURCH Notes to Consolidated Financial Statements For the Year Ended June 30, 2012

Note 7 - Related Party Transactions

The Preaching and Vision Pastor of the Church is a member of the governing board of Acts 29 Network, a separate not-for-profit corporation. The Church contributed $759,233 and $1,651,141, respectively, to Acts 29 Network during the years ended June 30, 2012 and 2011, of which $0 and $862,155, respectively, was payable and included in accrued expenses in the consolidated statement of financial position at June 30, 2012 and 2011. These contributions support church plants and develop church leaders, which is a key mission of the Church, as well as related salary and administrative costs of Acts 29 Network. The Church provided administrative services to Acts 29 Network and was reimbursed $43,495 and $51,903, respectively, during the years ended June 30, 2012 and 2011, for these services.

Note 8 - Defined Contribution Plan

The Church sponsors a defined contribution pension plan allowed under Internal Revenue Code section 403(b). The plan allows employees to participate in the plan through salary reductions. The Church matches or contributes a percentage of the taxable compensation of participating church staff as allowed by the Internal Revenue Code. For the years ended June 30, 2012 and 2011, the amount of pension expense representing contributions made by the Church, not through salary reduction agreements, was $240,608 and $223,737, respectively.

Note 9 - Net Assets

Temporarily restricted net assets were for the following purposes at June 30:

2012
Missions and benevolence Church expansion $ 27,663 91,330 118,993 $

2011
126,946 126,946

Note 10 - Subsequent Events

Subsequent to year end the church entered into two separate purchase and sale agreements for real property paying a total of $100,000 in earnest money. The purchase prices of the two agreements total $3,175,000. As of the date of this report, these transactions had not closed. Additionally, the Church listed the land and building of the Downtown Seattle church for sale. At June 30, 2012, the net book value reported in the consolidated statement of financial position for this property totaled $4,177,967. The Church has evaluated subsequent events through October 15, 2012, the date which the financials were available to be issued.

- 12 -

990-T
Department of the Treasury
Internal Revenue Service

Exempt Organization Business Income Tax Return

(and proxy tax under section 6033(e))
For calendar year 2011 or other tax year beginning JUL 1 , 2011 .and ending JUN 30, 2012

OMB No. 1545-0:87

kd Check box if
address changed B Exempt under section
Print
or

Name of organization ( LZ) Check box if name changed and see instructions.)
Mars Hill Church Number, street, and room or suite no. If a P.O. box, see instructions. 1411 NW 50th St
Cityor town, state, and ZIP code

501(cX3) Organizations Only D Employer identification number

(Employees' trust, see instructions.)

Open to Public Inspection for

wrr

BD5Q1(c)(3 ) 408(e) I |220(el

91-1733689
E Unrelated business activity codes
(See instructions.)

Type

408A I l53Q(a; 529(8)

assets

Seattle,

WA

98107

531190

C Book value of;

F Group exemption number (See instructions.)

at end of year

GCheck organization type

[x] 501(c) corporation

501(c) trust

401(a) trust

EH Yes

Other trust
LXJno

1,152,000.

HDescribe the organization's primary unrelated business activity. Rental of commercial space

During the tax year, was the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? If "Yes," enter the name and identifying number of the parent corporation.
J The books are in care of Jessica Pickett
(A) Income
Teleph one number

Part 1

Unrelated Trade or Business Income

c Balance
1c
2 3 4a 4b
4c

206- 816-3830 (B)Expenses (C) Net

1a Gross receipts or sales

b Less returns and allowances Costof goods sold (Schedule A, line 7) 3 Gross profit Subtract line 2 from line 1c 4a Capital gain net income (attach Schedule D)
c Capital loss deduction for trusts

b Net gain (loss) (Form 4797, Part II, line 17)(attach Form 4797)

5 Income (loss) from partnerships andS corporations (attach statement)

6 7 Rent income(Schedule C) Unrelated debt-financed income (Schedule E)

5 6 7 8

21,412.

36,954.

-15,542

8 9

Interest, annuities, royalties, and rents from controlled organizations (Sch. F). Investment income ofa section 501(c)(7), (9),or (17)organization

(Schedule G) 10 Exploited exempt activity income (Schedule I) 11 Advertising income (Schedule J) 12 Other income (See instructions; attach schedule.)
13 Total. Combine lines 3 throuqh 12

9 10

11
12 13

21,412.
deductions.)

36,954.

-15,542

Part II

Deductions Not Taken Elsewhere (See instructions for limit.ations on

14
15 16
17

(Except forcontributions, deductions must be directly connected with the unrelated business income.) Compensation ofofficers, directors, and trustees (Schedule K)
Salaries and wages Repairs and maintenance
Baddebts

14 15 16
17

18
19

Interest (attach schedule)

Taxes and licenses

18 19
20

20
21
22 23

Charitable contributions (See instructions for limitation rules.)

