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

[Jef Barnhart]

We, the steering commitee, have looked into it. The effort to get 501(c) is not worth it. the have way too many hoops that they want you to jump through. 

Jef

On Thu, 13 Jun 2002 15:46:58 -0600
"Crawford Rainwater" <crawford.rainwater at itec-co.com> wrote:

> 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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> 
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