Has anyone gone through the process of creating a 501(c)7 Nonprofit for their hunting camp? We have 9 members in our camp with the deed being held by three. I want to clean this up and was hoping someone could spell out the steps to take.I was also hoping to minimizee the use of a lawyer to keep expenses down.
PunkyHollow
Punky, we just successfully did this, 5 owners to our camp. Cost us $895 at a local attorney. Our mission statement was "to promote outdoor recreation and educate the youth involved in the camp".
Good luck! Get the attorney, we were going to go it alone but too many issues that could cause major stuff later if you make a mistake.
Good luck! Get the attorney, we were going to go it alone but too many issues that could cause major stuff later if you make a mistake.
Non-Profit is the way to go.
Our club did it and there is no tax return to file. We have a "sinking fund" that we roll over excess money into and this is used like a self insurance policy we use for maintenance.
The only reoccurring paperwork is we have to file a corporate report yearly with the state.
Good Luck
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Our club did it and there is no tax return to file. We have a "sinking fund" that we roll over excess money into and this is used like a self insurance policy we use for maintenance.
The only reoccurring paperwork is we have to file a corporate report yearly with the state.
Good Luck
Yep. I hate attorneys, but there is certain things that need to be done correctly or you will be sorry later. A couple hundred bucks per person is pretty cheap considering that if it isn't done correctly you run the chance of losing the whole camp to issues later on.4c_game_chaser said:
Our camp was formed not to hunt(we all own farms anyway) but to have a place to get away from society and take the families to wind down. Our by laws dictate what happens if someone wants to leave, they forfeit their share to the remaining owners or can hand it down to one of their children, nothing more and a share has no resale value. Spouses have no rights to the share etc.. Attorney took care of all of that for us short of writing up the rough by laws, which I did. he just tweaked them to make them binding.mus42tang said:
Punky - I can recommend a lawyer we used to form our nonprofit depending on where you are located. He had set up numerous ones for other camps. It is really the way to go along with a strong set of bylaws. It was relatively cheap, especially if you are splitting it between 9 guys.
I echo what 4c mentioned. We wanted to make sure our bylaws were written in a way where their is no financial interest in someone leaving the camp. We have it where you bought the recreation associated with the camp not as an investment. When you leave, you don't get your initial investment back. That way when 2 or 3 members decide 10 years from now that they want to sell, you don't have the remaining members scrambling to come up with cash or being forced to sell the whole thing.
I echo what 4c mentioned. We wanted to make sure our bylaws were written in a way where their is no financial interest in someone leaving the camp. We have it where you bought the recreation associated with the camp not as an investment. When you leave, you don't get your initial investment back. That way when 2 or 3 members decide 10 years from now that they want to sell, you don't have the remaining members scrambling to come up with cash or being forced to sell the whole thing.
All good information. Our camp has survived the last 40+ years by mutual agreement and working together. Now we are all in our 50's or older and I can see where this all could unravel very quickly if someone dies (especially if it was a deed holder) and I think incorporating (as a nonprofit) is the best way to go. I'm trying to understand as much of the process as possible and would be willing to do the legwork on a lot of the paperwork, however, I totally agree that to do this without a lawyers oversight would be imprudent.
If the nonprofit entity is the owner the property be careful. The federal rules to remain a nonprofit include a stipulation that the organization can receive up to 35% of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. So if you happen to have timber or own the oil/gas rights you may have some difficulty meeting this requirement. Depends on your particular circumstances if the 501c7 would work for you.
That’s a 6 yr old post you are referencing. Archery school could be construed as a business. Way to many legal issues to contend with to rely on internet “experts”. Pay a lawyer versed in such matters a consulting fee to see what your options are. Good luck.
I practiced tax law for 25+ years. I see advantages of the 501(c)(7) "Social Club", but if it were me, I'd seriously look at the LLC route. You may have read where Pa LLC's have a $500 or so annual fee for each member of the LLC, BUT that is just for "Professional LLC's". You know....Licensed professionals like Attorneys, CPA's, Dentist etc. For a hunting club that annual fee doesn't apply.
