[CLUE-Admin] CLUE Trade Name & Checking Account --> problems!

[Crawford Rainwater]

Another issue with Option 2 is sales tax from the auction.
Just an thought, since it is one I personally hate to deal
with (re ITEC).

Stick with option 1, get the 501c along with the CO Corp For
Non-profit status as well via the Sec Of State.  File CLUE as
a DBA as well (additional deal).  You will need Articles of
Inc. for Non-Profit drafted, By-Laws (maybe), and first meeting
minutes is the norm (for "profit" corps).  After that, a status
filing every two years with the Sec Of State Office.

This is the simple nutshell version.  Check with a corp attorney
type for specifics if the Sec Of State's web site does not answer
the questions then, as well as to get "pre-drafted" versions of
the Articles and By-Laws.

Hope this helps.

--- Crawford

> -----Original Message-----
> From: clue-admin-admin at clue.denver.co.us
> [mailto:clue-admin-admin at clue.denver.co.us]On Behalf Of Jeffery Cann
> Sent: Thursday, June 13, 2002 11:12 AM
> To: clue-admin at clue.denver.co.us
> Subject: [CLUE-Admin] CLUE Trade Name & Checking Account --> problems!
>
>
> Greetings,
>
> At Tuesday's meeting, someone asked if we considered the tax
> implications of
> getting a CLUE checking account.  We have not, but I spoke with
> my CPA today.
>
> I asked about registration of CLUE with the Colorado Department
> of Revenue (via
> Trade Name) - whether we should register as an association (or a
> partnership).
> He explained that it is common for non-profit associations (like
> CLUE -- even
> those who do not elect 501(c)(3) status) to register their
> association via a
> Trade Name.
>
> We then spoke about the upcoming auction.  He explained that
> because we are not
> a 501(c)(3) and will be accepting donations from users that are not
> tax-deductable, we would be liable for tax payment on all of the
> proceeds of
> the auction.  We are in effect, acting like a broker.  So, it is
> actually a
> business!  Although we are not trying to make a profit, we still would owe
> taxes because we do not have the 501(c)(3) tax exemption.
>
> I had planned to get the CLUE trade name validated tomorrow
> morning.  We needed
> it to open a commercial bank account in order to accept checks
> for the CLUE
> auction.  After speaking with Mark we have two options:
>
> 1.  He recommended that we run the auction like a garage sale -->
> cash only and
> personal checks (written to me).  Under the current tax law,
> individuals are
> allowed tax free income gains via garage sales.  This would allow
> us to avoid
> paying taxes on the proceeds.
>
> 2.  Continue as planned with the CLUE checking account but then
> bear the tax
> burden.  I believe we would have to file taxes as a group, but we
> certainly
> would owe for the proceeds of the auction.
>
> Mark (my CPA) recommends #1 and I agree, based on his
> recommendation.  So, I
> think we will have to advertise that the auction is cash only.
> If folks want
> to write checks, they would have to write them to me personally.
> This is an
> acceptable way to accept checks without the tax liability caused
> by opening a
> CLUE account.
>
> Jeff
>
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