How to Understand Family Law ?
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For anyone that is going through a divorce, then you need to try and make sure that you find someone to represent your interests. This is because in divorce cases there can be a lot of tricky legal issues to navigate around.
A family or divorce lawyer is going to give you a lot if you decide to hire them. Here are some things that a family or divorce lawyer can do for you.
Accepting Land Donations: What Charity Professionals Need to Know
As anyone who’s been associated with a charitable organization can attest to, receiving donations is a welcome and somewhat rare surprise. Donations are an encouraging show of support that allows the organization’s professionals to continue their work, and the organization itself to continue to pursue its goals.
Accordingly, in the rare instances where charitable organizations receive large land donations, the immediate reaction is typically one of joy – given the financial and logistical byproducts of such generosity. The subsequent reaction is often one of mild nervousness, however, as there are some important considerations to review and understand in regards to land donations – preferably before one of these donations is accepted.
The good news is that once you adapt to these factors, land donations are easy to take advantage of, and are sure to provide charities with many valuable benefits.
To help any charitable organization that’s thinking of accepting a large land donation, let’s take a look at some factors to consider before doing so!
The following tip is intended for charitable organizations that plan to use donated land in their own organization, as opposed to selling it to another party outright.
Receiving an extra 50 acres of land to use for charitable purposes is awesome, but what of the staff required to carry out an organization’s practices and work towards its goals on this land? Bluntly stated, many charities rush to accept land donations without considering the staffing implications of such a decision. To be sure, even maintaining land – before it’s built on or used for any significant cause – requires ample support.
Needless to say, charities should set aside the staff required to maintain any land that’s been donated before accepting such a contribution. They should obtain even more staff to operate any additional charitable components that are planned for this land, including new buildings and branches.
Potential Construction and Maintenance Costs
First, we’ll take a look at some of the potential construction and maintenance costs associated with donated land that’ll be kept and used by a charitable organization.
As every homeowner knows, land isn’t cheap to buy, keep up, or even live on. Moreover, the costs of maintaining land, building on land, and operating structures on land is significant to say the least. Thus, many charities and nonprofits are surprised to find that “donated” land ends up requiring a substantial amount of money to cultivate and put to use.
To assure that donated land doesn’t become a major financial burden to any charity, it’s imperative that the professionals responsible for accepting or passing on said donation meet with a financial expert beforehand to explore the long-term costs associated with owning the property. This consultation will require some type of upfront payment, but the financial benefits – including possibly saving a tremendous amount of cash later on – are invaluable. Generally speaking, the “background” costs of maintaining land – including landscaping, natural disaster response, waste removal, and more – prove more costly than anticipated.
Furthermore, the charitable professionals responsible for determining the potential uses of land should consult with construction experts to see roughly how much it would cost to erect the desired building(s). Nearly every parcel of donated land will need at least one building to be built on it, or repaired. In some instances, the cost of repairing and modifying an existing building (especially when it doesn’t currently suit an organization’s wants and needs) will near that of constructing a new one.
For especially careful charitable professionals, it might also be worth meeting with energy experts at local electricity and natural gas companies to see what the cost of power on a piece of donated land will be (general construction blueprints must be drafted beforehand). Like the aforementioned land-maintenance expenditures – electricity and other forms of energy often cost more than one would think.
Now let’s take a brief look at what costs charities and nonprofits that plan to sell a donated piece of land may have to account for.
The scope of these potential costs is much smaller than that of modifying and using a land donation, but charity professionals would nevertheless do well to plan for them.
Land that will be sold may need to be landscaped and otherwise cultivated, and any structures it contains may need to be repaired. Unsightly land and homes fetch far lower prices on the open market. In some rare cases, such properties require months or even years to sell – a costly process in terms of realtor fees.
From start to finish, the process of accepting a land donation can be taxing. It involves reviewing and recording its condition, meeting with professionals (realtors if the land will be sold, and construction experts if it will be used), selling it or beginning its construction, and assuring that all these things happen without issue. Furthermore, the process needs to be handled by a project manager – someone who is reliable, qualified, and willing to operate according to the wishes of the charity’s executives.
It’s important that a competent project manager or management team be selected and consulted before a land donation is accepted, to assure that the land is as valuable and useful to its recipient charity as possible.
These tips are sure to help any charity or nonprofit that’s considering accepting a land donation. As was initially stated, there are more factors to contemplate before accepting such a generous offering than most individuals realize, but once these factors are weighed and handled, the financial and operational benefits of the donation are sure to be significant.
