Posted by John K Haslach, CPA, MST on April 01, 2009 at 10:53:55:
If there is a mortgage on your real estate, you probably have UBIT.
Use of Non-Profit Corporation - Posted by Kent - WA
Posted by Kent - WA on March 14, 2009 at 10:11:04:
I am looking into forming a non-profit corporation in Nevada. I see some distinct advantages to operating a non-profit and I am looking for some knowledgable opinions. First, I donate to charities a good percentage of my income already and I have the goal of creating a substantial amount of income in my lifetime as well as giving away the majority of this to different causes. One of my chief goals is to help with homelessness in the United States. I am a pre-foreclosure investor as well as a Real estate Agent, and I would like to do a lot of my life’s work from a non-profit charity that I operate. Secondly, I can see this as a possible Asset protection strategy in terms of limiting my liability should someone decide to sue me for my activities or in the event things don’t go according to plan. Thirdly, I see this as a possible tax planning strategy, in that I can take a regular salary from the Non-profit (and pay taxes on it) but I can leave the majority of revenue in the 501 3(c) to be used to generate more revenue and support my charitable causes. I also see with the political climate we are facing both here in the State of Washington where I currently live as well as in the “other” Washington (DC), that if you have the ability to generate a lot of revenue there are getting to be way too many politicians who want to take it away from you and force you to donate to someone who just had 8 kids or someone who signed up for a bad mortgage, etc. It is starting to look like the inmates are running the asylum. Thanks for your input in advance.
Beware UBIT - Posted by Jimmy
Posted by Jimmy on March 16, 2009 at 06:10:42:
running a business enterprise out of a charitable org exposes your entity to the Unrelated Business Income Tax.
Congress snuffed this idea out 50 years ago. because it fundamentally unfair for one business to be tax-exempt, and the competitor next door to have full exposure to tax hits.
you can be as charitable as you want, and I applaud your devotion to good causes.
you should sit down with a seasoned tax lawyer or tax CPA and get sound advice.