Ultrabuzzard
Pre-Flight
Well folks, next week I will file incorporation papers for the Aerovalley Flying Club, which will be listed as a non profit. If all goes well, we will be up and running by mid March!
Flying Club update
- Thread starter Ultrabuzzard
- Start date
I believe it will take a while until the IRS certifies your non-profit status (having it listed as non-profit with the state doesn't give you that status)Until the IRS sends you their determination, you will have to keep your books and withhold taxes as a for-profit.
I'm sure there are about 20 accountants here who can correct me on that
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Should not be much of an issue; withholding applies to payment of wages to employees, which I seriously doubt that there will be any paid employees.
If the corporation does not make money, no federal tax will be owed anyway.
If the corporation does not make money, no federal tax will be owed anyway.
Witholding would also apply to sales tax. If your state taxes services such as renting out aircraft that may apply. Also, depending on your state, as a charitable non-profit you may be exempt from sales tax, e.g. on office supplies or even fuel.
Also, once you have a non-profit charitable determination you can provide receipts for donations of money or goods which may help to raise funds during the startup phase of a club that eventually will own assets. Until that point, members can make loans to the club, but those won't confer any tax benefit.
So, my recommendation stands: Until you have the IRS non-profit determination in hand, run it like a for-profit business accounting wise.
Areeda
Pattern Altitude
Our flying club is non-profit but not a charitable non-profit. I really don't understand all the differences
I'm curious what airplane(s) you have and what kind of a deal? Did the club buy them, lease them, or deal with an FBO for a "super-block" rate?
Joe
I'm curious what airplane(s) you have and what kind of a deal? Did the club buy them, lease them, or deal with an FBO for a "super-block" rate?
Joe
JeffDG
Touchdown! Greaser!
The big difference with a "charitable" non-profit is that you could have "donations" to the club instead of dues, and those donations would be tax deductible to you...IRS ain't gonna allow that to happen!
Not if the club is solely benefits its members. If the club provides benefit to the community at large (providing free rides for disabled kids etc.), a club or a subsidiary of the club may well be eligible for charitable non-profit status.
Areeda
Pattern Altitude
Are there only 2 types of non-profits?
I assume that to be a charitable non-profit (is it 501c3?) you have to have a "charitable purpose". I asked our club member volunteer accountant if we could set up one of those for the purpose of subsidizing the flight training of full time students. All I got was a groan as he turned around and ran away at full speed.
Joe
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Ultrabuzzard
Pre-Flight
As I said, if all goes as planned. Nothings happened yet. I am planning to do a commercial dry lease on a C172. I am still researching which way to incorporate, but it looks to me like I will be setting up as a 501c3 non profit corp, subject to a talk with a corp. atty.
Areeda
Pattern Altitude
I wish you luck, and I'm certainly not an expert making a definitive statement here.
However, I don't know of any Flying Club that has gotten a "c3". If I understand it correctly you have to have a charitable purpose. If you get it donations are deductible.
Joe
AdamZ
Touchdown! Greaser!
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Adam Zucker
Your on Target Joe. Quick Thought Ultra Buzzard why not contact AOPA I bet they have some great resources that can give or suggest that answer.
If you are 'Dungtown Flying Club Inc', a not for profit corporation that provides aircraft for the benefits of its members who pay dues, you are exempt from federal corporate income tax and depending on your state, you may not have to pay property tax on your hangar, be exempted from sales tax on certain items etc. Any contributions by the members to the club are just that, contributions, loans whatever you call it.
If your club spins of 'Dungtown Hope in Flight foundation' with a goal written into the charter to: 'Enable kids with developmental disabilities to experience the joy of flight, provide free transport services for unwanted puppies and kittens and to foster understanding of general aviation in the greater Dungtown community'. You MAY be able to obtain charitable status for that subsidiary. If you get that charitable determination, DHFC could issue receipts with the charitable language and contributors could deduct it from their taxable income as charitable contribution. You can then use those contributions to fulfill the charter goals of DHFC. If you start diverting money for other non-charitable club activities (e.g. a fishing outing to Gastons for the clubs officers) and you are found out about, your state attorney general may have you publicly crucified and a friendly gentleman from the IRS will pull your fingernails out with a staple remover one by one.
If your club spins of 'Dungtown Hope in Flight foundation' with a goal written into the charter to: 'Enable kids with developmental disabilities to experience the joy of flight, provide free transport services for unwanted puppies and kittens and to foster understanding of general aviation in the greater Dungtown community'. You MAY be able to obtain charitable status for that subsidiary. If you get that charitable determination, DHFC could issue receipts with the charitable language and contributors could deduct it from their taxable income as charitable contribution. You can then use those contributions to fulfill the charter goals of DHFC. If you start diverting money for other non-charitable club activities (e.g. a fishing outing to Gastons for the clubs officers) and you are found out about, your state attorney general may have you publicly crucified and a friendly gentleman from the IRS will pull your fingernails out with a staple remover one by one.
Ultrabuzzard
Pre-Flight
And all this is why I'm running this past an atty.... I'm not exactly sure about the 501c3 status. Lots of mumbo-jumbo in the explainations I'm seeing on line.
Ultrabuzzard
Pre-Flight
JeffDG
Touchdown! Greaser!
R
Ruben4759
Guest
I just wanted to ask you a question. What form did you filed the 1023 or 1024 for the Non Profit status.
Thanks,
Ruben