Re: MCM - Digest V1 #201

["Robert P. Cashin" <rcashin@juno.com>]

Hi Everybody,

        There is a lot to discuss today. First, I want to thank Diana Walstad
for volunteering to take the poster/book sales from Gomberg. I have
emailed Dave reminding him to send the inventory to her. She has also
accepted a position as a member of the MC. Welcome aboard Diana, we look
forward to hearing your opinions  in our discussions. The SC has decided
to sell her book in addition to the others we currently offer.

        Next, I want to thank Bob M for his inputs on incorporation. I have been
waiting for this to go on to the next phase, which is the by-laws,
constitution, etc.

>Mary tells me that the AGA is strongly inclined to become a nonprofit 
>organization.  Before going through the necessary steps, however, I 
>think it is a good idea clarify what becoming a nonprofit corporation 
>will (and will not) accomplish, and how much it will cost.
>
>As a nonprofit corporation, the AGA will be able to engage in 
>profit-making activities without paying federal or state income tax.  
>The AGA may also enjoy other benefits:
>* The AGA will have a formal structure with directors, officers and 
>by-laws.  This structure may be beneficial to the organization.
>* The AGA may qualify for lower postal rates.
>* As a corporation, the individual members of the AGA will be 
>protected if the AGA is sued.
>* The AGA can receive donations on a tax-deductible basis.
>>Note:  the AGA will not necessarily be exempt from collecting state 
>sales - state law varies depending where goods are sold.  Furthermore, 
>dues will not necessarily be tax-deductible.

        These are all things that will help the organization. I am particularly
interested in protection of the individual members from liability.
>
>It will require money and effort to form the organization and comply 
>with annual reporting requirements.  Here is what is required:
>
>* The AGA will become a nonprofit corporation in some state.  In 
>Massachusetts, this involves filing some simple paperwork and paying a 
>$35 fee. 

        Does anyone have any objection to Mass. being the state in which we get
incorporated? If not, lets set it up that way as I suspect it will make
Bob's job easier living in that state too.

>* The AGA will file a form with the IRS asking for tax-exempt ("=A7 
>501(c)(3)") status.  The IRS charges a $150 user fee, $300 if the 
>receipts of the AGA are over certain thresholds.  The purpose of the 
>filing is to demonstrate to the IRS that the AGA's purposes merit a tax 
>exemption.  Generally, it takes the IRS between two and six months to 
>rule on the request.
>* The AGA will file some additional paperwork to qualify for state tax 
>exemptions.  Several forms must be filed in Massachusetts if the AGA 
>incorporates here.  Additionally, it may be a good idea to file for 
>sales tax exemption if the AGA regularly sells goods in other states.

        Do we have to have the federal status in order to get it from the state
or can they proceed concurrently?

>* Annual filings will probably be required with the state of 
>incorporation and the federal government.  In Massachusetts, a simple 
>annual report must be filed together with a $15 fee.  A federal report 
>Form 990 - is required if the AGA's gross receipts for the year exceed 
>$25,000.  The AGA will need to hire an accountant to prepare this form 
>if it is required.
>
>I will not charge the AGA for handling the paperwork except to the 
>extent I incur out-of-pocket expenses, which should not exceed $50.  
>In total, it should cost the AGA between $200 and $500 to become a 
>nonprofit organization.    On an ongoing basis, the AGA will probably 
>have to pay an accountant to prepare annual financial statements and 
>tax returns.  I work with an accountant who generally charges about
>$250-$300 per year for this type of work.  All these figures are based 
>on incorporation in Massachusetts, and may differ somewhat if the AGA 
>incorporates elsewhere.

        The expenses should not be a problem. Last year we voted to allot $1000
for this effort.
>
>If you are interested in incorporating the AGA, here is what I will need

>to go forward:
>
>* I will need to speak with someone regarding the management structure 
>of the AGA.  The Articles of Incorporation and corporate By-laws will 
>contain a number of details concerning management, such as the initial 
>officers and Board of Directors of the AGA, their terms of office, and 
>their powers.  These matters will need to be decided before the AGA is 
>incorporated.

        I guess I should be the contact for this with the rest of the 

>* I will need to speak with someone who can supply me with financial 
>data for the past few years.  The nature of the AGA's finances will 
>affect the amount of the AGA's filing fee with the IRS and the extent 
>of its ongoing reporting obligations.

        David Lass has this info. Please see him for it.

>* The AGA will need to prepare a "mission statement."  This statement 
>is important in order to convince the IRS that the AGA is worthy of a
tax 
>exemption.

        How does this differ from the Purpose listed on the inside front cover
of TAG, or does it differ?

        We definitely want to proceed.

        Mary, thanks for getting the ads in the national magazines.

        I think that is it for now, Bob C



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