ACCY161Fa10_Notes21

ACCY161Fa10_Notes21 - ACCY 161 Fall 2010 Accounting for...

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ACCY 161 – Fall 2010 Accounting for Not-For-Profit Organizations – Chapters 14 and 15 ACCY161Fa10_Notes21 Page 1 of 6 I. Nature of Not-For-Profit Organizations (NPO’s) A. Major defining characteristics of NPO – essentially the same as for governmental entities 1. Receipt of resources (usually financial resources) from sources that do not expect to receive a benefit in return in proportion to the resources provided. 2. Operating purposes that are other than providing goods or services for a profit. 3. Absence of a defined ownership that can be sold or that can be distributed upon liquidation. 4. Known as NGO’s in the international arena – non-governmental organizations. 5. While called not-for-profits, they still need to make a profit to reinvest in their activities B. Differing operating characteristics among NPO’s – differ from governmental entities 1. Tax-exempt and taxable a. IRS Code Section 503 – most well known is the “501(c) (3)” organization. b. Tax exemption goes beyond income tax – sales tax and property tax but may be replaced by a “…payment in lieu of taxes…” c. Sometimes it is easier to just stay a taxable organization as you will not pay any taxes. d. File an information return, not a tax return - http://www.irs.gov/charities/index.html
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ACCY 161 – Fall 2010 Accounting for Not-For-Profit Organizations – Chapters 14 and 15 ACCY161Fa10_Notes21 Page 2 of 6 2. Taxable income (also known as unrelated business income, UBI) for tax-exempt NPO’s so tax exempt does not mean non-taxable 3. Size and structure a. Most are small and local a few are large –Catholic Healthcare West (Mercy Healthcare) b. Members – nominate and elect the board – a legal issue
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This note was uploaded on 12/15/2011 for the course ACCY 161 taught by Professor Staff during the Fall '10 term at CSU San Bernardino.

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ACCY161Fa10_Notes21 - ACCY 161 Fall 2010 Accounting for...

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