Depreciation (attach Form 4562)
Less depreciation claimed on Schedule Aand elsewhere on return Depletion
21 22a

22b
23

24
25

Contributions to deferred compensation plans

Employee benefit programs

24 25 26 27
28

26 27 28 29 30

Excess exempt expenses (Schedule I) Excess readership costs (Schedule J) Other deductions (attach schedule) Total deductions. Add lines 14 through 28 Unrelated business taxable income before netoperating loss deduction. Subtract line 29 from line 13

29 30
31 32

0.

-15,542.
0. -15,542. 1,000. -15.542.

31
32

Net operating loss deduction (limited tothe amount online 30)

Unrelated businesstaxable income before specific deduction. Subtract line 31 from line 30

33 34
123701

Specific deduction (Generally $1,000, but see instructions for exceptions.) Unrelated business taxable income. Subtract line 33from line 32. If line 33 isgreater than line 32, enter the smaller
of zero or line 32

33

34

02-24-12

LHA

For Paperwork Reduction Act Notice, see instructions.

1

Form 990-T (2011)

Mars

09400116 781355 13091

2011.05000

Hill

Church

13091

Form

990-T
Check box if address changed

Exempt Organization Business Income Tax Return

For calendar year 2010 or other tax year beginning

OMB No. 1545-0687

Department of the Treasury Internal Revenue Service

(and proxy tax under section 6033(e)) JUL 1, 2010 , and ending JUN 30, 2011
Check box if name changed and see instructions.)

Name of organization ( Print or Type

Open to Public Inspection for 501(c)(3) Organizations Only D Employer identification number (Employees' trust, see instructions.)

2010

B Exempt under section X 501(c )( 3 ) 220(e) 408(e) 408A 529(a) 530(a)

Mars Hill Church

Number, street, and room or suite no. If a P.O. box, see instructions.

91-1733689
E Unrelated business activity codes
(See instructions.)

1411 NW 50th St
City or town, state, and ZIP code

Seattle, WA

98107
501(c) trust 401(a) trust

531190
Other trust

| C Book value of all assets F Group exemption number (See instructions.) at end of year X 501(c) corporation G Check organization type |

H Describe the organization's primary unrelated business activity. | Rental of commercial space X No I During the tax year, was the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? ~~~~~~ | Yes | If "Yes," enter the name and identifying number of the parent corporation. J The books are in care of | Jessica Pickett Telephone number | 206-816-3830 (A) Income (B) Expenses (C) Net Part I Unrelated Trade or Business Income Gross receipts or sales Less returns and allowances c Balance ~~~ | 1c Cost of goods sold (Schedule A, line 7) ~~~~~~~~~~~~~~~~~ 2 Gross profit. Subtract line 2 from line 1c ~~~~~~~~~~~~~~~~ 3 Capital gain net income (attach Schedule D) ~~~~~~~~~~~~~~~ 4a Net gain (loss) (Form 4797, Part II, line 17) (attach Form 4797) ~~~~~~ 4b Capital loss deduction for trusts ~~~~~~~~~~~~~~~~~~~~ 4c Income (loss) from partnerships and S corporations (attach statement) ~~~ 5 Rent income (Schedule C) ~~~~~~~~~~~~~~~~~~~~~~ 6 23,877. 41,510. Unrelated debt-financed income (Schedule E) ~~~~~~~~~~~~~~ 7 Interest, annuities, royalties, and rents from controlled organizations (Sch. F)~ 8 Investment income of a section 501(c)(7), (9), or (17) organization (Schedule G) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 9 10 Exploited exempt activity income (Schedule I) ~~~~~~~~~~~~~~ 10 11 Advertising income (Schedule J) ~~~~~~~~~~~~~~~~~~~~ 11 12 Other income (See instructions; attach schedule.) ~~~~~~~~~~~~ 12 23,877. 41,510. 13 Total. Combine lines 3 through 12 13 Part II Deductions Not Taken Elsewhere (See instructions for limitations on deductions.) (Except for contributions, deductions must be directly connected with the unrelated business income.) 1a b 2 3 4a b c 5 6 7 8 9

1,152,000.

CO

PY

-17,633.

FI LE

-17,633.

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Compensation of officers, directors, and trustees (Schedule K) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Salaries and wages ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Repairs and maintenance ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Bad debts ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Interest (attach schedule) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Taxes and licenses ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Charitable contributions (See instructions for limitation rules.) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Depreciation (attach Form 4562) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 21 Less depreciation claimed on Schedule A and elsewhere on return ~~~~~~~~~~~~~ 22a Depletion ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Contributions to deferred compensation plans ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Employee benefit programs ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Excess exempt expenses (Schedule I) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Excess readership costs (Schedule J) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Other deductions (attach schedule) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Total deductions. Add lines 14 through 28 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income before net operating loss deduction. Subtract line 29 from line 13 ~~~~~~~~~~~~ Net operating loss deduction (limited to the amount on line 30) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income before specific deduction. Subtract line 31 from line 30 ~~~~~~~~~~~~~~~~~ Specific deduction (Generally $1,000, but see instructions for exceptions.) ~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income. Subtract line 33 from line 32. If line 33 is greater than line 32, enter the smaller of zero or line 32 LHA For Paperwork Reduction Act Notice, see instructions.

