response 12 of 127:

Jul 18 18:01 UTC 1998

well, this immediately throws teh auction.cf into a cocked hat ...
        "only to the extent that their contributions are gifts,
        with no consideration received."
  
who is responsible for massaging this pending imbroglio?
  
who does the best hoop-dance around here?

response 14 of 127:

Jul 18 19:04 UTC 1998

The question is, now that you have it, what are you going to do with it?

I would hate to see another organization squander its 501(C)(3) status.

response 16 of 127:

Jul 18 22:43 UTC 1998

Quite right, no need for massaging anything.  I'm curious what Dan means by 
"guidelines".

THanks Jan, for all your work.  It took someone to stand up and do the
drudgery on this to make it work, and you did it.

response 18 of 127:

Jul 19 01:40 UTC 1998

So, will some one in plain English, tell me whether or not the money from
the auction is refunadble? (It makes no diference in my bids, just curious.)

response 20 of 127:

Jul 19 05:54 UTC 1998

Didn't we have a problem with this last summer with nt?  Normal donations
aren't refundable.  I don't think the auction's are, either.

response 22 of 127:

Jul 19 06:44 UTC 1998

I think there basically 3 differences 501c3 makes, one small, 2 big.
The small one is we will need to be *slightly* more careful about
chasing down all the obscure tax consequences and following them.  This
is mostly a reporting/recording issue, and is almost entirely stuff we
are doing already, and *should* be doing anyways.

The first of the major things is, individual donors who already donate
stuff to grex, will get a few more tax options, if they so choose.  I
think this benefit will be primarily psychological, and I don't expect
this to have a major financial impact to the individuals concerned, to
grex, or to the federal government.  It's still nice to make those
individuals feel good, because they've done a huge favour for grex.

The second of the major benefits is the one I think could be most useful
to grex: we have now enormously improved our chances of pimping some
serious hardware from a Big Company.  We've already made a choice to
specialize in technically obselete "formerly expensive" computer
equipment, and developed in-house expertise to make this equipment
useful on grex.  Until now, we've only been able to use hardware that
was so obselete, even the accountants in the company had given up on
recovering any value from the hardware in question, so they were willing
to give it up to anyone who would haul it away.  Now, we can get that
equipement at least a year earlier in the depreciation schedule, after
it's been replaced and is functionally worthless to the company, but
still has book value and isn't quite "worthless" to the accountant.  We
can essentially give that book value back to the company in the form of
tax credits, and get ahold of newer stuff.

( Of course m-net has long had the same benefit.  In fact, they've
gotten some interesting hardware this way, which they basically wasted
because they weren't able to use the in-house expertise they had
effectively. )

response 24 of 127:

Jul 19 14:08 UTC 1998

Geez. You may think it is wonderful that you can sit on your ass doing
nothing, after somebody hands you the tools which can help you move your
organization far beyond its limited role and make it a truly meaningful
part of the community. Maybe that's what you had in mind from the start.
However, if you do so, you will just have to live with the fact that I will
look down on you for wasting opportunity.

response 26 of 127:

Jul 19 14:38 UTC 1998

I don't think Grexes providing the services it provides, free of charge, to
all comers is "sitting on it's ass'.  If you do, and you choose to think less
of us for it -- so be it.

Can't please everyone.

response 28 of 127:

Jul 19 15:51 UTC 1998

I warned that the text of the letter I entered is not safe for people who
are easily alarmed or unused to talking to bureaucrats.  I think TS didn't
survive the letter:

>well, this immediately throws teh auction.cf into a cocked hat ...
>       "only to the extent that their contributions are gifts,
>       with no consideration received."
>  
>who is responsible for massaging this pending imbroglio?

That clause does not say that we can't have auctions.  Here's a quote from
IRS publication 557:

   FUND-RAISING EVENTS:  If the donor receives somthing of value in return
   for the contribution, a common occurence with fund-raising events, part
   or all of the contribution may not be deductible.  This may apply to fund-
   raising activities such as charity balls, bazaars, banquets, auctions,
   concerts, athletic events, and solicitations for membership or contributions
   when merchandise or benefits are given in return for payment of a
   specified minimum contribution.

