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Home -> Community -> Mailing Lists -> Oracle-L -> RE: OT -- training
You're absolutely correct. I had a momentary brain-burp and applied what I knew of tax-exempt to not-for-profit.
>From the IRS's FAQ at http://www.irs.gov/prod/bus_info/eo/eo-faqs.html#11
"Non-profit and not-for-profit are state law concepts. Most states have laws whereby an entity can be incorporated as a non-profit or not-for-profit organization. However, the mere fact that an entity is organized as a non-profit or not-for-profit organization does not indicate that it is exempt from federal income tax."
So the IRS (Federal law) doesn't recognize non-profit or not-for-profit.
However, the discussion was really about whether you had to make a profit to be a legitimate business.
Check http://www.irs.gov/plain/forms_pubs/pubs/p5350104.htm Quote:
"Presumption of Profit
An activity is presumed carried on for profit if it produced a profit in at
least 3 of the last 5 tax years, including the current year. Activities
that consist primarily of breeding, training, showing, or racing horses are
presumed carried on for profit if they produced a profit in at least 2 of
the last 7 tax years, including the current year. You have a profit when
the gross income from an activity is more than the deductions for it.
"If a taxpayer dies before the end of the 5-year (or 7-year) period, the
period ends on the date of the taxpayer's death. If your business or
investment activity passes this 3- (or 2-) years-of-profit test, presume it
is carried on for profit. This means it will not come under these limits.
You can take all your business deductions from the activity, even for the
years that you have a loss. You can rely on this presumption in every case,
unless the IRS shows it is not valid.
"Using the presumption later. If you are starting an activity and do not
have 3 (or 2) years showing a profit, you may want to take advantage of
this presumption later, after you have the 5 (or 7) years of experience
allowed by the test. You can choose to do this by filing Form 5213. Filing
this form postpones any determination that your activity is not carried on
for profit until 5 (or 7) years have passed since you started the activity.
"The benefit gained by making this choice is that the IRS will not immediately question whether your activity is engaged in for profit. Accordingly, it will not restrict your deductions. Rather, you will gain time to earn a profit in 3 (or 2) out of the first 5 (or 7) years you carry on the activity. If you show 3 (or 2) years of profit at the end of this period, your deductions are not limited under these rules. If you do not have 3 (or 2) years of profit, the limit can be applied retroactively to any year in the 5-year (or 7-year) period with a loss.
"Filing Form 5213 automatically extends the period of limitations on any year in the 5-year (or 7-year) period to 2 years after the due date of the return for the last year of the period. The period is extended only for deductions of the activity and any related deductions that might be affected."
They've changed the rules since I last was interested. I'm pretty sure that it used to be just 1 year out of the last 4 or 5. Now it's 3 years out of the last 5. I wonder how many dot coms could meet that test -- assuming that they stay in business for 5 years?
"Mercadante,
Thomas F" To: Multiple recipients of list
ORACLE-L
<NDATFM_at_labor.st <ORACLE-L_at_fatcity.com>
ate.ny.us> cc:
Sent by: Subject: RE: OT -- training
root_at_fatcity.com
08/15/2001 02:46
PM
Please respond
to ORACLE-L
The IRS is not picky about not-for-profits making a profit - they just get taxed for it. I was a treasurer for a NFP, and we always made a (modest) profit. We just paid like normal taxpayers.
They also taxed you for income that was "outside" your stated reason for being.
tday6 said:
"2. You can never make a profit."
Tom Mercadante
Oracle Certified Professional
-----Original Message-----
Sent: Wednesday, August 15, 2001 10:16 AM
To: Multiple recipients of list ORACLE-L
Yes. It does. But, as someone pointed out earlier, as an individual it's only partially deductible. If you're a business then it is an expense that can be offset against income (and thus is 100% deductible). If you're not already a DBA (or at least in an IT field) then it's probably not deductible.
As always, check with a real tax lawyer. Me? I just slept at a Holiday Inn last night.
Regarding registering as a non-profit -- 2 points.