14 15 16 17 18 19 20 22b 23 24 25 26 27 28 29 30 31 32 33 34

0. -17,633. 0. -17,633. 1,000. -17,633. Form 990-T (2010) 13091__1

023701 03-03-11

14160507 781355 13091

1 2010.05000 Mars Hill Church

Form 990-T (2010)

Part III
35

Mars Hill Church Tax Computation

91-1733689

Page

Organizations Taxable as Corporations. See instructions for tax computation. Controlled group members (sections 1561 and 1563) check here | See instructions and: a Enter your share of the $50,000, $25,000, and $9,925,000 taxable income brackets (in that order): (1) $ (2) $ (3) $ b Enter organization's share of: (1) Additional 5% tax (not more than $11,750) $ (2) Additional 3% tax (not more than $100,000) ~~~~~~~~~~~~~ $ c Income tax on the amount on line 34 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 36 Trusts Taxable at Trust Rates. See instructions for tax computation. Income tax on the amount on line 34 from: Tax rate schedule or Schedule D (Form 1041) ~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 37 Proxy tax. See instructions ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 38 Alternative minimum tax ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 39 Total. Add lines 37 and 38 to line 35c or 36, whichever applies

35c 36 37 38 39

0.

0.

Part IV
40 a b c d e 41 42 43 44 a b c d e f g 45 46 47 48 49

Tax and Payments

At any time during the 2010 calendar year, did the organization have an interest in or a signature or other authority over a financial account (bank, securities, or other) in a foreign country? If YES, the organization may have to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. If YES, enter the name of the foreign country here | 2 During the tax year, did the organization receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If YES, see instructions for other forms the organization may have to file. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 3 Enter the amount of tax-exempt interest received or accrued during the tax year | $ Schedule A - Cost of Goods Sold. Enter method of inventory valuation | N/A 1 Inventory at beginning of year ~~~ 1 6 Inventory at end of year ~~~~~~~~~~~~ 6 2 Purchases ~~~~~~~~~~~ 2 7 Cost of goods sold. Subtract line 6 3 Cost of labor~~~~~~~~~~~ 3 from line 5. Enter here and in Part I, line 2 ~~~~ 7 4 a Additional section 263A costs ~~~ 4a 8 Do the rules of section 263A (with respect to b Other costs (attach schedule) ~~~ 4b property produced or acquired for resale) apply to 5 Total. Add lines 1 through 4b 5 the organization?

Part
1

FI LE

Foreign tax credit (corporations attach Form 1118; trusts attach Form 1116) ~~~~~~~~ 40a Other credits (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~ 40b General business credit. Attach Form 3800 ~~~~~~~~~~~~~~~~~~~~~~ 40c Credit for prior year minimum tax (attach Form 8801 or 8827) ~~~~~~~~~~~~~~ 40d Total credits. Add lines 40a through 40d ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Subtract line 40e from line 39 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Other taxes. Check if from: Form 4255 Form 8611 Form 8697 Form 8866 Other (attach schedule) Total tax. Add lines 41 and 42 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Payments: A 2009 overpayment credited to 2010 ~~~~~~~~~~~~~~~~~~~ 44a 2010 estimated tax payments ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44b Tax deposited with Form 8868 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44c Foreign organizations: Tax paid or withheld at source (see instructions) ~~~~~~~~~~ 44d Backup withholding (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~ 44e Credit for small employer health insurance premiums (Attach Form 8941) ~~~~~~~~ 44f Other credits and payments: Form 2439 Form 4136 Other Total | 44g Total payments. Add lines 44a through 44g ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Estimated tax penalty (see instructions). Check if Form 2220 is attached | ~~~~~~~~~~~~~~~~~~~ Tax due. If line 45 is less than the total of lines 43 and 46, enter amount owed ~~~~~~~~~~~~~~~~~~~ | Overpayment. If line 45 is larger than the total of lines 43 and 46, enter amount overpaid ~~~~~~~~~~~~~~ | Enter the amount of line 48 you want: Credited to 2011 estimated tax | Refunded | V Statements Regarding Certain Activities and Other Information (see instructions)

PY
Date

40e 41 42 43

0. 0.

CO
=
Title

45 46 47 48 49 Yes

0. 0.

No

X X

Yes

No

Sign Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

May the IRS discuss this return with the preparer shown below (see instructions)?

Signature of officer Print/Type preparer's name

Date Preparer's signature

Yes

No

Richard Battershell, Paid CPA Preparer Battershell & Nichols, PS Firm's name Use Only 33507 9th Ave S Ste C-1 Federal Way, WA 98003 Firm's address

Check if self- employed Firm's EIN Phone no.

PTIN

P00004435 27-1095574

023711 03-04-11

14160507 781355 13091

2 2010.05000 Mars Hill Church

253-839-1620 Form 990-T (2010) 13091__1

Form 990-T (2010)

Page Mars Hill Church 91-1733689 Schedule C - Rent Income (From Real Property and Personal Property Leased With Real Property)(see instructions) Description of property

1.

