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Saturday, December 29, 2007

Re: [AlpacaTalk] Re: AOBA Shennanigans/subsidiary

John,
It has been a very long time that I recall that we have agreed on
anything at all, but you have said more in your last post, far better
than I have, what many of use feel. Thank you so much for saying what I
wish I had said.

Best wishes to you and your family, John, and I do wish the best of
health and prosperity to all in the New Year.

I do wish I had the discretionary funds to donate to all of the causes
I feel strongly about. Honestly, I do not. I, and many others (even
AOBA members) do not have more money than required to pay the monthly
bills and feed our alpacas, let alone "donate" to AOBA to gain
benefactor status or the ability to donate $25K females to the AOBA
auction (which I gather is what got AOBA into trouble in the first
place?). most of us have to punch a time clock every day, and I daresay
most of us DO NOT have 6 figure gross incomes.

Heather

On Dec 29, 2007, at 9:11 PM, gatewayfarm wrote:

> --- In AlpacaTalk@yahoogroups.com, libby@... wrote:
> >
> > Hello Heather,
> >
> > I hear your anger at people who give to AOBA and whom you think
> somehow
> > benefit more.
> >
> > Benefactors pay for what they get and way above that. They don't
> get
> > "special free priviliges...they pay dearly for them.
>
> Libby,
>
> You consistently fail to acknowledge the perspective of folks that
> comment negatively about these issues.
>
> If it is a donation, freely given, then the benefits should be in the
> altruistic act itself, would you not agree?
>
> If they are benefits that are dearly paid for, then let's call it for
> what it is. It is not a donation, or a gift. It is a fee.
>
> Now, if a small breeder with 10 breeding females "donates" one, they
> have given away 10% of their herd.
>
> On the other hand, if a breeder with 1000 breeding females "donates"
> one, they have given away 1/10th of one percent.
>
> The dollar value may be the same, but the difference in sacrifice (or
> generosity, as it were) is huge.
>
> If someone that makes $20k a year in farm income "gives" at
> benefactor level, that represents 25% of their income.
>
> On the other hand, if someone who makes $1 million a year in farm
> income gives at the benefactor level, it represents about 1/2 of one
> percent of their income.
>
> Again, the dollar value may be equivalent, but the difference in
> sacrifice is huge - so huge that the word "sacrifice" probably
> doesn't even apply to the latter example.
>
> You must remember, there are any number of people in this industry
> that financed their entry with their retirements, their homes, their
> inheritances, etc. and simply do not have large amounts of disposable
> income, or in some cases even a positive cash flow.
>
> While we can debate the wisdom of their decisions, that does nothing
> to change the landscape.
>
> When a "large" breeder speaks of "sacrifice" or "generosity" to those
> less fortunate, it is seldom well received. Rather, it comes across
> with an air of arrogance. "Let them eat cake..."
>
> That subscription and member list that is "dearly paid for" by one,
> is completely out of reach for another. The failure to acknowledge
> similar inequities cost Marie Antionette her head!!
>
> Inequity is a sad reality in our world, and in our industry. It
> seems to me that we, as an industry, would do well to recognize this,
> and where possible to maintain as much equity as we can. It is where
> we fail in this regard that we see the most complaining.
>
> The AOBA Marketing program has been an area that has only exacerbated
> perceptions of inequity. I say this without judgment as to the value
> of the program itself. The implementation of the program, especially
> in recent years, has created tiers of membership beyond those
> invisioned in the AOBA Bylaws. And, again, when folks are lectured
> about what a bargain it represents, it often comes across as arrogant
> and condescending (regardless of how "right" the words might be).
>
> I and my family will end this year having donated far more to
> charities than what it would have cost to have been an AOBA
> benefactor. Heifer Intl, YWAM, our church and several other
> organizations will probably acknowledge our donations with a post
> card. We will not receive statutes, plaques, magazine subscriptions,
> marketing or any other tangible benefit for our donations. Beyond
> this post, no one except those charities that we support (and the
> IRS) will know anything about it.
>
> That, Libby, reflects the values I was raised with. Charity was done
> quietly, and without expectation of return or recognition. Anything
> less was considered to cheapen the act of giving.
>
> Be that as it may, I would encourage you to acknowledge the
> perspectives of folks such as Heather (who Lord knows I seldom see
> eye to eye with). It is unbecoming not to.
>
> John Merrell
> Gateway Farm Alpacas
> http://www.gateway-alpacas.com
> Alpaca, a natural elegance.

