[AlpacaTalk] UBIT taxes and non profit status-from the IRS website
I have been reading up on the IRS website about non profits and UBIT taxes. Here is what I learned. I am sure that there are holes since this is not the complete tax law, so please consider that before you ridicule me for leaving something out!
There are 2 requirements to be listed as a non profit.
1. That no one person or select few people can directly benefit from the organization (more than the group as a whole).
2.The objects of the organization must be the betterment of conditions of those engaged in the pursuits of labor, agriculture, and horticulture, the improvement of the grade of their products, and the development of a higher degree of efficiency in their respective occupations.
So, because AOBA is a non-profit, they are tax exempt. However, when you gross over $1000 a year in unrelated business income tax (UBIT 501(c)(3), you will have to pay tax on all that income. UBIT was established in 1950, so AOBA should have been paying this all along since it is not a new tax requirement and is listed right there on the non profit IRS page. UBIT tax returns as well as non profit (990 form) are PUBLIC RECORD for all to view.
Unrelated Business Income Tax
For most organizations, an activity is an unrelated (and subject to unrelated business income tax) if it meets three requirements:
1. It is a trade or business.
2. It is regularly carried on.
3. It is not substantially related to furthering the exempt purpose of the organization.
1.Libby said that AOBA paid taxes all along, so if this UBIT tax is new to AOBA, what taxes have been paid?
2. Also, an even better question is since all you need is to file the UBIT forms for all gross income over $1000, WHY was there a need to start a new for profit company?
3. If a non profit is NOT to benefit specific members of the organization, why does AOBA have the BENEFACTOR designation set up to cater to large breeders who can afford the prices such as AOBA BOARD MEMBERS and AOBA JUDGES? Isn't this not only a conflict of interest but it is in violation of the rules of a non profit organization.
Anyone have answers to these questions?
Stephanie
Stardust Alpacas
Creswell, OR
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posted by Chaddo at 1:31 PM
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