They're pretty picky about this. (LOL)
lhoska_at_calibr
esys.com To: Multiple recipients of
list
Sent by: <ORACLE-L_at_fatcity.com>
root_at_fatcity. cc:
com Subject: RE: OT -- training
08/14/2001
05:41 PM
Please
respond to
ORACLE-L
Speaking about progressing in your current field wouldn't technical
training
of dba qualify for a tax break under the same category as training for FAA
ground instructor? Otherwise, your FAA ground instructor registered as a
private business (and we're back to the beginning of our discussion).
Doesn't surprise me neither does it make me jealous. There are so many
different career decisions you can make. I like being a dba..
Btw, I am pretty sure you can write off your technical book fees even as an
individual..
-----Original Message-----
Sent: Tuesday, August 14, 2001 4:54 PM
To: Multiple recipients of list ORACLE-L
Appearances to the contrary, Canada is a separate country with their own tax laws.
However, the tax dodge that you mention is common here too.
Here's a really good one -- become a Certified FAA Ground Instructor. You
teach people how to pass the FAA ground exam. Since it's not life
threatening, it's relatively simple to get this certificate. Then get a
student or two. After that you can buy an airplane. The airplane, the gas
to fly it, the maintenance and hangering of the airplane, the cost of
getting the experience necessary to become a Certified Flight Instructor
(CFI), books, aircraft simulator software, landing fees, even the cost of
overnight lodging in some cases, instructors' fees (in short, a whole ton
of things that make flying a hobby for the rich) become tax deductable
because they are helping you progress in your field as an instructor. The
IRS does not allow you to deduct training that qualifies you for a new
field but it does allow you to deduct training that allows you to progress
in your current field. Because of the FAA requirements for becoming a CFI
almost anything having to do with flying will count as "training".
"Boivin, Patrice
J" To: Multiple recipients of
list ORACLE-L
<BoivinP_at_mar.dfo- <ORACLE-L_at_fatcity.com>
mpo.gc.ca> cc:
Sent by: Subject: RE: OT --
training
root_at_fatcity.com
08/14/2001 04:17
PM
Please respond to
ORACLE-L
I know in Canada that some high-paid executives have "farms" in rural areas
(ahem, cottages really) where they grow forage, seed, or raise a couple of
sheep, rabbits, a few pigs, some chickens, or one cow. All for tax
deductions of course. It helps if the farm is near a lake.
Another good one is "horse farm". There is a particularly big one in
Ontario that specializes in horse racing... and never makes a profit. Ha
ha
ha ha ha ha...
This is my opinion, of course. But I saw many of these when I used to
enter
farm tax records for Statistics Canada years ago.
Regards,
Patrice Boivin
Systems Analyst (Oracle Certified DBA)
-----Original Message-----
From: tday6_at_csc.com [SMTP:tday6_at_csc.com]
Sent: Tuesday, August 14, 2001 3:44 PM
To: Multiple recipients of list ORACLE-L
Subject: RE: OT -- training
I guess that we'll let the IRS sort this one out. Your friend is
probably
right and I was probably overly emphatic when I said that you MUST
show a
profit sometime. But I would rather not leave it up to the IRS to
decide
whether it is a business or a hobby.
"Post, Ethan"
<epost_at_kcc.co To: Multiple recipients
of list ORACLE-L
m> <ORACLE-L_at_fatcity.com>
Sent by: cc:
root_at_fatcity. Subject: RE: OT --
training
com
08/14/2001
01:17 PM
Please
respond to
ORACLE-L
Actually I talked to a friend who is pretty knowlegable about this
stuff
and
he says that what it will really come down to is intent. The IRS is
not
going to call your business a hobby if it is in fact unquestionably
a
business, even if it has lost money for a period of years. - E
>-----Original Message-----
>From: tday6_at_csc.com [mailto:tday6_at_csc.com]
>Sent: Tuesday, August 14, 2001 7:41 AM
>To: Multiple recipients of list ORACLE-L
>Subject: RE: OT -- training
>
>
>Check with your tax advisor again or get a new tax advisor. I
don't
>remember the exact details but you MUST show some tax-able profit
for a
>certain number of years out of every so many years (eg, 1 year
>out of the
>last 4 - I'm not sure that those are the right numbers) or the IRS
will
>decide that your "business" is just a "hobby" and force you to
>go back and
>give up all your business deductions. It doesn't have to be a
>huge profit,
>but it does have to be a positive number.