[Non-text portions of this message have been removed]

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[AlpacaTalk] Re: AOBA Shennanigans/subsidiary

--- In AlpacaTalk@yahoogroups.com, libby@... wrote:
>
> Hello Heather,
>
> I hear your anger at people who give to AOBA and whom you think
somehow
> benefit more.
>
> Benefactors pay for what they get and way above that. They don't
get
> "special free priviliges...they pay dearly for them.

Libby,

You consistently fail to acknowledge the perspective of folks that
comment negatively about these issues.

If it is a donation, freely given, then the benefits should be in the
altruistic act itself, would you not agree?

If they are benefits that are dearly paid for, then let's call it for
what it is. It is not a donation, or a gift. It is a fee.

Now, if a small breeder with 10 breeding females "donates" one, they
have given away 10% of their herd.

On the other hand, if a breeder with 1000 breeding females "donates"
one, they have given away 1/10th of one percent.

The dollar value may be the same, but the difference in sacrifice (or
generosity, as it were) is huge.

If someone that makes $20k a year in farm income "gives" at
benefactor level, that represents 25% of their income.

On the other hand, if someone who makes $1 million a year in farm
income gives at the benefactor level, it represents about 1/2 of one
percent of their income.

Again, the dollar value may be equivalent, but the difference in
sacrifice is huge - so huge that the word "sacrifice" probably
doesn't even apply to the latter example.

You must remember, there are any number of people in this industry
that financed their entry with their retirements, their homes, their
inheritances, etc. and simply do not have large amounts of disposable
income, or in some cases even a positive cash flow.

While we can debate the wisdom of their decisions, that does nothing
to change the landscape.

When a "large" breeder speaks of "sacrifice" or "generosity" to those
less fortunate, it is seldom well received. Rather, it comes across
with an air of arrogance. "Let them eat cake..."

That subscription and member list that is "dearly paid for" by one,
is completely out of reach for another. The failure to acknowledge
similar inequities cost Marie Antionette her head!!

Inequity is a sad reality in our world, and in our industry. It
seems to me that we, as an industry, would do well to recognize this,
and where possible to maintain as much equity as we can. It is where
we fail in this regard that we see the most complaining.

The AOBA Marketing program has been an area that has only exacerbated
perceptions of inequity. I say this without judgment as to the value
of the program itself. The implementation of the program, especially
in recent years, has created tiers of membership beyond those
invisioned in the AOBA Bylaws. And, again, when folks are lectured
about what a bargain it represents, it often comes across as arrogant
and condescending (regardless of how "right" the words might be).

I and my family will end this year having donated far more to
charities than what it would have cost to have been an AOBA
benefactor. Heifer Intl, YWAM, our church and several other
organizations will probably acknowledge our donations with a post
card. We will not receive statutes, plaques, magazine subscriptions,
marketing or any other tangible benefit for our donations. Beyond
this post, no one except those charities that we support (and the
IRS) will know anything about it.

That, Libby, reflects the values I was raised with. Charity was done
quietly, and without expectation of return or recognition. Anything
less was considered to cheapen the act of giving.

Be that as it may, I would encourage you to acknowledge the
perspectives of folks such as Heather (who Lord knows I seldom see
eye to eye with). It is unbecoming not to.

John Merrell
Gateway Farm Alpacas
http://www.gateway-alpacas.com
Alpaca, a natural elegance.

__._,_.___
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Re: [AlpacaTalk] AOBA Shennanigans/subsidiary

Maybe buy an animal or two from us little guys....

Heather

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Re: [AlpacaTalk] AOBA Shennanigans/subsidiary

Ok Libby, I think you have me confused with someone else. I never said
a word about special free privileges. I never said the word token. I
don't understand this passage "If you weren't a benefactor and didn't
pay the 5,000, the same benefits benefactors get would cost you less."