(1) (2) (3) (4) 2.

rent for personal property is more than 10% but not more than 50%) Rent received or accrued

(a) From personal property (if the percentage of (1) (2) (3) (4)
Total

(b) From real and personal property (if the percentage

of rent for personal property exceeds 50% or if the rent is based on profit or income)

3(a) Deductions directly connected with the income in

columns 2(a) and 2(b) (attach schedule)

0.

Total

0.
(b) Total deductions.

(c) Total income. Add totals of columns 2(a) and 2(b). Enter here and on page 1, Part I, line 6, column (A) |

0.
2.
Gross income from or allocable to debtfinanced property

Enter here and on page 1, Part I, line 6, column (B)

0.

PY
3.
(attach schedule)

Schedule E - Unrelated Debt-Financed Income (see instructions)

1.
Description of debt-financed property

Deductions directly connected with or allocable to debt-financed property

(a) Straight line depreciation

(b) Other deductions

CO
6.
Column 4 divided by column 5

(1) 2333 Western Avenue (2) (3) (4) 4. Amount of average acquisition 5.
debt on or allocable to debt-financed property (attach schedule)

34,218.

Statement 2 59,487.

(attach schedule)

FI LE

(1) (2) (3) (4)

Statement 3 803,825.

Statement 4 1,152,000.

Average adjusted basis of or allocable to debt-financed property (attach schedule)

7. Gross income reportable (column 2 x column 6)

8. Allocable deductions (column 6 x total of columns 3(a) and 3(b))

69.78%
% % %

23,877.

41,510.

Enter here and on page 1, Part I, line 7, column (A).

Enter here and on page 1, Part I, line 7, column (B).

23,877. Totals ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | Total dividends-received deductions included in column 8 | Schedule F - Interest, Annuities, Royalties, and Rents From Controlled Organizations (see instructions) Exempt Controlled Organizations
1. Name of controlled organization
Employer identification number

41,510. 0.

2.

Net unrelated income (loss) (see instructions)

3.

Total of specified payments made

4.

5. Part of column 4 that is included in the controlling organization's gross income

6.

Deductions directly connected with income in column 5

(1) (2) (3) (4) Nonexempt Controlled Organizations 7.

Taxable Income

8.

Net unrelated income (loss) (see instructions)

9. Total of specified payments

made

10.

Part of column 9 that is included in the controlling organization's gross income

11.

Deductions directly connected with income in column 10

(1) (2) (3) (4)

Add columns 5 and 10. Enter here and on page 1, Part I, line 8, column (A). Add columns 6 and 11. Enter here and on page 1, Part I, line 8, column (B).

Totals
023721 03-03-11

0.

0.
Form 990-T (2010)

14160507 781355 13091

3 2010.05000 Mars Hill Church

13091__1

Form 990-T (2010)

Mars Hill Church Schedule G - Investment Income of a Section 501(c)(7), (9), or (17) Organization
(see instructions) 1. (1) (2) (3) (4)
Description of income

91-1733689

Page

2.

Amount of income

3. Deductions directly connected (attach schedule)

4. Set-asides (attach schedule)

5. Total deductions
and set-asides (col. 3 plus col. 4)

Totals (see instructions)

0. 9 Schedule I - Exploited Exempt Activity Income, Other Than Advertising Income

1. Description of 2. Gross unrelated business income from trade or business 3. Expenses directly connected with production of unrelated business income 4. Net income (loss) from unrelated trade or business (column 2 minus column 3). If a gain, compute cols. 5 through 7. 5. Gross income from activity that is not unrelated business income 6. Expenses

Enter here and on page 1, Part I, line 9, column (A).

Enter here and on page 1, Part I, line 9, column (B).

0.

exploited activity

attributable to column 5

7. Excess exempt expenses (column 6 minus column 5, but not more than column 4).

(3) (4)

Totals

(see instructions)

Part I

Income From Periodicals Reported on a Consolidated Basis

2. Gross advertising income 3. Direct advertising costs

CO
4. Advertising gain or (loss) (col. 2 minus col. 3). If a gain, compute cols. 5 through 7. 4. Advertising gain or (loss) (col. 2 minus col. 3). If a gain, compute cols. 5 through 7.

9 Schedule J - Advertising Income

1. Name of periodical (1) (2) (3) (4)

Enter here and on page 1, Part I, line 10, col. (A).

Enter here and on page 1, Part I, line 10, col. (B).

PY
5. Circulation
income

(1) (2)

Enter here and on page 1, Part II, line 26.

0.

0.

0.

6. Readership
costs

7. Excess readership costs (column 6 minus column 5, but not more than column 4).

Totals (carry to Part II, line (5))

Part II

0. 0. 9 Income From Periodicals Reported on a Separate Basis

columns 2 through 7 on a line-by-line basis.) 2. Gross advertising income 3. Direct advertising costs

FI LE

0.
(For each periodical listed in Part II, fill in 7. Excess readership costs (column 6 minus column 5, but not more than column 4).

