[TriLUG] Upcoming vote on TriLUG non-profit status
jtrilug at indythinker.com
Sat Feb 5 13:07:39 EST 2011
On 02/05/2011 11:56 AM, Brian McCullough wrote:
> I have been trying to listen to the audio of the meeting that work
> prevented me from attending, and have been having a lot of trouble
> making sense out of parts of it, with low volume and mumbling ( not
> necessarily intentional ) obscuring information.
We apologize for any issues with the audio quality. If there were any
parts that raised questions for you, feel free to ask them here on the list.
> One question that I have not heard ( seen ) discussed, is that of the liability of the Treasurer once the corporate organization has been destroyed, since all of the income of TriLUG will become personal income of the Treasurer.
This is a very valid question and I do not think we have properly
addressed it. I am not sure what it would take in order to have the
expenses of the LUG be deductible from treasurer's taxable income, but
any income that remains could be taxable at the standard rate. We should
consult a tax attorney and/or CPA in order to find out what the
implications are. Another issue that pops to mind is that, if some of
the expenses are deductible, the treasurer may be tempted to in incur
expenses that go beyond income, as a means of gaining an additional tax
At the very least, I believe that the paperwork obligation might make it
harder to recruit a treasurer for future terms. With no claim to
expertise on the topic, here's how I currently see the paperwork burden
for each of the choices we're considering:
+ Dissolving the corporation would result in at least needing to submit
a Schedule C (Form 1040) to the IRS each year. If the treasurer
previously was able to submit personal taxes on a 1040-EZ, he/she would
need to upgrade to a full 1040.
+ If we keep the non-profit corporation registered with the North
Carolina Secretary of State but choose not to seek a tax-exempt status
with the IRS, we would probably need to submit some sort of traditional
corporate tax return each year (e.g. 1120, 1120S, or similar). The
income from that would pass through to either the treasurer or a list of
shareholders. Each person receiving income (or recognizing loss) would
need to recognize this income on his/her personal taxes (e.g. Schedule C
(1040), Schedule K (1040), etc).
+ If we get our 501(c)(3) classification back, we would submit one 990N
each year, which consists of eight simple questions. There would be no
effect on anyone's personal taxes.
IMO, The 501(c)(3) and the 990N are the simplest solution.
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