Thanks for reading, and thank you to all the caring individuals and organizations that donate land, as well as the top-notch groups that put this land to good use!
There are times in our lives where unexpected accidents or emergencies come up and our normal income and savings just will not cover everything. We can ask friends and family for assistance, but even that might not cover everything. Thanks to the internet, there are donation services that allow us to make a case for help from total strangers, tapping the reserve of empathy and charity of others in order to make ends meet. But even though money received from online donation services are donations, you may be responsible for taxes on that money.
Donations to charities are considered tax-exempt because they are made to organizations who have been designated by the government as charities. They have filed special paperwork that allows them to receive money and not pay taxes on it. You, as a private citizen, are not a charitable organization, and thus are required to obey any and all federal and state tax laws.
However, donations collected through donation services may be considered gifts. Gifts, in the eyes of the IRS, are not taxable because the recipient does not provide something in return to the giver. The size of the gift also comes into play when dealing with taxes. Any gifts over $14,000 are considered taxable, but the recipient does not pay them. The giver of the gift must pay what is called a gift tax.
Gift taxes can be complicated. It all comes down to who is giving the gift. An individual can give a gift of $14,000 without paying a gift tax. However, if a couple gives the gift from a joint account, they can give up to $28,000. The IRS considers the couple as being able to give $14,000 individually. The couple can give one in-law from two different other couples up to $14,000, making the annual limit of a couple giving a gift to $56,000 without paying a gift tax.
There are exceptions to gift taxes. A person giving their spouse money is not considered taxable for any amount of money. The catch is that both spouses must be U.S. citizens. If the spouse is not a citizen, special rules apply. If the gift is directly paid to a medical or educational institution, such as for paying medical bills and tuition costs, then it is not taxable.
Crowdfunding has opened up a whole new way for people to raise money for a variety of things, from starting a business to a creative endeavor. If donations are made in these conditions, the money is taxable because the person receiving the donations is providing a product or service in return for the money. Most donation sites specifically consider money donated for an emergency or problem in time of need as a gift.
There have been cases where large sums of money were collected through donation sites that were taxable. For instance, if a person sets up a donation site for another person, the money could be taxed if the person who set up the site, collects many donations and gives it all to the recipient. Remember, individuals are only allowed to give $14,000 as a gift without it being taxed. If the recipient of the money had set up the site, then taxes can be avoided, as the money is going straight to the person it is intended to help. Also, it is within the tax rules for donation pages that get over $20,000 to be issued a tax form.
There are issues for the donors as well as the recipients. Donations made on crowdfunding sites are not tax deductible. They are considered gifts and not donations, and therefore are not eligible to be deducted. In order for donations to be deductible, they must have been given to a charitable organization with the proper designation.
If you are unsure of what your tax responsibilities are when it comes to crowdfunding donations, consult a tax professional. Crowdfunding is still a very new phenomenon, and accountants and the IRS are still ironing out the legal details of receiving crowdfunding.
There are other situations where donations can be collected. If your employer gives you a bonus at Christmas, it is considered taxable income even though the gesture can be seen as a gift. However, if the bonus was small, such as them buying you lunch or giving you a small physical gift, there is no need to report it.
Another area where donations can be taxed is for political campaigns. If you choose to run for office, there are special rules applied to any money given to you for your campaign. Any money given to you for your campaign must be spent on the campaign, or saved for future campaigns. Any donated money that is used for anything else other than the campaign is considered taxable income.
If you are a campaign contributor, there are tax issues involved there as well. The IRS strictly forbids any campaign contributions from being deducted from your federal taxes. However, at the state level, the rules are a little different. Four states: Oregon, Virginia, Arkansas, and Ohio, all allow you to claim campaign donations on your state taxes up to a certain amount. This is to encourage citizens to participate in the democratic process, but there are many controversies surrounding the practice. Opponents of the practice claim the credits cost states tax revenue.
Whether you are running for office or just need a little hand to get by, charitable donations to individuals have stepped into a new, confusing era. The IRS has yet to catch up with these new trends, and accountants are not fully prepared to handle the paperwork involving crowdfunding. The increased use of donation sites will prompt swift legal changes and the community of crowdfunders will experience some growing pains. Still, the use of the sites is a great way to help people in need who have no other alternative. Whether the money was given to help someone pay a medical bill, start their own small business, or write a book, donating to individuals is always a good investment.
The advent of crowdfunding and the concurrent dramatic expansion in non-profits in both the United States and around the world, has presented many business owners with more than a few not-so-easily-answered questions. At last report, Kickstarter, the leading crowdfunding destination site on the web, has collected more than $3.5 billion for nearly 400,000 projects since 2009.