1. Name of periodical (1) (2) (3) (4) (5) Totals from Part I

5. Circulation
income

6. Readership
costs

0.
Enter here and on page 1, Part I, line 11, col. (A).

0.
Enter here and on page 1, Part I, line 11, col. (B). Enter here and on page 1, Part II, line 27.

0. 0.
(see instructions) 3. Percent of
time devoted to business

Totals, Part II (lines 1-5)

0. 0. 9 Schedule K - Compensation of Officers, Directors, and Trustees

1.
Name

2.

Title

4. Compensation attributable
to unrelated business

(1) (2) (3) (4) Total. Enter here and on page 1, Part II, line 14
023731 03-03-11

% % % %

0.
Form 990-T (2010)

14160507 781355 13091

4 2010.05000 Mars Hill Church

13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Footnotes Statement 1 }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Average Adjusted Basis - Western Ave }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Net Book value of property - beginning of rental period Net Book value of property - end of rental period Total Average Net Book Value

1,152,000. 1,152,000. }}}}}}}}}}}}} 2,304,000. 2. }}}}}}}}}}}}} 1,152,000. ~~~~~~~~~~~~~

Average Acquisition Debt - Western Ave }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} July August September October November December January February March April May June Total

PY

FI LE
5 2010.05000 Mars Hill Church

825,550. 821,600. 817,650. 813,700. 809,750. 805,800. 801,850. 797,900. 793,950. 790,000. 786,050. 782,100. }}}}}}}}}}}}} 9,645,900. ~~~~~~~~~~~~~ 12. }}}}}}}}}}}}} 803,825.

Average Acquisition Debt

CO

14160507 781355 13091

Statement(s) 1 13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Schedule E - Other Deductions Statement 2 }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Description }}}}}}}}}}} Interest Property tax Personnel costs allocated Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 55,526. 3,943. 18.

- SubTotal -

59,487.

PY

Total of Form 990-T, Schedule E, Column 3(b)

}}}}}}}}}}}}} 59,487. ~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Average Acquisition Debt on or Statement 3 Allocable to Debt-Financed Property }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 803,825. - SubTotal 1 803,825. }}}}}}}}}}}}} Total of Form 990-T, Schedule E, Column 4 803,825. ~~~~~~~~~~~~~ Description }}}}}}}}}}} Average Acquisition Debt

FI LE

14160507 781355 13091

6 2010.05000 Mars Hill Church

CO

Statement(s) 2, 3 13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Average Adjusted Basis of or Statement 4 Allocable to Debt-Financed Property }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 1,152,000. - SubTotal 1 1,152,000. }}}}}}}}}}}}} Total of Form 990-T, Schedule E, Column 5 1,152,000. ~~~~~~~~~~~~~ Description }}}}}}}}}}} Average Basis

FI LE
14160507 781355 13091 7 2010.05000 Mars Hill Church Statement(s) 4 13091__1

CO

PY

Form

990-T
Check box if address changed

Exempt Organization Business Income Tax Return

For calendar year 2009 or other tax year beginning

OMB No. 1545-0687

Department of the Treasury Internal Revenue Service (77)

(and proxy tax under section 6033(e)) JUL 1, 2009 , and ending JUN 30, 2010
Check box if name changed and see instructions.)

Name of organization ( Print or Type

Open to Public Inspection for 501(c)(3) Organizations Only D Employer identification number (Employees' trust, see instructions for Block D on page 9.)

2009

B Exempt under section X 501(c )( 3 ) 220(e) 408(e) 408A 529(a) 530(a)

Mars Hill Church

Number, street, and room or suite no. If a P.O. box, see page 8 of instructions.

91-1733689
E Unrelated business activity codes
(See instructions for Block E on page 9.)

1401 NW Leary Way

City or town, state, and ZIP code

Seattle, WA

98107
501(c) trust 401(a) trust

531190
Other trust

C Book value of all assets F Group exemption number (See instructions for Block F.) | at end of year X 501(c) corporation G Check organization type |

H Describe the organization's primary unrelated business activity. | Rental of commercial space I During the tax year, was the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? ~~~~~~ | Yes If "Yes," enter the name and identifying number of the parent corporation. | J The books are in care of | Jarrod Job Telephone number | (206) (A) Income (B) Expenses Part I Unrelated Trade or Business Income Gross receipts or sales Less returns and allowances c Balance ~~~ | 1c Cost of goods sold (Schedule A, line 7) ~~~~~~~~~~~~~~~~~ 2 Gross profit. Subtract line 2 from line 1c ~~~~~~~~~~~~~~~~ 3 Capital gain net income (attach Schedule D) ~~~~~~~~~~~~~~~ 4a Net gain (loss) (Form 4797, Part II, line 17) (attach Form 4797) ~~~~~~ 4b Capital loss deduction for trusts ~~~~~~~~~~~~~~~~~~~~ 4c Income (loss) from partnerships and S corporations (attach statement) ~~~ 5 Rent income (Schedule C) ~~~~~~~~~~~~~~~~~~~~~~ 6 24,511. 45,772. Unrelated debt-financed income (Schedule E) ~~~~~~~~~~~~~~ 7 Interest, annuities, royalties, and rents from controlled organizations (Sch. F)~ 8 Investment income of a section 501(c)(7), (9), or (17) organization (Schedule G) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 9 10 Exploited exempt activity income (Schedule I) ~~~~~~~~~~~~~~ 10 11 Advertising income (Schedule J) ~~~~~~~~~~~~~~~~~~~~ 11 12 Other income (See instructions; attach schedule.) ~~~~~~~~~~~~ 12 24,511. 45,772. 13 Total. Combine lines 3 through 12 13 Part II Deductions Not Taken Elsewhere (See instructions for limitations on deductions.) (Except for contributions, deductions must be directly connected with the unrelated business income.) 1a b 2 3 4a b c 5 6 7 8 9

1,152,000.