I'm not beating up anyone. And as I said in a previous post, I do know
very well that shows are not cheap and I know what it does cost to run
even a small show.

You know, I mainly said, give us little guys back our stupid Alpacas
Magazine subscriptions.

I'm pleased for you that you have so much money that you can donate
animals to AOBA, and I wouldn't give a rat's ass about the statue,
either, if I had that kind of money. But you're surely getting
something in return for it, aren't you? Like a nice tax write-off for
your own business? To many of us, $25000 is a good portion of our total
yearly gross income. So I'm sorry if I take your indignation with a
grain of salt. Many of us don't see $5000, gross, per month, so we
don't have that kind of money to be such generous benefactors to AOBA.
Many of us are lucky if we see $1500 net per paycheck.

So please try to keep things in perspective when you vent. We do not
walk the same paths and definitely do not wear the same shoes. And yes,
I do wish the playing field were a bit more level between those with
deep pockets and those of us with empty pockets.

Best,
Heather

On Dec 29, 2007, at 7:05 PM, libby@alpacafarm.com wrote:

>
>
> Hello Heather,
>
> I hear your anger at people who give to AOBA and whom you think
> somehow
> benefit more.
>
> Benefactors pay for what they get and way above that. They don't get
> "special free priviliges...they pay dearly for them. You referred to
> them,
> I think, as elite who get more than the rest. The point is they pay
> for it
> and much more without getting more. If you weren't a benefactor and
> didn't
> pay the 5,000, the same benefits benefactors get would cost you less.
> There is NO"big deal" in being a benefactor financially and shouldn't
> they
> get some "token" for their $5,000?. It is something good that people
> are
> willing to do for the association...just like donating a female
> alpaca to
> AOBA. Yes, for $25,000, we get our name mentioned in the catalog and
> now we
> get a statue. I promise you that buying an ad in the magazine and
> buying
> that statue and the few other perks comes nowhere near the donated
> $25,000
> (for example). People do it to raise money for AOBA's marketing and to
> help out the general membership who would not otherwise be able to
> afford
> the FRG or AOBA's marketing. Without benefactors and people donating
> females and sponsoring and volunteering, the cost of AOBA's marketing
> would
> be MUCH, MUCH, MUCH higher for each and every person. Please don't
> beat up
> those who donate in this way. You have no idea how much money it
> brings to
> AOBA and to all the members, including you. Good deeds should be
> thanked...not trashed by accusations of "elite" etc.
>
> Not sure I made this as clear as I should but if you understood how
> much
> marketing for the membership truly costs to keep it going, you'd not
> begrudge these donors the little they do get.
>
> Thanks for listening.
>
> Sorry I am coming across so strong but donations and sponsorships are
> needed desperately by ALL shows and AOBA and if people stop donating
> and
> sponsoring, AOBA, shows and the things supported by such donations
> will
> nearly completely drop off or become so expensive that truly only the
> elite
> could do it. Talk to anyone who runs a show how critical sponsorships
> are.
> Ask AOBA's marketing committee how much donated items, donated
> animals and
> sponsorships mean to AOBA and its members.
>
> Clear as mud? Hope this helps explain what I'm trying to say.
>
> Take care,
>
> Libby
>
> Libby Forstner
> Magical Farms
>
> Heather Zeleny
> <alpacatalk@westw
> indalpacas.com> To
> Sent by: AlpacaTalk@yahoogroups.com
> AlpacaTalk@yahoog cc
> roups.com
> Subject
> Re: [AlpacaTalk] AOBA
> 12/29/2007 09:50 Shennanigans/subsidiary
> PM
>
>
> Please respond to
> AlpacaTalk@yahoog
> roups.com
>
>
>
> Hi Libby,
> I think if you look at my post from 4:37pm, you'll see that I did
> speak
> to the $1500 and $5000 benefactor levels. So yes, I do know that is
> not
> free.
>
> Your point was what?
>
> Heather
>
> On Dec 29, 2007, at 6:00 PM, libby@alpacafarm.com wrote:
>
> >
> >
> > Hello Heather,
> >
> > Benefactors pay $5,000. That's free?
> >
> > Libby
>
> [Non-text portions of this message have been removed]
>
> [Non-text portions of this message have been removed]
>
>
>

[Non-text portions of this message have been removed]

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Re: [AlpacaTalk] Re: [alpacapolitics] AOBA subsidiary



Sorry Heather and Stephanie,

I meant to address this to Stephanie since she asked the question. So
sorry about the confusion!