Many crowdfunding sites don’t accept donations for the traditional kinds of projects non-profit organizations manage. But the truth is that Kickstarter and other crowdfunding sites like it have demonstrated that individuals and businesses are willing to put up funding for a wide variety of causes – provided they are sufficiently motivated to see the project succeed. Even if the sites don’t encourage non-profits to crowdfund, it doesn’t change the fact that there are likely many people who would be willing to contribute.
But complex questions arise when a not-quite non-profit wants to get in on the action. Can someone donate to a for-profit enterprise? How is that donation handled legally and financially? How does it affect the tax situations of the contributor and company? How can a for-profit company solicit donations without looking like they are either performing the digital equivalent of panhandling or staving off bankruptcy?
The answers to these questions are all related. So it is necessary to take a step back and define exactly what all these different situations mean before we can determine the practical answers.
From a contributor’s standpoint, crowdfunding is not all that different from straightforward capitalism. A group of investors gets together, pools their capital and forms a company or project with it. The difference between a crowdfunded project and a capitalized business is the “investors” or contributors receive no shares in the new company.
From the business point of view, crowdfunding is more like offering a pre-order than it is a round of capital. There are two reasons for this. First, the amounts in question in a typical crowdfunded project are minimal. Very often new companies and projects will offer contribution tiers in the single digits. The justification for this is an emphasis on the number of contributors rather than seeking high buy-ins.
The second reason businesses see crowdfunding as more of a pre-order is because the rewards offered to their contributors often center around the product or service being proposed as the reason funding is needed. If someone contributes to a new board game, for example, the reward for their contribution is very often a copy of the game itself.
From a legal point of view, crowdfunding does not qualify as a securities offering because no shares in the company are being solicited. Were shares being made available, it would qualify as a securities offering and there would be voluminous regulatory hoops the company would need to jump through. Crowdfunding bypasses this requirement because ultimately, the money offered is a gift. The contributor is promised nothing other than a minimal one-time reward, and there isn’t legally any contract to deliver even that much.
Since a contribution in these circumstances is legally a gift, then it would seem any organization would be in a position to solicit donations. However, there’s one more issue to consider.
The chief strength of a non-profit organization is the fact that IRS regulations permit individuals to deduct contributions to a non-profit from their taxable income.
This process is governed under Title 26, section 501 of the United States Code. This law and several others apply certain criteria to an organization seeking non-profit status. It also obligates any such organization to perform certain acts and file appropriate paperwork with various government authorities at both the federal and state level.
An organization that does not meet the requirements for a non-profit can still accept donations, but they can’t promise their contributors any tax benefits as a result of making such donations. Legally, those funds would be considered gifts, and would likely not qualify as a deduction for the contributor.
The organization accepting such a donation would also likely have to pay taxes on it as if it were regular income. This would be true for any crowdfunding income, so it is almost certain it would apply to any donation or contribution, even one that took place outside the scope of a traditional crowdfunding campaign.
Naturally, if a company’s accountant is on the ball, they could make a credible case that any products or services offered to contributors could be deducted from the business’ income as expenses arising from the campaign. While this would mitigate the tax bill somewhat, the status of the original funds wouldn’t change.
Options for Businesses and Nonprofits
It has become clear in the last decade that businesses can not only take advantage of crowdfunding, donations, contributions, and pre-orders like any other organization – but they can do so for a variety of purposes. Even if certain crowdfunding sites restrict project types, there is nothing stopping any company from soliciting donations on its own, even for a purpose traditionally associated with a charity or a non-profit.
Nonprofits with the appropriate tax status, naturally, can continue to take donations and offer tax deductions to their contributors as well.
The key to understanding the specifics of any one situation is recognizing the legal status of the money transfer. Is the contributor getting something in exchange? Then it’s a pre-order. Are they deducting the money from their taxes? Then the organization has to be a non-profit with the appropriate tax classification. Is the contribution being solicited by a for-profit company, but meant for a quasi-charitable purpose? That’s a situation that should probably get the once-over from both a business attorney and an accountant just to make certain there is no confusion on the part of the contributor.
As long as funds aren’t being solicited for one purpose and then used for another, there is little in the way of a legal hazard. That said, it is always good advice to consult a qualified business attorney before engaging in transactions with the public that might lead to uncertainty or confusion. The potential penalties for getting it wrong are too burdensome when compared to the relatively trivial cost of finding out for sure ahead of time.
