has an S Corp to handle the finances of what is to him a not for profit activity. The S Corp has a Bank Account. The money going into the account was apparently given to him by parents of kids who played. The money going out of the account was expenses of the teams such as uniforms, payments to referees, payments to play in tournaments, and so on. Over the course of each year these are approximately in balance which is why client saw no need to file the tax returns. I have a headache and I may not be thinking clearly but I believe four things are true about this situation.
1. The money paid by the parents is revenue to the S Corp just as if he were trying to make a profit.
2. The money paid out by the S Corp is expenses just as if he were trying to make a profit.
3. The balance of one and two is either taxable profit or deductible loss (unless of course they exactly balance for any given year.)
4. Given his purpose a 501(c)(3) organization would have been more suitable than an S Corp.
Am I overlooking anything?
1. The money paid by the parents is revenue to the S Corp just as if he were trying to make a profit.
2. The money paid out by the S Corp is expenses just as if he were trying to make a profit.
3. The balance of one and two is either taxable profit or deductible loss (unless of course they exactly balance for any given year.)
4. Given his purpose a 501(c)(3) organization would have been more suitable than an S Corp.
Am I overlooking anything?
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