Revolution Erupts

[Stu]

...If we really are calling this tuition, then that alone could be paid through on bank loan program and get the tax breaks along with education. Travel / food / uniforms could be on a seperate loan if needed

This educational loan idea would not work. Drum Corps are 501c3 "Charities" not Educational Institutions.

Edited September 11, 2011 by Stu

[Grumpy]

If we really are calling this tuition, then that alone could be paid through on bank loan program and get the tax breaks along with education.

You can call it tuition or anything else you want, but as a tax consultant I am telling you this would never pass muster with the IRS as even remotely qualifying for any of the existing education tax credits.

[The Other Mike]

This educational loan idea would not work. Drum Corps are 501c3 "Charities" not Educational Institutions.

Ok, it was a thought.

So, whats the difference tax wize between a 501c3 Charity and a 501c3 not for profit ?

[garfield]

Ok, it was a thought.

So, whats the difference tax wize between a 501c3 Charity and a 501c3 not for profit ?

None.

But your idea is intriguing in a way not connected with "educational" funding ala low-cost college loans via Sallie Mae or other program.

I would use the monthly payment coupon idea even if it is run through a local bank. It's a convenience for parents to pay monthly, and the monthly fee to the bank for servicing is dependent upon the number of participants. A medium-sized metro area could have enough schools for a local banker to take on the service, and it seems to me that a low-cost DCI financing package for 4000 or more marching members could work. One could presume that many, if not all, parents would take advantage of it for a level monthly payment option to financing Johnnie's drum corps. If the prior year's bill is in arrears, then Johnnie doesn't march.

I don't see this as needing approval from any government agency, but I certainly know that paying for "pay-to-play" fees at a public school is, in fact, a tax deduction if it's paid to the school system. DCI could act in that roll and maybe make a few nickels on the side.

This is not a blanket enthusiastic recommendation but I think the idea has merit. How many parents (or MM's) use discretionary cash to pay drum corps fees today anyway? Wouldn't it be reasonable to assume that much of it is paid via credit card then paid off over the year? Finding a cheaper way for parents to pay and giving DCI, or a local bank, a small fee for service doesn't sound totally unworkable.

IMO

[Stu]

Ok, it was a thought.

So, whats the difference tax wize between a 501c3 Charity and a 501c3 not for profit ?

All 501c3 entities are non-profits, but they are designated to the IRS in various ways such as: charitable, religious, educational, scientific, literary, public safety, amateur sports for youth or handicapped, child advocacy, preventing cruelty to animals; etc... And, the guidelines which govern those entities are somewhat different depending on the specific designation. It would be stretch, for example, to call Revolution an Educational Institution just like it would be a big stretch to call it a Religious Activity. The corps is neither directly tied to a formal school in which the members attend formal academic classes, nor are they tied directly to a formal church in which the members engage in religious services.

[JimF-LowBari]

All 501c3 entities are non-profits, but they are designated to the IRS in various ways such as: charitable, religious, educational, scientific, literary, public safety, amateur sports for youth or handicapped, child advocacy, preventing cruelty to animals; etc... And, the guidelines which govern those entities are somewhat different depending on the specific designation. It would be stretch, for example, to call Revolution an Educational Institution just like it would be a big stretch to call it a Religious Activity. The corps is neither directly tied to a formal school in which the members attend formal academic classes, nor are they tied directly to a formal church in which the members engage in religious services.

And how does "tax deductible" fall into this... Still have someone telling me a corps dues donation is deducatible.

[Tom Brace]

All 501c3 entities are non-profits, but they are designated to the IRS in various ways such as: charitable, religious, educational, scientific, literary, public safety, amateur sports for youth or handicapped, child advocacy, preventing cruelty to animals; etc... And, the guidelines which govern those entities are somewhat different depending on the specific designation. It would be stretch, for example, to call Revolution an Educational Institution just like it would be a big stretch to call it a Religious Activity. The corps is neither directly tied to a formal school in which the members attend formal academic classes, nor are they tied directly to a formal church in which the members engage in religious services.

It also might be a stretch to call Revo an active 2012 Open Class Drum Corps at this point.

[garfield]

And how does "tax deductible" fall into this... Still have someone telling me a corps dues donation is deducatible.

I think the key component is "financial benefit" of participating. In making a contribution to Friends of DCI to get good seats the deductible portion is the difference between the contribution and the value of the seats. So a $1000 contribution will garner a smaller deduction if you get tickets as a premium for your contribution.

What financial benefit does a MM get from marching? Well, maybe educationally there's a benefit, but certainly there is no direct financial benefit.

I say the entire dues is a tax deduction.

(Disclaimer: Not intended to provide investment or tax advice. See your tax professional prior to acting on anything I say here.)

[Stu]

And how does "tax deductible" fall into this... Still have someone telling me a corps dues donation is deducatible.

Please check with a tax consultant, but it is my understanding that a generic donation to the 501c3 corporation is tax deductible, but a donation for a specific member's dues (in which the specific member gets something specific in return such as performance opportunities) is not tax deductible.

[Dave]

Giving to pay a member's dues is not tax-deductible because it's not a donation; the member directly benefits from that money. This discussion comes up on a semi-annual basis when members come looking for sponsorships and some have been erroneously informed that they can tell would-be sponsors "It's tax-deductible!" as an incentive.