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I am considering creating a defense fund where I accept donations from the public to assist in financing a legal case that I am bringing against the University of Chicago. In conjunction with our motion for summary judgement that we will be filing sometime in August, we will issue a press release that may include a statement about accepting donations for the defense. What are the legal, accounting and tax issues related to such a defense fund?

"Have nunchucks. Will travel."-JCoC
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Why would you be establishing a "defense" fund, if you are the plaintiff?

Just wondering,

Donna
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Author: Donna405 | Date: 7/31/05 7:35 PM | Number: 80185

Why would you be establishing a "defense" fund, if you are the plaintiff?

Good point. What is a legal fund for a plaintiff called?

"Have nunchucks. Will travel."-JCoC
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Good point. What is a legal fund for a plaintiff called?


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Idiocy
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I am considering creating a defense fund where I accept donations from the public to assist in financing a legal case that I am bringing against the University of Chicago. In conjunction with our motion for summary judgement that we will be filing sometime in August, we will issue a press release that may include a statement about accepting donations for the defense. What are the legal, accounting and tax issues related to such a defense fund?

If you are suing, you don't need a defense fund, since you're not the defense. You don't need a litigation fund either, since most attorneys that would handle such a case will do so on a contingency basis.

If you were in a situation where you needed a defense fund, all contributions to the fund would be considered as income to you and nondeductible to the donors, unless you successfully qualified as a not-for-profit organization under one of the Secton 501 subsections and the IRS granted you the right to accept deductible contributions.

Ira
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