Church Arrangement with Professional

[geekgirldany]

Just doesn't sound right to me. Maybe if they had arrangements with another psychologist to provide services so the members don't have to go directly to that one psychologist. What I mean is that the fund isn't just for that one psychologist. They could go to Dr Norman down the street instead. It does sound like a work around for them to get the deduction for contributions.

[erchess]

One Further Thought

I would be more comfortable with the arrangement if it were clear that most of the people receiving discounted care were NOT members of the congregation. Let's compare the situation to a food pantry. Surely the fact that some members of the church get food from its food pantry does not quash the deductibility of contributions to the pantry. However, if all the facts and circumstances indicated that the church was really operating a buying club for its members then surely the donations take on the character of purchases and lose their deductibility.

Furthermore it would seem to me that discounts received by a member even under the most favorable scenario could be deemed tangible benefits of membership in which case I believe they would reduce the member's deductible contribution.

[LTS]

this board/other board

>>Good Grief...<<

Okay, I'm sorry. I'm just a bit off because of something that's happening with the "other" board. But after all, you DID request our "usual candor."

i don't think you need apologize for anything. this separation of church and state 'of mind' scenario doesn't pass the smell test on so many levels that irony, sarcasm, or satire seemed appropriate to me. none have defended the case without reservations that disallow the attempt at creative accounting in favor of the church. old jack is wise.

re; other board. if it is the sec 1031, fm 8824 scrum - i agree with you - 85k realized and recognized gain. i just wanted to get on you side of things regarding how folks have wishfully wanted to apply 'mortgages'.

[jainen]

Thank you

>>irony, sarcasm, or satire seemed appropriate to me<<

Thank you for your kind words. Once in a while someone on this board will agree with my tax position, but almost never my style even though Black Bart made me pledge to never personally attack other posters any more.

Speaking of words, I had to look up "scrum." It's a good metaphor. It sounds like screed, which several people have used on this forum, but actually refers to a fair but adversarial start. That particular discussion is way past beginning, though. I've about given up. It's good to know that in THIS forum at least there are professionals who understand that Tax Tools has no greater claim to accuracy than the IRS itself.

[George Boutwell]

That's a novel concept

It's OK for a church to be charitable, as long as they are not charitable with their own members.

If you want to ignore the position IRS has taken on Scientologist contributions for what they see as similar services, I guess that position has some merit.

[Corduroy Frog]

Thanks for your comments

Thanks for comments from everyone.

I think the general picture is that this is a device to use the tax-exempt status of the church to provide dubious tax deductions. But I resent the implication that the church leaders are intentionally doing anything illegal. Boutwell, I know the preacher's wife, and you would be invited to step outside the building, whether you were invited inside or not.

I also hope that any church who wants to do sporadic or programmatic benevolence be not discouraged from doing so because of legal and tax concerns in an overly-litigious society.
The Scientologists, for example, have a successful drug rehabilitation program as part of their normal operation (or so they claim).

But I did ask for candid opinions and received several. Thanks.

Corduroy Frog

[jainen]

a particular answer

>>I resent the implication that the church leaders are intentionally doing anything illegal.<<

Nobody suggested this was a criminal consipiracy but you yourself point out that, "this is a device to use the tax-exempt status of the church to provide dubious tax deductions." You may know more than you say about their morals, but the way you presented it suggested to some of us that the church was intentionally trying to evade taxes. I was honestly (candidly) offended at that, and perhaps others felt the same or were uncomfortable because of my first response.

It's best to carefully slant the question when there's a particular answer you want to hear.

[Lion]

For-Profit Activity using Church Property

I'm just passing along something I heard from someone else in a different situation. However, I do remember a former clergy in our church telling our vestry that the diocese told her that church property could be used for church programs and other not-for-profit organizations but renting to or allowing use by for-profit organizations opened up a whole 'nother can of worms. Now, in our case, the diocese is the legal owner of our property and not our local parish; so what she was talking about might have been rules of the diocese as opposed to guidance from the finance/legal department of the diocese trying to keep us out of incurring tax-related problems. Since this church is not your client or prospective client, I'd suggest they research the whole set-up with their own financial and legal advisors who would be more likely to have access to the big picture and all the little details.

[erchess]

I don't understand why anyone would refuse to do clergy

returns. I will do any return i feel qualified to do so long as I have a client who is willing to pay his or her lowest legal tax. Depending on the wishes of the client I am willing to think exclusively in terms of the current year or attempt to plan for the long run. What I think of the laws applying to the taxpayer's situation is irrelevant. I frequently have to tell people tax figures that are significantly more or less than they would be if I were the grand pooh bah of everything.

[Corduroy Frog]

Good Grief II

[QUOTE=jainen;38978 You may know more than you say about their morals, but the way you presented it suggested to some of us that the church was intentionally trying to evade taxes.

It's best to carefully slant the question when there's a particular answer you want to hear.[/QUOTE]

Jainen, let's shut this one down. No suggestions, no inuendos, no slants were presented from this end. I don't know what's so hard to understand about a group of people who don't know whether a tax break can exist for them, and choose to ask someone in tax practice about the issues. I have fielded dozens of questions about the line between tax avoidance and tax evasion, and so have you.

[Uncle Sam]

Church Arrangement

In reading the prior posts and seeing the controversy discussed - I'd like to add my own thoughts (some will possibly repeat those of others).
The fact that a private party, not directly affiliated with the Church, is using the facility rent free - doesn't that strike a sensitive nerve with the governing Church board - having the membership dues pay for the operating expenses of the Church?
Next, as was previously mentioned - and this is probably the most important - WHO determines the persons eligible to have the Church's earmarked funds be used for him/her?
Are there predetermined policies with respect to the earmarked fund's management?
What will happen if a congregant or parishioner in need of the psychologist's services chooses NOT TO USE HIS SERVICES, and instead, wishes to consult with another practitioner having no connection at all with the Church? Will that person's request for assistance be denied because he/she didn't use the Church's rent free person?
I really believe you've got more legal issues to contend with here than tax/accounting issues and a specialist in tax exempt organizations be consulted before the Church jeopardizes its tax exempt status.
And you are correct - Churches and houses of worship are exempt from 990 filings.

[jainen]

your own opinion

>>No suggestions, no inuendos, no slants were presented<<

No, sir, you can't back out of this so easily. I already admitted I was predisposed to it yesterday, but let me explain what it was in your original post that triggered such ill humor.

You want to know "what's so hard to understand about a group of people who don't know whether a tax break can exist for them." Well, first, they did not ask you as a professional. You used capital letters to emphasize that this was a private family matter, not a client.

You yourself described their arrangements with decidedly pejorative terms, such as "too many parties" and "teetering." Those arrangements included letting a commercial operator take advantage of their tax-free property, with a little personal kick-back to the church members. Now they are looking for a specific legal loophole to expand these blatant abuses.

You got mighty defensive about our answers, even though you asked for candor and we almost unanimously agreed with what you claimed to be your own opinion.

[Corduroy Frog]

Thanks

Thanks to all parties who responded. I appreciate your help.

[Davc]

As an addendum note that there is an exception to the UBI rules for the rental of real property as long as it's not "debt financed property". If a house is donated to a church they can rent it out without UBI as long as it didn't come with a mortgage.

[OldJack]

As an addendum note that there is an exception to the UBI rules for the rental of real property as long as it's not "debt financed property". If a house is donated to a church they can rent it out without UBI as long as it didn't come with a mortgage.

I did not know that! Thanks for the info Davc.