And just the upfront disclaimer, consult with a tax attorney or attorney and CPA who knows the tax laws. Don't print this out and say...."This guy said". I've been out of the business for many years....some things change....some don't.
An LLC is taxed as a "Disregarded Entity" which means if the LLC has no sources of taxable income (royalties, timber, etc) then no tax return needs filed. Member contributions are not taxable income. Should the entity have taxable income, the "default" for more than one member is a Partnership Return, form 1065. You really don't need a professional to file the 1065...if needed. Especially if it's just royalties and\or timber.
Remember, nobody "owns" a 501(c) organization. The 501(c) has bylaws that control it's operation....and it's controlled by the Directors that are appointed. The 501(c) would work when\if there is no buy-out issues to contend with. In other words, if a member put in $5,000 for a contribution, he owns nothing to sell at a future date. Also, as a side note, should the organization want to change the bylaws, a copy of the changes must be submitted to the IRS in the year any changes were done.
"Buy-Outs" with LLC's can be controlled via buy-sell agreements. With LLC's each member owns "membership interest" similar to corporate shares....and these same membership interest can be voting and non-voting. The Operation Agreement controls this. A buy-sell agreement can simply state if you put in $5-K, then if you ever want out you can only get $5-K and it can address a time period for the buy out to be paid. (Thus averting the need to cough up cash right away) Buy sells can also control the "who" the owner can sell or transfer their interest to. Agreements can be stated so that existing members have the first right of refusal to buy....so one guy can't transfer his interest to...say his soon to be ex-wife etc.
Is it more complex than just buying a camp with a bunch of guys? Yes...a bit more. OTOH when down the road members pass away, get a divorce, have children who all receive a chunk of Dad's share of the real-estate in the camp....then decide to come up with 25 of their friends to party during hunting season.....things can get sticky.
So....some complex now can save a lot of grief and aggravation down the road. And can also provide the members with an easy way to control who owns what....and who can use it when.
FWIW
And just the upfront disclaimer, consult with a tax attorney or attorney and CPA who knows the tax laws. Don't print this out and say...."This guy said". I've been out of the business for many years....some things change....some don't.
An LLC is taxed as a "Disregarded Entity" which means if the LLC has no sources of taxable income (royalties, timber, etc) then no tax return needs filed. Member contributions are not taxable income. Should the entity have taxable income, the "default" for more than one member is a Partnership Return, form 1065. You really don't need a professional to file the 1065...if needed. Especially if it's just royalties and\or timber.
Remember, nobody "owns" a 501(c) organization. The 501(c) has bylaws that control it's operation....and it's controlled by the Directors that are appointed. The 501(c) would work when\if there is no buy-out issues to contend with. In other words, if a member put in $5,000 for a contribution, he owns nothing to sell at a future date. Also, as a side note, should the organization want to change the bylaws, a copy of the changes must be submitted to the IRS in the year any changes were done.
"Buy-Outs" with LLC's can be controlled via buy-sell agreements. With LLC's each member owns "membership interest" similar to corporate shares....and these same membership interest can be voting and non-voting. The Operation Agreement controls this. A buy-sell agreement can simply state if you put in $5-K, then if you ever want out you can only get $5-K and it can address a time period for the buy out to be paid. (Thus averting the need to cough up cash right away) Buy sells can also control the "who" the owner can sell or transfer their interest to. Agreements can be stated so that existing members have the first right of refusal to buy....so one guy can't transfer his interest to...say his soon to be ex-wife etc.
Is it more complex than just buying a camp with a bunch of guys? Yes...a bit more. OTOH when down the road members pass away, get a divorce, have children who all receive a chunk of Dad's share of the real-estate in the camp....then decide to come up with 25 of their friends to party during hunting season.....things can get sticky.
So....some complex now can save a lot of grief and aggravation down the road. And can also provide the members with an easy way to control who owns what....and who can use it when.
FWIW
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