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Author: cub Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121585  
Subject: non-profit and back earnings Date: 10/2/1997 6:41 PM
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I started a non-profit 501 c3 ,with my husband five years ago. It was only a year and half ago that we began getting a salary. Our board recently voted that we were entitled to our back pay now that we are more financially stable. The question I have is that my father-in law is very savvy about stocks etc. but not about giving donations as a way to decrease tax liability. He already is giving us the max in parental giving per year. Is it kosher for him to give the company a donation that we can use towards the back pay and if it is should we take the money as regular money and pay the taxes up front or should we put them into a 403b? We already have a good amount in mutual funds from his annual parent gifts, so how can we best deal with this situation? Thanks for any info .
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 452 of 121585
Subject: Re: non-profit and back earnings Date: 10/3/1997 1:29 PM
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<<He already is giving us the max in parental giving per year. Is it kosher for him to give the company a donation that we can use towards
the back pay and if it is should we take the money as regular money and pay the taxes up front or should we put them into a 403b? We already have a good amount in mutual funds from his annual parent gifts, so how can we best deal with this situation?>>

As you are probably already aware, if you solicit funds on behalf of a 501(c)(3) organization to be used for your own PERSONAL use, you could run into a BUNCH of problems...not just with the IRS, but with your own Attorney General. If you dad wants to make a charitable contribution to the organization, great. If the board (hopefully you are NOT sitting on the board) then decides to use these funds in order to pay back salaries, so be it.

But before you undertake this transaction, you should really speak with the tax pro involved in your 501c3 organization in order to get his/her opinion on the transaction, and to make sure that a large contribution by a single indiviual will not push you into a "foundation" status.

TMF Taxes
Roy


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