>
>
>
>
> lhoska_at_calibr
>
> esys.com To: Multiple
>recipients of list ORACLE-L
> Sent by:
><ORACLE-L_at_fatcity.com>
> root_at_fatcity. cc:
>
> com Subject: RE: OT
>-- training
>
>
>
>
> 08/13/2001
>
> 06:05 PM
>
> Please
>
> respond to
>
> ORACLE-L
>
>
>
>
>
>
>
>
>
>I've heard from my tax adviser your business doesn't have to show
any
>profit
>for number of years after opening. I suspect even then it is
>not required.
>What if you having hard time making profit? It doesn't mean
>you have to
>close your business...I assume in that case you can also register
as a
>non-profit organization. Are tax breaks better for
>non-profits? I don't
>know..
>Also, if you don't already know.. some training companies
>(Learning Tree
>International per example) won't even register you for class
>if you're an
>individual. You have to be a corporation.
>Lyuda
>
>-----Original Message-----
>Sent: Monday, August 13, 2001 3:42 PM
>To: Multiple recipients of list ORACLE-L
>
>
>You could create a web site that features some technical
>materials and use
>it to advertise your services if you are willing to moonlight on a
few
>jobs,
>just enough to turn a profit within a couple years. Then I
>would presume
>you would have no trouble writing the training off as a legitimate
biz
>expense.
>
>- Ethan
>- http://www.geocities.com/epost1
>
>>-----Original Message-----
>>From: Ron Rogers [mailto:RROGERS_at_galottery.org]
>>Sent: Monday, August 13, 2001 11:42 AM
>>To: Multiple recipients of list ORACLE-L
>>Subject: Re: OT -- training
>>
>>
>>Patrice,
>> There is "resistance" to any training that I feel is
>>necessary to further my knowledge and/or enhance my
>>understanding of the Oracle processes. Even though I have
>>money in the budget for such items I have to submit a business
>>case defining the gains to the company and after completing
>>the course with a passing grade the company will reimburse me
>>the expenses for the course only. I also have to sign a waver
>>that I will pay the company back the full cost of the course
>>if I leave their employment before 365 days. Needless to say I
>>pay for everything myself and hope to write it off on taxes if
>>they ever get the bill signed into law.
>>ROR mª¿ªm
>>
>>>>> BoivinP_at_mar.dfo-mpo.gc.ca 08/13/01 11:46AM >>>
>>Just out of curiosity, how many days / weeks of real training did
your
>>employer provide you with in the last couple of years?
>>
>>"real" is in quotes, I don't mean the little 1 - 3 day
>>seminars given by
>>CareerTrack and other "training" companies, or
>>management-related stuff like
>>little MBA-flavoured certificates from universities.
>>
>>Oh, and did the amount of training you received match what you
>>were told
>>during your job interview?
>>
>>Regards,
>>Patrice Boivin
>>Systems Analyst (Oracle Certified DBA)
>>
>>Systems Admin & Operations | Admin. et Exploit. des systèmes
>>Technology Services | Services technologiques
>>Informatics Branch | Direction de l'informatique
>>Maritimes Region, DFO | Région des Maritimes, MPO
>>
>>E-Mail: boivinp_at_mar.dfo-mpo.gc.ca
<mailto:boivinp_at_mar.dfo-mpo.gc.ca>
>>
>>--
>>Please see the official ORACLE-L FAQ: http://www.orafaq.com
>>--
>>Author: Boivin, Patrice J
>> INET: BoivinP_at_mar.dfo-mpo.gc.ca
>>
>>Fat City Network Services -- (858) 538-5051 FAX: (858)
538-5051
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Lists
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>>Author: Ron Rogers
>> INET: RROGERS_at_galottery.org
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538-5051
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>
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Received on Wed Aug 15 2001 - 14:32:07 CDT
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