The short answer to this question is yes, but it is assuredly a qualified yes. This operational policy does not exist for some businesses because of the classification of contributions and revenue actions. Non-profit organizations can choose to consider payments from specific individuals as either dues or donations, but companies that are focused on marginal cash flow will have a difficult time using this policy effectively in terms of accounting. An example would be an exercise gym that sells “memberships” for a set price over a designated time period. This fee is clearly a profit-driven revenue action required for access to the gym equipment. Nonprofit businesses have more latitude, as any typical 501(c)3 company can operate as an organization that takes donations and allows contributors access to any benefits of the organization. The question becomes which type is best suited for the club in terms of protecting cash inflows.
Members Versus Donors
The general rule regarding a contribution versus a dues payment is whether the paying individual received anything of intrinsic value as a result of the financial transfer.
If a membership includes access to certain facilities that are restricted to non-contributors, then there could be some benefits of membership. Examples of those benefits could also include being allowed to vote on certain initiatives of the club. This usually means that the club would inherently respond to any allowed collective input as well.
This is a very different relationship than merely recognizing an individual as a donor. Being a donor normally indicates the financial transaction was conducted voluntarily by the contributing party with zero consideration given in return. Such a business relationship allows the receiving organization to act freely in using the funds as they see fit. This is also an example of a pure gift, or charitable contribution.
So the bottom line is that members will typically have certain assumed privileges within the organization, such as regular admission to a clubhouse – whereas donors are normally powerless without achieving a specific level of contribution to become a full beneficial member.
Set the Parameters First
The ability to use membership contribution is legally determined by the tax records. Not only will payments be classified as contributions, but each member contributor must be supplied a tax statement at the end of the each year. Proper detailed ledger maintenance is very important, especially for organizations with significant assets and a high volume of member contributors. Using the donation access model can clearly put the funds in a non-taxable category. Depending on the type of organization, donations can also be used in facility operation budgets as well as long as the organization or club does not show a profit at the end of the tax year. This can be especially solidified for tax purposes when there is an established program for donation redistribution to certain charities or organizational drives. Once the rules for membership are determined they will be in effect for an entire accounting year, so always prepare for the long-term use of the associated model.
There are several rules that organizations must follow when accepting donations from associate members. While primary donations will normally be a set fee within a certain time period, which is usually one year, allocations can also be made for pledges to specific events and recurring gifts. Non-profit organizations can also offer different classes of membership based on donation amounts and level of involvement within the mission of the organization. It is vital that all guidelines for membership and donation classification be stipulated before the process begins to ensure effective application throughout the first year. Necessary adjustments in policy can then be made at the end of the year.
Dues Model Membership
While there are usually some benefits of being an organization member, “dues” are still considered as donations by the Internal Revenue Service. The IRS is ultimately the primary concern when determining which operational model to choose. There are some definite advantages to having a membership program, even if it does change the nature of the relationship between the club and its primary regular associates. The dues become an immediate and dependable source of revenue each year when fees come payable, which gives the management staff an idea of how much cash flow can be generated based on the size of the membership or associate list. Dues that accrue in January will not be evaluated for tax purposes until an entire year later, which gives the club benefit of the resources throughout the remainder of the year.
Evaluating the Legalities of Your Organizational Structure
There are some legal issues that may also be associated with making a change in dues or donation club policy. Local chapters of national associations may not be able to make this change if the national book of rules for operation prohibits the shift. Major national organizations actually make most of their income on per capita tax from the local chapters based on the membership rosters. Organization associations are governed from the top down just like for-profit businesses, and all primary central chapters make the rules. This can include allowances for membership voting on certain club business decisions as well as the defined benefits of membership. And the most important overall aspect of operating for all beneficiaries – whether they be members, donors or just associates – is ensuring the business licenses are properly listed as 501(c)3 companies for all tax and employment purposes, including payroll. Members and associates are allowed to donate their time as well as money, but time is not generally allocated as a requirement. Time donations are mere contributions with no apparent consideration and no financial evaluation in most instances.
Clubs or organizations that sell alcoholic beverages or host wagering transactions will normally need a gaming license as well as alcoholic beverage license, which is issued by local government. While this does not necessarily seem to concern membership or donor status for associates, many small communities implement local ordinances that stipulate that the only individuals who can be served must be members unless the club has scheduled an event that is open to the public. Maintaining a license to operate in full functionality can still impact the type of associate structure any club or organization chooses when developing the best business model for the particular organizational mission.
This business transition is not one to be taken lightly, as the decision on associate type typically lasts a year after donations are made or dues are paid. The scope of direction and focus of the organization is important to the decision and conducting a comprehensive feasibility assessment is a good first step.