Note that the IRS is OK with all these things.  It recognizes that they are
common among tax-exempt organizations and doesn't object to us doing them.
We do several of these things - membership dues and selling donated objects.
They are legal.  The question is how much of the person giving us money can
deduct from their taxes.  Before we had tax-exempt status, the answer was
easy:  not a cent.  (Except that technically we always had tax-exempt status,
only the IRS hadn't officially noticed yet - some braver users have been
deducting their donations for years.)  With tax-exempt status the answer
can be a bit more complex, since it involves the value of the goods received.  
Most of our donors won't be bothering with this, since their donations are
small or they don't itemize deductions - they won't be deducting anything,
which is certainly fine with the IRS.

Note also that the issue of what you deduct from your taxes isn't, for
the most part, Cyberspace Communications' problem.  That's between you and
the IRS.  You're welcome to deduct anything you think you can get away with.
We need to figure out what kinds of receipts we should give people.  That's
all.  The next paragraph from publication 557 talks about this a bit, but
we need to get publication 1391 to get full answers on this:

   If a donor received some benefit in return for a contribution to your
   organization, the donor can only deduct the portion of the contribution,
   if any, that is more than the fair value of any benefit or merchandise
   to be given to contributors.  You should determin in advance the fair
   value of any benefit or merchandise to be given to contributors and tell
   them when you publicize the fund-raising event or solicit their
   contributions how much is deductable and how much is for benefit or
   merchandise.

   This topic is discussed in more detail in Publication 1391, "Deductability
   of Payments Made to Charities Conducting Fund-Raising Events."  You can ask
   IRS to send you a copy.  [Mark has already asked.]

So yeah, we need to figure out the "fair value" of Grex memberships (off the
top of my head, I'd guess $2 a month - maybe less, but I want to read 1361
before deciding this) and how to handle the auctions (I think we don't set
a value on market goods - donors deduct their estimate of fair value, buyers
deduct their estimate of fair value, but again, 1391 should clarify this).

Lots of tax-exempt organizations do things like the auction.  I don't actually
know exactly how to handle it, but rules exist and they can't be all that
hard to follow or there'd be lots fewer of these things going on.  It's
not an "imbroglio" that requires "massaging".  We just need to figure out
the tax law so we can give our users a little guidiance and support in
filling out their tax forms sometime before next April.

Any user who finds all this too high for them is welcome to just continue
doing as they have done in the past - donate money and don't deduct it from
your taxes.  That way the tax-exempt status will have no impact on you at
all.

response 30 of 127:

Jul 20 04:53 UTC 1998

Good show, Jan.

Dues to a 501(c)3 are deductible, except for that "something of value"
thing. I don't think Grex gives anything that fits into this category.
I have already cited the case of a New York non-profit that restricts
parking at its Manhattan headquarters to members. The value of that does
not have to be declared. That "something of value" is something that
is either provided "rarely" (like, say, an annual dinner), or also sold
(like a slick magazine). So, don't even consider trying to put a "value"
on grex membership. The dues are a simple donation.

response 32 of 127:

Jul 20 15:50 UTC 1998

re #27: I don't care what you do with your chainsaw, until you ask me to
        subsidize your activities. You want to stick your hand in my wallet?
        Sorry -- I'm going to tell you what I think.

        Don't pretend that you went out and bought a chaninsaw, and that I
        have no right to tell you how to use it. You went out and got a
        tax exemption -- a goverment subsidy of your activities.

response 34 of 127:

Jul 20 17:00 UTC 1998

resp:32

Aaron, do you feel the need to approve of *every* program the government 
sees fit to support?  If so, surely there are far bigger fish to fry 
than one little system that provides free internet access to the poor 
and the world.