No

706-6641
(C) Net

CO

PY

-21,261.

FI LE

-21,261.

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Compensation of officers, directors, and trustees (Schedule K) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Salaries and wages ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Repairs and maintenance ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Bad debts ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Interest (attach schedule) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Taxes and licenses ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Charitable contributions (See instructions for limitation rules.) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Depreciation (attach Form 4562) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 21 Less depreciation claimed on Schedule A and elsewhere on return ~~~~~~~~~~~~~ 22a Depletion ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Contributions to deferred compensation plans ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Employee benefit programs ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Excess exempt expenses (Schedule I) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Excess readership costs (Schedule J) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Other deductions (attach schedule) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Total deductions. Add lines 14 through 28 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income before net operating loss deduction. Subtract line 29 from line 13 ~~~~~~~~~~~~ Net operating loss deduction (limited to the amount on line 30) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income before specific deduction. Subtract line 31 from line 30 ~~~~~~~~~~~~~~~~~ Specific deduction (Generally $1,000, but see instructions for exceptions.) ~~~~~~~~~~~~~~~~~~~~~~~~ Unrelated business taxable income. Subtract line 33 from line 32. If line 33 is greater than line 32, enter the smaller of zero or line 32 LHA For Privacy Act and Paperwork Reduction Act Notice, see instructions.

14 15 16 17 18 19 20 22b 23 24 25 26 27 28 29 30 31 32 33 34

0. -21,261. 0. -21,261. 1,000. -21,261. Form 990-T (2009) 13091__1

923701 01-08-10

14110502 781355 13091

1 2009.05030 Mars Hill Church

Form 990-T (2009)

Part III
35

Mars Hill Church Tax Computation

91-1733689

Page

Organizations Taxable as Corporations. See instructions for tax computation. Controlled group members (sections 1561 and 1563) check here | See instructions and: a Enter your share of the $50,000, $25,000, and $9,925,000 taxable income brackets (in that order): (1) $ (2) $ (3) $ b Enter organization's share of: (1) Additional 5% tax (not more than $11,750) $ (2) Additional 3% tax (not more than $100,000) ~~~~~~~~~~~~~ $ c Income tax on the amount on line 34 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 36 Trusts Taxable at Trust Rates. See instructions for tax computation. Income tax on the amount on line 34 from: Tax rate schedule or Schedule D (Form 1041) ~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 37 Proxy tax. See instructions ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 38 Alternative minimum tax ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 39 Total. Add lines 37 and 38 to line 35c or 36, whichever applies

35c 36 37 38 39

0.

0.

Part IV
40 a b c d e 41 42 43 44 a b c d e f 45 46 47 48 49

Tax and Payments

At any time during the 2009 calendar year, did the organization have an interest in or a signature or other authority over a financial account (bank, securities, or other) in a foreign country? If YES, the organization may have to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. If YES, enter the name of the foreign country here | 2 During the tax year, did the organization receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If YES, see page 5 of the instructions for other forms the organization may have to file. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 3 Enter the amount of tax-exempt interest received or accrued during the tax year | $ Schedule A - Cost of Goods Sold. Enter method of inventory valuation |

Part
1

FI LE

Foreign tax credit (corporations attach Form 1118; trusts attach Form 1116) ~~~~~~~~ 40a Other credits (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~~~~ 40b General business credit. Attach Form 3800 ~~~~~~~~~~~~~~~~~~~~~~ 40c Credit for prior year minimum tax (attach Form 8801 or 8827) ~~~~~~~~~~~~~~ 40d Total credits. Add lines 40a through 40d ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 40e Subtract line 40e from line 39 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 41 Other taxes. Check if from: Form 4255 Form 8611 Form 8697 Form 8866 Other (attach schedule) 42 Total tax. Add lines 41 and 42 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 43 Payments: A 2008 overpayment credited to 2009 ~~~~~~~~~~~~~~~~~~~ 44a 2009 estimated tax payments ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44b Tax deposited with Form 8868 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 44c Foreign organizations: Tax paid or withheld at source (see instructions) ~~~~~~~~~~ 44d Backup withholding (see instructions) ~~~~~~~~~~~~~~~~~~~~~~~~ 44e Other credits and payments: Form 2439 Form 4136 Other Total | 44f Total payments. Add lines 44a through 44f ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 45 Estimated tax penalty (see instructions). Check if Form 2220 is attached | ~~~~~~~~~~~~~~~~~~~ 46 Tax due. If line 45 is less than the total of lines 43 and 46, enter amount owed ~~~~~~~~~~~~~~~~~~~ | 47 Overpayment. If line 45 is larger than the total of lines 43 and 46, enter amount overpaid ~~~~~~~~~~~~~~ | 48 Enter the amount of line 48 you want: Credited to 2010 estimated tax | Refunded | 49 V Statements Regarding Certain Activities and Other Information (See instructions on page 17)

PY
N/A
Check if self-employed

0. 0.