Stephanie, this was an excellent question. I didn't think to do this in my
example.

Libby

Libby Forstner
Magical Farms

libby@alpacafarm.
com
Sent by: To
AlpacaTalk@yahoog AlpacaTalk@yahoogroups.com
roups.com cc

Subject
12/29/2007 09:49 Re: [AlpacaTalk] Re:
PM [alpacapolitics] AOBA subsidiary


Please respond to
AlpacaTalk@yahoog
roups.com



Hi Heather,

Sure. Let me give you a total picture example that might help. I'll let
the accountants out there correct me but remember it's fake income and
over-simplified to make it easier to explain.

Before we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Other income: 500.00
> Gross Income: $800.00
> Taxes paid: -0-
> Net income after Taxes: $800.00
>

> AFTER we realized we had to pay taxes on income but taxable income wasn't
separated out:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Other income: 500.00
> Gross Income $800.00
> Taxes paid: $266.64 (33.33%--just an example.Don't know actual tax
amount...probably higher than 33.33%)
> Net income after taxes: $533.36 ($800 income minus taxes of $266.64 i.e.
entire $800.00 is taxable because all income is taxed)

Now, Board sets up "subsidiary" cost center to house the taxable income.
Here's how it works if I understand it correctly:

Taxable Income sources separated out by accountants for tax purposes:
FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Taxable Income Gross: $300.00
Taxes paid @33.33% = $100.00
Net taxable income left: $200.00 ($300- $100)

Non-taxable Income kept separate from taxable income by accountants:
Other income: 500.00
Tax paid on non-taxable Income: -0-
Non taxable income left: $500.00 ($500.00 - 0 = $500.00 i.e. no
income lost to taxes!)

Net Income after taxes: $200.00 left from taxable income + Plus non
taxable income of $500.00 = Income of $700.00. By separating out the
taxable from non-taxable, AOBA gets to keep $700 instead of $533.36.

Now imagine the actual huge dollars with real revenue and you are seeing
savings of BIG dollars for the memberships.

So, in this example, by separating out taxable income, AOBA pays $100.00 in
taxes instead of $266.64. In the end we have less money because we have to
pay taxes on the taxable amounts BUT we reduce the tax burden by separating
out the taxable income and only paying taxes on that income.

There is NO more income; actually less. But it's more than we'd have left
if we didn't separate out the taxable income.

It has to be done this way to satisfy the regulations. The same elected
Board oversees the subsidiary, which is like a checkbook which tracks
certain income separately. Perfectly legal but you have to follow the
rules or you simply end up paying taxes on the entire amount again.

We should thank the Board for finding a legal way to reduce the
Association's tax burden.

Does this help??

Call me at 330-722-4820 if you need me to walk through this with you in
person. Might help. While AOBA pays $100 in taxes that they didn't have
before, they can't afford NOT to do this because we are still ahead with
the $200 taxable income we get to keep in this example. If we don't do
this and all income is taxable and we pay $266.64 in taxes, we are still
ahead but barely ahead.

Libby

Libby Forstner
Magical Farms

Stardust Alpacas
<stardustalpacas@
yahoo.com> To
Sent by: AlpacaTalk@yahoogroups.com
AlpacaTalk@yahoog cc
roups.com
Subject
Re: [AlpacaTalk] Re:
12/29/2007 09:15 [alpacapolitics] AOBA subsidiary
PM

Please respond to
AlpacaTalk@yahoog
roups.com

Hi Libby,

I'm not getting into a tizzy about anything. I would
appreciate it if you could include your FAKE example
of how the taxes are to be paid on the FOR PROFIT
corporation. Maybe that example would help the rest if
us understand the benefits a bit more. Is the ALC
going to pay less taxes than it would if AOBA paid
them?

