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Tax Law (Questions About Taxes)/Cell Phone Tower on Church Property

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Question
Mr. Stancil,

Our local church is considering allowing a telephone company to place a cell phone tower on church property for the purpose of receiving a monthly income.  One of the main concerns is 'Would this income affect the  church's  exempt status and/or create some type of required tax payment?'

Thanks for your help.............Billy

Answer
Billy,

Thanks for your question.

While this is an issue that has many variables to it, this will definitely not affect your tax exempt status. It could create unrelated business income, which would be taxable at corporate rates.

To avoid the tax, there are several exceptions.  First, if the net income from the rental is under $1,000 it is not taxable.

Second, it also depends on how it is structured.  If you are renting real estate and not the town itself, you are engaged in a rental activity of real property and are not subject to the tax. If you own the tower, it is the rental of personal property and would be taxable.

Third, there is an exception to the exception.  If the property is debt-financed, there must be an apportionment of the total property to the rented property and some income tax would be due.

Fourth, I can't address this specifically, as local and state laws vary considerably, but the portion of the property that is rented out may no longer be exempt from local property taxes.

Finally, be sure to have your attorney review the lease agreement, and perhaps even a competent tax accountant familiar with unrelated business income tax issues.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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