Lets start with the big five, in terms of jeopardizing the church's tax exempt status:
their net earnings may not inure to any privateshareholder or individual,■they must not provide a substantial benefit to privateinterests,■they must not devote a substantial part of theiractivities to attempting to influence legislation,■■ they must not participate in, or intervene in, anypolitical campaign on behalf of (or in opposition to)any candidate for public office, andthe organization’s purposes and activities may notbe illegal or violate fundamental public policy.
So, in terms of the UBTI, as long as the funds were kept at the orgaNizational level and used to fuuther the church's mission, aimply selling for a profit, (or gain) alone is not an issue
The church can (for purposes of THIS PROJECT) classify you as an independent contractor, as long as you pay the self employment tax associated this does not differ (in effect) from the ministers being self-employed for Social Security purposes with respect to their ministerial income ... a best practice might however be to sure that the income for this project alone be a separate 1099, not only will it document that the property will be owned by the church, it will keep things "cleaner" all around for tax reporting and any after-the-fact documentation that might be needed
You concern about unrelated income, in my professional opinion, (as long as the intellectual property be owned by the church and when sold does not inure to any individual, but rather is used to pay operational expenses of the church and other things that further the churches organization purposes (which as per IRS is ...
the organization must be organized and operatedexclusively for religious, educational, scientific, or othercharitable purposes) ... is rightfully conservative, but I believe unfounded (again, qualified this way, as above)
I would structure this a a specific project, ... separate the project both by (1) not requiring anything other than a specific result and (2) issuing a separate 1099 for the payment ... regardless of WHO the person providing the service is
And finally, be sure that proceeds of any future sale by the church be used (and documented well) to further the religious purposes of the church and not inure to any specific individual in an excess way
Hope this helps
You may already have this, but this may prove to be helpful if you do not have it in this form:
Let me know if you have any questions at all...
I have not come across these rules for determining UBI before. I have only found this basic explanation:
"Generally, a church creates UBI based on the analysis of these three elements: (1) the church receives income from a trade or business; (2) the trade or business is regularly conducted; and (3) the trade or business is not substantially related to the church’s exempt purposes."
Next, what would be the implications and requirements of making me an independent contractor as opposed to an employee?
Okay, what would be the implications and requirements of making me an independent contractor as opposed to an employee so that I would hold the copyrights?
I am not the pulpit minister here. However, I am being supported for the express purpose of creating these materials and making them available, as well as filling the pulpit from time to time as needed. My family lives, and I maintain my office in a home supplied by the church. (This is also where I maintain the offices of a publishing company that I own and operate).
Would it be acceptable to be classified as an independent contractor? If not, why not? If so, what would be the tax consequences, and are there any considerations that would need to be taken into account in order to properly maintain that status with the IRS?
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