Thanks,

Stephanie

--- libby@alpacafarm.com wrote:

>
>
>
>
> Hello Stephanie,
>
> There is no more income. It's just that now we have
> to pay taxes on income
> we didn't use to have to pay taxes on. There's
> actually less income as we
> have to pay taxes now on income we received before
> but didn't pay taxes on.
>
> Example using FAKE income (so don't get into a tizzy
> re: amounts):
>
> Before we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
> Gross Income: $300.00
> Taxes paid: -0-
> Net income after Taxes: $300.00
>
> AFTER we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
> Gross Income $300.00
> Taxes paid: 100.00
> Net income after taxes: $200.00
>
> So you see, same income but now taxable so we
> actually have less income.
>
> Non profits DO make money! Whoever told you that a
> not for profit can't
> "make" a profit? Revenue and expenses never
> exactly match and I've worked
> for many, many non-profits in my career that made
> money. The key is how
> much you make and in what areas before you have to
> pay taxes. Separating
> out the taxable income from the non-taxable income
> protects you from paying
> taxes on the non-taxable income. It's the right,
> smart thing to do when
> you run a not for profit and it's perfectly
> legal...that why the rules are
> there to allow it. Consult a non-profit attorney if
> you don't believe this
> to prove it to yourself.
>
> Libby
>
> Libby Forstner
> Magical Farms
>
>
>
>
> Stardust Alpacas
>
> <stardustalpacas@
>
> yahoo.com>
> To
> Sent by:
> alpacapolitics@yahoogroups.com,
> AlpacaTalk@yahoog
> alpacatalk@yahoogroups.com
> roups.com
> cc
>
>
>
> Subject
> 12/29/2007 07:01 [AlpacaTalk]
> Re: [alpacapolitics]
> PM AOBA
> subsidiary
>
>
>
>
> Please respond to
>
> AlpacaTalk@yahoog
>
> roups.com
>
>
>
>
>
>
>
>
>
> If there was a reason to make a for profit
> corporation, then there IS surplus money. If AOBA
> chose to donate the money before the end of the year
> (such as to the ARF), then they would avoid paying
> tax
> on that surplus money. Instead, they choose to keep
> it. Non profits are not-for-profit by definition.
> Why
> is there a profit to hold on to? Are they charging
> to
> much to the members?
>
> If this was not an issue before, then obviously they
> now have too much money in the bank to be considered
> a
> non profit, which is why they had to make the
> change.
>
> Seems to me, that AOBA should consider changing
> itself
> into a non-profit cooperative (like AFCNA), where
> the
> surplus money COULD go back to the members since
> apparently the members don't own AOBA. Seems more
> fair
> to the people that gave all that surplus money to
> AOBA
> in the first place.
>
>
> Stephanie
>
> --- Acres of Love <alpacas@acresoflove.com> wrote:
>
> > There seems to be some mis-conception that AOBA
> has
> > suddenly, magically
> > begun turning some extraordinary profit, resulting
> > in "surplus funds". No
> > new "for profit" company was started. A corporate
> > entity, Alpaca Livestock
> > Company was formed to encompass three existing
> > enterprises...Alpacas
> > Magazine, F&RG and the auction at Nationals.
> >
> > There is no new money. Just your friendly local
> IRS
> > wanting income tax on
> > the money generated by Alpacas Mag, F&RG program
> and
> > the auction held at
> > Nationals. So, there is no "surplus funds" to
> "give
> > back" to members.
> > Matter of fact, there is LESS money now, as IRS
> now
> > gets some. The function
> > of the Alpaca Livestock Company is to provide an
> > official accounting point
> > for the portion of activities and transactions
> > within the realm of AOBA
> > which the IRS deems taxable.
> >
> > We are on Dish Network and have seen several
> (AOBA)
> > commercials this month,
> > one as recent as 2-3 days ago. We have not seen an
> > ILA commercial for some
> > time, but we usually see them nearly as often as
> > AOBA spots.
> >
> > Tennessee corporation records are, like many
> states,
> > available on-line.
> > Alpaca Livestock Company is "owned" by the Alpaca
> > Owners and Breeders
> > Association. AOBA members are just that,
> "members",
> > not "owners" of AOBA,
> > thus they do not "own" Alpaca Livestock Company,
> > either. Wholly owned
> > subsidiary companies do not issue stock
> > certificates, as there are no
> > "shares".
> >
> > Income tax liability could be avoided by AOBA by
> > merely stopping publication
> > of Alpacas Magazine, discontinuing the F&RG
> program,
> > cancelling the auctions
> > at Nationals and ceasing TV ad purchases. Since we
> > can't afford the TV
> > spots ourselves, we prefer that AOBA continue the
> > aforementioned activities,
> > even if some portion of the funds involved are
> > subjected to income tax.
> >
> > Jess
> >
> > Jess & Cookie Bowers
> > Acres of Love Alpaca Ranch
> > Acres of Love Alpaca Transport
>
=== message truncated ===

