BigW Posted March 21, 2019 Share Posted March 21, 2019 4 hours ago, Jeff Ream said: retain and add new/more...that's the ultimate goal of any successful business Growth is always desirable… but also being able to sustain the business. Some do the growth route and grow too quickly, then collapse in on themselves. My thought is DCI needs to just grow in some way, shape or form. Quote Link to comment Share on other sites More sharing options...
Jeff Ream Posted March 21, 2019 Author Share Posted March 21, 2019 3 hours ago, Fran Haring said: I'll vouch for this. Even though you make fun of my sartorial style. Or lack thereof. i didn't start that trend, i just joined the pile! 1 Quote Link to comment Share on other sites More sharing options...
cixelsyd Posted March 21, 2019 Share Posted March 21, 2019 8 hours ago, Stu said: According to the attorney I spoke with a few years back this is my understanding: The tax exempt status is a privalige bestowed upon a charity. And as long as the services of that charity are related to the mission, and the revenue from said services goes toward the mission, the profits are typically tax exempt. For example that is where thrift stores come in. However the tax exempt privalige should not be used as an advantage to compete with for profit business. That is why there is an IRS stipulation concerning how much can be done outside the actual mission; and it will be taxed at the corporate rate. So CrownTICKETS would have to be an example of that, right? Quote Link to comment Share on other sites More sharing options...
Stu Posted March 21, 2019 Share Posted March 21, 2019 (edited) 4 hours ago, cixelsyd said: So CrownTICKETS would have to be an example of that, right? Here is the way it was presented to me by the attorney and as I understand it: (a) If the non profit Crown parent company utlizes CrownTickets just for its own Crown events then that is likely fine. (b) Since Crown is also a member of the non profit DCI, CrownTickets can likely be used in the same manner to sell DCI tickets, but might also catch the attention of the IRS if Crown was not part of the line-ups at the events. (c) if Crown used CrownTckets to sell tickets to events like rock or country concerts, that would likely be taxed at the corporate rate. And as long as it is a rather small percentage of their revenue stream, and the revenue only goes to the Crown mission, they are likely fine. The important words here though are small percentage. Point being is that the highest percentage of overall revenue still must be generated by donors, sponsors, members, and 'related to mission' non taxable services. (d) However, if the unrelated rock and country ticket sales begin to garner more than a small percentage of overall revenue, it will likely then be considered as in direct competition with for profit companies such as TicketMaster; and at that time the IRS could yank the non profit status from Crown because a lot of their revenue is being garnered from taxable income in direct competition with a for profit company. This again is why most non profit income must come from donors, sponsors, members, and 'related to business' non taxable services. Important note: I am not an attorney and do not claim to be one. This information above was presented by a layperson and not intended as any legal advice whatsoever. Edited March 21, 2019 by Stu Quote Link to comment Share on other sites More sharing options...
garfield Posted March 21, 2019 Share Posted March 21, 2019 (edited) 1 hour ago, Stu said: Here is the way it was presented to me by the attorney and as I understand it: (a) If the non profit Crown parent company utlizes CrownTickets just for its own Crown events then that is likely fine. (b) Since Crown is also a member of the non profit DCI, CrownTickets can likely be used in the same manner to sell DCI tickets, but might also catch the attention of the IRS if Crown was not part of the line-ups at the events. (c) if Crown used CrownTckets to sell tickets to events like rock or country concerts, that would likely be taxed at the corporate rate. And as long as it is a rather small percentage of their revenue stream, and the revenue only goes to the Crown mission, they are likely fine. The important words here though are small percentage. Point being is that the highest percentage of overall revenue still must be generated by donors, sponsors, members, and 'related to mission' non taxable services. (d) However, if the unrelated rock and country ticket sales begin to garner more than a small percentage of overall revenue, it will likely then be considered as in direct competition with for profit companies such as TicketMaster; and at that time the IRS could yank the non profit status from Crown because a lot of their revenue is being garnered from taxable income in direct competition with a for profit company. This again is why most non profit income must come from donors, sponsors, members, and 'related to business' non taxable services. Important note: I am not an attorney and do not claim to be one. This information above was presented by a layperson and not intended as any legal advice whatsoever. IRC 501 and 511 have the most useful definitions of UBTI and of how income is characterized by what types of organizations. The whole notion of a non-profit "business" encroaching on the "turf" of a for-profit business and, thereby, drawing IRS scrutiny is incorrect. The only claim that is valid is if the income derived from the operation is used to further the mission of the org. Further, there are exemptions for orgs run by volunteers, and even exemptions specifically for bingo operations (so BD is probably OK, lol). Even, as one PM suggested, if Crown Tickets were a wholly-owned separate for-profit enterprise that sold venue tickets for lots of performance idioms, if Crown Tickets donates all of it's net profits to Carolina Crown, then all of Crown Ticket's profits are as "tax free" as the nonprofit Crown itself. Wondering what you might think, Stu, is a "small percentage" of the revenue stream might be. 5%? 2%? 8% or 10%? Would you consider 50% to be a "small percentage" of total income? I'm not trying to pick a fight. But I disagree that "for-profit" business ventures must be ignored and DCI must concentrate on more begging and sponsorships dollars instead. Edited March 21, 2019 by garfield Quote Link to comment Share on other sites More sharing options...
