Re: Well, this makes a lot more sense - Posted by John
Posted by John on July 02, 2001 at 22:34:00:
You can pay yourself a handsome salary and deduct that from the corps profits. That way you make a good income and the corp is still non-profit.
Re: But a 501c3, for what purpose??? - Posted by IB (NJ)
Posted by IB (NJ) on July 04, 2001 at 20:59:09:
Thanks John. But I’m interested in being a little more involved with the youth than simply making charitable contributions. I want to be able to hire and train them as Carpenters/Contracors, Investors, etc. while doing rehabs. I then would like the profit generated from this NFP to grant scholarships, etc. I definitely plan on talking to an accountant and attorney who specialize in this to make sure it can be done. Thanks again for the information.
Great info…John - Posted by JT - IN
Posted by JT - IN on July 04, 2001 at 10:33:02:
Obviously, as demostrated by your post, you know the details concerning the nfp’s, and the rest of us don’t really know, but are peckin around the issue. Amazing what many years of education in Accting will produce.
I am aware of the complexity of these, and was trying to convey that idea, without knowing all the nuances, that you have been able to clearly point out. Thanks!
Please address the other post concerning deducting a property in which a low amt. was paid, and deducting a higher FMV, in a short time frame; (as opposed to highly appreciated assets, such as stocks, etc.), I have researched this, and understand the problem with doing so, but could not succintly state, as I believe you will be/are able to. Thanks, thanks, and thanks!
Are you moving back to Ohio? or getting another pair of boots?
JT - IN
Re: Question on related topic - Posted by JT - IN
Posted by JT - IN on July 03, 2001 at 06:13:53:
Gerald:
I am NO accountant, but I believe that you are limited to deducting what your basis is, in the property. In your case, it would be the purchase price, plus any closing costs. Darn it anyway!
This would be a great strategy, but then our non-profits might be loaded up with a bunch of undesirable goods, if you could deduct FMV.
JT - IN
Re: Well, this makes a lot more sense - Posted by JT - IN
Posted by JT - IN on July 03, 2001 at 06:19:00:
John:
Hopefully the salary that you will be drawing, will be no higher than a commensurate salary for a lateral/comparable position, otherwise you run the high risk of a sham operation, to protect the non-profit status. Now I realize this is done all the time in religious organizations, but then the IRS does keep a little distance in those instances.
A 501(c)3 needs to be formed for a legitimate non-profit reason, other than supplying a handsome slaray to the key person.
JT - IN
Re: Great info…John - Posted by JHyre in Ohio (Today)
Posted by JHyre in Ohio (Today) on July 04, 2001 at 11:34:14:
The general rule is that long-term cap gain assets contributed to charity are deductible to the extent of fair market value, while other assets (e.g.- inventory) are deductible to the extent of basis…so your example of appreciated stock is on the mark. This technique appears (I used that word because I haven’t looked at this issue for a few years and the law may have changed) to be a way to create ORDINARY deductions from CAPITAL property…ordinary deductions are much more useful than capital losses, which only apply to offset capital gains ($3,000 annual exception to that rule).
Dunno where I’ll be living yet…in Texas until July 31st, with occasional weekend forays back North.
John Hyre
This is correct… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on July 04, 2001 at 11:40:11:
FMV deduction is for long-term cap gain assets, as opposed to inventory. Check out Charitable Remainder Unitrusts…great way to give (on a deferred basis) while getting a deduction (on a current basis).
John Hyre
Re: Question on related topic - Posted by Nate(DC)
Posted by Nate(DC) on July 03, 2001 at 14:45:29:
My understanding is that you can deduct fair market value of the donation…however, I think you would have a very hard time arguing that the FMV is $32K when you bought it for $4K just a short time before. But let’s say you bought a house for $4K and held it for 25 years and then it was worth $50K. If you donated it, you could write-off $50K. A lot of nonprofits encourage people to do that with appreciated stocks to avoid the capital gains tax - you get the tax writeoff on the FMV without having to sell and pay the taxes. (Of course, stocks are a lot more straightforward to value than real estate…)
NT