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Re: [AlpacaTalk] AOBA Shennanigans/subsidiary



Hello Heather,

I hear your anger at people who give to AOBA and whom you think somehow
benefit more.

Benefactors pay for what they get and way above that. They don't get
"special free priviliges...they pay dearly for them. You referred to them,
I think, as elite who get more than the rest. The point is they pay for it
and much more without getting more. If you weren't a benefactor and didn't
pay the 5,000, the same benefits benefactors get would cost you less.
There is NO"big deal" in being a benefactor financially and shouldn't they
get some "token" for their $5,000?. It is something good that people are
willing to do for the association...just like donating a female alpaca to
AOBA. Yes, for $25,000, we get our name mentioned in the catalog and now we
get a statue. I promise you that buying an ad in the magazine and buying
that statue and the few other perks comes nowhere near the donated $25,000
(for example). People do it to raise money for AOBA's marketing and to
help out the general membership who would not otherwise be able to afford
the FRG or AOBA's marketing. Without benefactors and people donating
females and sponsoring and volunteering, the cost of AOBA's marketing would
be MUCH, MUCH, MUCH higher for each and every person. Please don't beat up
those who donate in this way. You have no idea how much money it brings to
AOBA and to all the members, including you. Good deeds should be
thanked...not trashed by accusations of "elite" etc.

Not sure I made this as clear as I should but if you understood how much
marketing for the membership truly costs to keep it going, you'd not
begrudge these donors the little they do get.

Thanks for listening.

Sorry I am coming across so strong but donations and sponsorships are
needed desperately by ALL shows and AOBA and if people stop donating and
sponsoring, AOBA, shows and the things supported by such donations will
nearly completely drop off or become so expensive that truly only the elite
could do it. Talk to anyone who runs a show how critical sponsorships are.
Ask AOBA's marketing committee how much donated items, donated animals and
sponsorships mean to AOBA and its members.

Clear as mud? Hope this helps explain what I'm trying to say.

Take care,

Libby

Libby Forstner
Magical Farms

Heather Zeleny
<alpacatalk@westw
indalpacas.com> To
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Subject
Re: [AlpacaTalk] AOBA
12/29/2007 09:50 Shennanigans/subsidiary
PM


Please respond to
AlpacaTalk@yahoog
roups.com



Hi Libby,
I think if you look at my post from 4:37pm, you'll see that I did speak
to the $1500 and $5000 benefactor levels. So yes, I do know that is not
free.

Your point was what?

Heather

On Dec 29, 2007, at 6:00 PM, libby@alpacafarm.com wrote:

>
>
> Hello Heather,
>
> Benefactors pay $5,000. That's free?
>
> Libby

[Non-text portions of this message have been removed]

[Non-text portions of this message have been removed]

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Re: [AlpacaTalk] AOBA Shennanigans/subsidiary

Hi Libby,
I think if you look at my post from 4:37pm, you'll see that I did speak
to the $1500 and $5000 benefactor levels. So yes, I do know that is not
free.

Your point was what?

Heather

On Dec 29, 2007, at 6:00 PM, libby@alpacafarm.com wrote:

>
>
> Hello Heather,
>
> Benefactors pay $5,000. That's free?
>
> Libby

[Non-text portions of this message have been removed]

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Re: [AlpacaTalk] Re: [alpacapolitics] AOBA subsidiary



Hi Heather,

Sure. Let me give you a total picture example that might help. I'll let
the accountants out there correct me but remember it's fake income and
over-simplified to make it easier to explain.

