AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
I am a bookkeeper for a 501(3)c non profit organization.
They have held cultural festival.
For the festival they printed a booklet for the festival program.
they had some sponsor like business owners or schools who donated this organization money. In return these sponsor's name and business information is printed in the booklet.
My question is this money a donation or program services income?
Thank you,
Meral Korucu
Answer First we need to decide whether the information printed in the booklet would be considered by the IRS as an Advertising or a. Acknowledgment.
Note also page 5 "The Announcement further stated that the
Service would not apply the guidelines to organizations that are
of a purely local nature and that receive relatively
insignificant gross revenue from corporate sponsors and that
generally operate with significant amounts of volunteer labor."
Therein we see
---Start of Excerpt--
v) Advertising. For purposes of this section, the term
advertising means any message or other programming material which
is broadcast or otherwise transmitted, published, displayed or
distributed, and which promotes or markets any trade or business,
or any service, facility or product. Advertising includes
messages containing qualitative or comparative language, price
information or other indications of savings or value, an
endorsement, or an inducement to purchase, sell, or use any
company, service, facility or product.
---End of Excerpt-- http://pages.citebite.com/s1s8w0b5f0pdt
If something is advertising at all then it can not be called an
acknowledgment for purposes of the exception to the unrelated
business tax.
At section 1.513-4(c)(2), the IRS defines "Substantial return
benefit" and gives certain exceptions at
(c)(2)(iv) "the use or acknowledgment of the name or logo (or
product lines) of the payor's trade or business in connection
with the activities of the exempt organization."
From the meager facts I would not be able to inform you whether the information printed in the booklet is Advertising or an Acknowledgment. If it is an acknowledgment, then the income is a donation.
Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com
