Tax Tips for Higher Education
Accountable Reimbursement Plans
The IRS is looking closely at substantiation of employee expenses and reimbursements. Does your institution have proper policies/procedures in place? Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. Their CFO and Accounting team were work through our “tax checklist” when they came to these two questions…
Election Year: Candidate Appearances
Candidate Appearances Where Speaking or Participating as a Non-Candidate. Candidates may also appear or speak at organization events in a non-candidate capacity. For instance, a political candidate may be a public figure who is invited to speak because he or she: (a) currently holds, or formerly held, public office; (b) is considered an expert in a non political field; or (c) is a celebrity or has led a distinguished military, legal, or public service career.
The Future of Sales Taxes in the Wake of “Wayfair”
The Supreme Court’s recent decision in “South Dakota vs. Wayfair” threw out the tenets of the decades-old “physical presence” requirement that governed state nexus. If you have internet sales, take note. SITUATION:
Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. SCC has a profitable activity whereby their graphic design and marketing students collaborate on a “business venture” selling apparel and other items that sports SCC’s logo and mascot – the Saltwater Surfdogs. The venture brings in gross income of over $1 million annually.
Virtual Currency Can Provide Interesting Opportunities
Has your institution decided to accept contributions of “virtual currency?” The IRS issued guidance in 2014, but it might be getting stale. SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. TBC’s Controller calls us to ask about “Bitcoin.” What if we have a donor who wants to give us “virtual currency?” What about a student who wants to pay tuition in “Bitcoin?” We tell her that, “virtual currency” (aka “digital currency” or “cryptocurrency”) is treated as property, not cash by the IRS. TBC needs to establish policies and procedures – they could include a section on virtual currency in their Gift Acceptance Policy – regarding how and when they might accept virtual currency.
Qualified Parking as UBIT, Part 5
ISSUE:
New Internal Revenue Code Section 512(a)(7) is causing quite an outcry, but might it be much ado about nothing?
SITUATION:
Idaho Bible College and Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i). They are not required to file Form 990 annually.
The Controller at IBCS has been working up some calculations in 2018 on potential UBIT on their parking. After reviewing “Tax Tips” over the past month, she relates that they have the following parking facts:
Parking lot with 60 spaces, 20 faculty and staff. For the most part, the lot is used equally by employees, students, and visitors. No one is charged for parking.
The lot was constructed 10 years ago at a cost of $30,000. It is being depreciated over 15 years. IBCS typically spends $6,000 on parking lot sweeping, $2,000 on lining/striping, and $2,000 on snow removal in a normal year.
She complains, “There are three ridiculous problems with this. One, it makes no sense that we should pay taxes on expenses. Two, it is a lot of work to try and come up with an allocation method – especially when there is no guidance in sight. Three, we’ve never had to file a Form 990-T before and that adds time and expense that this organization does not have.”
On the surface, for IBCS, costs total $12,000 and employees use the lot 1/3 of the time. So, according to the current, conventional tax wisdom, they’d have annual “imputed UBI” of $4,000.
However, let’s look at this from another angle.