Before we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Other income: 500.00
> Gross Income: $800.00
> Taxes paid: -0-
> Net income after Taxes: $800.00
>

> AFTER we realized we had to pay taxes on income but taxable income wasn't
separated out:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Other income: 500.00
> Gross Income $800.00
> Taxes paid: $266.64 (33.33%--just an example.Don't know actual tax
amount...probably higher than 33.33%)
> Net income after taxes: $533.36 ($800 income minus taxes of $266.64 i.e.
entire $800.00 is taxable because all income is taxed)

Now, Board sets up "subsidiary" cost center to house the taxable income.
Here's how it works if I understand it correctly:

Taxable Income sources separated out by accountants for tax purposes:
FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
Taxable Income Gross: $300.00
Taxes paid @33.33% = $100.00
Net taxable income left: $200.00 ($300- $100)

Non-taxable Income kept separate from taxable income by accountants:
Other income: 500.00
Tax paid on non-taxable Income: -0-
Non taxable income left: $500.00 ($500.00 - 0 = $500.00 i.e. no
income lost to taxes!)

Net Income after taxes: $200.00 left from taxable income + Plus non
taxable income of $500.00 = Income of $700.00. By separating out the
taxable from non-taxable, AOBA gets to keep $700 instead of $533.36.

Now imagine the actual huge dollars with real revenue and you are seeing
savings of BIG dollars for the memberships.

So, in this example, by separating out taxable income, AOBA pays $100.00 in
taxes instead of $266.64. In the end we have less money because we have to
pay taxes on the taxable amounts BUT we reduce the tax burden by separating
out the taxable income and only paying taxes on that income.

There is NO more income; actually less. But it's more than we'd have left
if we didn't separate out the taxable income.

It has to be done this way to satisfy the regulations. The same elected
Board oversees the subsidiary, which is like a checkbook which tracks
certain income separately. Perfectly legal but you have to follow the
rules or you simply end up paying taxes on the entire amount again.

We should thank the Board for finding a legal way to reduce the
Association's tax burden.

Does this help??

Call me at 330-722-4820 if you need me to walk through this with you in
person. Might help. While AOBA pays $100 in taxes that they didn't have
before, they can't afford NOT to do this because we are still ahead with
the $200 taxable income we get to keep in this example. If we don't do
this and all income is taxable and we pay $266.64 in taxes, we are still
ahead but barely ahead.

Libby

Libby Forstner
Magical Farms

Stardust Alpacas
<stardustalpacas@
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Subject
Re: [AlpacaTalk] Re:
12/29/2007 09:15 [alpacapolitics] AOBA subsidiary
PM


Please respond to
AlpacaTalk@yahoog
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Hi Libby,

I'm not getting into a tizzy about anything. I would
appreciate it if you could include your FAKE example
of how the taxes are to be paid on the FOR PROFIT
corporation. Maybe that example would help the rest if
us understand the benefits a bit more. Is the ALC
going to pay less taxes than it would if AOBA paid
them?

Thanks,

Stephanie

--- libby@alpacafarm.com wrote:

