numismatic nonprofit foundations
btcollects
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My eyebrow raises every time I see the phrase "numismatic foundation." I suppose the seed of my skepticism is that our hobby is collecting money, which seems to be the antithesis of charity. I'm curious if any forum members have considered the tax benefits of structuring their collecting activities as nonprofit foundations?
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Interesting.
Talk to a living accountant. He/she can help the OP understand what the OP thinks is being discussed.
I have no idea how a numismatic "non-profit" would run.
I am personally suspect of the whole "non-profit" bit. I'd like to see how much the people who run the "non-profit" are paid and also how any "consultants" are paid. I would also want to see all reimbursed expenses for things such as travel and meals.
Not sure of your angle. You can't use a foundation to wheel and deal and collect money, and have it pay all of the expenses to do so. That is not a charitable purpose.
Once assets are contributed to a foundation, they can only be used to further its charitable purpose.
It is a creative idea but based on the scenario described by the OP I would be concerned the IRS could revoke the tax exempt status of the proposed foundation for failing to adhere to the exempt activities identified when the foundation was established. Trading coins and paying for hobby expenses out of the foundation my not fly with the IRS. Could be a real mess if a collector put their collection into a tax exempt foundation that lost tax exempt status.
Remember, the Newman collection that was sold by Heritage, was entirely owned by a nonprofit foundation!
The Newman Numismatic Portal is a good example of how a numismatic non-profit should work. It's a great resource that you need to bookmark, if you haven't done so already.
https://nnp.wustl.edu/
Once you start to think about how to use non profit money for your own purposes, that could be a problem.
There you go. If your activities are enriching citizens through numismatic education, that can be a charitable mission. That is different than your collecting activities.
If I were the IRS I would immediately "red flag" any "non-profit" related to collectibles. Expect to be audited.
You'd go to jail.
A numismatic foundation could be structured for educational purposes. However, the IRS is not made up of morons. You can't run around doing your own business and write off the expenses to a fictitious non-profit. You also could not maintain ownership of your collection as the non-profit would own it. You can not be the sole proprietor of a non-profit - someone correct me if I'm mistaken, but there must be a board.
It would make much more sense to structure such an endeavor as a simple business in which case you DON'T go to jail for writing off the business expenses of a business.
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Some orange haired guy from the big Apple just had his non-profit shuttered by the AG, if my memory serves me correctly. Just sayin. Peace Roy
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It's not that you are getting an additional tax benefit from business expenses. The foundation isn't paying income taxes to begin with (ignoring 2% excise tax on gains for private operating foundations).
It is that you are incurring expenses for personal benefit rather than furthering the tax exempt purpose that is the transgression.
The foundation owns the contributed assets. Those assets must be used to further the tax exempt purpose of the foundation. If the foundation ceases, the assets must be contributed to another tax-exempt, turned over to the state, etc. The contributor cedes control to a board of directors, a board of trustees, or whatever body controls the entity, and cannot inure any further benefit.
It sounds like a tax evasion scheme as articulated by the OP. PASS.
+1
You seem to be approaching this as some sort of tax dodge or hustle rather than a way to advance numismatics. If that's the case, then that will be your downfall. There is a large numismatic non-profit organization that already exhibits, travels to shows, offers educational programming, buys, receives and gives away coins to advance it's numismatic mission. It's the ANA.
Do you really want to learn more about establishing and running a numismatic non-profit? Do an internship at the ANA or join the staff and learn from the inside. Despite the ANA's problems (real or imagined), it's a complex, yet focused, non-profit that meet's its mission of educating the public about the history, art and science of money.
See http://www.doubledimes.com for a free online reference for US twenty-cent pieces
As usually, the IRS has rules for almost anything, the following is from the IRS:
“In addition, there are several restrictions and requirements on private foundations, including:
restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons;
requirements that the foundation annually distribute income for charitable purposes;
limits on their holdings in private businesses;
provisions that investments must not jeopardize the carrying out of exempt purposes; and
provisions to assure that expenditures further exempt purposes.”
More, much more, can be found here:
https://www.irs.gov/charities-non-profits/charitable-organizations/private-foundations
I don’t think that this would be feisable unless you added an educational piece to it. If the goal is to simply avoid taxes then why not enjoy it now tax free and when the time comes gift it to a charity that is already tax exempt. Like St Jude’s would be top on my list. I do that with stock gains. Just my 2 cents. You can offset gains with charity donations.
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It sounds like a tax evasion scheme as articulated by the OP. PASS.
+1.
If you do try it, well, I hope you enjoy your time in Club Fed.
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I'm unintentionally not-for-profit. Does that count?
I think you are missing that our hobby is more than just the collecting of money, it is also the collection and sharing of information, knowledge, and subsequently opportunity- which are all not the antithesis of charity.
Very old IRS/Treasury rules permitted a low level of self-support via a tax exempt charitable foundation - the EPNNES was formed way back then and was grandfathered for Eric Newman. When he died that option ended, and EPNNES operates like other charitable foundations. No member of the Board or other can personally benefit; something in the foundation stays there.
OP - Please talk to a CPA or Foundation/Trust attorney. What you think you are proposing is not what you are proposing....About all your suggestions will get you is 5-10 years in a federal prison and forfeiture of all assets related to the activity, plus a $100,000 fine.
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