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From: ask@cbrma.UUCP (A.S.Kamlet)
Newsgroups: net.legal,net.taxes,net.religion,net.politics
Subject: Re: RE. Scopes II (non-profit corps and churches)
Message-ID: <4954@cbrma.UUCP>
Date: Thu, 21-Aug-86 18:08:21 EDT
Article-I.D.: cbrma.4954
Posted: Thu Aug 21 18:08:21 1986
Date-Received: Fri, 22-Aug-86 21:16:34 EDT
References: <1069@bu-cs.bu-cs.BU.EDU>
Reply-To: ask@cbrma.UUCP (A.S.Kamlet(Art))
Organization: AT&T Bell Laboratories, Columbus
Lines: 53
Xref: mnetor net.legal:3335 net.taxes:547 net.religion:2737 net.politics:9319

In article <1069@bu-cs.bu-cs.BU.EDU> bzs@bu-cs.BU.EDU (Barry Shein) writes:
>
>>A non-profit corporation is roughly defined as a corporation that does not pay
>>money to the stockholders.  (Yes, if Exxon stopped distributing its dividends,
>>that would make it a non-profit corporation.  And a darn poor investment.
>
>Not to knit picks, but I'm, still not satisfied with this definition. Many
>if not most of the corporations on the OTC don't pay dividends, but I don't
>think that makes them either non-profit (nor particularly poor investments,
>but that's a different issue.) I'm sincere, what *is* the definition of
>a non-profit organization? Surely not just one that operates at a loss?
:
:
Disclaimer:  I'm not a lawyer, but I believe the following to be
correct.  Please don't take my comments as Truth; only as my
best belief as to what the facts are:

In order to qualify as a non-profit organization
for which I can take tax deductions when I make a
contribution,  the organization must qualify under the appropriate
section ( I think is is 403 ) of the IRS code.   The organization
must fill out the IRS forms and send a copy of its purpose, bylaws, etc
to the IRS.   The IRS may rule yes or no on whether the organization qualifies
as a 403 (various subsections) organization.

A 403() organization will not hesitate to tell you that it is a
403() organization, if you ask.  Exxon would probably not qualify.
Also, not all aspects of the organization automatically qualify.

The general IRS rule on churches is that the religion parts of a church
qualify, but the non-religion aspects don't.   For example, a church
land and building, used for religious purposes, would qualify, and the church
would probably not pay taxes on this property.   Contributions made for the
upkeep of this property and to pay church employees, and for other
"bona fide"  religious purposes would probably be ruled as valid tax deductions.

But if the church also owned, say,  a computer manufacturing company which
earned lots of money that was plowed back into the church,  the IRS would
probably rule that:  1)  it's perfectly fine for the church to own and
operate the company; 2) money that I give to the company, whether to
buy its computers or as a donation to the company itself, would not
be tax deductible; 3) the earnings of the company would be taxable, the
same as for any similar manufacturing company; and 4) property taxes
etc would be due from the company.

Also, if a part of the church was engaged in what the IRS calls
political lobbying or something like that, the IRS can rule that
part of the church's activity to be non-tax exempt.   If the church has
not taken care to set up any such lobbying organization as a separate
entity, the IRS could threaten to declare (at its peril :-) ) that
the church itself is non-tax exempt!!
-- 
Art Kamlet   AT&T Bell Laboratories  Columbus  {cbosgd | ihnp4}!cbrma!ask