>
>
>
>
> Hello Stephanie,
>
> There is no more income. It's just that now we have
> to pay taxes on income
> we didn't use to have to pay taxes on. There's
> actually less income as we
> have to pay taxes now on income we received before
> but didn't pay taxes on.
>
> Example using FAKE income (so don't get into a tizzy
> re: amounts):
>
> Before we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
> Gross Income: $300.00
> Taxes paid: -0-
> Net income after Taxes: $300.00
>
> AFTER we realized we had to pay taxes on income:
> FRG income: $100.00
> Magazine: $100.00
> Auction: $100.00
> Gross Income $300.00
> Taxes paid: 100.00
> Net income after taxes: $200.00
>
> So you see, same income but now taxable so we
> actually have less income.
>
> Non profits DO make money! Whoever told you that a
> not for profit can't
> "make" a profit? Revenue and expenses never
> exactly match and I've worked
> for many, many non-profits in my career that made
> money. The key is how
> much you make and in what areas before you have to
> pay taxes. Separating
> out the taxable income from the non-taxable income
> protects you from paying
> taxes on the non-taxable income. It's the right,
> smart thing to do when
> you run a not for profit and it's perfectly
> legal...that why the rules are
> there to allow it. Consult a non-profit attorney if
> you don't believe this
> to prove it to yourself.
>
> Libby
>
> Libby Forstner
> Magical Farms
>
>
>
>
> Stardust Alpacas
>
> <stardustalpacas@
>
> yahoo.com>
> To
> Sent by:
> alpacapolitics@yahoogroups.com,
> AlpacaTalk@yahoog
> alpacatalk@yahoogroups.com
> roups.com
> cc
>
>
>
> Subject
> 12/29/2007 07:01 [AlpacaTalk]
> Re: [alpacapolitics]
> PM AOBA
> subsidiary
>
>
>
>
> Please respond to
>
> AlpacaTalk@yahoog
>
> roups.com
>
>
>
>
>
>
>
>
>
> If there was a reason to make a for profit
> corporation, then there IS surplus money. If AOBA
> chose to donate the money before the end of the year
> (such as to the ARF), then they would avoid paying
> tax
> on that surplus money. Instead, they choose to keep
> it. Non profits are not-for-profit by definition.
> Why
> is there a profit to hold on to? Are they charging
> to
> much to the members?
>
> If this was not an issue before, then obviously they
> now have too much money in the bank to be considered
> a
> non profit, which is why they had to make the
> change.
>
> Seems to me, that AOBA should consider changing
> itself
> into a non-profit cooperative (like AFCNA), where
> the
> surplus money COULD go back to the members since
> apparently the members don't own AOBA. Seems more
> fair
> to the people that gave all that surplus money to
> AOBA
> in the first place.
>
>
> Stephanie
>
> --- Acres of Love <alpacas@acresoflove.com> wrote:
>
> > There seems to be some mis-conception that AOBA
> has
> > suddenly, magically
> > begun turning some extraordinary profit, resulting
> > in "surplus funds". No
> > new "for profit" company was started. A corporate
> > entity, Alpaca Livestock
> > Company was formed to encompass three existing
> > enterprises...Alpacas
> > Magazine, F&RG and the auction at Nationals.
> >
> > There is no new money. Just your friendly local
> IRS
> > wanting income tax on
> > the money generated by Alpacas Mag, F&RG program
> and
> > the auction held at
> > Nationals. So, there is no "surplus funds" to
> "give
> > back" to members.
> > Matter of fact, there is LESS money now, as IRS
> now
> > gets some. The function
> > of the Alpaca Livestock Company is to provide an
> > official accounting point
> > for the portion of activities and transactions
> > within the realm of AOBA
> > which the IRS deems taxable.
> >
> > We are on Dish Network and have seen several
> (AOBA)
> > commercials this month,
> > one as recent as 2-3 days ago. We have not seen an
> > ILA commercial for some
> > time, but we usually see them nearly as often as
> > AOBA spots.
> >
> > Tennessee corporation records are, like many
> states,
> > available on-line.
> > Alpaca Livestock Company is "owned" by the Alpaca
> > Owners and Breeders
> > Association. AOBA members are just that,
> "members",
> > not "owners" of AOBA,
> > thus they do not "own" Alpaca Livestock Company,
> > either. Wholly owned
> > subsidiary companies do not issue stock
> > certificates, as there are no
> > "shares".
> >
> > Income tax liability could be avoided by AOBA by
> > merely stopping publication
> > of Alpacas Magazine, discontinuing the F&RG
> program,
> > cancelling the auctions
> > at Nationals and ceasing TV ad purchases. Since we
> > can't afford the TV
> > spots ourselves, we prefer that AOBA continue the
> > aforementioned activities,
> > even if some portion of the funds involved are
> > subjected to income tax.
> >
> > Jess
> >
> > Jess & Cookie Bowers
> > Acres of Love Alpaca Ranch
> > Acres of Love Alpaca Transport
>
=== message truncated ===

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