[TriLUG] Upcoming vote on TriLUG non-profit status

[Justis Peters]

On 02/05/2011 11:56 AM, Brian McCullough wrote:
> I have been trying to listen to the audio of the meeting that work 
> prevented me from attending, and have been having a lot of trouble 
> making sense out of parts of it, with low volume and mumbling ( not 
> necessarily intentional ) obscuring information.
We apologize for any issues with the audio quality. If there were any 
parts that raised questions for you, feel free to ask them here on the list.
> One question that I have not heard ( seen ) discussed, is that of the liability of the Treasurer once the corporate organization has been destroyed, since all of the income of TriLUG will become personal income of the Treasurer.
This is a very valid question and I do not think we have properly 
addressed it. I am not sure what it would take in order to have the 
expenses of the LUG be deductible from treasurer's taxable income, but 
any income that remains could be taxable at the standard rate. We should 
consult a tax attorney and/or CPA in order to find out what the 
implications are. Another issue that pops to mind is that, if some of 
the expenses are deductible, the treasurer may be tempted to in incur 
expenses that go beyond income, as a means of gaining an additional tax 
deduction.

At the very least, I believe that the paperwork obligation might make it 
harder to recruit a treasurer for future terms. With no claim to 
expertise on the topic, here's how I currently see the paperwork burden 
for each of the choices we're considering:
+ Dissolving the corporation would result in at least needing to submit 
a Schedule C (Form 1040) to the IRS each year. If the treasurer 
previously was able to submit personal taxes on a 1040-EZ, he/she would 
need to upgrade to a full 1040.
+ If we keep the non-profit corporation registered with the North 
Carolina Secretary of State but choose not to seek a tax-exempt status 
with the IRS, we would probably need to submit some sort of traditional 
corporate tax return each year (e.g. 1120, 1120S, or similar). The 
income from that would pass through to either the treasurer or a list of 
shareholders. Each person receiving income (or recognizing loss) would 
need to recognize this income on his/her personal taxes (e.g. Schedule C 
(1040), Schedule K (1040), etc).
+ If we get our 501(c)(3) classification back, we would submit one 990N 
each year, which consists of eight simple questions. There would be no 
effect on anyone's personal taxes.

IMO, The 501(c)(3) and the 990N are the simplest solution.

Kind regards,
Justis