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If Im a sole proprietor and I host a charity event for a local

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If I'm a sole proprietor...
If I'm a sole proprietor and I host a charity event for a local charity. Does the money I collect for tickets count as income? Basically I'm concerned that the amount of the net from the event will show up on my Schedule C as net income. I understand for income tax purposes that it should be a wash as I can deduct the amount I end up donating on my Schedule A. I'm concerned though that I'll be stuck paying self-employment tax on the amount and cannot figure out how to avoid it other than to have the checks for tickets written directly to the charity and then have them reimburse me for my expenses.
Submitted: 9 years ago.Category: Tax
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11/4/2008
Tax Professional: TaxMomNJ, Senior Tax Advisor replied 9 years ago
TaxMomNJ
TaxMomNJ, Senior Tax Advisor
Category: Tax
Satisfied Customers: 245
Experience: 7 years experience with tax preparation company, over 500 hours of tax courses taken
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Hi, guzzy. I have a few questions.

 

You say you host a charity event for a local charity? Do you do that as a part of your business?

 

Do you receive any payment for hosting the event? Is the payment for your services or only for your expenses in putting together the event? What are your expenses in putting together the event?

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Customer reply replied 9 years ago

I don't do that as part of my business. I'm having an event to celebrate 5 years in business with all the proceeds after expenses going to the charity.

 

Expenses include renting the venue, paying to have piano tuned, advertising, invitations, maybe some for food. I'm also getting other sponsors to offset the cost, e.g. they pay me $100 to be a co-sponsor of the event.

Tax Professional: TaxMomNJ, Senior Tax Advisor replied 9 years ago

Who pays you to be a co-sponsor of the event?

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Customer reply replied 9 years ago

Other businesses. So they might pay $100 or $250 and their name will be included in the program brochure or in some other advertising medium for the event. I use the money to offset expenses for the event and ultimately, if I get more in sponsor money than I have expenses the excess is also donated to the charity.

 

Ultimately, I do not want to make anything on this event.

Tax Professional: TaxMomNJ, Senior Tax Advisor replied 9 years ago

As long as you are not pocketing any of the funds (whatsoever) from this event, you cannot legally be taxed on anything. Rightfully, the checks for the donations/tickets SHOULD be written directly to the charity. The businesses should be writing the checks to the charity as well, in all honesty. This is the safest way you can make sure you cannot be taxed on any of the funds.

TaxMomNJ
TaxMomNJ, Senior Tax Advisor
Category: Tax
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Experience: 7 years experience with tax preparation company, over 500 hours of tax courses taken
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