CO
=
Title Date

0. 0.

Yes

No

X X

1 2 3 4a b 5

Inventory at beginning of year ~~~ Purchases ~~~~~~~~~~~ Cost of labor~~~~~~~~~~~ Additional section 263A costs ~~~ Other costs (attach schedule) ~~~ Total. Add lines 1 through 4b

1 2 3 4a 4b 5

6 Inventory at end of year ~~~~~~~~~~~~ 6 7 Cost of goods sold. Subtract line 6 from line 5. Enter here and in Part I, line 2 ~~~~ 7 8 Do the rules of section 263A (with respect to property produced or acquired for resale) apply to the organization?

Yes

No

Sign Here
Paid Preparer's Use Only

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

May the IRS discuss this return with the preparer shown below (see

Signature of officer Preparer's signature

Date

Firm's name (or yours if selfemployed), address, and ZIP code

Battershell & Nichols, PS 30640 Pacific Hwy S Ste B Federal Way, WA 98003 2 2009.05030 Mars Hill Church

EIN Phone no.

P00171119 27-1095574 253-839-1620 Form 990-T (2009) 13091__1

Yes Preparer's SSN or PTIN

instructions)?

No

923711 01-08-10

14110502 781355 13091

Form 990-T (2009)

Page Mars Hill Church 91-1733689 Schedule C - Rent Income (From Real Property and Personal Property Leased With Real Property)(see instr. on pg 18) Description of property

1.

(1) (2) (3) (4) 2.

rent for personal property is more than 10% but not more than 50%) Rent received or accrued

(a) From personal property (if the percentage of (1) (2) (3) (4)
Total

(b) From real and personal property (if the percentage

of rent for personal property exceeds 50% or if the rent is based on profit or income)

3(a) Deductions directly connected with the income in

columns 2(a) and 2(b) (attach schedule)

0.

Total

0.
(b) Total deductions.

(c) Total income. Add totals of columns 2(a) and 2(b). Enter here and on page 1, Part I, line 6, column (A) |

0.
2.
Gross income from or allocable to debtfinanced property

Enter here and on page 1, Part I, line 6, column (B)

0.

PY
3.
(attach schedule)

Schedule E - Unrelated Debt-Financed Income (See instructions on page 19)

1.
Description of debt-financed property

Deductions directly connected with or allocable to debt-financed property

(a) Straight line depreciation

(b) Other deductions

CO
6.
Column 4 divided by column 5

(1) 2333 Western Avenue (2) (3) (4) 4. Amount of average acquisition 5.
debt on or allocable to debt-financed property (attach schedule)

33,326.

Statement 2 62,233.

(attach schedule)

FI LE

(1) (2) (3) (4)

Statement 3 847,275.

Statement 4 1,152,000.

Average adjusted basis of or allocable to debt-financed property (attach schedule)

7. Gross income reportable (column 2 x column 6)

8. Allocable deductions (column 6 x total of columns 3(a) and 3(b))

73.55%
% % %

24,511.

45,772.

Enter here and on page 1, Part I, line 7, column (A).

Enter here and on page 1, Part I, line 7, column (B).

24,511. 45,772. Totals ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | 0. Total dividends-received deductions included in column 8 | Schedule F - Interest, Annuities, Royalties, and Rents From Controlled Organizations (See instructions on page 20) Exempt Controlled Organizations
1. Name of controlled organization
Employer identification number

2.

Net unrelated income (loss) (see instructions)

3.

Total of specified payments made

4.

5. Part of column 4 that is included in the controlling organization's gross income

6.

Deductions directly connected with income in column 5

(1) (2) (3) (4) Nonexempt Controlled Organizations 7.

Taxable Income

8.

Net unrelated income (loss) (see instructions)

9. Total of specified payments

made

10.

Part of column 9 that is included in the controlling organization's gross income

11.

Deductions directly connected with income in column 10

(1) (2) (3) (4)

Add columns 5 and 10. Enter here and on page 1, Part I, line 8, column (A). Add columns 6 and 11. Enter here and on page 1, Part I, line 8, column (B).

Totals
923721 01-08-10

0.

0.
Form 990-T (2009)

14110502 781355 13091

3 2009.05030 Mars Hill Church

13091__1

Form 990-T (2009)

Mars Hill Church Schedule G - Investment Income of a Section 501(c)(7), (9), or (17) Organization
(see instructions on page 20) 1. (1) (2) (3) (4)
Description of income

91-1733689

Page

2.

