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Nonprofit Law/Tax Liability for a charitable fund

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Question
Dear Harvey,

Thank you for fielding this question.

In 2014 I organized and ran a charitable golf tournament that raised $5000 for pancreatic cancer research.  In an effort to do everything legally, I requested and was granted an EIN, and I opened up a separate interest-free checking account to receive entry fees, donations, etc.  


I didn't think much of it because outside of a very small amount of carryover, the money that is raised at the end of the tournament is donated to a specific non-profit organization.  I don't make a nickel off of it, but I just realized with this newly acquired EIN, I may have reporting obligations with the federal government.

Any advice you could provide would be greatly appreciated.

Answer
From what you wrote, it appears that the fund that you set up did not have any organizational document like articles of incorporation or charitable trust declaration that would be required to make it qualified to be treated by the IRS as a 501(c)(3) organization or other tax-exempt organization. See http://www.irs.gov/pub/irs-pdf/p557.pdf starting on the bottom of page 24 under the heading "Organizational test". You must have the required clauses in the organizational document. Samples start on
page 71.

Therefore, the operation would be treated at least as to its activities in 2014, as a regular for-profit operation.  Unless there is documentation to establish another type of entity, it would be treated as your sole business (sole proprietorship) and you would report the activity on your individual tax return.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.

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Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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