Stu Posted March 21, 2019 Share Posted March 21, 2019 52 minutes ago, garfield said: IRC 501 and 511 have the most useful definitions of UBTI and of how income is characterized by what types of organizations. The whole notion of a non-profit "business" encroaching on the "turf" of a for-profit business and, thereby, drawing IRS scrutiny is incorrect. The only claim that is valid is if the income derived from the operation is used to further the mission of the org. Further, there are exemptions for orgs run by volunteers, and even exemptions specifically for bingo operations (so BD is probably OK, lol). Even, as one PM suggested, if Crown Tickets were a wholly-owned separate for-profit enterprise that sold venue tickets for lots of performance idioms, if Crown Tickets donates all of it's net profits to Carolina Crown, then all of Crown Ticket's profits are as "tax free" as the nonprofit Crown itself. Wondering what you might think, Stu, is a "small percentage" of the revenue stream might be. 5%? 2%? 8% or 10%? Would you consider 50% to be a "small percentage" of total income? I'm not trying to pick a fight. But I disagree that "for-profit" business ventures must be ignored and DCI must concentrate on more begging and sponsorships dollars instead. A fight will not take place; unlike some others you do not make personal assesments or jabs. Anyway... Yes in the strict definition, if generated revenue goes directly to the mission, that is legal. However, directly to the mission is where the blurry murkyness exists. Is the official mission of corps in DCI, as stipulated as being 100% charitable, really what is going on, or is the reality of creating entertainment which competes against touring rock/pop concerts and touring broadway musicals now the main focus? And if the organization is mainly engaging in taxable revenue to support the mission, but the services including the corps are determined as actually competing in the open marketplace instead of fufilling the actual stated charitable mission, it can be moved from non profit status by the IRS. And I believe rightly so; and to me DCI corps are dangerously close to moving away from their officially declared charitible missions. Quote Link to comment Share on other sites More sharing options...
JimF-LowBari Posted March 21, 2019 Share Posted March 21, 2019 What would be DCIs “officially declared charitable mission”. Belong to an old car club that was non-profit then screwed up and lost that. Changed their mission statement and who knows what else and back to non-profit so interested. Quote Link to comment Share on other sites More sharing options...
Fran Haring Posted March 21, 2019 Share Posted March 21, 2019 1 hour ago, garfield said: IRC 501 and 511 have the most useful definitions of UBTI and of how income is characterized by what types of organizations. The whole notion of a non-profit "business" encroaching on the "turf" of a for-profit business and, thereby, drawing IRS scrutiny is incorrect. The only claim that is valid is if the income derived from the operation is used to further the mission of the org. Further, there are exemptions for orgs run by volunteers, and even exemptions specifically for bingo operations (so BD is probably OK, lol). Even, as one PM suggested, if Crown Tickets were a wholly-owned separate for-profit enterprise that sold venue tickets for lots of performance idioms, if Crown Tickets donates all of it's net profits to Carolina Crown, then all of Crown Ticket's profits are as "tax free" as the nonprofit Crown itself. Wondering what you might think, Stu, is a "small percentage" of the revenue stream might be. 5%? 2%? 8% or 10%? Would you consider 50% to be a "small percentage" of total income? I'm not trying to pick a fight. But I disagree that "for-profit" business ventures must be ignored and DCI must concentrate on more begging and sponsorships dollars instead. That makes complete sense to me, as a layman without knowledge of all the ins and outs of income, taxes, organization status, etc. Plus... Crown Tickets has been around for a while. Not an unknown entity. I gotta figure if there was any impropriety (NOT at all implying anything of that sort here) or any questions about "profit vs. non-profit" classifications, it would have been discovered/addressed/rectified by now. Quote Link to comment Share on other sites More sharing options...
Weaklefthand4ever Posted March 21, 2019 Share Posted March 21, 2019 48 minutes ago, Stu said: Is the official mission of corps in DCI, as stipulated as being 100% charitable, really what is going on, or is the reality of creating entertainment which competes against touring rock/pop concerts and touring broadway musicals now the main focus? And if the organization is mainly engaging in taxable revenue to support the mission, but the services including the corps are determined as actually competing in the open marketplace instead of fufilling the actual stated charitable mission, it can be moved from non profit status by the IRS. And I believe rightly so; and to me DCI corps are dangerously close to moving away from their officially declared charitible missions. Far off subject so I'll say first: Blah blah blah Vic Firth and Zildjian blah blah blah George Hopkins. Now that's taken care of so here is where I get confused. Wouldn't every major university sports team be in constant peril if this same type of status change? They charge for tickets, concessions, swag, etc. And they are competing in the open marketplace with any stadium concert that would come through town. I'm not the brightest bulb in the pack so forgive me if I'm way off base with the question, but the line is so blurry. Quote Link to comment Share on other sites More sharing options...
Stu Posted March 21, 2019 Share Posted March 21, 2019 10 minutes ago, Weaklefthand4ever said: Far off subject so I'll say first: Blah blah blah Vic Firth and Zildjian blah blah blah George Hopkins. Now that's taken care of so here is where I get confused. Wouldn't every major university sports team be in constant peril if this same type of status change? They charge for tickets, concessions, swag, etc. And they are competing in the open marketplace with any stadium concert that would come through town. I'm not the brightest bulb in the pack so forgive me if I'm way off base with the question, but the line is so blurry. (a) What is the actual main focus of the university? Football or Accademic Education in multiple desciplines? (b) What is the actual main focus of DCI, not the stated mission, but the actual main focus? Charitable Youth Services or Commercial Entertainment? Quote Link to comment Share on other sites More sharing options...
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