Amount of income

3. Deductions directly connected (attach schedule)

4. Set-asides (attach schedule)

5. Total deductions
and set-asides (col. 3 plus col. 4)

Totals (see instructions on page 21) 2. Gross unrelated business income from trade or business

0. 9 Schedule I - Exploited Exempt Activity Income, Other Than Advertising Income

1. Description of 3. Expenses directly connected with production of unrelated business income 4. Net income (loss) from unrelated trade or business (column 2 minus column 3). If a gain, compute cols. 5 through 7. 5. Gross income from activity that is not unrelated business income 6. Expenses

Enter here and on page 1, Part I, line 9, column (A).

Enter here and on page 1, Part I, line 9, column (B).

0.

exploited activity

attributable to column 5

7. Excess exempt expenses (column 6 minus column 5, but not more than column 4).

(3) (4)

Totals

(see instructions on page 21)

Part I

Income From Periodicals Reported on a Consolidated Basis

2. Gross advertising income 3. Direct advertising costs

CO
4. Advertising gain or (loss) (col. 2 minus col. 3). If a gain, compute cols. 5 through 7. 4. Advertising gain or (loss) (col. 2 minus col. 3). If a gain, compute cols. 5 through 7.

9 Schedule J - Advertising Income

1. Name of periodical (1) (2) (3) (4)

Enter here and on page 1, Part I, line 10, col. (A).

Enter here and on page 1, Part I, line 10, col. (B).

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5. Circulation
income

(1) (2)

Enter here and on page 1, Part II, line 26.

0.

0.

0.

6. Readership
costs

7. Excess readership costs (column 6 minus column 5, but not more than column 4).

Totals (carry to Part II, line (5))

Part II

0. 0. 9 Income From Periodicals Reported on a Separate Basis

columns 2 through 7 on a line-by-line basis.) 2. Gross advertising income 3. Direct advertising costs

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0.
(For each periodical listed in Part II, fill in 7. Excess readership costs (column 6 minus column 5, but not more than column 4).

1. Name of periodical (1) (2) (3) (4) (5) Totals from Part I

5. Circulation
income

6. Readership
costs

0.
Enter here and on page 1, Part I, line 11, col. (A).

0.
Enter here and on page 1, Part I, line 11, col. (B). Enter here and on page 1, Part II, line 27.

0. 0.
(see instructions on page 21) 3. Percent of
time devoted to business

Totals, Part II (lines 1-5)

0. 0. 9 Schedule K - Compensation of Officers, Directors, and Trustees

1.
Name

2.

Title

4. Compensation attributable
to unrelated business

Total. Enter here and on page 1, Part II, line 14

923731 01-08-10

% % % %

0.
Form 990-T (2009)

14110502 781355 13091

4 2009.05030 Mars Hill Church

13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Footnotes Statement 1 }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Average Adjusted Basis - Western Ave }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Net Book value of property - beginning of rental period Net Book value of property - end of rental period Total Average Net Book Value

1,152,000. 1,152,000. }}}}}}}}}}}}} 2,304,000. 2. }}}}}}}}}}}}} 1,152,000. ~~~~~~~~~~~~~

Average Acquisition Debt - Western Ave }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} July August September October November December January February March April May June Total

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5 2009.05030 Mars Hill Church

869,000. 865,050. 861,100. 857,150. 853,200. 849,250. 845,300. 841,350. 837,400. 833,450. 829,500. 825,550. }}}}}}}}}}}}} 10,167,300. ~~~~~~~~~~~~~ 12. }}}}}}}}}}}}} 847,275.

Average Acquisition Debt

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14110502 781355 13091

Statement(s) 1 13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Schedule E - Other Deductions Statement 2 }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Description }}}}}}}}}}} Interest Property tax Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 58,800. 3,433.

- SubTotal -

62,233.

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Total of Form 990-T, Schedule E, Column 3(b)

}}}}}}}}}}}}} 62,233. ~~~~~~~~~~~~~

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Average Acquisition Debt on or Statement 3 Allocable to Debt-Financed Property }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 847,275. - SubTotal 1 847,275. }}}}}}}}}}}}} Total of Form 990-T, Schedule E, Column 4 847,275. ~~~~~~~~~~~~~ Description }}}}}}}}}}} Average Acquisition Debt

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14110502 781355 13091

6 2009.05030 Mars Hill Church

CO

Statement(s) 2, 3 13091__1

Mars Hill Church 91-1733689 }}}}}}}}}}}}}}}} }}}}}}}}}} ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Form 990-T Average Adjusted Basis of or Statement 4 Allocable to Debt-Financed Property }}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}}} Activity Number Amount Total }}}}}}}} }}}}}}}}}}}}}} }}}}}}}}}}}}} 1,152,000. - SubTotal 1 1,152,000. }}}}}}}}}}}}} Total of Form 990-T, Schedule E, Column 5 1,152,000. ~~~~~~~~~~~~~ Description }}}}}}}}}}} Average Basis

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14110502 781355 13091 7 2009.05030 Mars Hill Church Statement(s) 4 13091__1

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